Mock Exam

Business Law Mock Exam

Exam Details

• Lecturer: Prof. Dr. Philipp Maume, S.J.D. (La Trobe)
• Course: Business Law I / Introduction to Business Law
• Date: Mock Exam (Winter Semester)
• Total Points: 60 Points
• Duration: 120 Minutes
• Original PDF: Mock Exam.pdf

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Part 1: Theory Questions (32 P)

1. Avoiding a Contract (8 P total)

• Question a: What is the consequence if you avoid a contract under § 119 BGB or § 123 BGB? (2 P)
• Question b: If you avoid a contract under § 119 BGB, the other party is entitled to damages under § 122 BGB. However, if you avoid a contract under § 123 BGB, there is no such entitlement. Why is that? Explain! (3 P)
• Question c: Assume that you bought a bike that has a material defect (e.g., the brakes are not working). Can you avoid the contract under § 119 II BGB? Explain! (3 P)

Solution: Avoiding a Contract

Part a (2 P)

• Consequence: Pursuant to § 142 I BGB, the avoided legal transaction is deemed void from the beginning (ex tunc). Any performance already exchanged under the void contract must be returned under the rules of unjust enrichment (§ 812 I 1 Alt. 1 BGB).

Part b (3 P)

• Explanation:
  • Under § 122 I BGB, a party who avoids a contract due to mistake (§ 119 BGB) must compensate the other party’s reliance damage (negative interest), since the other party was not at fault and relied in good faith on the contract’s validity.
  • However, under § 123 BGB, the contract is avoided because of fraudulent deceit or unlawful duress committed by the other party. The other party acted in bad faith and caused the defect in consent themselves, meaning they do not deserve protection. Consequently, they have no claim to reliance damages.

Part c (3 P)

• No, you cannot avoid the contract under § 119 II BGB.
• Explanation: Under German civil law, once the risk has passed to the buyer (§ 446 BGB), the specific sales warranty rights (§ 437 BGB) are exclusive and take priority over the general civil law avoidance rules under § 119 II BGB.
• Reason: Allowing the buyer to avoid the contract under § 119 II BGB would strip the seller of their statutory “right to a second chance” (cure under § 439 BGB) and bypass the shorter sales law limitation periods (§ 438 BGB).

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2. The Law of Agency (7 P total)

• Question a: What are the three requirements for valid representation by an agent? (3 P)
• Question b: Can a 12-year-old be an agent? Explain! (2 P)
• Question c: Who represents a public liability company (Aktiengesellschaft, AG)? (2 P)

Solution: The Law of Agency

Part a (3 P)

• Three Requirements (§ 164 I BGB):
  1. Agent’s own declaration of intent: The agent must have some scope of discretion (distinguishing them from a mere messenger).
  2. In the name of the principal: The agent must disclose that they are acting on behalf of someone else (disclosure principle / Offenkundigkeitsprinzip).
  3. Within the scope of the power of representation: The agent must have authority, either statutory (by law) or transaction-based (proxy / power of attorney).

Part b (2 P)

• Yes, a 12-year-old can act as an agent.
• Explanation: Under § 106 BGB, a minor between 7 and 17 years old has limited legal capacity. Under § 165 BGB, the validity of a declaration of intent made by or to a representative is not affected by their limited capacity. Because the contract binds only the principal, the minor incurs no personal liabilities or legal disadvantages, which is why the law permits it.

Part c (2 P)

• Representation of an AG: An Aktiengesellschaft is represented by its management board (Vorstand) pursuant to § 78 I AktG (German Stock Corporation Act).

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3. Standard Business Terms (7 P total)

• Question a: What are Standard Business Terms? (2 P)
• Question b: What are the advantages and risks of Standard Business Terms? (3 P)
• Question c: Give a short example of Standard Business Terms in practice! (2 P)

Solution: Standard Business Terms

Part a (2 P)

• Definition: Under § 305 I 1 BGB, Standard Business Terms (Allgemeine Geschäftsbedingungen – AGB) are all pre-formulated contract terms for a multi-use context (intended for three or more contracts) that one party (the user) presents to the other party upon concluding a contract. They are not individually negotiated.

Part b (3 P)

• Advantages:
  • Rationalization: Saves time and transaction costs by standardizing the contracting process.
  • Risk Allocation: Clear and predictable allocation of risks.
  • Uniformity: Consistent terms across all customers and transactions.
• Risks:
  • Bargaining Inequality: The stronger party (user) can unilaterally dictate the terms.
  • Unfair Disadvantage: The weaker party (often consumer) may be subject to one-sided, unfavorable terms.
  • Lack of Transparency: Customers rarely read them, allowing the user to sneak in surprise clauses.

Part c (2 P)

• Example: The “Terms of Service” checkbox that consumers must click when buying goods on an online shopping portal (e.g., Amazon) or when signing up for a subscription service (e.g., Spotify).

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4. Company Law (10 P total)

• Question a: What is the difference between the one-tier board structure and the two-tier board structure? Explain and give an example for each structure. (3 P)
• Question b: What are the legal requirements for the application of the Business Judgment Rule? Describe a situation in which the Business Judgment Rule applies! (4 P)
• Question c: Together with your two friends A and B, you (C) want to establish a German limited liability company (GmbH). Your friend D owes you money. Instead of making your contribution for your shares in the company in cash, you want to contribute the claim against D. Is this possible in general? Why/why not? What other requirements must be met for such type of contribution? (3 P)

Solution: Company Law

Part a (3 P)

• One-Tier Structure: A single administrative body (Board of Directors) both manages and supervises the company.
  • Example: US/UK companies (e.g., Apple Inc., Microsoft Corporation).
• Two-Tier Structure: Separation of management and supervision into two separate organs: the Management Board (Vorstand) runs the business, while the Supervisory Board (Aufsichtsrat) supervises and appoints the managers.
  • Example: German companies (e.g., Siemens AG, Volkswagen AG).

Part b (4 P)

• Requirements for the Business Judgment Rule (BJR): Codified in § 93 I 2 AktG (and applicable by analogy to GmbH directors):
  1. A business decision must be made.
  2. The director must act in good faith.
  3. The director must act in the best interest of the company.
  4. The decision must be based on adequate information.
  5. The director must be free of conflicts of interest.
• Example Situation: A director of an automotive company decides to invest €10 million in developing a new hydrogen engine after reviewing extensive feasibility studies, expert reports, and financial forecasts. Even if the project fails completely, the director is protected from personal liability if they met these requirements.

Part c (3 P)

• Is it possible? Yes, it is possible.
• Explanation: This is a contribution in kind (Sacheinlage). Claims (receivables) are assignable assets with economic value and can therefore be contributed to a GmbH.
• Requirements:
  1. The claim must be transferable under § 398 BGB.
  2. The contribution in kind must be specified in the articles of association (Satzung).
  3. A contribution report (Sachgründungsbericht) must be prepared, detailing the valuation and recoverability of the claim.
  4. The claim must be economically valuable (valuable up to the nominal value of the shares it covers). Under differential liability (Differenzhaftung, § 9 GmbHG), if D is insolvent and cannot pay, C is personally liable for the difference in cash.

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Part 2: Case Study (28 P)

Question 5: Case Study (Wrongly Labeled Wine) (28 P)

The detailed facts, question, and full statutory analysis are stored in Case - Wrongly Labeled Wine.

Case - Wrongly Labeled Wine

References without law book default to BGB.

Mock Exam Winter 2024

Case - Wrongly Labeled Wine

Facts

M is a very well-paid commercial lawyer. At the age of 50, he decides to retire because ‘life is too short’. He decides to open a small bar/bistro in Southern Munich. He runs the bistro in his own name. The bistro is open four days a week from 5pm until 11pm. M employs a part-time chef who provides for two changing meals every night. M also employs a part-time cleaner on a EUR 538 basis (so-called ‘minijob’). W (M’s wife) also helps in the restaurant two or three days a week. In winter, the bistro is closed because M and W prefer to spend this time of the year in Tuscany (Italy). Overall, the small bistro generates about EUR 45,000 turnover per year. M is fine with this – he earned more than enough money while he practiced as a commercial lawyer.

On Monday, 29th of July, M rings up the wholesale wine trader T, who is based in Hamburg. M orders four boxes (of six bottles each) of his best-selling Tuscan red wine for the restaurant. The price per bottle is EUR 12. Two days later he orders one box (of six bottles) of the same winemaker’s ‘flagship wine’ for EUR 30 per bottle, again by telephone. This second batch is meant for private consumption.

Both shipments arrive on 2nd of August (Friday). M stores the five boxes in his cellar. On 7th of August, he opens the first box and realizes that all the labels of all the bottles are upside down (so they are all at an angle of 180 degrees). He gives T another call and explains the situation. He wants new bottles with the correct labels. The writing on the label is hardly legible, and it feels odd to put them on display in his bar.

T says that he is terribly sorry, but due to a major mistake, the winemaker had labeled all the bottles of this vintage upside down. Thus, T cannot send M new bottles with the correct labels. Besides, it would be impossible for him to come down to Munich and fix the labels. M would probably need to keep the bottles. T explains that the wine itself is fine, so M is still able to sell it in his bar (which is correct).

Questions:
a. M asks you if he can give the bottles back because he ordered them via telephone. Would that be possible? (7 P)
b. What are M’s rights as a buyer regarding the wrongly labeled bottles for the restaurant? (14 P)
c. Assume that – in contrast to the original scenario – M is operating the bistro through a private limited company (GmbH), with him as the sole shareholder. Does that affect your conclusion under b.? If so, how? (7 P)

Solution

Solution Summary

Part a: Right of Withdrawal (§§ 312g I, 355 BGB)

• Issue: Can M withdraw from the contract and return the bottles?
• Rule: Under §§ 312g I, 355 BGB, a buyer has a right of withdrawal for distance contracts (§ 312c BGB) only if the buyer is a consumer (§ 13 BGB) and the seller is an entrepreneur (§ 14 BGB).
• Application:
  • Trader status of T: → (+), T is a commercial wine trader (§ 14 BGB).
  • Transaction 1 (4 boxes of red wine):
    • M ordered them “for the restaurant”.
    • Operating a restaurant/bistro is a commercial activity for profit.
    • M acts in the exercise of his trade. Thus, M is an entrepreneur (§ 14 BGB) and not a consumer (§ 13 BGB).
    • → (-) No right of withdrawal.
  • Transaction 2 (1 box of flagship wine):
    • M ordered this batch for “private consumption”.
    • M acts for purposes outside of his commercial activity. Thus, M is a consumer (§ 13 BGB).
    • Telephone order is a distance contract (§ 312c BGB).
    • Withdrawal declaration is made on August 7th, which is within the 14-day period (§§ 355 II, 356 II No. 1a BGB).
    • → (+) Right of withdrawal exists.
• Conclusion: M can only give back the 1 box of flagship wine, but not the 4 boxes of red wine for the restaurant.

Part b: Buyer’s Rights for the Restaurant Wine

• Issue: What rights can M assert against T regarding the wrongly labeled restaurant wine?
• Rule: Buyer’s rights under § 437 BGB require a valid sales contract, a material defect at the passing of risk, and no loss of rights.
• Application:
  • 1. Contract: → (+), sales contract under § 433 BGB.
  • 2. Material defect (§ 434 BGB):
    • Objective requirements (§ 434 III BGB): The quality must be customary and expected.
    • Wine bottles displayed in a bar are expected to have correct, legible labels. An upside-down, illegible label deviates from this standard.
    • → (+) Material defect (§ 434 III No. 2 BGB) at the passing of risk (§ 446 BGB).
  • 3. Commercial inspection duty (§ 377 HGB):
    • Applies only if the sale is a commercial transaction for both parties.
    • T is a merchant under § 1 HGB.
    • Is M a merchant?
      • Under § 1 II HGB, a merchant is anyone conducting a commercial business that requires a commercially organized business operation.
      • M’s bistro has small turnover (€45k/year), limited hours (4 days/week, 5pm-11pm), seasonal closure (winter), and minimal staff (1 part-time chef, 1 minijob cleaner).
      • → Bistro does not require a commercially organized business operation.
      • → M is not a merchant under § 1 HGB or a registered merchant under § 2 HGB. M is a non-merchant.
    • → § 377 HGB does not apply. M’s delayed notification does not exclude his rights.
  • 4. Warranty Rights (§ 437 BGB):
    • Cure (§ 439 I BGB):
      • Replacement: Winemaker labeled the entire vintage upside down. Sending conforming bottles of this vintage is impossible → excluded (§ 275 I BGB).
      • Repair: Fixing labels requires T to travel to Munich or pay high costs. For €288 worth of wine, this is disproportionate → T can refuse cure (§ 439 IV BGB).
    • Revocation (§§ 437 No. 2, 326 V BGB):
      • Cure is impossible/refused. No deadline is required.
      • Is the defect trivial (§ 323 V 2 BGB)? No, because visual appearance is crucial for display and resale in a bar.
      • → (+) Right of revocation exists.
    • Price Reduction (§§ 437 No. 2, 441 BGB):
      • → (+) Right to reduce price exists.
• Conclusion: M cannot demand cure, but he has the right to revoke the contract (refund against return) or reduce the purchase price.

Part c: Impact of Operating as a GmbH

• Issue: Does operating through a GmbH change the conclusion under b.?
• Rule: Under § 13 III GmbHG and § 6 I HGB, a GmbH is always a merchant by legal form.
• Application:
  • If the bistro is run by a GmbH, the buyer is the GmbH.
  • Both T and the GmbH are merchants. The contract is a commercial transaction for both sides.
  • Thus, the duty of immediate inspection and notification (§ 377 I HGB) applies.
  • Goods delivered on Friday, August 2nd. Inspected on Wednesday, August 7th (5 days later).
  • An upside-down label is an obvious defect. Waiting 5 days exceeds the “immediate” requirement (§ 121 I 1 BGB, typically 1-2 days).
  • Since the GmbH failed to notify T immediately, the goods are deemed accepted (§ 377 II HGB).
• Conclusion: Yes, it affects the conclusion. The GmbH loses all defect rights, and the wine is deemed accepted.

Advanced Legal Analysis

The topics analyzed below (Apparent Merchant, Commercial Customs, Self-Cure, and pre-incorporation GmbH liability) were not covered in the lectures and are therefore out of scope for the exam. They represent advanced commercial, corporate, and civil law issues.

Topic 1: Apparent Merchant Status

• Issue: Can M be held liable under commercial law rules (specifically the duty to inspect and notify under § 377 HGB) under the doctrine of the apparent merchant?
• Rule: Under the doctrine of the apparent merchant, a person who is not a merchant under the HGB but who, by their own conduct, creates the appearance of being a merchant in a way that is imputable to them, is treated as a merchant in transactions with third parties who rely on this appearance in good faith.
• Application: If M ordered the wine for the restaurant using professional letterheads, a trade name suggesting a large-scale commercial business, or signed the email/call with commercial representations that created the appearance of a larger, commercially organized enterprise, T could argue that M must be treated as a merchant. In that case, M would be bound by the duty of immediate inspection and notification (§ 377 HGB). However, simply stating the order is “for the restaurant” is generally insufficient to establish such an appearance, as restaurants can easily be small-scale non-merchant trades.
• Conclusion: Unless M actively created a false impression of commercial scale, he is not treated as an apparent merchant, and § 377 HGB remains inapplicable.

Topic 2: Commercial Custom (§ 346 HGB)

• Issue: Does a commercial custom exist in the wine wholesale trade that limits M’s right to revoke the contract for minor label misalignments?
• Rule: Under § 346 HGB, commercial transactions between merchants (or involving an apparent merchant) must take into account the customs and usages applicable in commercial trade.
• Application: In the wholesale wine sector, certain deviations in packaging or labeling that do not affect the product’s liquid quality are sometimes governed by trade customs, which might require the buyer to accept a reasonable price reduction rather than permitting full revocation. However, since M is not a merchant and no apparent merchant status is established, commercial customs cannot be applied to his disadvantage. Furthermore, since the wine was intended for display in a bar, a visual label defect of 180 degrees is severe enough that a custom forcing acceptance would likely violate good faith.
• Conclusion: Commercial customs under § 346 HGB do not restrict M’s right to revoke.

Topic 3: Self-Cure & Expense Reimbursement

• Issue: Could M have fixed the labels himself and demanded that T reimburse him for the costs?
• Rule: Unlike contract for work law, German sales law does not contain a statutory right to self-cure. A buyer who remedies a defect themselves without first setting a deadline for cure (and waiting for it to expire or showing it was rejected/impossible) cannot claim reimbursement for expenses under sales law or the rules of management without mandate (§§ 677, 683 BGB).
• Application: If M had printed new labels and glued them onto the bottles himself, he would have bypassed T’s right to second chance. Because M did not set a deadline (and although replacement was impossible, repair by T was not legally ruled out until T refused it), M would not be entitled to claim the costs of his own labeling efforts.
• Conclusion: M could not have claimed reimbursement for the expenses of self-cure.

Topic 4: Pre-Incorporation GmbH Liability

• Issue: If the GmbH was in the process of formation but not yet registered on August 2nd, who is liable for the wine transaction?
• Rule: Before registration in the commercial register, a GmbH does not exist as a legal entity (§ 11 I GmbHG). The pre-incorporation association is called a pre-incorporation company. Under § 11 II GmbHG, anyone who acts in the name of the company prior to registration is personally, jointly, and severally liable.
• Application: If the contract was concluded on July 29th and delivery occurred on August 2nd, and the GmbH was only registered later, the contract would initially bind the pre-incorporation company. Under § 11 II GmbHG, M would be personally liable for the payment of the EUR 288. Upon registration of the GmbH, the liabilities of the pre-incorporation company automatically transfer to the registered GmbH, and M’s personal liability under § 11 II GmbHG is extinguished.
• Conclusion: M would be personally liable under § 11 II GmbHG for transactions prior to registration, but this liability is extinguished upon successful registration of the GmbH.

Write-Up

Question a: Right of Withdrawal for Telephone Orders

Issue: Does M have a right of withdrawal under § 312g I BGB to return the wine bottles because they were ordered via telephone?

Rule: Under § 312g I BGB, a right of withdrawal pursuant to § 355 BGB is granted to a consumer in the case of distance contracts. A distance contract under § 312c I BGB is a contract concluded between an entrepreneur (§ 14 BGB) and a consumer (§ 13 BGB) using exclusively means of distance communication (such as the telephone).

Under § 13 BGB, a consumer is any natural person who enters into a legal transaction for purposes that are predominantly neither commercial nor their independent professional activity. Under § 14 I BGB, an entrepreneur is a natural or legal person who acts in the exercise of their commercial or independent professional activity when entering into a transaction.

The withdrawal period is 14 days (§ 355 II 1 BGB). Under § 356 II No. 1a BGB, for sales contracts, the period begins when the consumer receives the goods. Under § 187 I BGB, the day of receipt is excluded. Under § 188 II BGB, the period ends at 24:00 on the 14th day. Under § 355 I 5 BGB, it is sufficient if the withdrawal is sent before the period expires.

Application:

• The First Order (4 boxes for the restaurant): M ordered the four boxes of Tuscan red wine specifically “for the restaurant”. M operates a bar/bistro. Operating a restaurant or bar is a commercial activity, as it is an independent, permanent economic activity carried on for profit. Although the bistro is small (generating €45,000 turnover per year) and operates seasonally, it is still a commercial activity. In concluding this transaction, M acted in the exercise of his trade. Therefore, M qualifies as an entrepreneur (§ 14 BGB) rather than a consumer (§ 13 BGB). The first order is a B2B transaction, and M does not have a right of withdrawal under § 312g I BGB for the four boxes of restaurant wine.
• The Second Order (1 box of flagship wine): M ordered this box for his “private consumption”. Since this transaction was entered into for personal purposes outside of his trade, M acts as a consumer under § 13 BGB. T is a wholesale wine trader acting in the exercise of his trade, thus qualifying as an entrepreneur under § 14 BGB. The contract was concluded via telephone (means of distance communication) within a distribution system organized for distance sales. Therefore, this transaction constitutes a valid distance contract under § 312c I BGB. Under § 312g I BGB, M has a statutory right of withdrawal.
  M received the printer on Friday, 2nd of August. Excluding the day of receipt (§ 187 I BGB), the 14-day withdrawal period started on Saturday, 3rd of August (§ 188 I BGB) and would end on Friday, 16th of August at 24:00 (§ 188 II BGB). M declared his wish to return the bottles on Wednesday, 7th of August, which is well before the deadline. No exclusion of withdrawal under § 312g II BGB applies.

Conclusion: M has a right of withdrawal only regarding the one box of flagship wine meant for private consumption, but not for the four boxes ordered for the restaurant.

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Question b: M’s Rights regarding the Defective Restaurant Wine

Issue: What rights can M assert against T regarding the wrongly labeled bottles of wine for the restaurant under § 437 BGB?

Rule: Under § 437 BGB, the buyer has rights to cure, revocation, price reduction, or damages if there is a valid sales contract (§ 433 BGB), a material defect (§ 434 BGB) at the passing of risk (§ 446 BGB), and no exclusion of rights.

If both parties are merchants under the HGB, the commercial transaction rules apply, requiring the buyer to immediately inspect and notify the seller of defects (§ 377 I HGB); otherwise, the goods are deemed accepted (§ 377 II HGB). There is a structural difference between the BGB entrepreneur concept and the HGB merchant concept. While anyone carrying out a trade or commercial activity is an entrepreneur under § 14 BGB, only those whose business requires a commercially organized business operation due to its nature or scope are merchants under § 1 II HGB (unless registered).

Under § 439 I BGB, cure consists of repair or replacement. If cure is impossible under § 275 I BGB, the claim for cure is excluded, and the buyer can revoke the contract immediately without setting a deadline under § 326 V BGB. Under § 323 V 2 BGB, revocation is only excluded if the defect is trivial. Alternatively, the buyer can reduce the purchase price under § 441 BGB (which is possible even if the defect is trivial).

Application:

1. Contract and Defect: M and T concluded a valid sales contract under § 433 BGB for the four boxes of Tuscan red wine. Under § 433 I 2 BGB, the seller must deliver the goods free from material defects. A material defect exists if the goods do not meet the subjective or objective requirements at the passing of risk (§§ 434 I, 446 BGB). The facts do not suggest a subjective agreement regarding the labels, so the objective requirements under § 434 III BGB apply. Under § 434 III 1 No. 2 BGB, the goods must have the quality which is customary for goods of the same kind and which the buyer can expect. While the wine itself is non-defective, all the bottles are labeled upside down (at an angle of 180 degrees) and the writing is hardly legible. Wine bottles purchased for display and sale in a bar are expected to have properly aligned, legible labels. An upside-down, illegible label deviates significantly from this customary quality, making the bottles look unprofessional or damaged, which impairs their resale potential. Thus, the wrong labeling constitutes a material defect under § 434 III 1 No. 2 BGB that was present at the passing of risk (§ 446 BGB).
2. Applicability of § 377 HGB: Since this is a transaction between two business actors, it must be assessed whether M’s rights are excluded due to a failure to notify the seller immediately under § 377 HGB. The duty of immediate inspection and notification applies only if the purchase is a commercial transaction for both parties (§ 377 I HGB). This requires both parties to be merchants under the HGB. T is a wholesale wine trader and therefore a merchant under § 1 HGB. M is a natural person running a small bistro. Under § 1 II HGB, a business is a commercial business (and its owner a merchant) only if its nature or scope requires a commercially organized business operation. M’s bistro generates a turnover of only EUR 45,000 per year, is open only four days a week, is closed entirely during the winter, and employs only a part-time chef and a cleaner on a minijob basis. A business of this limited scale does not require a commercially organized operation. Thus, M is not a merchant under § 1 HGB. Since M has not registered his business in the commercial register, he is also not a registered merchant under § 2 HGB. Therefore, M is not a merchant. Although he is an entrepreneur under § 14 BGB for this B2B transaction, the narrower HGB merchant status is not met. Consequently, § 377 HGB does not apply, and M’s rights are not excluded despite the delay of five days between delivery (2nd of August) and inspection/notification (7th of August).
3. Remedies under § 437 BGB:
   • Cure (§§ 437 No. 1, 439 BGB): Under § 439 I BGB, the buyer can choose between repair or replacement delivery. T states that the winemaker labeled the entire vintage upside down. Delivering replacement bottles of the same vintage with correct labels is physically impossible. The claim for replacement is therefore excluded under § 275 I BGB. Repairing the bottles would require T to either travel from Hamburg to Munich to glue new labels or pay for shipping and labor to do so. Since the contract value is very low (€288) and the wine itself is fine, the cost of repair is disproportionate. Under § 439 IV BGB, T can validly refuse repair due to disproportionate costs. Consequently, M cannot demand cure.
   • Revocation (§§ 437 No. 2, 326 V, 323 BGB): Because cure is impossible/validly refused, M can revoke the contract without setting a deadline under § 326 V BGB. Revocation is only excluded under § 323 V 2 BGB if the defect is trivial. Although the wine is drinkable, the visual presentation and legibility of the labels are essential for wine sold and displayed in a bar. Thus, the defect is not trivial. M can declare revocation to T (§ 349 BGB). Upon revocation, the contract is converted into a restitution relationship (§ 346 I BGB), meaning M can return the 24 bottles and demand the full refund of the purchase price (EUR 288).
   • Price Reduction (§§ 437 No. 2, 441 BGB): Alternatively, M can declare a price reduction. The purchase price would be reduced in proportion to the lower value of the defective bottles compared to their non-defective value (§ 441 III BGB).

Conclusion: M cannot demand cure, but he has the right to revoke the contract (returning the bottles for a full refund of €288) or to reduce the purchase price.

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Question c: Impact of Operating through a GmbH

Issue: Does operating the bistro through a private limited company (GmbH) affect the conclusion under b.?

Rule: If the bistro is operated by a GmbH, the contract is concluded between T and the GmbH. A GmbH is a legal entity (§ 13 I GmbHG). Under § 13 III GmbHG and § 6 I HGB, a GmbH is a merchant by virtue of its legal form, regardless of the actual size or scope of its business operations. Therefore, the sales contract is a commercial transaction for both parties (zweiseitiges Handelsgeschäft, § 343 HGB). Consequently, the commercial duty to inspect and notify under § 377 HGB applies to the GmbH. Under § 377 I HGB, the buyer must inspect the goods immediately after delivery and notify the seller of any defect immediately. Otherwise, the goods are deemed to be accepted under § 377 II HGB, unless the defect is hidden. Under § 121 I 1 BGB, “immediately” is defined as “without culpable delay”.

Application: The goods arrived on Friday, 2nd of August, but M (acting as the representative of the GmbH) did not open the box and discover the defect until Wednesday, 7th of August. For obvious defects (such as upside-down and illegible labels that are visible upon opening a box), an inspection period of 1 to 2 days is customary in commercial transactions. While a weekend occurred (3-4 August), the GmbH should have inspected the goods on Friday or Monday (5 August) at the latest. By waiting five days (until Wednesday) without any justification, the GmbH acted with culpable delay. Since the upside-down labels were obvious and discoverable upon opening, they do not qualify as hidden defects. Thus, the wine bottles are deemed accepted by the GmbH.

Conclusion: Operating through a GmbH affects the conclusion. The GmbH is a merchant by legal form (§ 6 HGB), making § 377 HGB applicable. Due to the five-day delay in notifying T, the goods are deemed accepted, and the GmbH loses all rights for defects under § 437 BGB.

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