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Case:
RGZ 104, 265 I. Civil Senate
Date:
05 April 1922
Note:
Translated German Cases and Materials under the direction of Professors P. Schlechtriem, B. Markesinis and S. Lorenz
Translated by:
Carola Pfau
Copyright:
Professor Basil Markesinis

In March 1920 the plaintiff sent the defendant a price-list of goods he had in stock. This was stated to involve no obligation (freibleibend). Crystallised tartaric acid, priced at 68.50 M, was included in the list. On 20 March the defendant sent the plaintiff a telegram: "Request best price for 100 kilos Gries lead-free tartaric acid." Two days later the plaintiff replied by telegram: "Lead-free tartaric acid 128 M. per 100 kilos cash on delivery here." Then the defendant telegraphed: "100 kilos lead-free Gries tartaric acid OK, confirmatory letter follows." When the letter arrived it transpired that both parties intended to sell the goods and thought the other wished to buy them. The defendant refused to accept or pay for the goods and the plaintiff sold them at public auction. The plaintiff now claims as damages the difference between the price he thought had been agreed and the sum received at auction.

The Landgericht allowed the plaintiff only two-thirds of the claim, but the Oberlandesgericht allowed it in full. The defendant appealed, and his appeal was allowed.

Reasons

It is manifest that it nowhere appeared from the telegrams between the parties which of them was to be the buyer and which the seller. According to the evidence, both of them intended to be the seller.

The court below was of the view that as the plaintiff had only shortly previously offered the defendant crystallised tartaric acid in a price-list containing certain conditions as to payment, the defendant should have realised from the fact that the plaintiff's telegram contained the same conditions as to payment that the plaintiff wished to sell the goods; since the defendant must accept this construction of the plaintiff's telegram, a contract of sale arose.

The appellant objects that since both parties intended different things, there was no agreement. This fact could not be got round by saying, as the court below had done, that the defendant had committed a fault in misunderstanding the plaintiff's telegram, for it remained the fact that neither party wanted to buy and that therefore a contract had not been formed. It was quite another matter whether the supposed negligence gave rise to other consequences.

We cannot agree with the appellant on this point, for what the court below said was quite true: if the plaintiff's telegram was such that in all the circumstances it would be normal in the trade to give it a meaning going beyond the purely literal, the defendant must be held to such meaning; a contract would have been formed and the only possibility would be to seek to rescind it (anfechten). But we cannot agree with the court below that on its proper construction the plaintiff's telegram meant that he wanted to sell. [explanation omitted in the text]... There is therefore a true lack of agreement. Both parties used words which seemed to match, but meant them in a different sense in such a way that there was no agreement. No contract of sale was formed.

In fact both parties are to blame for the misunderstanding, each having expressed himself unclearly, doubtless to save words. The defendant's telegram read: "Request best price for ...tartaric acid." "Best" implies a comparison, and can only be used where there is room for play, upwards in the case of a sale and downwards in the case of a purchase. What the defendant meant was that he wanted to know the lowest price for 100 kilos of tartaric acid. The same is true of the plaintiff. If instead of transmitting the words "Tartaric acid 128 M." he had said "offer tartaric acid .. 128", there would have been no doubt what he meant. As it was, neither party said clearly what he wanted. Both of them are at fault, but we agree with the Landgericht that the fault of the defendant was the greater: it was he who started the negotiations, and therefore should have taken particular care to express himself clearly.

Thus the plaintiff cannot demand performance. The question is whether on these facts there is room for a claim for damages. Some scholars say yes, others no. It is generally agreed that damages for culpa in contrahendo may be claimed if a contract comes about. When no contract eventuates, there are many cases where the Code allows a claim for the plaintiff's negative interest, i.e. reliance damages: so under para. 122 (rescinding a declaration of will on the ground of error), para. 179 (agent acting without proper authorisation), para. 307 (impossible performance knowingly or carelessly undertaken), para. 309 (formation of an unlawful contract). Writers are not agreed whether these principles can be extended to other cases, but in fact extension to similar cases has already been made by both courts and scholars. If both parties are to blame for the fact that an offer which was time-limited did not lead to a contract because the acceptance did not reach the offeror in time, then, according to RGZ 97, 339, the loss suffered by the acceptor is to be split between the parties. If a carrier who offers his services publicly fails to reply to a request for carriage, he can be made liable for reliance damages under para. 663 BGB [reference]. The considerations which led the legislator to make the provisions mentioned above can be found in the Protokollen ... In discussing the rescission of a declaration of will not seriously intended, it was said that equity requires the person making the declaration to pay for the reliance loss sustained by the other party if reasonably unaware that the declaration was not serious, the reason being that it was the declarer who caused the transaction to take place. Then it was said that this liability is imposed in the interests of security of transactions. Like reasons - equity and security of transactions - justify us in applying the same principles to the present case, one of so-called unapparent absence of agreement. Where one party has expressed himself so carelessly as to cause the other party to misunderstand him, equity and the security of transactions certainly require that he be saddled with the loss. Whether the same would apply in a case where there was no carelessness is a matter we need not now decide. As has already been stated, the plaintiff here was at fault as well as the defendant, so one must ask whether the plaintiff's claim is not barred by his own carelessness. The answer is that it is not. The plaintiff's claim would fail if he was at fault in mistaking the other party's declaration (as under paras 122, 179, 307, 309), but that is not the present situation. Here the plaintiff could well believe that the defendant wanted to buy acid. The fault of the plaintiff was rather that he also expressed himself badly and caused the defendant to misunderstand him. In a case like this the personal fault of the victim does not destroy his claim, because it cannot be said, in the words of the Code, that he "should have known" the defendant's true meaning; it only has the effect that the loss is to be borne by both parties in proportion to their carelessness, since the fault of both of them contributed to the harm. But the harm which is to be so divided between them is not the value of performance, but only the so-called negative interest. Equity does not require that the plaintiff recover the profit he would have made if the contract had come into existence, but only that he be compensated - either wholly or, as in this case, partially only - for the harm he suffered from being of the good faith belief, due to the defendant's faulty mode of self-expression, that the defendant wanted to effect a purchase. No other solution accords with the statutory provisions mentioned above, in the case of rescinding for error and so on. If the plaintiff proves his assertions, his negative contractual interest consists of the difference between the auction price and the market price or other possible price on the day that the plaintiff learnt that the defendant wanted to sell rather than to buy, that being the day on which the plaintiff could sell off the goods.

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