Exam WS23

Introduction to Business Law Exam Winter Semester 2023/2024

Exam Details

• Lecturer: Prof. Dr. Philipp Maume, S.J.D. (La Trobe)
• Course: Introduction to Business Law
• Date: Winter Semester 2023/2024
• Total Points: 62 Points
• Duration: 120 Minutes
• Original PDF: Exam WS23.pdf

---

Part 1: Theory Questions (29 P)

Please refer to all relevant legal provisions!

1. DOIs and Contracts (11 P total)

• Question a: How does one enter into a contract? (0.5 P)
• Question b: What is necessary for entering into a contract if two persons exclusively communicate via letters? Explain and give an example. (3.5 P)
• Question c: What is the legal effect of a counteroffer? (1 P)
• Question d: What is an “invitation to treat”? Explain and give one short example! (1.5 P)
• Question e: Which duties arise from a sale of goods contract? For each, give one example for the seller and the buyer. (4.5 P)

Solution: DOIs and Contracts

Part a (0.5 P)

• A contract is concluded by two corresponding declarations of intent (Willenserklärungen), namely an offer (Antrag, § 145 BGB) and an acceptance (Annahme, § 147 BGB).

Part b (3.5 P)

• Requirement: Declarations of intent made to an absent person (unter Abwesenden) become effective at the point in time when they are received by the recipient (§ 130 I 1 BGB).
• Explanation of Receipt (Zugang): Receipt occurs when the declaration enters the recipient’s sphere of control (Machtbereich) in such a way that under normal circumstances the recipient can be expected to take note of it.
• Application: The offer letter becomes effective upon receipt by the offeree. The offeree must then accept the offer. The acceptance letter must also be received by the offeror within the period in which the offeror can expect to receive an answer under normal circumstances (§ 147 II BGB).
• Example: Alice sends a letter to Bob offering to sell her laptop for €500. The letter is delivered to Bob’s mailbox on Monday afternoon. It becomes effective on Tuesday morning when mail is normally checked. Bob mails his acceptance letter on Wednesday. It is delivered to Alice’s mailbox on Friday. The contract is concluded on Friday when Alice receives the acceptance.

Part c (1 P)

• Under § 150 II BGB, an acceptance with additions, restrictions, or other modifications is deemed to be a rejection of the original offer combined with a new offer (counteroffer).

Part d (1.5 P)

• Definition: An invitation to treat (invitatio ad offerendum) is not a binding offer but a mere invitation to others to submit an offer. It lacks the necessary intention to be legally bound (Rechtsbindungswille).
• Example: Goods displayed in a shop window with a price tag, or advertisements in a catalog or on a website.

Part e (4.5 P)

• Under § 433 BGB, a sales contract creates primary obligations for both parties:
  • Seller’s duties (§ 433 I BGB): The seller is obliged to deliver the thing to the buyer and to transfer ownership of the thing, free from material and legal defects.
    • Example: Delivering the laptop to the buyer and transferring its title.
  • Buyer’s duties (§ 433 II BGB): The buyer is obliged to pay the seller the agreed purchase price and to accept delivery of the thing.
    • Example: Paying €500 in cash or via bank transfer and taking possession of the laptop.

---

2. Tort Law (8 P total)

• Question a: What is the main advantage of claiming damages under § 280 BGB in comparison to § 823 I BGB? (3 P)
• Question b: Can a 6-year-old, an 8-year-old, and a 17-year-old be held liable for negligently crashing his/her bike into a car turning left at an intersection? Explain for each age separately. (5 P)

Solution: Tort Law

Part a (3 P)

• Reversal of Burden of Proof for Fault: Under § 280 I 2 BGB (contractual liability), the debtor’s fault is presumed. The debtor must prove they did not act culpably (Exkulpationsbeweis). Under § 823 I BGB (tort), the claimant bears the full burden of proving that the tortfeasor acted intentionally or negligently.
• Liability for Auxiliaries: Under contract law (§ 278 BGB), a party is strictly liable for the fault of their performing agents (Erfüllungsgehilfe). Under tort law (§ 831 BGB), the principal can escape liability for vicarious agents (Verrichtungsgehilfe) by proving they selected and supervised them with due care (Exkulpationsmöglichkeit).
• Pure Economic Loss: Contractual claims (§ 280 BGB) cover pure economic loss (reines Vermögen), whereas § 823 I BGB only protects specific absolute rights (life, body, health, freedom, property), excluding pure economic loss.

Part b (5 P)

• Tort capacity is determined by § 828 BGB:
  • 6-year-old: Under § 828 I BGB, a person who has not completed their 7th year of age is completely irresponsible for damage they cause. Thus, the 6-year-old is not liable.
  • 8-year-old: Under § 828 II 1 BGB, a child between 7 and 10 is not responsible for damage caused to another in an accident involving a motor vehicle, a railway, or a suspension railway, unless they caused the damage intentionally. Since this is a road traffic accident with a car (motor vehicle) and the crash was negligent (not intentional), the 8-year-old is not liable.
  • 17-year-old: Under § 828 III BGB, a minor between 10 and 18 is responsible if they possess the cognitive capacity (Einsichtsfähigkeit) to realize their responsibility. A normal 17-year-old possesses this capacity. Since the youth acted negligently (§ 276 II BGB), they are liable (subject to possible contributory negligence of the driver under § 254 BGB).

---

3. Consumer Protection (4 P total)

• Question a: Why does German/EU law grant a right of withdrawal for distance contracts and off-premises contracts? Give and explain three reasons. (3 P)
• Question b: If you want to withdraw from a contract, what reason do you have to give to the trader as an explanation? (1 P)

Solution: Consumer Protection

Part a (3 P)

1. No Physical Inspection (Distance Contracts): Consumers shopping online or by mail cannot physically inspect, touch, or try out the goods before purchase, leading to information asymmetry.
2. Surprise Effect & Pressure (Off-premises Contracts): In off-premises scenarios (e.g., doorstep sales), consumers are often caught off guard in their private environments and might be pressured into making a contract they did not originally want.
3. Protection from Rash Decisions: It provides a cooling-off period to protect the consumer from impulsive or poorly thought-out transactions, balancing the structural power imbalance between merchants and consumers.

Part b (1 P)

• Under § 355 I 4 BGB, the consumer does not have to state any reasons for the withdrawal (ohne Angabe von Gründen).

---

4. Transfer of Ownership (6 P total)

• Question a: What are the requirements for a transfer of ownership? (2 P)
• Question b: Anna (A) has stolen Peter’s (P) money and buys a laptop from Berta (B) by paying the purchase price with this money. Has B become the new owner of the money by acquisition in good faith? (4 P)

Solution: Transfer of Ownership

Part a (2 P)

• According to § 929 sentence 1 BGB, the transfer of ownership of a movable thing requires:
  1. Agreement (Einigung) between the owner and the acquirer that ownership shall transfer.
  2. Delivery (Übergabe) of the thing (transfer of possession).
  3. Right to dispose (Verfügungsbefugnis) of the owner (or authorization, or good faith acquisition).

Part b (4 P)

• Typically, under § 935 I BGB, a good faith acquisition of title (§ 932 BGB) is excluded if the thing was stolen, lost, or otherwise missing (abhandengekommen).
• However, under § 935 II BGB, the exclusion of good faith acquisition does not apply to money or bearer instruments.
• Although the money was stolen from P, B acquired the money in good faith (§ 932 BGB) because she did not know (nor was grossly negligent in not knowing) that the money did not belong to A.
• Therefore, B has become the new owner of the money.

---

Part 2: Case Study (33 P)

5. Case Study: Simone and the Defective BMW

Simone (S) wants to buy a second-hand car from Carl (C), a car salesman. Since she has no time, she sends her son Adam (A), who is 17 years old, to C’s shop, telling him he is acting for his mother. C thinks A is at least 20 years old and sells him a specific BMW — which A knows is the favorite car of his mother she told him to get.

Before that, he asks if everything is OK with the BMW since he knows nothing about cars. C tells him there may be some scratches due to the usage of the vehicle, but everything else is fine, although he knows that the engine is on the brink of failure.

A takes the car home. When S drives the BMW for the first time, the engine breaks down. Feeling cheated, S calls C and wants to get back her money. C answers that this is not possible under any circumstances since it was a second-hand car, and he is not liable — especially since S cannot prove that the motor was defective when he sold the car. On the other hand, he offers her that he could fix the engine for EUR 2,000.

• Question a: How can S get her money back? (31 P)
• Question b: Alternatively: Can she get the motor fixed? If so, how much does she have to pay for the repair? (2 P)

Solution: Case Study

Part a: How can S get her money back? (31 P)

S has two primary legal pathways to retrieve her purchase price: Rescission due to material defect or Avoidance for fraudulent deceit.

Option 1: Rescission of the Sales Contract

S can demand the return of the purchase price under §§ 346 I, 437 No. 2, 323 BGB by rescinding the contract.

1. Existence of a Valid Sales Contract (§ 433 BGB):
   • A concluded the contract with C. A is 17 and has limited legal capacity (§ 106 BGB).
   • However, A acted as a representative (agent) for S. Under § 164 I BGB, a declaration of intent made by a representative in the name of the principal directly binds the principal if they had authority.
     • A declared he was acting for S (in her name).
     • S gave A an internal power of attorney (§ 167 I 1st Alt. BGB).
     • Under § 165 BGB, the representative’s limited capacity does not affect the validity of the representation.
   • Thus, a valid sales contract was concluded directly between S and C.
2. Material Defect (§ 434 BGB) at the Transfer of Risk (§ 446 BGB):
   • The engine was on the brink of failure at delivery and broke down immediately. A functional engine is an expected quality of a second-hand car unless otherwise agreed. C explicitly stated “everything else is fine.” Thus, a material defect existed at the transfer of risk.
3. Setting a Period for Cure (§ 323 I BGB) and Exceptions:
   • S generally needs to set a period for supplementary performance (Nacherfüllung, § 439 BGB).
   • However, C refused to repair the car for free, demanding EUR 2,000. Under § 439 II BGB, the seller must bear all repair costs. C’s insistence on payment constitutes a serious and definitive refusal of cure (§ 323 II No. 1 BGB).
   • In addition, C acted fraudulently, which makes setting a period for cure unreasonable (§ 323 I BGB / § 440 BGB).
4. Exclusion of Warranty?
   • C claims he is not liable because it is a second-hand car.
   • However, C is an entrepreneur (§ 14 BGB) and S is a consumer (§ 13 BGB). In a consumer goods sale, liability for defects cannot be excluded before a defect is reported (§ 476 I 1 BGB). Any such contract term is void.
   • Furthermore, under § 444 BGB, a seller cannot invoke an exclusion of liability if they fraudulently concealed the defect. C knew about the engine failure risk and lied.
5. Burden of Proof:
   • C claims S cannot prove the engine was defective at sale.
   • Under § 477 I BGB, if a defect appears within the presumption period (formerly 6 months, now 1 year for new contracts), it is presumed to have existed at delivery. The engine broke down on the first drive. C bears the burden to rebut this presumption, which he cannot do.

Conclusion 1: S can successfully declare rescission and demand the full refund of the purchase price under §§ 346 I, 437 No. 2, 323 BGB in exchange for returning the BMW.

---

Option 2: Avoidance for Fraudulent Deceit

Alternatively, S can avoid the contract under § 123 I BGB.

1. Deceit (Täuschung): C made a false representation of fact by claiming “everything else is fine” despite knowing the engine was about to fail.
2. Fraudulent Intent (Arglist): C acted willfully, knowing his statement was false, to induce the purchase.
3. Causality: The deceit caused A to buy the vehicle. Under § 166 I BGB, since A was the representative making the DOI, his state of mind is decisive. A was deceived.
4. Declaration & Period: S (the principal) can declare the avoidance (§ 143 I BGB) within the one-year period (§ 124 BGB).
5. Legal Effect: Under § 142 I BGB, the contract is void ex tunc (from the beginning).

Conclusion 2: S can demand the refund of the purchase price under § 812 I 1 1st Alt. BGB (unjust enrichment) in exchange for returning the vehicle.

---

Part b: Can she get the motor fixed? If so, how much does she have to pay? (2 P)

• Yes, S has a right to supplementary performance (Nacherfüllung) under §§ 437 No. 1, 439 I BGB. She can choose repair (Mängelbeseitigung).
• Under § 439 II BGB, the seller is required to bear all expenses necessary for the purpose of supplementary performance (materials, labor, transport).
• Therefore, C must fix the engine at no cost to S. S has to pay EUR 0.