References without law book default to BGB.
Case - Watch Chronograph
Facts
Carla (C) wants to buy one of Gordon’s (G) watches. The two friends form an “agreement”, saying G will sell “a blue chronograph” to C. Is there a valid contract?
Solution
Slides Solution
- Issue: Is there a valid contract (here: sale of goods contract, § 433 BGB)?
- Rule: Offer & acceptance are needed, both with the intention to be legally binding.
- → (+), declarations of intent are present.
- Application: Offer & acceptance have to contain all essential elements of the contract (essentialia negotii).
- Parties: → (+), C and G.
- Price: → (-), C and G don’t agree on a specific price.
- Goods: → (-), C and G don’t specify a particular watch (just “a blue chronograph” when G has multiple).
- Conclusion: Vital elements are missing.
- Conclusion: There is no valid contract.
Write-Up
Issue: Did C and G form a valid sale of goods contract pursuant to § 433 BGB?
Rule: The formation of a contract requires two matching declarations of intent: an offer (§ 145 BGB) and an acceptance (§ 147 BGB). For these declarations to constitute a valid contract, they must contain all the essential elements of the agreement (essentialia negotii). For a sales contract under § 433 BGB, the essential elements are the contracting parties, the precise subject matter of the sale, and the purchase price.
Application:
C and G formed an “agreement”, indicating they both made declarations of intent to enter into a transaction. We must determine if these declarations contained the necessary essentialia negotii.
- Parties: The parties are clearly identified as C and G.
- Price: The parties did not agree on any specific purchase price for the transaction.
- Subject Matter: The agreement only mentioned “a blue chronograph”. Since G owns multiple watches, this description is too vague to identify the exact, specific good being sold.
Because the parties failed to determine the exact subject matter and did not agree on a price, vital elements of the contract are missing. As long as the parties have not agreed on all points of a contract upon which an agreement was required to be reached, the contract is, in case of doubt, not concluded (§ 154 I BGB).
Conclusion: C and G did not agree on the essential terms of a sales contract. Therefore, there is no valid contract.