References without law book default to BGB.

Case - Newspaper Ad

Facts

Andy (A) plans to sell an oil painting showing his grandmother on a white horse. Thus, he advertises it in the local newspaper. The advertisement states a price of EUR 500.

Carol (C), always looking for extraordinary paintings, reads it and writes A the following letter: “Dear Andy, I hereby buy the painting advertised in the newspaper for EUR 500.”

A writes that he is very sorry but has already sold the painting. C, however, insists on the “contract” and asks A to transfer ownership to C. Is there a binding contract between A and C?

Solution

Slides Solution

• Issue: Is there a valid sale of goods contract according to § 433 BGB?
• Rule: A contract requires an offer, an acceptance, and, in each case, the intention to be legally bound / to enter into a contract.
• Application:
  • A. Offer (§ 145 ff. BGB):
    • 1. Advertisement (Invitation to treat / invitatio ad offerendum): → (-). An advertisement is just an invitation to treat. If it were a binding offer, an unlimited number of people could form a contract with A, binding him to perform multiple contracts for a single unique painting. Thus, there is no intention to be legally bound (Rechtsbindungswille).
    • 2. C’s letter: This constitutes the legally binding offer. → (+)
  • B. Acceptance:
    • A wrote back stating he had already sold it. He rejected the offer. → (-)
• Conclusion: There is no valid contract between A and C.

Write-Up

I. Claim of C against A for transfer of ownership pursuant to § 433 (1) sentence 1 BGB
C could have a claim against A to transfer ownership and deliver the painting pursuant to § 433 (1) sentence 1 BGB. This requires a valid sales contract to have been concluded between A and C. A contract requires two concurring declarations of intent (Willenserklärungen): an offer (Antrag, § 145 BGB) and an acceptance (Annahme, § 147 BGB).

1. Offer
First, it must be determined whether there was a valid offer.

a) Offer by A
A’s newspaper advertisement could constitute an offer. An offer is a declaration of intent that contains all essential terms of the contract (essentialia negotii) and is made with the objective intention to be legally bound (Rechtsbindungswille).

Whether a declaration manifests an intention to be legally bound must be determined from the perspective of a reasonable independent observer (§§ 133, 157 BGB). Generally, advertisements in a newspaper do not constitute binding offers. This is because a seller typically has a limited stock (here, a single unique painting) and does not want to risk becoming liable for damages if multiple parties accept the offer simultaneously. Thus, from an objective standpoint, the advertisement is not a binding offer but merely an invitation to make an offer (invitatio ad offerendum / invitation to treat). Consequently, A did not make an offer.

b) Offer by C
However, C’s letter to A (“I hereby buy the painting…”) contains all essentialia negotii (the parties, the painting, and the price of EUR 500) and was sent with a clear intention to be legally bound. Therefore, C made a valid offer to A.

2. Acceptance by A
For a contract to be formed, A must have accepted C’s offer. Acceptance is an expression of consent to the terms of the offer.

Here, A did not accept C’s offer. Instead of consenting, A replied by stating that he was sorry but had already sold the painting. This statement constitutes an explicit rejection of C’s offer.

II. Conclusion
Since there is no concurring offer and acceptance, no binding sales contract was formed between A and C. Consequently, C has no claim against A to transfer ownership of the painting under § 433 (1) sentence 1 BGB.