References without law book default to BGB.

Case - Mental Capacity

Facts

Paul (P), 18 years of age, has a mental illness. The symptoms are not recognizable.
Viktor (V) sells Paul his car for EUR 8,000.
Can V demand the purchase price?

Variation 1:
Viktor sells Paul a hotdog for EUR 3. Is there a valid contract?

Variation 2:
Paul (P) is healthy but totally drunk. Viktor sells Paul his car for EUR 8,000. Can Viktor demand the purchase price?

Solution

Slides Solution

Original Case

• Issue: Can V demand the purchase price in line with § 433 II BGB?
• Rule: He can demand payment if there is a valid sales contract.
• Application: Is P’s DoI valid?
  • P is mentally ill → incapacity to contract, § 104 No. 2 BGB.
  • → P’s DoI is void, § 105 I BGB.
  • → Sales contract is void.
• Conclusion: V can’t demand the purchase price.

Variation 1

• Issue: Is there a valid contract?
• Rule: For entering a valid contract, the parties must be able to form a DoI.
• Application:
  • What kind of contract? It’s a “mixed” contract (Sale of goods → hotdog; Services rendered → “cooking” of the hotdog). Focus on “selling” a hotdog → § 433 BGB.
  • Is P’s DoI valid? P is mentally ill → incapacity to contract (§ 104 No. 2 BGB) → P’s DoI is void (§ 105 I BGB).
  • Fiction of a contract, § 105a S. 1 BGB (Everyday transactions):
    • P is of full age? → (+)
    • Incapable of contracting? → (+)
    • Everyday transaction? → (+)
    • Funds of low value? → (+), 3 EUR = low value.
    • Immediate execution of the contract? → (+)
    • Is sentence 2 not applicable? (No considerable danger to the person/assets) → (+)
• Conclusion: There is a valid contract.

Variation 2

• Issue: Can V demand the purchase price according to § 433 II BGB?
• Rule: He can demand payment if there is a valid sales contract (offer and acceptance).
• Application: Is P’s DoI valid?
  • P is totally drunk.
  • → P’s DoI is void, § 105 II BGB.
  • → There is no valid sales contract.
• Conclusion: V can’t demand the purchase price.

Write-Up

Issue: Can V demand the purchase price from P under § 433 II BGB, and does a valid contract exist in the variations?

Original Case

Issue: Can V demand the purchase price of EUR 8,000 from P pursuant to § 433 II BGB?

Rule: A claim for the purchase price requires a valid sales contract consisting of two matching declarations of intent. Under § 105 I BGB, any declaration of intent made by a person incapable of contracting (§ 104 No. 2 BGB) is void ab initio, regardless of whether the illness is recognizable to the other party.

Application: P suffers from a mental illness, which renders him incapable of contracting under § 104 No. 2 BGB. Because P’s declaration of intent (acceptance of the offer) is legally void, no valid sales contract was formed.

Conclusion: V cannot demand the purchase price of EUR 8,000 from P.

---

Variation 1

Issue: Did V and P form a valid contract for the hotdog?

Rule: Buying a hotdog is primarily a sale of goods contract under § 433 BGB. Generally, declarations of intent by a person incapable of contracting are void (§ 105 I BGB). However, an exception exists under § 105a BGB for everyday transactions. If a person of full age who is incapable of contracting enters into an everyday transaction using means of low value, the contract is regarded as effective once performance and consideration have been effected, provided it poses no considerable danger to the person’s assets or health.

Application: As established, P is incapable of contracting under § 104 No. 2 BGB. However, P is 18 years old (full age). Buying a hotdog is a typical everyday transaction, and EUR 3 is considered a means of low value. The contract was executed immediately. Furthermore, eating a hotdog poses no considerable danger to P’s person or assets (§ 105a sentence 2 BGB).

Conclusion: By statutory fiction under § 105a BGB, a valid contract was formed between P and V.

---

Variation 2

Issue: Can V demand the purchase price of EUR 8,000 from P under § 433 II BGB when P is totally drunk?

Rule: A valid sales contract requires valid declarations of intent. Under § 105 II BGB, a declaration of intent is void if it is made in a state of unconsciousness or temporary mental disturbance.

Application: P is healthy, so he does not fall under the permanent incapacity rule of § 104 BGB. However, P is totally drunk, which qualifies as a state of temporary mental disturbance that prevents the free exercise of will. Therefore, P’s declaration of intent to buy the car is legally void.

Conclusion: Since P’s declaration of intent is void under § 105 II BGB, no valid sales contract was formed. V cannot demand the purchase price.