References without law book default to BGB.

Case - Impossibility

Facts

Mary (M) loves sailing. After inheriting EUR 100,000, she decides to invest the money in a used yacht. She meets William (W), who intends to sell his Bavaria C 57. They enter into a sale of goods contract at a price of EUR 90,000. M deposits EUR 9,000. M and W agree that M can pick up the boat next week and sail it to its mooring. The next day, however, lightning hits the boat, destroying it completely.

a) Can M demand a transfer of ownership?
b) Can W demand payment?
c) Can M get the EUR 9,000 back?

Solution

Slides Solution

Part A: Transfer of Ownership

• Issue: Can M demand transfer of ownership of the boat from W under § 433 I BGB?
• Rule: § 433 I BGB (Seller’s duty to deliver); § 275 I BGB (Impossibility).
• Application: W and M signed a sales contract. Lightning destroyed the boat. Delivery of this specific yacht is impossible. → (+)
• Conclusion: M cannot demand delivery.

Part B: Payment of Purchase Price

• Issue: Can W demand payment under § 433 II BGB?
• Rule: § 326 I BGB (Entitlement to consideration is excluded if performance is impossible).
• Application: W’s delivery duty is excluded under § 275 I BGB. Thus, M’s payment duty is excluded under § 326 I BGB. → (+)
• Conclusion: W cannot demand payment.

Part C: Refund of Deposit

• Issue: Can M demand the deposit back under §§ 326 IV, 346 I BGB?
• Rule: §§ 326 IV, 346 I BGB (Paid consideration can be claimed back).
• Application: M paid a deposit of EUR 9,000, which is no longer owed. She can claim it back. → (+)
• Conclusion: M can claim the EUR 9,000 back.

Write-Up

Part A: Claim for Transfer of Ownership

Issue: Can M demand a transfer of ownership of the yacht from W under § 433 I 1 BGB?

Rule: Under § 433 I 1 BGB, the seller is obliged to transfer ownership. However, under § 275 I BGB, a claim for performance is excluded to the extent that performance is impossible for the debtor or for anyone else.

Application: M and W entered into a valid contract for a specific used yacht. The yacht was completely destroyed by lightning. Since the specific yacht no longer exists, performance is impossible. W’s duty to perform is excluded under § 275 I BGB.

Conclusion: M cannot demand the transfer of ownership.

Part B: Claim for Payment of Purchase Price

Issue: Can W demand the payment of EUR 90,000 from M under § 433 II BGB?

Rule: Under § 326 I BGB, if the debtor is not required to perform under § 275 I BGB, the claim to consideration (payment) is excluded.

Application: W’s obligation to deliver is excluded under § 275 I BGB. Consequently, M’s obligation to pay the purchase price is excluded under § 326 I BGB. The exceptions under § 326 II BGB do not apply because the destruction (lightning) was an act of God and not M’s fault.

Conclusion: W cannot demand payment of the purchase price.

Part C: Refund of Deposit

Issue: Can M demand the return of the EUR 9,000 deposit under §§ 326 IV, 346 I BGB?

Rule: Under § 326 IV BGB, if consideration is paid although it is not owed under § 326 I BGB, the paid consideration can be claimed back in accordance with the provisions for revocation (§§ 346 et seq. BGB).

Application: M paid a EUR 9,000 deposit. Since she is not obliged to pay the purchase price under § 326 I BGB, she can claim this deposit back.

Conclusion: M is entitled to get the EUR 9,000 deposit back under §§ 326 IV, 346 I BGB.