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Case:
RGZ 130, 119
II. Civil Senate
Date:
24 October 1930
Note:
Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz
Translated by:
Mrs Irene Snook
Copyright:
Professor B.S. Markesinis

By contract of 2 September 1919, the shipyard company Sch. in E., solely owned by the first and second defendant, agreed to build for the claimant a new freight steamer at a price of RM8.5 million, to be delivered by 31 December 1920. Out of the total price, to be paid in five equal instalments, the claimant had paid the first RM 1.7 million on 29 September 1919. Delivery did not take place, but the company Sch., as a result of the devaluation of currency during 1920, by letter of 6 April demanded for the first time a higher purchase price, which, after lengthy discussions, was refused by the claimant. The shipbuilding company then rescinded the contract by letter of 12 January 1921. On 23 May 1923 the claimant brought an action for delivery of the steamer, which the Landgericht rejected in its decision of 26 February 1923. The claimant's further appeal was rejected by the default judgment of the Oberlandesgericht, which has in the meantime become binding.

By this action the claimant demands from the first and second defendant repayment of the gold value of the RM 1.7 million paid as purchase price, estimated at RM 298, 245.50 plus compensation for the devaluation of further sums of money totalling RM 4.8 million, which the claimant gradually and before 3 March 1920 managed to obtain these sums intended as instalments for the purchase price payable to the Sch. company and which had been paid into the Dresdner Bank in Berlin. The amount of compensation due was claimed to be a sum of RM 400,000. The claimant holds the first and second defendant liable as joint and several debtors for its claim based on default and on para. 346 BGB; furthermore, it demands that the third defendant tolerates execution and enforcement of the judgment in respect of the inheritance of the deceased Mrs. C., a former co-owner of the Sch. company. The defendants raised the defence of laches and limitation of action in respect of the claim and denied having been in default, and thus the existence of a claim for damages. They claim themselves that the claim for unjust enrichment could only have existed, if at all, in respect of the RM 1.7 million already paid but that it had, however, lapsed in the meantime since the money had become worthless, without having been used by company Sch. Moreover, the defendants set off several counter-claims totalling RM 172,732.07.

The Landgericht rejected the claimant's demand for damages insofar as it was based on the devaluation of the sums of RM 4.8 million allegedly held ready for payment of the purchase price; but in respect of the RM 1.7 million already paid by the claimant it acknowledged the claim for full compensation of the value, amounting to RM 298,245.50 and, after deduction of undisputed counter-claims amounting to RM 114, 204. 15, it ordered the first and second defendant as joint and several debtors to pay RM 184, 041. 35 plus interest and ordered the third defendant to tolerate execution of this judgment. On appeal by the defendants, the appeal court, by part-judgment, rejected the claim in respect of a further RM 10,000. The claimant's demand for a further RM 20,000, raised in a counter-appeal, was unsuccessful and so was its further appeal.

Reasons

...

The decision appealed against correctly refutes the application of the principles governing the rescission of a contract for the first and second defendant's liability in respect of the RM 1.7 million already paid and restricts their liability to unjust enrichment. The appeal court's findings that there is no basis in law for applying paras 346 et seq. BGB to the right of rescission as provided by law, and moreover that those specific cases for which these provisions, by their express wording, in fact apply are marked by the existence of a culpable or at least illegal breach of contract, correspond to the legal concepts as expressed in the decisions of this Senate in JW [1928], p. 57, No.8 and RGZ 116, 377. It cannot be admitted that in the current case company Sch.'s rescission of the contract , based on the principle of rebus sic stantibus, is a contractually based rescission.

In this context, the legal construction of the so-called clausula is irrelevant. According to the case law which had already been established when the case was first brought to court and according to the court of appeal's correct assumption, in such cases the basis for the rescission lies on the one hand in the fundamental change in the economic conditions on which the parties had based their contract, and on the other hand in the negative behaviour of the other contractual party refusing to make allowance for these changes and to renegotiate the contract; this means that the reasons for the rescission are circumstances which were not tacitly implied in the original contract, which later case law crystallised as the requirement for the legal maxim of a 'positive breach of contract' (positive Vertragsverletzung) (RGZ 103, 332; JW [1926], 157, No.9). The argumentation submitted by the further appeal cannot be followed where it assumes that, in cases of a right of rescission provided by law, the principles contained in paras 346 et seq apply at least through the then applicable provisions of para. 327, first sentence. Following the case law of the Reichsgericht ( RGZ 116, 379), the appeal court correctly points out that the basic principle expressed in the second sentence of para. 327 precludes the application of paras 346 et seq. The legal genesis of para. 327 (Protokolle zum Entwurf, vol. 1, p. 652, 653) make it clear that the provisions of para. 327, sentence 2 are a direct result of the aim to avoid the unjust hardship which the debtor incurs from paras 346 et seq. in cases where rescission takes place without any fault on his behalf. In such cases the legislator wanted to restrict the debtor's liability. The legal wording only partially reflects this fundamental principle which is based on correct considerations of expediency and fairness, since the wording of para. 327, sentence 2 gives rise to the assumption that it merely intended to provide for liability for unjust enrichment on the part of the recipient of a declaration of rescission, who was not answerable for the circumstances giving rise to rescission; the above-mentioned legislative principle rather bases the duty to hand back the received goods on the fact that the recipient is in fact answerable for the circumstances, irrespective of which party actually pronounces the rescission. On the other hands it follows from the legal text that the "other party", who is not answerable for the reasons for rescission, necessarily means the party liable to hand back the goods since only "this party" is liable for unjust enrichment. It is therefore unobjectionable to follow the provision's interpretation as expressed in the RGR-Kommentar (para. 327, n.2) and to acknowledge that it is generally applicable, i.e. irrespective of the party who pronounces the rescission. Reaching this result by way of analogy is clearly justified and follows the legal principle expressed in para. 323 III BGB that in cases where neither party is answerable for the fact that the contract has become impossible to perform, the duty to hand back anything already received is subject to the principles on unjust enrichment. In this case, para. 323 III cannot directly be applied, as requested by the defendants, since performance of the contract has not become impossible. The point of view raised by the further appeal is also irrelevant, according to which, when the extent of liability is established, regard must be taken of whether or not rescission was deliberately chosen out of several possible legal remedies.

Where, according to the above deliberations and in respect of the RM 1,7 million already paid, the first and second defendant are only liable under the principle of unjust enrichment, the claim as pursued by this action is diminished by RM 10, 000, taking into account the changes in calculation made by the claimant himself.