On 24 March 1919, the parties entered a 'precontract' (Vorvertrag) before a notary, by Clause II of which the plaintiff, at any time on the defendant's demand, undertook to enter a contract of sale with the defendant so as to vest in him ownership in house no. 49 in P 'with all contents'. It was agreed and ordered that an entry should be made in the land register to secure this future claim. By Clause III 'the precise terms and conditions of the sale are to be finalised on the drawing up of the sale contract, the price of house and contents not to exceed 40,000 M'. By Clause IV the plaintiff's undertaking was to last until 24 March1920.
The relevant entry in the land register was made on the defendant's behalf on 28 March 1919. on 12 March 1920 the defendant gave the plaintiff one week to perform his obligations but the plaintiff did nothing, in the belief that the contract was void because the parties' agreement regarding the price was inaccurately recorded. He sought a declaration to that effect, and an injunction requiring the defendant to consent to the erasure of the entry in his favour in the land register. The defendant counter-claimed for an injunction that the plaintiff transfer house and contents for 40,000 M. and agree to a change of ownership in the land register. The lower court rejected the claim and gave judgment on the counter-claim. On the plaintiff's appeal the counter-claimant cross-appealed for a judgment that the plaintiff sell him the property on the terms of the Landgericht's judgment. Judgment in the Oberlandesgericht was in the defendant's favour. The plaintiff's appeal was allowed.
On the substance of the matter, the appellant rightly insisted on a point which he raised below, namely that the 'precontract' of 24 March 1919 is invalid for want of content.
It is familiar law that a precontract must meet not only the formal requirements (which is here the case - para. 313 para. 1 BGB), but also the substantive requirements of the main contract. In particular, the duties undertaken by the parties in the precontract must be certain or at least ascertainable, so that a court can determine the content of the ultimate contract (RGZ 66, 121; 72, 385; see also RGZ 106, 177). No such certainty or ascertainability exists in the 'precontract' of 24 March 1919. A sale contract, and consequently a precontract to a sale, requires agreement of the parties not only on the thing or right which constitutes the object of the contract but also on the price (para. 433 BGB). We need not ask whether the seller's duty with regard to the contents was sufficiently certain or ascertainable under the contract of 24 March, since in any case the buyer's counterpart, the price, is left uncertain; the only thing fixed about the price is its upper limit, viz. 40,000 M. The plaintiff could not on the basis of such a precontract have insisted on going through with a sale contract, let alone at a price of 40,000 M.; nor can the defendant, even if he offers the highest sum mentioned. On the price alone, the agreement of 24 March lacks the quality of a precontract; it is simply a draft or sketch, not binding on either party, and capable, at the very most, of use in the interpretation of a subsequent precontract or main contract, if one were to be made. But there is the further point that the parties specifically agreed to postpone making the detailed terms of sale until the time of the later contract (compare para. 154 para. 1 BGB_. It therefore depended on the free decision of both parties what these detailed terms should be, and such a decision could not imaginably be replaced or amplified by a judicial decision. Neither the Landgericht nor the Oberlandesgericht made any such attempt: both simply took 40,000 M as the purchase price without even adverting to the matter or revalorisation, which they should have raised proprio motu (RGZ 106, 422; 107, 19, 129, 150; 109, 69).
The plaintiff's claim for a declaration that the contract of 24 March 1919 was void is therefore justified.
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