References without law book default to BGB.

Case - Firewood Theft

Facts

Woody (W) is a timber dealer. Winter is coming, and with it, a massive demand for firewood. W has 15 cubic meters stored in a trailer next to a forest road ready for sale.

Branda (B) meets W at his office and buys these 15 cubic meters. W tells her where she can pick up the wood. B pays the purchase price of EUR 1,800. W doesn’t know that the firewood had been stolen the day before he met with B.

After W has told B about the theft, B buys 15 cubic meters of wood from Gina (G) at a price of EUR 2,700.

a) Can B demand the transfer of ownership of the wood from W?
b) Can B get EUR 1,800 back from W?
c) Can B demand compensation from W? What does this entail?

Solution

Slides Solution

Part A: Transfer of ownership

• Issue: Has B a claim for transfer of ownership of the wood against W according to § 433 I BGB?
• Rule: For this claim, the claim must be incurred and not be excluded.
• Application:
  • A. Claim incurred: → (+), sale of goods contract (§ 433 BGB) between B and W due to two matching DoIs. The fact that the wood was already stolen does not hinder the formation of the contract (§ 311a I BGB)! The transfer of ownership is W’s primary duty.
  • B. Claim excluded: Has the claim for performance been excluded due to § 275 BGB? Is the performance impossible?
    • What is the performance? → Procurement of ownership (§ 433 I BGB) in line with § 929 S. 1 BGB. Requires agreement, delivery, and right to transfer. Delivery is impossible.
    • W cannot procure ownership of the wood. It is impossible for him to do so in the sense of § 275 I BGB. → (+), the claim has been excluded.
• Conclusion: B cannot demand the transfer of ownership of the wood from W according to § 275 I BGB.

Part B: Return of payment

• Issue: Can B claim back the EUR 1,800 from W in line with §§ 326 IV, 346 I BGB?
• Rule: For this claim, there needs to be a contract to which no consideration is owed by B (§ 326 I BGB), and the exception of § 326 II BGB must not apply.
• Application:
  • A. Contract: → (+), see above; W has a claim for the EUR 1,800 (§ 433 II BGB).
  • B. No consideration owed (§ 326 I 1 BGB): → (+), W is not obliged to perform according to § 275 I BGB. No exception under § 326 I 2 BGB applies.
  • C. No exception of § 326 II BGB: → (+), B is not responsible for the impossibility (theft by a third party), and B is not in default of acceptance.
• Conclusion: B can demand back the EUR 1,800 from W according to §§ 326 IV, 346 I BGB.

Part C: Compensation

• Issue: Can B demand compensation from W according to §§ 311a II, 275 IV BGB?
• Rule: For this claim, the following requirements must be met: (1) Contractual Obligation, (2) Inability to perform under § 275 BGB (obstacle occurred before the formation of the contract), (3) Element of fault (§ 311a II BGB: knowledge/negligent ignorance of obstacle), (4) Damages.
• Application:
  • 1. Contractual Obligation: → (+), W has a duty to procure ownership (§ 433 I BGB).
  • 2. Inability to perform due to § 275 BGB: → (+), obstacle occurred before the formation of the contract.
  • 3. Element of fault: Knowledge by W? → (-). Negligent ignorance by W? → probably (+), W should have checked if the wood was still there.
  • 4. Damages: → (+), difference between G’s and W’s price (EUR 2,700 - EUR 1,800 = EUR 900).
• Conclusion: B can claim EUR 900 from W as damages.

Write-Up

Issue: What claims can B assert against W concerning the purchased firewood and the paid purchase price?

Part A: Claim for Transfer of Ownership

Issue: Can B demand the transfer of ownership of the wood from W under § 433 I 1 BGB?

Rule: For this claim, a valid contract must exist, and the claim for performance must not be excluded by impossibility (§ 275 I BGB).

Application: A valid sales contract was concluded between B and W. Even though the wood had already been stolen before the contract was concluded, this initial impossibility does not prevent the formation of a valid contract (§ 311a I BGB). Thus, the claim initially arose. However, under § 275 I BGB, the claim for performance is excluded to the extent that performance is impossible. Procuring ownership under § 929 S. 1 BGB requires delivering the goods. Since the specific 15 cubic meters of wood in the trailer were stolen by an unknown third party, W can no longer deliver them. It is objectively impossible to fulfill the obligation.

Conclusion: B cannot demand the transfer of ownership of the wood from W, as the claim is excluded by § 275 I BGB.

---

Part B: Claim for Repayment

Issue: Can B demand the repayment of the EUR 1,800 from W under §§ 326 IV, 346 I BGB?

Rule: Under § 326 I 1 BGB, if the debtor does not have to perform due to impossibility, the claim to the counter-performance is automatically extinguished. If the counter-performance was already rendered, the obligee can demand restitution under § 326 IV BGB in conjunction with § 346 I BGB, unless an exception applies.

Application: Because W does not have to perform due to impossibility under § 275 I BGB, the claim to the counter-performance (payment) is automatically extinguished. B is thus no longer obliged to pay the EUR 1,800. Since she has already paid, she can demand restitution under § 326 IV BGB in conjunction with § 346 I BGB. None of the exceptions in § 326 II BGB apply, as B was neither responsible for the theft nor in default of acceptance.

Conclusion: B can demand the repayment of the EUR 1,800 from W.

---

Part C: Claim for Compensation

Issue: Can B demand EUR 900 in damages from W under § 311a II BGB?

Rule: Because the impossibility existed before the contract was concluded, damages are governed by § 311a II BGB. The requirements are: a valid contract, an initial impossibility under § 275 BGB, fault regarding the ignorance of the impossibility, and damages.

Application:

• The valid sales contract and initial impossibility under § 275 I BGB have been established.
• Fault: W did not know the wood was stolen. However, he is liable if his lack of awareness was due to negligence (§ 276 II BGB). A careful timber dealer should reasonably verify that the goods are still in the open forest trailer before selling them. W’s failure to do so likely constitutes negligent ignorance.
• Damages: Under § 311a II BGB, the obligee can demand damages in lieu of performance. This aims to put B in the financial position she would have been in if the contract had been properly performed (positive interest). If W had performed, B would have received wood worth EUR 2,700 for EUR 1,800. To cover her needs, she had to engage in a cover purchase (Deckungskauf) for EUR 2,700. The difference is her damage: EUR 2,700 - EUR 1,800 = EUR 900.

Conclusion: B can demand EUR 900 as compensation from W under § 311a II BGB.