References without law book default to BGB.

Case - Second-Hand Lancia

Facts

Steven (S) wants to buy a used Lancia from Carlo (C), a second-hand vehicle dealer. When S examines the car for defects, he asks C whether the Lancia has ever had an accident. C denies it, smiling, although he knows this is not true.

S and C agree on the purchase; S pays EUR 10,000 and drives away.

A few weeks later, S recognizes irregularities in the car’s coating. An expert report proves that accidental damage happened a few years ago.

Can S get the purchase price back?

Solution

Slides Solution

• Issue: Can S get the purchase price back in line with § 812 I 1 Alt. 1 BGB?
• Rule: For a claim of restitution by S against C (§ 812 I 1 Alt. 1 BGB), C must have (1) obtained something, (2) as a result of performance, (3) without legal grounds.
• Application:
  • 1. Something obtained: Ownership of money? Transfer of ownership according to § 929 S. 1 BGB:
    • a) Agreement (that ownership is to pass) → (+), two matching DoIs (S & C)
    • b) Delivery (of the movable thing = money) → (+)
    • c) Right to transfer ownership (by C, wait S) → (+), S was owner of money
    • → (+), C obtained ownership of money.
  • 2. As a result of the performance: → (+), S thought he had the duty to pay the purchase price due to an alleged contract (§ 433 II BGB).
  • 3. Without legal grounds: Is there a valid contract?
    • a) Formation of a sales contract? → (+), two matching DoIs (S & C).
    • b) Voidance of the contract?
      • aa) Reason for Avoidance:
        • Mistake about essential characteristics (§ 119 II BGB)? In principle (+) if C did not know. However, § 119 II BGB cannot be applied if the mistake is a material defect under § 434 BGB. An accident is a material defect → § 434 BGB applies. Sale of goods law has priority. → Contract cannot be avoided according to § 119 II BGB.
        • Deceit (§ 123 I Alt. 1 BGB)? Deceit → (+), C caused misconception about the state of the car. Intentional act → (+), C knew about the accident and wanted to deceive S. Causality → (+), without the deceit, S would not have formed a contract with a price of EUR 10,000. → (+), deceit; therefore, reason (+).
      • bb) Declaration of Avoidance (§ 143 I BGB): → (-), not yet.
      • cc) Within the period: → (+), within one year of discovery (§ 124 I BGB).
    • → For the time being, the contract is valid. If S declares the contract void (§ 143 I BGB), it is to be regarded as void from the beginning. Then, no legal grounds exist for C to obtain ownership of money.
• Conclusion: After making the declaration of avoidance, S can demand the purchase price back from C according to § 812 I 1 Alt. 1 BGB. (Note: There may also be other ways to get the money back due to material defect under § 434 BGB, but this focuses on § 812 BGB).

Write-Up

Issue: Can S demand the return of the EUR 10,000 purchase price from C pursuant to § 812 I 1 Alt. 1 BGB?

Rule: Under § 812 I 1 Alt. 1 BGB, a claim for restitution requires that a person has obtained something, as a result of performance, and without legal grounds. For the legal ground (a contract) to be absent, it may be avoided under § 119 II BGB (mistake) or § 123 I Alt. 1 BGB (deceit).

Application:
1. Something obtained: C must have obtained something. Through the handover of the physical money, C obtained possession. Furthermore, ownership of the money was validly transferred from S to C under § 929 S. 1 BGB, as they agreed on the transfer, the money was delivered, and S was authorized to transfer it. Thus, C obtained ownership and possession of the EUR 10,000.

2. By performance: C obtained the money through S’s performance (Leistung), because S consciously and purposely augmented C’s assets to fulfill his payment obligation under the sales contract.

3. Without legal grounds: The performance must lack a legal basis. Initially, S and C concluded a valid sales contract (§ 433 BGB) through two matching declarations of intent. Therefore, a legal ground exists unless S successfully avoids the contract.

a) Avoidance under § 119 II BGB: S was mistaken about an essential characteristic of the car (its accident-free history). However, the general rules on avoidance for mistake (§ 119 II BGB) are superseded (lex specialis) by the specific warranty rights in sale of goods law (§ 434 BGB) once the risk has passed (i.e., upon handover of the car). Since the prior accident constitutes a material defect under § 434 BGB, S cannot avoid the contract under § 119 II BGB.

b) Avoidance under § 123 I Alt. 1 BGB: However, S may avoid the contract due to intentional deceit. The priority of warranty rights does not block avoidance for deceit. C explicitly lied about the car having an accident, thereby causing a misconception in S’s mind. C acted intentionally to deceive S. This deceit was causal, as S would not have agreed to buy the car for EUR 10,000 had he known the truth. Thus, a valid reason for avoidance exists.

S must still formally declare the avoidance to C (§ 143 I BGB). He has one year from the discovery of the deceit to do so (§ 124 I, II BGB).

Conclusion: Currently, the contract remains valid. However, once S explicitly declares avoidance to C, the sales contract will be deemed void ab initio (§ 142 I BGB). The legal ground will fall away, and S can demand the return of the EUR 10,000 from C under § 812 I 1 Alt. 1 BGB.