Source: https://olrl.ouplaw.com/view/10.1093/law/9780199572984.001.0001/law-9780199572984-chapter-046
Timestamp: 2020-08-03 09:48:23
Document Index: 241673747

Matched Legal Cases: ['arts\n6', 'arty\n3', 'arty\n2', '§ 1', '§ 932', '§ 366', 'art.\n40', '§ 2', 'Art 14', 'Art 17', 'Art 6', 'Art 934', '§ 367', 'Art 933', '§ 166', 'Art 933', 'Art 3', '§ 166', '§ 45', '§ 2', '§ 932', '§ 366', '§ 368', '§ 367', 'Art 2279', 'Art 2279', 'Art 2279', 'Art 2279', 'Art 2279', 'Art 2279', 'Art 2279', 'Art 1037', 'Art 192', 'Art 193', 'Art 249', 'Art 2279', 'Art 2279', 'Art 114', 'Art 2279', 'Art 2279', 'Art 2279', 'Art 453', 'Art 440', 'Art 1154', 'Art 399', 'Art 468', 'Art 385', 'Art 457', 'Art 476', 'Art 436', 'Art 523', 'Art 275', 'Art 157', 'Art 283', 'Art 261', 'Art 291', 'Art 1260', 'Art 302', 'Art 323', 'Art 388', 'Art 229', 'Art 257', '§ 367', 'Art 192', 'Art 193', 'Art 249', 'Art 114', '§ 932', '§ 367', '§ 932', '§ 2', '§ 368', '§ 932', '§ 368', '§ 932', '§ 368', '§ 932', '§ 431', 'Art 942', '§ 873', 'Art 997', 'Art 1156', 'Art 954', 'Art 66', 'Art 715', 'Art 933', '§ 367', 'Art 933', '§ 932', '§ 328', 'Art 3', '§ 932', 'Art 2268', 'Art 1036', 'Art 1147', 'Art 169', 'Art 1260', 'Art 3', '§ 367', 'Art 275', 'Art 157', 'Art 283', 'Art 261', 'Art 291', 'Art 302', 'Art 323', 'Art 388', 'Art 229', 'Art 2778', 'Art 522', 'Art 1707', 'Art 933', '§ 932', '§ 932', 'Art 934', 'Art 989', '§ 816', '§ 822', 'Art 1794', 'Arts 2269', 'Art 1483', 'Art 68', 'Arts 893', 'Art 2452', '§ 380', '§ 2', '§ 367', 'Art 2279', 'Art 2279', 'Art 1325', 'Art 930', '§ 1006', 'Art 835', 'Art 976', 'Art 1163', 'Art 938', 'Art 980', 'Art 927', 'Art 985']

Oxford Legal Research Library: Part X Transfer of Title, 40 Transfer of Title by a Non
Principle Research Assistants
Shar’ia Al Majalla al Ahkam al Addliyah
European Conventions, Legislation and Treaties
Part I Sales Law: Development and Modern Practice
2 Development of Domestic Sales Laws
B Roman Law
II Roman Sales Law
II The English Model
2 Adoption in Other Jurisdictions
3 Modifications of the Basic Model
2 The Uniform Commercial Code
3 Restatements of Law
IV Mixed Systems Leaning Towards Common Law
D Continental Europe
II French Law
2 The Code civil
3 Current Reform Projects
III Germanic Legal Systems
2 Codifications During and at the End of the Nineteenth Century
2.45 Prussian Allgemeine Landrecht
(b) The Austrian Codifications
(c) The German Codifications
(ii) Modernization
(d) Codifications in Switzerland
2.53 General
(ii) Law of Obligations and Civil Code
IV Nordic Systems
E Ibero-American Legal Systems
II Codifications
1 Early Laws
2 Codifications in the Nineteenth Century
2.65 General
(b) Wave of Codifications in the Nineteenth Century
3 The Situation Today
F African Legal Systems
II Pre-Colonial Period
III The Colonial Period
IV The Situation Today
G Middle Eastern and Arab Countries
II Main Influences
1 Shari’a
2.97 Impact
2.98 General
(b) Development of Al Majalla
III The Situation Today
2 Codifications
H Eastern Europe and Central Asia
II Pre-Soviet Period
2 Main Historical Influences
3 Pre-Soviet Codifications
III Soviet Period
IV Post-Soviet Period
II Legal Families Represented
1 Traditional Civil Law Legal Systems
(b) German Influence
3 Mixed Jurisdiction
III Modern Legal Systems and Tendencies
2 Modern Legal Systems
3 Principles of Asian Civil and Commercial Law
3 Uniform Laws and Projects
B Uniform Law
I General Development of Comparative Law
II Establishment of International Institutions and Preliminary Works
III UNIDROIT
1 The Road to the First Uniform Sales Laws
2 ULF and ULIS
3 Subsequent Endeavours
IV UNCITRAL
1 The CISG
(a) The Conference and its Aftermath
3.19 Irresolvable Disputes and Gaps
2 The CISG Today
(a) Worldwide Success
3.22 Application of the CISG
(i) The CISG in State Courts
(ii) The CISG in Arbitral Proceedings
(c) The Relationship to Other Instruments
3 Other UNCITRAL Instruments
V OHADA
C Uniform Projects
II UNIDROIT Principles of International Commercial Contracts
2 The Versions of the PICC
3 Functions and Purposes
3.51 General
(b) The PICC and the CISG
III Principles of European Contract Law
IV Draft Common Frame of Reference
(b) Optional International General Contract and Sales Law
D Unified Trade Terms and Trade Practice
E Lex Mercatoria
F The Body of International Sales Law
4 Contract and the Law
B Law Applicable to the Contract
2 Admissibility
(a) Express and Implicit
II Other Conflict-of-Laws Rules
III International Commercial Arbitration
IV Particular Issues in the International Sale of Goods
1 Application of the CISG
2 Dépeçage
3 Law Applicable to Choice-of-Law Clause Formation
4 Eligible Laws
C Content of Obligations
2 Contractually Defining Party Obligations
3 Trade Terms
II Interplay between Contract and Default System
5 Modern Practice of International Sales Law
I Previous Surveys
II Global Sales Law Surveys
C Results in Detail
I Sales Cases in General
II CISG Cases
III Familiarity with the CISG
IV Exclusion of the CISG
V Choice-of-Law Clauses
VI Specific Contract Clauses
VII Dispute Resolution Clauses
I Domestic Orientation
II Consequences of Choosing Domestic Rather than Uniform Law
III Dispute Resolution in International Sales Cases
Part II Ambit of Sales Law
6 General Remarks on the Ambit of Sales Law
B Legal Framework of Sales Law
I Civil Law Jurisdictions
1 Dualistic Systems
2 Monistic Systems
3 Additional Observations
II Common Law and Scandinavia
1 Sale of Goods Acts and the UCC
III Uniform Approaches
C Modern Consumer Protection Laws
II Realizing Consumer Protection Measures in Legal Frameworks
III The Definition of Consumer
IV Typical Measures of Consumer Protection
V Relationship of Domestic Consumer Protection to the CISG
7 The Concept of Goods
B General Definition of Goods
I Commonly Accepted Characteristics
II Res Extra Commercium
C Tangibles—Problematic Issues
II Bulk Goods, Future Goods, Growing Crops, etc
III Electricity, Gas, and Water
IV Vessels, Aircraft, etc
V Documentary Sales
D Intangibles
I Software and Information
II Rights or Things in Action
2 Stocks, Shares, and Companies
3 Know How, Goodwill, and Clientele
8 Identifying the Boundaries of a Sales Contract
A General Notions of Sales
I Passing of Property in the Goods
II Framework Agreements
B Sale by Auction
I Domestic Solutions
II Uniform Law
C Sale versus Other Supply of Goods Contracts
II Hire Purchase and Leasing Agreements
D Mixed Contracts
I Contracts for Goods to be Manufactured or Produced
1 Substance of the Contract Approach
2 Outcome of the Contract Approach
II Contracts for Supply and Services
III Turnkey Contracts
Part III Formation of The Contract
9 General Remarks on Contract Formation
B Cause and Consideration
II Cause
1 Equivalence of Performance and Counter-Performance
2 Illicit Cause
1 General Remarks about Consideration
(a) Need Not Be Adequate but Must Be Sufficient
9.22 Examples of Consideration
3 Provided by the Promisee
IV Judicial Control of Contract Terms
10 Offer and Acceptance
B Offer
I Definiteness of Offer
1 Minimum Content
(b) Subsequent Determination
(c) Indefinite Purchase Price
II Intention to be Bound
2 Offers Distinguished from Invitations to Treat
III Binding Effect of Offers
2 Irrevocability
10.33 Exceptions
3 Revocability
10.37 Exceptions
10.41 French-Influenced Legal Systems
(iii) Modern Approach
4 Consequences of Revocation of an Irrevocable Offer
IV Termination of Offers
1 Withdrawal and Revocation
2 Lapse of Time
3 Express or Implied Condition
5 Death and Incapacity
C Acceptance
I Declaration of Acceptance
II Time for Acceptance
III Effect and Effectiveness of Acceptance
IV Alterations between Offer and Acceptance
D Modern Forms of Contract Conclusion
E Language Problems
F Burden and Standard of Proof
A General Remarks on Electronic Communications
B Electronic Communications and Contract Formation
II Principle of Equality
III General Contract Conclusion
1 Offers and Invitations to Treat on a Website
3 Automated Transactions
IV Incorporation of Standard Terms
V Information Duties
C Burden and Standard of Proof
12 Standard Terms
B Specific Rules on Standard Terms
C Incorporation of Standard Terms
II Incorporation by Reference
III Incorporation by Practice and Usage
III Surprising Clauses
E Precedence of Negotiated Terms
F Battle of the Forms
II Last-Shot Rule
III Knock-Out Rule
A General Remarks on Agency
I Relationships at Issue
II Sources of Law
III The Law Applicable to Agency
1 Actual Authority
2 Formal Requirements
3 Apparent Authority
II Scope of Authority
2 Commercial Environment
3 Excess and Abuse
13.27 Ultra Vires Doctrine
III Sub-Agency
1 Reasons Inherent in the Authority
2 Agreement, Revocation, and Renunciation
3 Death, Incapacity, and Insolvency
C Disclosed and Undisclosed Agency
II Disclosed Agency
III Undisclosed Agency
2 Restrictions to Undisclosed Agency under Common Law
(a) Undisclosed Agency Excluded
13.44 Defences etc to Actions by or against the Principal
(c) Merger and Election
3 Consequences of Undisclosed Agency under Civil Law
4 Comparative Summary
D Liability of the Agent
III Extent of Liability
14 Modification of Contract
II Pre-existing Contractual Duty Rule
2 Practical Benefit
3 Abandoning Consideration Requirement
B Form Requirements
I Statutory Form Requirements
II No-Oral-Modification Clauses
Part IV Validity
15 General Remarks on Validity
A The Notion of Validity
B Implications of Invalidity
I Absolute Nullity and Void Ab Initio
II Relative Nullity and Voidable
III Unenforceable
IV Valid Only with Ratification
C Uniform Projects’ Approach to Validity
16 Capacity to Contract
B Capacity of Natural Persons
I Capacity to Bind and be Bound
1 Age-Related Incapacity
2 Impaired Mental Capacity
II Consequences of Lack of Capacity
2 Voidable
4 Valid only with Ratification and Unenforceable
III The Incapacity of Office
C Capacity of Legal Persons
II Ultra Vires Doctrine
D Capacity and Conflict of Laws
I Conflict-of-Laws Rules
II Electronic Contracting
17 Mistake and Error
B Conceptual Underpinnings
I Relationship to Common Law Misrepresentation
II Categorization
1 Who v Type
3 Mistakes as to Motive Usually Irrelevant
4 Mistake of Fact v Mistake of Law
5 Erreur-obstacle and Mutual Mistake Not Mistakes
C Characteristics of Relevant Mistakes
I Essential Nature and Causation
II Impact of Co-Contractant’s Reliance
III Must be Excusable
D Mistake as to Identity
E Error of Expression
I Significance of Co-Contractant’s Awareness
II Errors of Calculation
F Mistake as to Subject Matter or Circumstances
I Incorrectly Named Goods
II Existence of Goods
III Features of Goods
G Relationship to Sale of Goods Remedies
18 Fraud and Duress
B Fraud
I False Statement, Act, or Omission
1 Statement or Act
II Knowledge and Intent to Deceive
1 Made Knowingly
2 With Intent to Deceive
3 By a Party or Third Persons
III Influenced Consent to Contract
IV Relationship to Mistake
I Illegitimate Pressure
1 Meaning of Illegitimate
2 Object of the Threat
3 Third Party Threats
II Inducement to Contract
III Relationship to Undue Influence
19 Consequences of Mistake, Fraud, and Duress
B Rescission
I Requirements for Rescission
1 Notice by Party v Judicial Declaration
2 Other Potential Requirements
II Bars to Rescission
2 Expiration of Time
3 Good Faith, Rectification, and Adaptation
4 Equally Culpable Conduct
C Effects of Rescission
I Whole v Partial Rescission
II Restitution
1 Restitution in Kind or Money in Lieu
2 Fruits of Performance
20 Illegality and Immorality
I Correlating Illegality and Immorality
II Relationship to Fraud and Duress
B Approaches to Illegality and Immorality
C Constellations Involving Illegality or Immorality
I Contract Itself Illegal
II Content of Contract Contrary to Law
1 Prohibited Goods or Subject Matter
2 Performance Requires an Act Contrary to Law
III Contract Fortuitously Performed Contrary to Law
IV Contract Intended to Achieve a Prohibited Purpose
1 Intent Contravenes Law
2 Sham Transactions
D Consequences of a Contract Contrary to Law
I Performance of the Contract
21 Excessive Benefits and Unfair Advantages
II Object of Protection
B Gross Disparity
I Scope and Application to the Sale of Goods
II Objective Disparity Threshold
III Blameworthy Behaviour
C Unconscionability
I Relationship to Other Doctrines
1 Not Always a Unified Doctrine
2 The Notion of Undue Influence
3 Connection to Good Faith
II Unconscionable Transactions
1 Special Disadvantage
2 Exploitation or Taking Advantage
3 Unfair Clauses
21.36 Good Faith and Unconscionability
(c) Central Considerations
22 Form Requirements
B Statutory Requirements
II International Instruments
C Meaning of ‘In Writing’
D Form Stipulations by the Parties
I Form Required for Initial Contract
II Form Required for Alteration
Part V Pre-Contractual Liability
23 General Remarks on Pre-Contractual Liability
A Pre-Contractual Phase
B Negotiation Contract
C Legal Foundations
24 Pre-Contractual Duties
B Specific Pre-Contractual Duties
I Information Duties
II Breaking Off Contract Negotiations
IV Physical Damage to Person or Property
25 Pre-Contractual Liability
A Basis for Pre-Contractual Liability
B Extent of Liability
I Reliance Interest
II Expectation Interest
Part VI Construction of Contract
26 Interpretation and Supplementation
2 Relationship between Interpretation and Supplementation
II Possible Approaches
1 Subjective Approach
2 Objective Approach
3 Uniform Approach
B Wording of the Contract
2 Priority of Negotiated Terms
3 Linguistic Discrepancies
II Beyond the Literal Meaning
1 Commonsense Commercial Approach
2 Systematic Approach
III General Principles of Law
C Surrounding Circumstances and Subsequent Conduct
II Surrounding Circumstances
III Subsequent Conduct
IV Limitations and Exceptions
1 Parol Evidence Rule
2 Merger and Entire Contract Clauses
D Special Rules of Interpretation
I Favor Negotii
II Contra Proferentem
III Favor Debitoris
E Supplementation of the Contract
27 Practices and Usages
II Statutory References
1 Civil Codes, Commercial Codes, Sale of Goods Acts
2 Arbitration Statutes
B Practices Between Parties
I Frequency, Duration, Observance
1 Relationship to Other Rules
2 Relevance in Contract Formation
3 Relevance for Interpretation
III Ending a Practice
C Trade Usages
I Legal Nature of Usages
2 Quasi-Statutory Nature
II Prerequisites
1 Observance Within the Industry
2 Knowledge and Constructive Knowledge
3 Limitations to Application of Usages
III Determination of Relevant Usages
V Effects
Part VII Obligations of the Seller
28 General Remarks on Seller’s Obligations
A Contractual Terms and Default Obligations
I Characteristic Obligations
II Contractual Stipulations
III Default Provisions
B Main Obligations
II Transfer of Title
III Handing Over of Documents
C Additional Obligations
1 Contract Including Trade Terms
2 Default Rules Arising from Sales Law
3 General Principles of Contract Law
2 Installation, Training, and Other Services
4 Non-Competition
5 Ongoing Availability of Spare Parts
6 Protection of Life, Limb, and Property
II Legal Delivery
1 Internal Effects
2 External Effects
IV Impact of Breach of Other Obligations
B Place of Delivery
I Contractual Agreement
(a) ICC INCOTERMS®
(b) Domestic Trade Terms
II Default System
1 Domestic Rules
2 Uniform Rules
C Time of Delivery
1 Specific Date
3 Usages and Circumstances
II Default Rules
D Notification Duties
30 Documents and Costs
II Documents of Title and Transport Documents
1 Purpose and Significance
2 Examples and Definitions
III Other Documents
1 Documents Evidencing Conformity
(a) Certificates of Origin
30.18 GMP Documents
30.19 Other
2 Ancillary Documents Relating to Third Parties
IV Time and Place of Handing Over
I Contractual Terms
D Transportation and Insurance
E Other Costs
31 Conformity of the Goods
2 Non-Conformity v Non-Delivery
(a) Generic v Specific Goods
(b) Aliud v Peius
II Civil Law Systems
1 Guarantee and Serious Defect
2 Vice Apparent v Vice Caché
III Common Law Systems
2 Express and Implied Warranties
IV Uniform and Modern Approach
1 Uniform Concept
2 Contract and Default Provisions
3 Domestic Systems Following the CISG
B Contractual Requirements
1 Statutory Requirements
2 Express Statements, Public Statements, Usages
3 Description and Guarantee
4 Buyer’s Subsequent Specification
II Quantity
2 Uniform and Modern Approach
3 Permissible Discrepancies
III Quality
2 Sample and Model
4 Good Manufacturing Practices (GMP)
5 Public Law Requirements
6 Ethical Values and Codes of Conduct
IV Nature and Description
1 Domestic Systems
2 Uniform Approach
VI Other Aspects
2 Domestic Classifications and Consequences
C Default Requirements
I Fitness for Particular Purpose
1 Legislative Approaches
2 Particular Purpose Made Known to Seller/Accepted by Seller
3 Buyer’s Reliance on Seller’s Skill and Judgement
II Fitness for Ordinary Use
4 Public Law Requirements
6 Ethical Values
III Packaging
1 Domestic and International Approaches
2 Scope of Duty
D Immaterial Discrepancies
I Domestic Approaches
II Uniform Approach
E Buyer’s Knowledge of the Non-Conformity at Contract Conclusion
II Time of the Conclusion of the Contract
III Pre-contractual Duty to Examine
IV Seller’s Guarantee or Deceit
F Time of Non-Conformity
II Conclusion of the Contract
III Time of Delivery
IV Passing of Risk
V After Passing of Risk
G Burden of Proof
32 Third Party Property Rights
II Legal Regime
B Third Party Rights
I Contract for Third Party Goods
1 Validity Questions
2 Seller’s Liability for Eviction
II Contract for Encumbered Goods
1 Scope of Third Party Rights
2 Seller’s Own Security Rights
3 Seller’s Liability for Encumbered Goods
III Public Law Encumbrances
C Third Party Claims
D Time for Existence of the Right or Claim
E ‘Knowledge’ of Buyer
33 Industrial and Intellectual Property Rights
I Property Rights Distinguished
II Recent Awareness
B Relevant Rights
I WIPO and TRIPS as Examples
II Unfair Competition
III Rights Arising from Personality
C Approaches
I Classification: Property Rights v Non-Conformity
II CISG Approach
2 Irrelevance of Domestic Classification
3 Territorial Restriction
4 Knowledge of Seller
III Knowledge of Buyer
34 Examination and Notice
I Rationale and Comparative Overview
1 Strict Notice Requirement
2 Intermediate Approaches
3 No Notice
4 International Level
II Legal Basis for Buyer’s Notice Requirement
1 Contract and Usages
2 Statutory Default Provisions
III Scope of Notice Requirement
1 Type of Breach
(a) Non-Conformity
34.23 Documents
34.24 Third Party Rights
2 Transactions Covered
(a) Identity of Contracting Parties
34.28 Subject Matter
2 Right v Duty to Examine
3 Statutory Provisions on Examination
II Details of Examination
2 Default Rules
3 Circumstances of the Case
III Time for Examination
1 Determination of the Period
2 Beginning of the Period
II Details of Notice
1 Form Requirements
3 Transmission Risk
III Time for Notice
1 Determination of Period
34.60 Contract and Usages
34.61 Statutory Defined Periods
34.62 Fixed Period
(ii) Prompt v Reasonable Period of Time
34.69 Apparent v Hidden Non-Conformities
2 Start of the Period
34.70 Delivery v Physical Possession
34.71 Defect Discernible
3 Cut-Off Periods
34.73 Statutory Provisions
(b) Relationship to Limitation Periods
D Consequences
I General Consequences
1 Loss of All Remedies
(b) Sample and Instalment Contracts
34.81 Excessive Quantity or Better Quality
34.82 Exclusion of Non-Conformities Not Mentioned in Notice
2 Loss of Right to Cure Only
3 Loss of Right to Avoid Only
1 Seller’s Knowledge of Defect
3 Buyer’s Excuse
Part VIII Obligations of the Buyer
35 General Remarks on Buyer’s Obligations
I Payment of Price
II Taking Delivery
36 Payment
B Partial Payment
C Place for Payment
III Implications for Jurisdiction
D Time for Payment
F Modes of Payment
I Default Rules
III Set-Off
G Means of Securing the Unpaid Seller
I Retention of Title
II Other Means of Securing the Unpaid Seller
1 Purchase Money Security Interest
2 Seller’s Lien and Right to Retain Possession
3 Seller’s Right to Reclaim the Goods
4 Right of Stoppage in Transitu
37 Taking Delivery
B Acts Forming Part of Taking Delivery
I Taking Over
II Acts Enabling Seller to Make Delivery
38 Passing of Risk
A Notion of Risk
II Cases Covered
B Contractual Allocation of Risk
II Trade Terms
2 Specific INCOTERMS ®
C Default Rules on Passing of Risk
1 Historical Starting Points
2 Merchants and Consumers
II Systems of Allocation of Risk
1 Periculum Est Emptoris and Res Perit Domino
2 Delivery and Handing Over of the Goods
III Specific Cases
1 Unascertained Goods
38.47 General
(b) Approaches
(c) Bulk Sales
2 Goods Sold in Transit
3 Default by One Party
(a) Default by Seller
38.68 Default by Buyer
Part X Transfer of Title
39 Transfer of Title
I Interests and Terminology
II Contract and Transfer of Title
1 Systematic Approaches
2 Causal or Abstract Approach
(b) Different Systems
III Registration Requirements
1 Interests Involved
2 Typical Cases
II Choice of Law
1 Lex Rei Sitae
2 Law of the Sales Contract
3 Goods in Transit
4 Lex Fori
C Different Approaches
2 Ascertained Goods—Unascertained Goods
(b) Prerequisites for Appropriation
39.47 Knowledge of Buyer
II Consensual Approach
2 To the Buyer Itself
39.61 Brevi Manu Traditio
(b) Longa Manu Traditio
39.64 Indirect Possession
D Documents of Title
40 Transfer of Title by a Non-Owner
I Interests Involved and Practical Relevance
II Typical Scenarios
1 Factual Circumstances
III Encumbrances
IV Same Rules for Cultural Goods
B Different Approaches
2 Bona Fide Purchaser without Notice
(b) Reference Point of Good Faith
(c) Standard of Good Faith
40.38 Relevant Point in Time
40.39 Burden of Proof
3 Purchaser for Value
(a) Direct and Indirect Application
40.43 Original Owner’s Right to Buy Back v Bona Fide Recipient’s Claim for Reimbursement
40.44 Rules of Unjustified Enrichment
40.45 Definition of Value
II Nemo Dat Rule
(a) Mercantile Agent
(b) Seller in Possession
(c) Buyer in Possession
(d) Market Overt
(e) Voidable Title
(f) Estoppel
III Protection of Bona Fide Recipient
40.79 Principle
(b) Counter-Exceptions
Part XI Remedies for Breach of Contract
41 General Remarks about Remedies
B Cause-Oriented Approach
1 Roman Law as a Starting Point
2 Structure of Civil Codes
II Different Causes
(a) Delay of the Obligor
(b) Delay of the Obligee
3 Improper Performance
(b) Breach of Other Duties
C Breach-of-Contract Approach
1 History of Assumpsit
II Equal Treatment of Breaches
III Consequences of Breach
2 Specific Performance
D Modern Approach
II Breach-of-Contract Approach as a Starting Point
III Influences of the Cause-Oriented Approach
2 Reduction of Price
3 Nachfrist Principle
E Contractual Modification of Remedies
II Additional Remedies by Virtue of Contract
III Limitation of Remedies
1 Typical Clauses
41.58 Exclusion of Certain Remedies
2 Restrictions Imposed by Law
41.62 Minimum Standard of Protection
41.63 Consumer Sales
42 Suspension of Performance
B Right to Withhold Performance
II Default Prerequisites for Right to Withhold Performance
1 Performance Due
2 Concurrent Obligations
3 Non-Performance by the Co-Contractant
(a) Partial Performance
(b) Non-Conformity
4 Readiness to Perform
III Mechanism for Exercising Right to Withhold
1 No Notice Required
2 Notice by Withholding Party
3 Order of Court
1 Withholding Performance
2 Deposit of Purchase Price
C Uncertainty of Obligor’s Economic Position
2 The Situation in Legal Systems
II Seriousness of Economic Difficulties
III Relevant Point in Time
IV Assurance of Performance
V Right to Avoid the Contract
43 Specific Performance
I Interests Involved
1 Party Interests
2 Market Interests
1 Right v Remedy
2 Specific Performance v Cure
I Civil Law Approach
2 Aliud v Peius
II Common Law Approach
(a) Starting Point
43.27 Reasons for this Approach
2 Occasions where Specific Performance Granted
43.31 Action for the Price
(b) Unique Goods
(c) Requirement and Output Contracts
(a) Clean-Hands Doctrine
(b) Conduct of Both Parties
43.45 Potential Hardship for Obligor
III International Level
1 CISG
43.51 General
(b) Specific Performance in Case of Non-Conformity
2 Uniform Projects
43.62 Monetary Obligations
(b) Non-Monetary Obligations
C Enforcement
II Astreinte
2 PICC
III Substitute Performance at Obligor’s Expense
I Purposes of Damages
(a) Deterrence v Punishment
(c) Disgorgement of Profits
1 Full Compensation v Over-Compensation
2 Economic Benefits v Performance Principle
44.24 Difference Hypothesis of German Descent
(b) Economic Analysis of Law
(c) Performance Principle
3 Pecuniary v Non-Pecuniary Loss
(b) Moral Damages in Contract
B Causation
II Causation Doctrine
1 Natural Causality
2 Restrictions on Natural Causality
(a) Adequacy/Common Sense Approach
44.50 Scope of Protection of the Breached Duty
III Intervening Events
1 Third Party Intervention
2 Act or Omission by the Aggrieved Party
C Fault and Foreseeability
II Fault
2 Notion of Fault
(b) Attribution of Fault
3 Non-Conformity
III Foreseeability
2 Relationship to Fault
3 Specificities
(a) Relevant Persons
(b) Relevant Point in Time
(c) What Must Be Foreseen
D Form of Compensation
II Restitution in Kind
III Discretion of Parties and Adjudicators
IV Money
E Categorization of Losses
II Damnum Emergens and Lucrum Cessans
2 Treatment of Lost Profit
III Expectation and Reliance Loss
(a) Expectation Loss
(b) Reliance Loss
(c) Election Between Losses
IV Direct v Indirect Loss
2 Causality Approaches
(a) Mere Causality
44.143 Adequate Causality and Protective Scope of the Norm
(c) Length of Causality Chain
4 Degree of Fault
5 Statutory Definitions
V Incidental and Consequential Loss
1 Incidental Losses
2 Consequential Losses
F Extent of Damages
II General Non-Performance Loss
III Incidental Loss
2 Legal Costs
(b) Recovery as Damages for Breach of Contract
IV Consequential Loss
2 Property Damage and Personal Injury to the Buyer
(a) Damage to Property
(i) Damage to Other Property
44.182 Damage to the Chattel Itself
(b) Personal Injury
3 Loss of Goodwill and Reputation
4 Recourse for Liability to Third Parties
(a) Constellations
V Lost Profit
2 Lost Volume Cases
3 Loss of a Chance
G Methods of Calculation
II Concrete and Abstract Calculation
(b) Relationship of Calculation Methods
2 Concrete Calculation
44.228 General
(b) Substitute Transactions
(ii) Reasonableness of Substitute Transaction
(iii) Avoidance of the Contract
44.239 Repair
3 Abstract Calculation
(b) Available Market
44.249 Avoidance of the Contract
III Profit from Breach of Contract
H Mitigation
II Extent of Duty to Mitigate
2 Specific Examples of Mitigation Measures
(a) Substitute Transaction
(b) Dealing with Contract Breacher
I Contract Stipulations
I Agreed Sums Payable upon Breach of an Obligation
3 Functions of Agreed Sums
44.272 Securing Performance
44.275 Liquidating Losses
44.276 Effect of Limiting Liability
4 Protection of the Debtor
(a) Formal Requirements
44.280 Limits Fixed by Law
(c) Unenforceability of Penalty Clauses
(d) Reduction of Excessive Sums
5 Relationship to Other Remedies
44.291 Avoidance of Contract
II Limitation Clauses
(a) Exclusion Clauses
44.303 Certain Losses Excluded
(c) Caps
(a) Express Warranties and Guarantees
44.310 Minimum Adequate Remedy
(c) Gravity of Fault
(d) Personal Injury
I Burden of Proof
5 Loss Sustained
II Standard of Proof
2 Different Approaches to Certainty of Loss
3 Situations Where Standard Lowered
I Constellations
II Liability Systems
III Conceptual Approach
1 Impediment and Hardship Distinguished
2 Unitary Approach
3 Impact of Non-Breaching Party
B Impediments
II Contractual Allocation
2 Construction and Effect
1 Different Concepts
(a) Impossibility, Frustration
2 Initial v Subsequent Circumstances
3 Relevant Threshold
(a) Impact on Remedies
(iii) Avoidance
45.66 Reduction of purchase price
(b) Temporary Impediments
(c) Partial Impediments
(d) Duty to Give Notice
2 Initial v Subsequent Imbalance
4 Imbalance Not Known or Foreseeable
5 Notice Requirements and Limitations
(a) Duty to Renegotiate
(b) Adaptation of the Contract
D Obligee’s Behaviour
II Prerequisites for Exemption
1 Acts or Omissions by Obligee
2 Both Parties Contributing
I The Concept of Interest
2 The Territory of Interest
II Interests Involved
III Procedural v Substantive Approach
IV Starting Points
B Contractual Stipulations
I Admissibility
3 Form Requirements
II Limits
C Default Provisions
II Dates at which Interest Arises
1 Payment Due
46.54 Relevant Dates
46.55 Purchase Price
(iii) Unwinding of Contract
(b) Relevance of Obligor’s Responsibility for Delay
46.75 Fault
4 Initiating Proceedings
5 Date of Judgment or Award
III Rate
46.81 Indiscriminate Single Rate
(b) Different Rates
2 Variable Rate
3 Discretion of Adjudicator
4 CISG
(a) Uniform Approaches
(b) Application of Domestic Law
IV Compound Interest
D Interest and Damages
I Interest as Damages
II Damages in Addition to Interest
47 Avoidance
III Avoidance by Agreement
B Grounds for Avoidance
1 Contractual Agreement
2 Cause-Oriented v Unitarian Approach
II Cause-Oriented Approach
(a) Civil Law and Common Law
(b) Conditions, Warranties, and Intermediate Terms
2 Impossibility, Frustration, and Impracticability
47.32 General
(i) Development and Functions
47.40 Requirements
(a) Notion of Delay
(b) Nachfrist
(ii) Calculations of Period
(c) Period of Grace
47.61 Time of Essence
(ii) Express Contract Terms
(a) Civil Law Legal Systems
47.85 General
(ii) Perfect Tender Rule
(iii) Acceptance
(iv) Revocation of Acceptance
5 Legal Defects
III Unitarian Approach
2 The Nachfrist Approach
3 The Fundamental Breach Approach
(b) Notion of Fundamental Breach
(c) Non-Performance in General
(ii) Time of Essence
47.128 Nachfrist
47.129 Non-Conformity
(i) Cases of Fundamental Breach
47.134 Relevance of Possible Cure
47.135 Relevance of Nachfrist
IV Specific Cases
(a) General Acknowledgement
(b) Threshold for Avoidance
(d) Avoidance and Mitigation
(a) Cause-Oriented Approach
(b) Unitarian Approach
47.162 Partial Non-Performance
3 Instalment Contracts
4 Non-Conforming Documents
C Loss of Right to Avoid
II Impossibility to Make Restitution
D Mechanisms for Avoidance
I Ipso Facto
1 Terminology Ipso Facto and Ipso Iure
2 Impossibility and Frustration
3 Other Instances of Non-Performance
4 Avoidance Clauses
5 Expiration of Nachfrist
II Court Order
(a) Systems Following this Approach
(b) Reasons for this Approach
III Declaration by Aggrieved Party
2 Contents and Form of Declaration
47.205 Form
3 Time for Declaration
47.206 General
(b) Statutory Time Stipulations
(c) Dispatch v Receipt of Declaration
48 Price Reduction
B Preconditions
I Non-Conformity and Partial Performance
II Non-Performance Excused
III Mechanism of Price Reduction
C Calculation
I Reduction Equal to Inferior Value
II Proportional Reduction
III Reduction to Zero
II Relation to Other Remedies
49 Concurrent Remedies
I Typical Scenarios
II Relevance of Concurrent Remedies
III Possible Approaches
B Remedies for Breach v Mistake
II International Level
3 PECL and DCFR
C Remedies for Breach v Remedies for Misrepresentation
III Civil Law
IV CISG
D Remedies for Breach v Tort Remedies for Damage to Property
II Damage to Property
1 Domestic level
(a) Damage to the Chattel Itself
(b) Damage to Other Property
2 International Level
Part XII Unwinding of the Contract
50 Unwinding of the Contract
B Applicable Rules
II Property Law
III Unjust Enrichment
IV Tort Law
V Contractual Regime
C Effects of Contract Coming to an End
I Discharge of Primary Obligations
II Effect on Damages Claims
III Contract Provisions Not Affected by Avoidance
IV Restitution of Performance Received
2 Restitution of Purchase Price
3 Restitution of the Goods
50.30 Restitution of Fruits
(c) Deterioration of the Goods
4 Concurrent Restitution
5 Place, Costs, and Time of Restitution
Part XIII Limitation of Actions
51 Limitation of Actions
I Policy Reasons
II Procedural or Substantive Approach
III International Initiatives
IV Party Autonomy
B The Period Itself
II Traditional Civil Law Approach
2 Breach of Contract in General
3 Non-Conformity of the Goods
III The Common Law Approach
IV The Modern Approach
C Renewal and Extension of Limitation Periods
Part X Transfer of Title, 40 Transfer of Title by a Non-Owner
From: Global Sales and Contract Law
Types of approach and transfer of title — Delivery and obligations of the seller
A. General 40.01
I. Interests Involved and Practical Relevance 40.03
II. Typical Scenarios 40.05
1. Factual Circumstances 40.06
III. Encumbrances 40.09
IV. Same Rules for Cultural Goods 40.10
B. Different Approaches 40.13
I. General 40.14
1. Starting Points 40.15
2. Bona Fide Purchaser without Notice 40.18
(a) Persons Covered 40.20
(b) Reference Point of Good Faith 40.24
(c) Standard of Good Faith 40.30
(d) Relevant Point in Time 40.38
(e) Burden of Proof 40.39
3. Purchaser for Value 40.40
(a) Direct and Indirect Application 40.41
(i) Original Owner’s Right to Buy Back v Bona Fide Recipient’s Claim for Reimbursement 40.43
(ii) Rules of Unjustified Enrichment 40.44
(b) Definition of Value 40.45
II. Nemo Dat Rule 40.46
1. General 40.46
2. Exceptions 40.49
(a) Mercantile Agent 40.51
(b) Seller in Possession 40.53
(c) Buyer in Possession 40.55
(d) Market Overt40.58
(e) Voidable Title 40.60
(f) Estoppel 40.64
III. Protection of Bona Fide Recipient 40.68
1. General 40.70
2. Exceptions 40.76
(a) Principle 40.79
(b) Counter-Exceptions 40.80
40.01 Every buyer entering into sales contracts has a right to either itself becoming the owner of the goods or being authorized to transfer title to a third party. This expectation is of particular importance to buyers who intend to subsequently resell the goods. In these scenarios they enter into sales contracts as sellers. Thus in turn they take on the obligation to deliver the goods and transfer title. Where the original sales transaction has for any reason failed to effectively transfer title, the question arises whether reselling (non-owner) buyers are nevertheless able to give title to their purchasers.
40.02 It is interesting to note that, in regard to the transfer of title by a non-owner, the approaches adopted by legal systems cannot be categorized along traditional legal family lines.1 For example, common law jurisdictions can be found to draw more heavily on Roman tradition than do some of those legal systems that would traditionally be more associated with Roman law.
I. Interests Involved and Practical Relevance
40.03 The concept of ownership has gained worldwide acceptance. The right to own property and to not be arbitrarily deprived of it has been recognized in Article 17 of the Universal Declaration of Human Rights 1948. It has also found its way into many constitutions drafted and enacted (p. 514) subsequent to that Declaration.2 A situation where an unauthorized non-owner could deprive the owner of its title by transferring such title to another amounts to severe interference with this right. Consequently, owners can and do expect laws to not undermine and indeed to protect their ownership.
40.04 At the same time, sustainable market economies require the constant exchange of goods against counter-performance, usually money. For this to occur, the market must have confidence in the effectiveness of commercial transactions. As such, especially in a commercial environment, buyers demand that their reliance on becoming the owner or authorized reseller be protected.
II. Typical Scenarios
40.05 Questions concerning the transfer of title by a non-owner can arise in various fact scenarios each of which may have different consequences depending on the jurisdiction. However, broadly speaking, there are three factual circumstances that are particularly prone to occur in the field of the sale of goods.
40.06 In the standard scenario where the issue of acquisition of title from a non-owner arises, the buyer is under the impression that the seller with whom it contracts is the owner of the goods that are the object of the contract. Typically, the fact that the seller is in possession of the goods leads the buyer to believe that the seller is also the owner of the goods. The question of whether the non-owning seller is able to pass title to the buyer in these situations is a matter of property law.
40.07 In other instances, the buyer is aware that the seller is not the owner of the goods but rather deduces from the surrounding circumstances and the seller’s conduct that the seller is authorized to pass title. This is especially true in case of mercantile agents. In these instances the buyer is typically not aware of the precise owner of the goods but is very well aware of the fact that dealing with third party goods is precisely the business of the mercantile agent. The buyer therefore usually supposes that the agent is authorized to pass title to the goods.
40.08 These situations touch upon issues relating to both the law of agency as well as property law. Whether apparent authority is at all recognized is a question of agency. Whether it is sufficient for the buyer to believe that the seller is authorized to pass title in order to acquire title in good faith is a matter of property law. In particular, this pertains to the question as to the reference point for the good faith of the buyer—that is, the question of whether the buyer must be in good faith regarding the ownership of the seller or whether it is sufficient if the buyer in good faith believes the seller to be authorized to transfer title.
III. Encumbrances
40.09 Situations involving the sale of goods encumbered with third party rights are discussed separately in the context of legal defects.3 With regard to the acquisition of ownership, legal systems do not establish special rules to the effect that the title, if at all acquired by the recipient, is in any way stained with the previous encumbrances. Rather, as far as legal systems acknowledge the acquisition of title from a non-owner, it is not only the title of the original owner that is eliminated but also any encumbrances. This may be justified on the basis that the most powerful right to a good is ownership. If the law permits that right to be eliminated it would appear strange to have weaker rights to the goods remaining intact.
(p. 515) IV. Same Rules for Cultural Goods
40.10 The sale of and transfer of title to cultural goods has been at issue before numerous courts in different jurisdictions. However, this area of sales law has witnessed a veritable upheaval in the last 20 years. In particular, cultural goods originating in sensitive and critical regions or countries have prompted domestic, supranational, and international legislative bodies and institutions such as UNIDROIT to specifically deal with this issue.4 It is therefore worth mentioning cultural goods separately.
40.11 The majority of international instruments primarily oblige Contracting States to structure their property legislation in such a way as to prevent the illicit trade of cultural goods or—as in the case of EC regulations—establish immediate restrictions on the trade of cultural goods. In that sense, these instruments do not themselves establish rules on the transfer of title. Hence, the domestic property law rules governing the acquisition of title from a non-owner in principle apply to cultural goods as well. However, domestic legislators may have to modify these rules to achieve the goals set out in the international instruments. An exception in this regard is the 1995 UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects which contains express rules relating to the transfer of ownership in stolen or illegally exported cultural goods and also addresses issues of compensation of the buyer.5
40.12 At the domestic level the rules on the acquisition of title from a non-owner have not been changed as far as their basic structure is concerned. However, legal systems may have established different limitation periods for claims for restitution of the cultural item concerned.6
B. Different Approaches
40.13 From a comparative perspective, the issue of the acquisition of title from a non-owner is one of the areas of law where there are clearly different approaches taken by legal systems.
40.14 All legal systems are faced with the competing interests of the original owner of the goods and the recipient as well as the commercial necessity for goods to circulate freely. Hence, all legal systems have made efforts to balance out these interests. In doing so, legal systems have opted for different approaches raising different questions. Apart from some general remarks on the different starting points, these are discussed in greater detail below.7 At this stage the focus lies on those issues that are the same for all legal systems independent of the approach taken to the transfer of title by a non-owner. This relates to the notion that the entire issue is only of relevance where the buyer is in good faith. Furthermore, all legal systems have given consideration to the question whether the goods were acquired for value. Finally, the position of the (original) owner was under scrutiny in all legal systems.
(p. 516) 1. Starting Points
40.15 Bearing in mind that protection is—as a matter of principle—either granted to the original owner or to the recipient of the goods, legal systems are only left with two possible starting points. Both starting points are used by legal systems and it is difficult to tell which one is more popular with legislators. This is even more so as sometimes legal systems have shifted from one to the other and thus it cannot be said that one of them is more modern or more traditional.
40.16 In brief, the two competing approaches to the question of whether acquisition of title from a non-owner is possible are the so-called nemo dat rule on the one side and the protection of the bona fide purchaser on the other side. The first of these approaches strictly protects the original owner by stating that no one can give a better right than they themselves hold. The second approach, on the other hand, protects the recipient. According to this approach, the recipient acquires title and subsequently can resell the goods as their owner.
40.17 Obviously, these starting points differ significantly. However, independent of which starting point was chosen by a legal system, no system has neglected to take the competing interests into account. Consequently, legal systems have established exceptions to their general rules. In fact, these exceptions can be said to have a converging effect as in many instances the practical result will be the same. In other words, in those instances where it matters, legal systems protecting the owner give due regard to commercial necessities and protect the bona fide recipient. On the other hand, legal systems starting out with the protection of the bona fide recipient as the general rule protect the original owner where otherwise the restrictions on the concept of ownership—and thus a fundamental right—would appear all too harsh.
2. Bona Fide Purchaser without Notice
40.18 It is useful for the purposes of this chapter to point out that the issue of transfer of title by a non-owner is only relevant where the recipient of the goods is not aware of the fact that the seller is neither the owner nor authorized by the owner to transfer title. No legal system envisages the transfer of title from a non-owner to a recipient who is in bad faith regarding the ownership or the authorization to transfer title. The remarks in this chapter are built on that premise.
40.19 The terminology as to the state of awareness differs among legal systems. Civil law legal systems typically require that the recipient be in good faith. In common law jurisdictions it is more common to speak of a bona fide purchaser for value without notice.8 The difference in substance between these terms is that the common law terminology requires that the recipient obtained the goods in exchange for value—that is, that the buyer did not receive the goods gratuitously. In civil law systems the question whether the recipient has acquired the goods for value is also of relevance but dealt with at a different stage.
40.20 It is recognized in all legal systems that not every person can be a bona fide purchaser without notice. For legal systems protecting the bona fide recipient of the goods, the following textbook example is typically used to exemplify the issue. A lends his car to B. B turns to his friend C who is not aware of the situation between A and B. B transfers title in the car to C who pays a certain amount of money. As C is protected in his belief that B is the owner of the car, C is now the owner of the car. Immediately after that transaction B asks C to undo the transaction. C agrees. As C is the owner of the car he is now able to transfer title to B who then acquires ownership. As a result, A is deprived of its ownership.
(p. 517) 40.21 In common law jurisdictions it is typically stated that the purchaser must be at arm’s length. Civil law jurisdictions require that the transaction is not only a formal alteration of the legal situation but, in addition hereto, that the seller and buyer are not economically identical.
40.22 Specific problems may arise where the recipient of the goods is in bad faith but the agent who is entrusted with the acquisition of the goods is in good faith. In essence, the bad-faith principal attempts to hide behind the good faith of the agent. As discussed elsewhere in this work,9 in agency constellations, it is typically the state of mind of the agent that is relevant, not that of the principal. In order to prevent the expropriation of the owner by a bad-faith principal hiding behind a good-faith agent, some legal systems require that both be in good faith.10 Other systems only do so where the agent has acted on instructions of the principal.11
40.23 With regard to legal persons, difficulties may arise where several persons act as agents and one of them is in bad faith. In these situations, some legal systems deny protection where one of the agents is in bad faith.12 Whether additional persons involved in the factual handling of the transfer also have to be in good faith is disputed.13
40.24 While the requirement for the existence of good faith on the part of the purchaser is universally accepted, there is dispute as to the reference point of good faith. In other words, the question arises in which respect the purchaser must be in good faith. The issue is whether it is sufficient for the purchaser to believe in good faith that the seller is authorized by the owner to transfer title or whether it is necessary for the buyer to believe that the seller is actually the owner of the goods.
40.25 This question may appear subtle but it is of significant practical relevance. For example, a buyer who deals with a mercantile agent typically believes that the agent is authorized to transfer title even though the agent is not the owner of the goods. Where a legal system does not deem it sufficient that the buyer believes the seller to be authorized to transfer title, instead requiring that the good faith of the purchaser relates to the seller’s ownership, a buyer could never acquire title from a mercantile agent who is not actually authorized to pass title.
40.26 Legal systems differ in their approach to the reference point for good faith. One group of legal systems distinguishes commercial and private transactions. This applies in particular to common law legal systems but also to Germany. In common law legal systems the buyer’s perception that the seller is authorized to transfer title in the goods is only protected if the transfer is made to a buyer in the ordinary course of business.14 In the USA, § 1-201(9) UCC defines such a buyer as a person who obtains goods ‘without knowledge that the sale to him is in violation of the ownership rights or security interest of a third party’.
40.27 In Germany, the unambiguous wording of § 932 CC in the official English translation states that ‘The acquirer is not in good faith if he is aware, or as a result of gross negligence he is not aware, that the thing does not belong to the alienor.’ The rule is subject to much criticism and (p. 518) the majority view advocates an application by way of analogy to situations where the seller is authorized to transfer title by the person the seller deems to be the owner because it is in possession of the goods.15 In the field of commerce, the German Commercial Code supplements the German Civil Code in this regard as § 366 Com C states that where a merchant sells goods in the course of its business, it is sufficient that the buyer believes the seller to be authorized to sell and transfer title to them. It is not required that the buyer also believes the seller to be the owner.16
40.28 Another group of legal systems requires the good faith of the purchaser to relate to the ownership of the goods. Although this approach is prominently adopted by the German Civil Code,17 it is fundamentally a Romanistic one. Thus, it can be found primarily in legal systems belonging to that legal family, particularly in Ibero-American legal systems,18 Arabic legal systems,19 and also in individual jurisdictions in the USA (Louisiana20) and Canada (Québec21). However, there is some debate on the matter in these legal systems as well. In French law there are statements to the effect that good faith regarding the authorization of the seller to transfer title is sufficient.22 Yet, this does not appear to be the majority view.23 In Italy the Supreme Court, alongside the majority view in scholarly writings, has explicitly rejected the notion that good faith regarding the authorization of the seller is sufficient.24
40.29 A third group of legal systems neither distinguishes between commercial and private sales nor requires good faith to exclusively relate to the ownership or authorization of the seller. Rather, these legal systems deem it sufficient for any buyer to either believe that the seller is the owner or that it is authorized to transfer title in the goods.25 This approach is also followed at the international level, where Article VIII.-3:101(1)(d) DCFR requires that the purchaser ‘neither knew nor could reasonably be expected to know that the transferor had no right or authority to transfer ownership’.
40.30 Independent of whether it is sufficient for the buyer to be in good faith regarding the authorization of the seller to transfer title or whether it is required that the buyer in good faith believes the seller to be the owner of the goods, it is clear that where the buyer knows that this is not the case it deserves no protection. It is neither protected by legal systems generally protecting the bona fide purchaser, nor by any of the exceptions to the nemo dat rule in other legal systems. However, the question arises to what extent a legal system is prepared to protect a buyer where the lack of ownership or lack of authorization was recognizable. (p. 519) It is therefore necessary to determine whether and to what extent the buyer is protected where it was negligent in not realizing the real legal situation. In other words, the standard of good faith is decisive.
40.31 At this stage it is important to remember that where a legal system protects the expectation of the buyer to become the owner of the goods—be it as general rule, be it by way of exception—on account of the buyer’s good faith, the legal effect is an expropriation of the original owner. The standard that is required for the buyer to be in good faith may therefore also serve as a certain corrective tool to the interference with the legal position of the original owner.26
40.32 A first distinction made in comparative analysis of legal systems in this respect is that between a subjective and an objective approach to good faith. The subjective approach is understood to exclusively focus on the state of mind of the recipient while the objective approach focuses on the factual circumstances surrounding the transaction independent of the particular recipient.27
40.33 This distinction is, however, of greater relevance for the methodological approach taken by legal systems to situations where the buyer’s ignorance of the legal situation was due to its own negligence28 than it is for the practical outcome. From a mere technical perspective, those legal systems following a subjective approach to the notion of good faith acknowledge that a buyer who has no actual knowledge of the real legal situation technically is in good faith. However, these legal systems do not allow the buyer to rely on its good faith if the negligence is of a certain severity. Legal systems following an objective approach to the notion of good faith deny the existence of good faith on the part of the buyer to begin with where the factual circumstances indicate a certain degree of negligence on its side. The practical difference of these approaches—if at all existent—is marginal. At the end of the day the question is always whether the buyer’s expectation is protected under the given circumstances of the case.
40.34 At first glance legal systems vary with regard to the applicable standard of good faith. Some systems deny protection to the buyer where it was negligent in not realizing the real legal situation.29 Other legal systems require gross negligence.30 Then again, in common law jurisdictions the relevant phrasing is that the buyer must have acted ‘honestly’.31 While this is understood to mean that the buyer must have acted without positive knowledge of the real legal situation, negligence of the buyer is an important factor to prove that the buyer was not actually in good faith.32 In some instances the necessary corrective measure is provided by the requirement that the transfer was made in the ordinary course of business, for example where the seller is a mercantile agent.33
(p. 520) 40.35 While these phrasings appear to indicate practical differences in results achieved, the practical outcomes are by and large uniform. One might find a reason for this in the vagueness of the standards established by legal systems. It is widely agreed that there is no duty on the buyer to inquire into the legal situation. This may only be different where other circumstances indicate to the buyer that the seller is either not the owner or not authorized to transfer title in the goods.34 An important factor in this respect is the proportion of the purchase price to the object of the sales contract.35 Furthermore, the identity of the seller, its conduct, the time and place of the transfer, or unusual payment modalities may require the buyer to make further inquiries.36 In any case, the buyer is well advised to make inquiries, even if no such duty is imputed on it, as the circumstances listed will typically be sufficient to prove the necessary degree of negligence on its part.
40.36 Specific questions arise where public registers technically allow the buyer to take notice of the real legal situation. This is particularly the case where ownership is registered. Typically, such registers only exist for immovable property.37 The most important exceptions to this rule are registers for ships, aircraft, and cars. In some systems the rules on the good-faith acquisition of title from a non-owner do not apply to registered goods to begin with.38 In other systems a distinction is made regarding the purpose of the register. Thus, in France for example, cars, though registered, are encompassed by the rules on the good-faith acquisition of title from a non-owner.39 The register is considered to be only of administrative value. This is, however, different for ships and aircraft.40
40.37 In some systems—for example Switzerland—special registers exist for goods which are subject to a title retention clause. Under Swiss law, a retention of title clause is effective only if it is registered at the place of the recipient of the goods. This raises the question whether a buyer is in good faith when contracting with a seller for goods that previously have been sold to the seller under a registered retention of title. In other words, the question is whether the buyer is expected to be aware of a registered retention of title clause. In Switzerland, courts do not deem every buyer to be aware of retention of title clauses and thus to be in bad faith regarding the ownership of the seller.41 Only certain merchants—for example, used car dealers and antiques dealers—are in some instances required to consult the register before the transaction.42
(p. 521) (d) Relevant Point in Time
40.38 It is almost unanimously agreed by legal systems that it is the time of transfer of title which is relevant for the good faith of the buyer to be present.43 At the international level this approach was also adopted in Article VIII.-3:101(1)(d) DCFR. It should be noted that also in those legal systems where the usual transfer of title occurs upon the conclusion of the sales contract the reference point is not the conclusion of the contract but the—admittedly connected—transfer of title. For French law in particular it must also be noted that the good faith of the buyer in relation to the ownership of the seller at the time of transfer even cures defects of the underlying sales contract.44
40.39 The majority of civil law legal systems presume good faith on the part of the buyer.45 Consequently, it is for the original owner to prove that the recipient was not in good faith at the time title was transferred. This is different in common law jurisdictions46 as well as in the Draft Common Frame of Reference.47 In these systems it is the recipient of the goods who must prove to have been in good faith.
3. Purchaser for Value
40.40 Protecting the expectation of the bona fide purchaser—be it as a general rule, be it as an exception—and expropriating the original owner is a severe interference with the rights of the owner and, in that sense, a strong inclination towards the interests of the buyer. It appears to be common ground among legal systems that one should not lightly take sides with the buyer where this expectation would come to the buyer at no cost. In other words, legal systems generally reject the notion that a buyer should be protected where it has not obtained the goods for value.
40.41 Legal systems differ in their approaches to this issue. A clear-cut position is taken by common law jurisdictions. As discussed earlier, common law terminology already makes clear that the buyer can only be protected in the acquisition of title from a non-owner if it is a bona fide purchaser for value without notice.48 Consequently, wherever no price is paid for the goods, no protection is granted. The same approach is taken by Austria;49 the Netherlands;50 some Eastern European and Central Asian,51 Ibero-American,52 and Eastern-Asian systems;53 and also in Louisiana54 and Québec.55 These legal systems take a direct approach to the notion that a purchaser who has not obtained the goods for value should not be protected.
(p. 522) 40.42 Other systems take an indirect approach to that matter. As a general rule, these systems do not make the protection of the good-faith buyer dependent on whether it obtained the goods for value or not.56 Germany, in particular, bases this approach on the argument that such a distinction would contradict its general principle that the transfer of title and the underlying sales contract not only are two different transactions but that they are also entirely independent.57 However, these legal systems have developed other mechanisms to restrict the protection of good-faith purchasers to those who have obtained the goods for value.
(i) Original Owner’s Right to Buy Back v Bona Fide Recipient’s Claim for Reimbursement
40.43 Most legal systems recognize the right of the original owner to reclaim possession of stolen goods for a certain period of time. However, in some, that claim is only enforceable against reimbursement of the good-faith purchaser for the value it has given to obtain the goods.58 Thus, on the one hand, where the good-faith buyer has not given any value to obtain the goods, no reimbursement is due: the buyer is obliged to return the goods to the original owner without receiving anything in return. On the other hand, where the good-faith purchaser has given value equivalent to the goods, the original owner will effectively have to buy the goods at their value. Naturally, this alone may already destroy the owner’s interest in doing so.
(ii) Rules of Unjustified Enrichment
40.44 In other systems, particularly in Germany, the issue is solved by virtue of the rules on unjustified enrichment.59 Under the rules on unjustified enrichment, a claim for restitution is only successful if the other party is still enriched, either because it is still in possession of the goods or because it has received a surrogate from dealing with the goods. Otherwise, the goods cannot be recovered; in particular, there is generally no direct claim against the third party that has received the goods in good faith. This is different, however, where the third party received the goods gratuitously. In these situations a specific direct claim against the third party by the original owner for re-transfer of title is possible.60
(b) Definition of Value
40.45 If the protection of the good-faith purchaser depends on whether it has given value, this raises the question as to the definition of value. In typical sales scenarios, value naturally means payment of a sum of money as purchase price. However, as discussed earlier, the vast majority of legal systems equate barter transactions to sales contracts. This suggests that many legal systems would also be prepared to assume value to have been given where this did not consist of a sum of money but of goods.
II. Nemo Dat Rule
40.46 The traditional Roman law rule was that nemo plus iuris transferre potest quam ipse habet (no one can transfer more rights than he himself has). Today this rule is more commonly known as nemo dat quod non ipse habet 61 or even more briefly as the nemo dat rule. This rule clearly favours the rights of the original owner over those of the buyer. It sat comfortably within the Roman tradition as under Roman law there was no obligation to transfer title but rather the seller was liable for eviction. Furthermore, a buyer would become the true owner of the goods after a (p. 523) period of one year even if it had become aware that the seller had not been in a position to transfer title.62
40.47 From its Roman traditions, this rule found its way into various legal systems. Interestingly, the legal systems typically labelled as the ‘Romanistic systems’ are not the primary exponents of that rule. In particular, France has departed from Roman tradition,63 as have Italy and some of the Ibero-American legal systems64 as well as some of the Middle Eastern and Arab legal systems.65 However, Spain66 and Portugal67 have retained the Roman principle of nemo plus iuris transferre potest quam ipse habet.
40.48 The nemo dat rule is also employed by common law legal systems.68 Indeed, even Québec, a civil law state in a common law country, as recently as 1994 has adopted the nemo dat rule, having previously closely followed French tradition.69 In Austria the nemo dat rule appears to be the general principle as well.70 The Nordic systems used the Roman approach as a starting point, especially in the eighteenth century, but have increasingly departed from this rule.
40.49 The disadvantage of the nemo dat rule, namely the exposure of buyers, has been recognized in those legal systems operating with that rule. Consequently, a number of exceptions have been established, albeit to differing extents. Those jurisdictions following the English model have developed a number of very specific exceptions, while the USA have contented themselves with two exceptions which are, however, phrased rather broadly. These are addressed below in the context of mercantile agent and voidable title, and thus also encompass concepts of the seller and buyer in possession.
40.50 All the exceptions to the nemo dat rule require good faith on the part of the buyer claiming good title. The buyer can be acting in good faith even if it has acted negligently.71 The exceptions also require that the buyer is without knowledge of the defect in title. The question of whether actual or constructive knowledge is required is not entirely settled in the common law.72
40.51 A prominent example of an exception to the nemo dat rule concerns sales by mercantile agents. Buyers obtaining the goods from mercantile agents acquire good (p. 524) title in almost all cases, even if the mercantile agent was not the owner of the goods.73 Commercial necessity demands an exception of this kind, as without it mercantile agents would not be able to operate effectively. Mercantile agents are those who are in the business of selling or dealing with goods which are usually not owned by them. The possession by the mercantile agent of the goods creates an expectation on the side of the buyer that the agent has the authority to transfer title. This expectation is generally protected. However, the nemo dat rule is only restricted if an owner has consensually left the goods with the mercantile agent— even so, there is usually a rebuttable presumption that where the mercantile agent is in possession of the goods it is with the consent of the owner.74
40.52 While the scenario of the mercantile agent is explicitly dealt with in common law jurisdictions following the English model, a similar exception, though phrased more broadly, can be found in civil law jurisdictions following the nemo dat rule and the USA. In these systems the good-faith acquisition is possible where the goods are bought from a professional in its ordinary course of business.75
40.53 Another exception to the nemo dat rule applies to scenarios where the seller is no longer the owner of the goods but still in possession of them.76 For example, the seller has sold the goods to the first buyer and, as intended by the parties, property has passed to the buyer. However, the buyer asks the seller to store the goods for a certain period of time. During that period the seller is still able to pass title to a second buyer.
40.54 In practice this situation may occur under special financing agreements between the seller of the goods and an institution that financed the original acquisition of the goods to be sold to future customers of the seller.77 For example, where the seller has taken a bank loan to finance the acquisition of the goods and it was agreed that the loan will be paid back by parts of the purchase price the seller collects from its buyers, the bank may nevertheless insist on the seller transferring title in the goods to the bank for security purposes. In these instances the mercantile agent exception to the nemo dat rule does not apply. Nevertheless, from a commercial perspective it is necessary that the seller should be able to transfer title in the goods to the buyer. This is acknowledged in common law jurisdictions.
40.55 In the same way as the non-owning seller in possession of the goods is able to pass title to a buyer, so can a non-owning buyer in possession of the goods.78 The situation envisaged involves reselling buyers who have not yet acquired title but are in possession (p. 525) of the goods with the consent of their seller. These buyers are able to transfer title to their customers.
40.56 The borderlines of this exception are sometimes complicated. In an English case79 the reselling buyer had instructed the seller to deliver the goods directly to the buyer’s customer without ever taking physical possession of the goods. The court held that the exception to the nemo dat rule applied. It was held that by delivering the goods to the sub-buyer, the buyer had acquired constructive possession and that the seller was acting as agent for the buyer towards the sub-buyer.
40.57 It is important to note that this exception does not apply to hire purchase situations. Suppose that A and B conclude a hire purchase agreement for a car. Before payment of the last instalment of the purchase price B sells the car to C. In this scenario, B is not (yet) a ‘buyer’ in possession of the car. In common law jurisdictions special exceptions to the nemo dat rule often exist for these situations.80
40.58 The market overt is a controversial exception to the nemo dat rule. Pursuant to the market overt exception the good faith buyer at a market overt will obtain good title even if the goods were stolen. It is now a widely criticized exception that has been abolished in many common law jurisdictions, although in some cases only in relatively recent times. The rationale of the exception was based on the presumption that if goods were offered for sale in a public market, the true owner was in a position to know of the intention to sell and to reclaim possession.81
40.59 In those jurisdictions which retain the exception,82 markets overt are those which are ‘open, public and legally constituted’.83 Before the abolition of the exception in English law in 1994, all shops within the City of London were considered markets overt,84 as was any open, public, and legally constituted market or fair outside London.85 The reform of English law, in particular, had been prompted by the good-faith purchase of paintings at the Bermondsey Antiques Market.86 The paintings had been stolen a few years earlier from Lincoln’s Inn—one of the Inns of Court. The Bermondsey market was found to be a market overt and so the purchaser’s claim to ownership prevailed over the previous owner’s claims.
40.60 Closely related to issues of acquiring title from a non-owner are situations where the seller at the time of transfer of title is the owner of the goods but where the previous seller is able to rescind the contract. In many legal systems the usual rules on the transfer of title apply as long as the previous owner has not rescinded the contract as in these instances at the time of transfer the seller is the owner.87
40.61 In those legal systems where the acquisition of title from a non-owner is not generally accepted, instances where the rescission of the contract between the original owner and the seller causes title to fall back on the original owner present problems as to the position of the recipient of the goods. This particularly pertains to common law jurisdictions. These have developed specific (p. 526) rules as to situations involving voidable title. The common ground is that where the title is voidable at the time of ‘sale’88 but has not yet been annulled, the good-faith recipient acquires good title.89
40.62 However, the exact implementation of this basic rule is different in common law jurisdictions. In jurisdictions following the English model the voidable title rule necessitates inquiring as to the exact reason why the contract between the original owner and the seller has failed.90 The reason is that the situation of the recipient is entirely different in case of void title—that is, where the seller never even had voidable title. In these instances the buyer does not acquire title unless an exception to the general nemo dat rule applies.91 The protection of the third party thus depends on the reason why the contract between the first two parties has failed.92 For example, where the seller has committed fraud towards the original owner the buyer is better protected as the title is only voidable than in cases of mistake where the title is void from the beginning.93
40.63 In the USA the general distinction of cases involving title and void title is also maintained in principle. However, § 2-403(1) UCC employs a rather broad definition of the situations in which the voidable title rule applies. This eliminates a fair deal of the distinctions that create problems under the English model.94
40.64 In all common law jursidictions—except the USA—statutory statements of the nemo dat rule specifically exclude its operation where ‘the owner of the goods is by [its] conduct precluded from denying the seller’s authority to sell’.95 Although essentially the same, the scope of this statutory exception may vary slightly between common law jurisdictions. The natural consequence of a plain reading of the section may lead to assumption that it refers to situations involving agents and their authority. However, commentary suggests that in those jurisdictions where the legislation also specifically saves the common law rules on agency,96 the provision is therefore intended to only cover those circumstances where the owner is estopped from denying the apparent ownership of the seller.97
40.65 There are two scenarios in which an estoppel may operate as an exception to the nemo dat rule. The first is where the owner’s own voluntary representation, either by way of words or actions, (p. 527) gives rise to the belief that the seller is the owner of the goods.98 The second is where the owner by its own negligence has allowed the seller to create the impression that it, the seller, is the true owner.99
40.66 In cases of estoppel by representation the owner must have, by a clear and unequivocal representation, caused the buyer to rely on the belief that the seller was in fact the owner of the goods.100 The representation could be by words or actions. Merely leaving the goods or documents of title with the seller is not a representation which would give rise to an estoppel.101 The buyer must be able to demonstrate its reliance on the representation and must therefore prove that it, in fact, knew of the representation.102 The failure of an owner, who knows the buyer mistakenly believes the seller to own the goods, to disabuse the buyer of that mistake may give rise to an estoppel.103 This inaction is closely associated with estoppel by negligence.
40.67 It is generally accepted that cases of estoppel by negligence by the owner arise in limited circumstances because the law will not usually impose an obligation on an owner to ensure that its goods are not lost or stolen.104 The buyer seeking to rely on the owner’s negligence will not be able to do so unless it can prove that the owner has a duty of care to the buyer, and the owner negligently breached that duty. The negligence needs to be the proximate or real cause of the buyer entering into the sales transaction.105 The plain language of the statutes, however, does not typically refer to a duty of care, and this has led a small minority to the view that a duty of care is not required.106 In the common law the owner of goods does not have a duty to look after those goods, and thus carelessness on its own would not give rise to the estoppel exception. The lack of such a duty also means that merely leaving the goods in the custody of another is neither a representation of authority to sell107 nor negligence.108 It has been widely accepted in a variety of common law jurisdictions that the statement ‘[w]herever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it’109 is too broad110 and therefore does not reflect the intention of the exception.
(p. 528) III. Protection of Bona Fide Recipient
40.68 At the beginning of this chapter the basic conflict of the interests of the owner and the buyer of goods not belonging to the seller was outlined. The first solution presented—the nemo dat rule—as a starting point places primary importance on the interests of the original owner and thus attributes more weight to the protection of the rights of the original owner in the goods and awards less protection to the expectations of commerce.
40.69 The other approach to be found amongst legal systems takes the opposite starting point by giving primary regard to the protection of the bona fide recipient of the goods. In other words, legal systems following this approach protect the reliance of commerce in the flawless execution of contracts over the ownership of the original owner.
40.70 As discussed earlier, the nemo dat rule finds its basis in Roman law. The concept of protecting the bona fide purchaser is of Germanic origin.111 However, the notion that the recipient be in good faith when obtaining the goods is not an original feature of the Germanic approach but was only later derived from Roman law.112 The original Germanic approach was that where the original owner had entrusted a person with the goods, that person was able to transfer title to a third party independent of whether that party was in good faith or not.113
40.71 Today the arguments made in different legal systems to justify the protection of the good-faith recipient vary. One doctrinal explanation places particular emphasis on the possession of the seller. It is argued that the possession of the goods by the seller indicates its ownership or at least its authority to transfer title in the goods to the buyer so strongly that it is a legitimate expectation to acquire title in these scenarios. A clear legal basis for this approach can be derived from Article 2276(1) French CC114 where it is stated that possession equals title. In other systems possession of the goods establishes a presumption for the possessor being the owner.115
40.72 On a more general note it is often pointed out that where the original owner has entrusted a person with the goods, it should also be the owner who bears the risk that it will lose title. This reflects the traditional proverbial Germanic approach of ‘[w]o du deinen Glauben gelassen hast, dort sollst du ihn suchen’.116 In other words, the original owner should not turn on the third party, the recipient, but on the party in which it had enough faith to entrust it with the goods.
40.73 Another general justification for the protection of the good-faith recipient of the goods is derived from an economic perspective. As pointed out earlier, for a market to function its actors need to be able to rely on the successful completion of their transactions. Allowing good-faith acquisition of title from a non-owner and non-authorized seller provides legal certainty for buyers in that they can rely on their ability to pass on title when reselling the goods to their customers. In particular, they do not have to fear the often complicated and costly unwinding of contracts combined with the exposure to claims for damages by their customers. In this sense, the approach of protecting the good-faith recipient also dispenses with the necessity to inquire as to the origin of the goods and possibly any previous transfers. It also dispenses with (p. 529) the necessity to include claims by the original owner in the internal risk calculation and makes it unnecessary to acquire insurance against such claims or its consequences which lowers transaction costs.
40.74 Among the Germanic legal family in the narrow sense, the Germanic approach has been adopted in Germany and Switzerland. Austria appears to have chosen a different starting point.117 Notably, those legal systems in Europe and Asia118 that traditionally follow the model of the German Civil Code have also adopted the general approach of protecting the good-faith recipient of the goods. This first of all pertains to Greece and Japan.119 However, as briefly mentioned earlier,120 the Germanic approach has also become popular with legal systems belonging to the Romanistic legal family.121 The starting point in those systems was the French Civil Code, which in its Article 2276(1)122 equates possession to title. In addition to Belgium and Luxembourg, in Italy both the Civil Code of 1865 as well as its successor, the Civil Code of 1942, follow French law. The approach of protecting the bona fide purchaser has also been adopted in the DCFR.123
40.75 The general rule that the bona fide recipient is protected also applies in cases where the contract between the original owner and the seller is rescinded and although rescission may work retroactively. In such instances title would have fallen back from the seller to the original owner, save for the few legal systems that take an abstract approach to the transfer of title and the underlying sales contract. However, in these instances the original owner will have to be regarded as having entrusted the seller with the goods who then as a non-owner transferred title to the bona fide recipient.124
40.76 In the same way as legal systems starting out on the premise of the nemo dat rule have developed exceptions to the general rule, so have the legal systems starting out on the premise of the protection of the bona fide recipient.
40.77 The previous remarks on the development of the approach that protects the bona fide recipient of goods in its expectation that it has become the owner of the goods have revealed that the original owner is expected to turn to the person that transferred the goods to the recipient. In essence, this policy is based on the notion that the owner should bear the risk of having chosen an unreliable party and not the recipient of the goods. This allocation of risk is tailored to scenarios where the owner voluntarily transferred possession to the seller and where it is thus justified to have the owner bear the consequences of its decision.
40.78 This justification of the protection of the bona fide recipient is, however, hardly defensible, where the transfer of possession from the owner to the seller was not voluntary and thus not made by choice and decision of the owner. This concerns stolen and lost goods. All legal systems (p. 530) generally protecting the bona fide recipient have dealt with the question whether such protection is to be upheld where the goods have been stolen from the owner.
40.79 In principle, there is broad consensus that in case of stolen goods the interests of the original owner deserve more protection than the interests of the bona fide recipient and commerce. This means that typically the recipient of the goods does not acquire title.125 Other legal systems do not per se exclude the acquisition of title to stolen goods. However, the original owner is required to reclaim the goods within a certain period of time that usually spans three to five years.126 In case of cultural goods that period may be significantly longer.127
40.80 Denying protection to good-faith purchasers of stolen goods is an exception to the general rule that bona fide purchasers are protected. This exception has counter-exceptions.
40.81 A far reaching—but isolated—position is taken by Italian law, where the good-faith acquisition of stolen goods is generally possible, as the relevant provision on the acquisition of titles from a non-owner solely requires that the transferee be in good faith.128 A certain exception is made also by the Netherlands. Under Article 3.86(3) CC, good-faith acquisition is possible where the movable good is acquired by a natural person, the acquirer was not acting in the exercise of a profession or business, the acquirer has acquired the movable from a professional in the course of the latter’s ordinary business activity, and the acquisition has taken place on business premises.
40.82 Closely related are the exceptions found in some systems where the original owner cannot reclaim stolen goods where the good-faith buyer has obtained them in a public market, a public auction,129 or from a professional dealing with goods of that kind. In these situations the original owner may only reclaim the goods in return for reimbursement of the buyer for the price paid.130
40.83 Legal systems disagree as to the treatment of stolen money. However, the dividing line does not necessarily run between traditional legal families. In one group of legal systems a good-faith acquisition of stolen money is possible.131 Specific considerations are then made in relation to the treatment of special coins which are of value primarily to collectors rather than being used as legal tender. In these instances good-faith acquisition of title is excluded insofar as these coins are not treated as ‘money’.132 Typically the same approach is taken to the good-faith acquisition of bearer bonds.133 In common law jurisdictions these basic positions are shared as regards money and negotiable instruments.
(p. 531) 1 Thorn, pp 31, 32.
2 See eg Deu Art 14 Basic Law (Grundgesetz); see also Art 17 United Nations Universal Declaration of Human Rights 1948.
3 See Chs 32 and 33.
4 See eg the Council Regulation (EC) no 116/2009 of 18 December 2008 on the export of cultural goods; Council Regulaton (EC) no 1210/2003 of 7 July 2005 concerning certain specific restrictions on economic and financial relations with Iraq and repealing Regulation (EC) no 2465/96; 2001 UNESCO Convention on the Protection of the Underwater Cultural Heritage; 1995 UNIDROIT Convention on Stolen or Illegally Exported Cultural Objects. See also the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property.
5 See Art 6 of that Convention.
6 See eg Che Art 934(1bis) CC.
7 See paras 40.46 et seq, 40.68 et seq.
8 See eg Bishopsgate Motor Finance Corp Ltd v Transport Brakes Ltd [1949] 1 KB 332 (HL). See also Bridge, Sale of Goods, para 5.44.
9 See Ch 13.
10 Aut Koziol et al/Eccher, § 367, para 3; Che BaslerKommZGB/Stark/Ernst, Art 933, para 42, Thorn, p 148.
11 Deu § 166(2) CC; Fra Thorn, p 148.
12 Che BGer, 22 May 1930, BGE 56 II 183, 188, BaslerKommZGB/Stark/Ernst, Art 933, para 42; ZürcherKommZGB/Baumann, Art 3, paras 39 et seq; Deu BGH, 12 November 1998, NJW (1999), 284, 286, MünchKommBGB/Schramm, § 166, paras 20, 21 for information that is usually documented in writing; Tur Kocayusufpaşaoğlu et al, vol I, § 45.8, Oğuzman/Öz, p 188, İnceoğlu, p 19.
13 Comparative Thorn, p 149.
14 See eg Aus (NSW) s 5(1) Factors (Mercantile Agents) Act (1923); Can (Ont) s 2(1) Factors Act (1990); Eng s 2 Factors Act (1889); Hkg s 3(1) Factors Ordinance (1997); Ind Mulla, Sales, pp 258–9; Sgp s 2(1) Factors Act (1993); Nzl s 3(1) Mercantile Law Act (1908); USA § 2-403 UCC; Wal s 2 Factors Act (1889).
15 Deu BGH, 5 May 1971, NJW (1971), 1453, 1454; Staudinger/Wiegand, § 932, para 31.
16 Although in Aut the parallel provision of § 366 UGB was repealed recently, the new version of § 368 CC virtually reaches the same results: in case of an entrepreneur seller it suffices that the buyer believes that the seller is authorized to transfer title, see Koziol et al/Eccher, § 367, para 3.
17 See para 40.27. The following jurisdictions have implemented this approach: Ben, Art 2279(1) CC; Bfa Art 2279(1) CC; Caf Art 2279(1) CC; Civ 2279(1) CC; Cmr Art 2279(1) CC; Cog Art 2279(1) CC; Esp Thorn, p 130; Gab Art 2279 (1) CC; Gin Art 2279(1) CC; Grc Art 1037 CC; Jpn Art 192 CC; Khm Art 193 CC; Kor Art 249 CC; Mdg Art 2279(1) CC; Mli Art 2279(1) CC; Mng Art 114(1) CC; Ner Art 2279(1) CC; Tcd Art 2279(1) CC; Tgo Art 2279(1) CC.
18 Arg Art 453 Com C; Cri Art 440 Com C.
19 Afg Art 1154 CC; Dza Art 399 CC; Egy Art 468 CC; Lbn Art 385 CO; Lby Art 457 CC; Qat Art 476(3) CC; Syr Art 436 CC.
20 USA (La) Art 523 CC.
21 See Thorn, p 130.
22 See ibid, p 128.
23 See ibid.
24 See ibid, p 129.
25 See for Che BGer, 19 June 1912, BGE 38 II 187, 190; BGer 24 March 1939, BGE 65 II 62, 64; cf Thorn, p 126 with further references; Arm Art 275 CC; Aut Thorn, p 127; Aze Art 157 CC; Blr Art 283 CC; Kaz Art 261 CC; Kgz Art 291 CC; Prt Art 1260(1) CC; Rus Art 302 CC; Tjk Art 323 CC; Tur Oğuzman et al, pp 101ff, Serozan, Eşya, p 150; Ukr Art 388 CC; Uzb Art 229 CC; Vnm Art 257 CC.
26 See Art VIII.-3:101, Comment C(c) DCFR.
27 Thorn, p 131; with regard to the objective approach see further Chn Wang Liming, 4 China Leg Sci (2006), 83.
28 Comparative overview by Thorn, pp 131–40.
29 Aut Koziol et al/Eccher, § 367, para 3 (disputed); Chn Wang Liming, 4 China Leg Sci (2006), 84; Jpn Art 192 CC; Khm Art 193 CC; Kor Art 249 CC; Mng Art 114(1) CC; Twn Zejian, Property Right Law, p 229.
30 Deu § 932(2) CC.
31 Aus (Vic) s 3(2) SGA; Can (BC) s 2 SGA; Eng s 61(3) SGA; Hkg s 2(2) SGO; Irl s 62(2) SGA; Nzl s 2(2) SGA; Sco s 61(3) SGA; Sgp s 61(2) SGA; Wal s 61(3) SGA.
32 USA Landshire Food Service, Inc v Coghill 709 SW 2d 509, 513 (Mo App ED 1986). Although negligence of itself may not suffice see Aus (Vic) s 3(2) SGA; Can (BC) s 2 SGA; Eng s 61(3) SGA; Hkg s 2(2) SGO; Irl s 62(2) SGA; Nzl s 2(2) SGA; Sco s 61(3) SGA; Sgp s 61(2) SGA; Wal s 61(3) SGA.
33 Aus (Vic) ss 3, 30, 31 SGA, (NSW) s 5(1) Factors (Mercantile Agents) Act (1923); Aut § 367 CC; Deu BGH, 9 November 1998, NJW (1999), 425, 426, MünchKommBGB/Oechsler, § 932, para 49; Can (BC) ss 1, 30 SGA, (Ont) s 2(1) Factors Act (1990); Eng ss 24, 25, 26 SGA, s 2 Factors Act (1889); Hkg s 27 SGO, s 3(1) Factors Ordinance (1997); Irl s 25 SGA; Ind ss 2, 27, 30 SGA, Mulla, Sales, pp 258–9; Sco ss 24, 25, 26 SGA, Factors Act (1889), Factors (Scotland) Act (1890); Sgp ss 24, 25, 26 SGA, s 2(1) Factors Act (1993); Mys ss 2, 27, 30 SGA; Nzl ss 23, 27 SGA, s 3(1) Mercantile Law Act (1908); USA § 2-403 UCC; Wal ss 24, 25, 26 SGA, s 2 Factors Act (1889).
34 For the relevant reference point for good faith see paras 40.24 et seq. Aut § 368(2) CC; Deu MünchKommBGB/Oechsler, § 932, para 43.
35 Eastern Asia SJ Yang, p 288; Aut, § 368 CC; Deu OLG München, 12 December 2002, NJW (2003), 673, 673 (purchase of a 1781 Gragnani violin worth approx €100,000 for approx €70,000 cash at the main station), MünchKommBGB/Oechsler, § 932, para 48; Geo Georgian Supreme Court, 11 January 2010, no AS- 037-1306-09.
36 Aut Koziol et al/Eccher, § 368, para 2; Deu OLG München, 12 December 2002, NJW (2003), 673, MünchKommBGB/Oechsler, § 932, para 49: perceivable financial difficulties or unexplainable hastiness on the part of the seller.
37 Aut § 431 CC; Che Art 942(1) CC; Deu § 873 CC; Tur Art 997(1) CC.
38 See for Ita Art 1156 CC; also Arg, Prt, USA (La).
39 See Thorn, p 95.
40 The same is true in Che, see Schmid/Hürlimann-Kaup, paras 1081 et seq, and Tur Oğuman/Öz p 49 fn 2, Serozan, Eşya, p 151, Çağa/Kender, p 71 (for ships Art 954 Com C, for aircraft Art 66 Turkish Aviation Act).
41 BGer, 7 December 1916, BGE 42 II 578, 582, BGer, 22 May 1930, BGE 56 II 183, 186; BaslerKommZGB/Schwander, Art 715, para 6; see also Aut OGH, 28 January 1987, JBI 110 (1988), 311, Thorn, p 144 with further references.
42 See BGer, 28 January 1981, BGE 107 II 41, 43, BGer, 24 September 1987, BGE 113 II 397, 400; BGer, 5 March 1996, BGE 122 III 1, 3; BaslerKommZGB/Stark/Ernst, Art 933, paras 36 et seq; Tur 764(1) CC, Thorn, p 144 with further references.
43 Eastern Asia SJ Yang, p 288; Aut Koziol et al/Eccher, § 367, para 3; Arg Thorn, p 145; Che BaslerKommZGB/Stark/Erni, Art 933, para 40; Deu Staudinger/Wiegand, § 932, para 92; Tur Serozan, Eşya, p 149.
44 Thorn, p 147.
45 Arg 2362 CC; Aut § 328 sentence 2 CC; Che Art 3(1) CC; Chn Wang Liming, 4 China Leg Sci (2006), 84ff; Deu § 932(2) CC; Fra Art 2268 CC; Grc Art 1036(1) CC; Ita Art 1147(3) CC; Pol Art 169(1) CC; Prt Art 1260(2) CC; Tur Art 3(1) CC; Oğuzman et al, p 101; Serozan, Eşya, p 149.
46 Common Law Whitehorn Brothers v Davison [1911] 1 KB 463; USA Landrum v Armbruster, NC App Ct, 220 SE 2d 842, 844 7 January 1976.
47 See Art IIX.-3:101, Comment C(c) DCFR.
48 See eg (all using the expression ‘buys [goods] in good faith’) Aus (Vic) s 29 SGA; Can (BC) s 28 SGA; Eng s 23 SGA; Hkg s 25 SGO; Ind s 29 SGA (has obtained possession under a contract voidable under ss 19 or 19A of the Indian Contract Act); Irl s 23 SGA; Mys s 29 SGA (has obtained possession under a contract voidable under ss 19 or 20 of the Contracts Act); Nzl s 25 SGA; Sco s 23 SGA; Sgp s 23 SGA; Wal s 23 SGA.
49 Aut § 367, sentence 1 CC.
50 Nld 3.86 CC.
51 Arm Art 275 CC; Aze Art 157 CC; Bgr Thorn, p 121 citing references; Blr Art 283 CC; Kaz Art 261 CC; Kgz Art 291 CC; Rus Art 302 CC; tjk Art 323; Ukr Art 388 CC; Uzb Art 229 CC.
52 Arg Art 2778 CC.
53 SJ Yang, p 289.
54 USA (La) Art 522 CC.
55 Can (Qué) Art 1707(1) sentence 2 CC.
56 Che disputed but prevailing view, see BaslerKommZGB/Stark/Ernst, Art 933, 23; Deu MünchKommBGB/Oechsler, § 932, para 33; Fra, Ita, Prt; Tur, for opposing view see Serozan, Eşya, p 151; Twn Zheng/Chen, p 115.
57 Deu MünchKommBGB/Oechsler, § 932, para 33. This abstract approach to the transfer of title is called ‘Abstraktionsprinzip’, see paras 39.15 et seq.
58 Che Art 934(2) CC; Tur Art 989(2) CC.
59 See for Deu § 816(1) sentence 2 CC; for Twn see Wang Liming 4 (2006), China Leg Sci 79 at 86.
60 See Deu § 822 CC.
61 ‘No one can give what he himself does not have.’
62 Zimmermann, pp 279, 280.
63 See Thorn, pp 42ff, pointing out that in the drafting process of the French Code Civil the opinions had changed repeatedly and that a final decision on the approach to be taken could only be found at a relatively late stage.
64 Gtm Art 1794 CC; Mex Arts 2269, 2270, 2271 CC, León Tovar, pp 162–3; Ven Art 1483 CC.
65 Are Art 68 CC.
66 Thorn, p 49.
67 Prt Arts 893, 894 CC.
68 Aus (Vic) s 27 SGA; Can (BC) s 26(1) SGA; Eng s 21(1) SGA; Gha s 28(1) SGA; Hkg s 23(1) SGO; Ind s 27 SGA; Irl s 21(1) SGA; Ken s 23(1) SGA; Mwi s 21(1) SGA; Mys s 27(1) SGA; Nga s 21(1) SGA; Nzl s 23(1) SGA; Sco s 21(1) SGA; Sgp s 21(1) SGA; Tza s 21(1) SGA; Uga s 22(1) SGA; Wal s 21(1) SGA; Zmb s 21(1) SGA; Zwe s 21(1) SGA.
69 See Thorn, p 35. See also USA (La), which similarly contains a nemo dat rule, Art 2452 CC. For discussion of the controversy concerning revision to the Louisiana laws regarding the transfer of ownership of movables see TA Ibieta, ‘Comment: The transfer of ownership of movables’, 47 Louisiana Law Review (March 1987), 841, 848ff.
70 Aut § 380 CC: ‘Ohne Titel und ohne rechtliche Erwerbungsart kann kein Eigentum erlangt werden’ (Without title and without legal acquisition, title may not be acquired).
71 Aus (Vic) s 3(2) SGA; Can (BC) s 2 SGA; Eng s 61(3) SGA; Hkg s 2(2) SGO; Irl s 62(2) SGA; Nzl s 2(2) SGA; Sco s 61(3) SGA; Sgp s 61(2) SGA; Wal s 61(3) SGA.
72 Common Law (UK) Benjamin’s Sale of Goods, para 7-047. See also General Motors Acceptance Co v Mahfouz [1984] AJ no 1009, 14 DKR (4th) 437 (AB CA) as cited in Can McGuiness, para 6.98 discussing the difference between willful blindness where knowledge would be imputed and constructive notice.
73 See for Aus (NSW) s 5(1) Factors (Mercantile Agents) Act (1923); Can (Ont) s 2(1) Factors Act (1990); Eng s 2 Factors Act; Hkg s 3(1) Factors Ordinance (1997); Nzl s 3(1) Mercantile Law Act (1908); Sco s 2 Factors Act (1889, Factors (Scotland) Act 1890; Sgp s 2(1) Factors Act (1993); USA § 2-403 UCC; Wal s 2 Factors Act (1889).
74 See eg Aus (NSW) s 6(1) Factors (Mercantile Agents) Act (1923); Can (Ont) s 2(4) Factors Act (1990); Eng s 2(4) Factors Act; Hkg s 3(4) Factors Ordinance (1997); Sco s 2(4) Factors Act (1889), Factors (Scotland) Act 1890; Sgp s 2(1) Factors Act (1993); Nzl s 3(4) Mercantile Law Act (1908); Wal s 2(4) Factors Act (1889).
75 See for Aut § 367 CC.
76 Aus (Vic) s 30 SGA (includes transfer of a document of title to goods); Can (BC) s 30(1) SGA (or under any agreement for the sale, pledge, or other disposition of them); Eng s 24 SGA; Hkg s 27(1) SGO; Ind s 30(1) SGA; Irl s 25(1) SGA; Mys s 30(1) SGA; Nzl s 27(1) SGA (or under any agreement for the sale, pledge, or other disposition of them); Sco s 24 SGA; Sgp s 24 SGA; Wal s 24 SGA.
77 See eg Pacific Motor Auctions Ltd v Motor Credits Ltd [1965] AC 867 (PC).
78 Aus (Vic) s 31 SGA; Can (BC) s 30(3) SGA; Eng s 25(1) SGA; Hkg s 27(2) SGO; Ind s 30(2) SGA (as if such lien or right did not exist); Irl s 25(2) SGA; Ken s 26 SGA; Mwi s 25 SGA; Mys s 30 SGA (as if such lien or right did not exist); Nga s 25 SGA; Nzl s 27(2) SGA (or under any agreement for the sale, pledge or other disposition of them); Sco s 25(1) SGA; Sgp s 25 SGA; Tza s 25 SGA; Uga s 25 SGA; Wal s 25(1) SGA; Zmb s 25 SGA; Zwe s 25 SGA.
79 Four Point Garage Ltd v Carter [1985] 3 All ER 12 (QB).
80 See eg Eng s 27 Hire Purchase Act (1964); Sco s 27 Hire Purchase Act (1964); Wal s 27 Hire Purchase Act (1964).
81 Davenport/Ross, 2 International Journal of Cultural Property (1993) 29. It must be remembered that at the time of the creation of the exception there were a limited number of markets which, while occurring regularly, were not so frequent as to render the purpose of the exception impossible.
82 Can (BC) s 27 SGA (the only Canadian state to have ever imported the rule); Hkg s 24 SGO; Irl s 22 SGA.
83 Common Law Lee v Baynes (1856) 18 CB 599.
84 Common Law (UK) Benjamin’s Sale of Goods, para 7-020.
85 Common Law Lee v Baynes (1856) 18 CB 599; see also Benjamin’s Sale of Goods, para 7-020.
86 Schroeder, Colum Bus L Rev (1994), fn 459.
87 See Thorn, p 207.
88 Note that the term ‘sale’ in these jurisdictions must be distinguished from the term ‘contract for sale’. The former does not relate to the formation of the sales contract but to the time when the goods are handed over. In the present context the relevant point in time is best understood as the time at which the parties intended property to pass. See on this issue Ch 39.
89 Aus (Vic) s 29 SGA; Can (BC) s 28 SGA; Eng s 23 SGA; Gha s 29 SGA; Hkg s 25 SGO; Ind s 29 SGA (has obtained possession under a contract voidable under ss 19 or 19A of the Indian Contract Act); Irl s 23 SGA; Ken s 24 SGA; Mys s 29 SGA (has obtained possession under a contract voidable under ss 19 or 20 of the Contracts Act); Mwi s 23 SGA; Nga s 23 SGA; Nzl s 25 SGA; Sco s 23 SGA; Sgp s 23 SGA; Tza s 23 SGA; Uga s 23 SGA; Wal s 23 SGA; Zmb s 23 SGA; Zwe s 23 SGA.
90 See Thorn, p 208.
91 See ibid.
92 See ibid, p 209.
94 See ibid.
95 Aus (Vic) s 27 SGA; Eng, s 21(1) SGA; Gha s 28 SGA; Hkg s 23 (1) SGO; Ind s 27 (1) SGA; Ken s 23 SGA; Mwi s 21 SGA; Mys s 27 (1) SGA; Nga s 21 SGA; Sgp s 21(1) SGA; Tza s 21 SGA; Uga s 22 SGA; Zmb s 21 SGA; Zwe s 21 SGA. See generally on ambit of estoppel in SGAs Common Law Benjamin’s Sale of Goods, paras 7-008 et seq; Aus Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd and ors, 2003 VSC 291. For Asia (Common Law) see SJ Yang, p 284.
96 Most Common Law SGAs contain such a provision, however as possible exceptions see Ind and Mys SJ Yang, pp 283ff.
97 Common Law (UK) Benjamin’s Sale of Goods, para 7-008 (discussing Eng, Sco, and Wal but applicable more broadly).
98 Common Law (UK) Benjamin’s Sale of Goods, para 7-009; Eastern Distributors Ltd v Goldring [1957] 2 QB 600; Aus The Laws of Australia/Sutton para 8.4.107; Nzl Hawes, para 12.2.1.
99 Common Law (UK) Benjamin’s Sale of Goods, para 7-015; Aus The Laws of Australia/Sutton para 8.4.107; Nzl Hawes, para 12.2.2.
100 Common Law (UK) Benjamin’s Sale of Goods, para 7-009; Aus The Laws of Australia/Sutton para 8.4.107; Nzl Hawes, para 12.2.1.
101 Common Law (UK) Benjamin’s Sale of Goods, para 7-009; Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371; Aus Leonard v Ielasi (1987) 46 SASR 495 (SASC).
102 Common Law (UK) Benjamin’s Sale of Goods, para 7-010.
103 Common Law (UK) ibid, para 7-012.
104 Common Law (Nzl) Hawes, para 12.2.2.
105 Common Law Mercantile Credit Co Ltd v Hamblin [1965] 2 QB 242; Benjamin’s Sale of Goods, para 7-015; Aus Johnson Matthey (Aust) Ltd v Dascorp Pty Ltd and ors, [2003] VSC 291.
106 Common Law see dissent of Denning LJ in Central Newbury Car Auctions v Unity Finance Ltd [1957] 1 QB 371.
107 See para 40.66.
108 Common Law Moorgate Mercantile Co v Twitchings [1977] AC 890; Aus Thomas Australia Wholesale Vehicle Trading v Marac Finance Australia (1985) 3 NSWLR 452.
109 Eng Lickbarrow v Mason (1787) 2 Term Rep 63 per Ashurst J.
110 See for rejection of that proposition as too broad: Common Law Benjamin’s Sale of Goods, para 7-008 citing references; UK Armagas Ltd v Mundogas SA [1986] AC 717 (HL); Farquharson Brothers & Co v C King & Co [1902] AC 325 (HL); Aus Heid v Reliance Finance Corporation Pty Ltd 49 ALR 229 (HC); Can PAB v Children’s Foundation and ors, 1997 BCAC LEXIS 1530 (BC-CA); Nzl Stenning v Radio and Domestic Finance Limited, 1961 NZLR 7 (SC).
111 See the overview of the historical development provided by Thorn, pp 39ff.
112 See ibid, p 40.
113 See ibid.
114 That provision was formerly established in Art 2279(1) CC but renumbered in 2008. In Bel, Ben, Bfa, Caf, Civ, Cmr, Cog, Gab, Gin, Lux, Mdg, Mli, Ner, Tcd, and Tgo it is still Art 2279(1) CC.
115 See for Are Art 1325 CC; FHC, challenge no 19, session dated 24 October 1989, JY 11, UAEUP, MJ, second ed, year 10, 1989, p 536; Al Shamsy, p 284; Che Art 930(1) CC; Deu § 1006 CC; Dza Art 835(3) CC; Egy Art 976(3) CC; Irq Art 1163 CC; Kwt Art 938 CC; Lby Art 980(3) CC; Sau Ashoush, pp 153ff; Syr Art 927(3) CC; Tur Art 985(1) CC, Serozan, Eşya, p 144.
116 Literally translated: ‘It is where you have left your faith that you shall look for it.’
117 See para 40.41.