Recht Basics

• Deadline has been set by agreement (art. 102 para. 2 CO) • Deadline as a result of a duly exercised right of termination reserved by one party (art. 102 para. 2 CO) • Reminder pointless (debtor manifestly refuses performance) • Reminder unreasonable (debtor obstructs receipt)

Requirements (art. 91 CO): • The debtor must offer to perform • Creditor must refuse to accept without good cause The creditor need not be at fault.

Consequence: • Exclusion of the debtor’s default (no interest for late payment due) • Risk is transferred to the creditor • No objection that the contract has not been fulfilled • Right of deposit of the contractual object (art. 92-94 CO) • Termination of the contract (art. 95 CO)  

Types of exclusion / modification: • Exclusion of simple negligence • Limitation of damages (floor / cap / combination) • Intensifying the prerequisites for liability Limits to exclusion: • Art. 100 CO • Art. 101 para. 2 and 3 CO

Termination

:

• Debtor receives performance

novation (art. 116 seq. CO)
merger of interest (art. 118 CO)
set-off (art. 120 seq. CO)

• Debtor does not receive performance

cancellation by agreement (art. 115 CO)
impossibility (art. 119 CO)
forfeiture of a right

Prerequisites (art. 120-123 CO): • Reciprocity • Similarity by content • The counter-claim must be due, actionable and free of any objections • No exclusion by contract or law (art. 125 et seq. CO)

• Prevents actionability • A time-barred obligation can still be fulfilled and be set-off (art. 120 para. 3 CO) • The obligee can still use the defense of an unfulfilled contract (art. 82 CO) even if his claim is time-barred 
Important: A court may not consider the expiration of a period of limitation ex officio (art. 142 CO), the obligor must assert that the claim is time-barred.

Requirements: • Obligation must be prescribable (this is in general the case) • The applicable prescription period must have passed • The obligor must not have waived prescription (art. 141 CO) 

Time limits: • Art. 127 CO: ordinary period of limitations: ten years • Art. 128 CO: five years for some obligations • Special time limits: art. 60, 67, 210, 371 CO etc. 

Calculation of time periods: • Begin: art. 130 para. 1 CO • Calculation: art. 132 CO • Impediment, suspension: art. 134 CO • Interruption: art. 135 CO

promisee underlying debt relationshipt to third party performance relationship to promisor cover ratio relationship to promisee

• Real contracts to the benefit of a third party: the third party is entitled to demand performance himself • Unreal contracts to the benefit of a third party: the third party is not entitled to demand performance

• Change of ownership: Transfer of a claim from one person (assignor) to another person (assignee) o By contract (art. 164 et seq. CO) o By law or court order (art. 166 CO) 
• The debtor is not involved in the assignment 
• Requirements: o Disposition of the right must be in writing (art. 165 para. 1 CO) o The assignor must be entitled to dispose of the claim o Assignability of the claim (art. 164 para. 1 CO), esp. no exclusion of assignment (by contract, law, or legal nature of claims)

 Effects: 
• The former creditor is replaced by the new creditor (assignee) 
• All preferential and accessory rights are transferred with the claim 
• Art. 167-169 CO: the legal position of the obligor must not be worsened by an assignment of the claim 
• Liability of assignor: o Assignment for valuable consideration: existence of the claim (art. 171 para. 1 CO) / solvency of the obligor only if he has warranted this (art. 171 para. 2 CO) o No valuable consideration: Neither warranty for existence nor solvency (art. 171 para. 3 CO)

• Internal assumption of debt: contract between the obligor and a third party in which the third party promises to free the obligor from certain obligations (art. 175 CO) • External assumption of debt: the obligee and the third party agree that the third party will perform instead of the original obligor; the original obligor is freed (art. 176 para. 1 CO) • Cumulative assumption of debt: not mentioned explicitly in the law; does not free the original obligor, the third party and the original obligor are jointly and severally liable for the debt  

• Nominate contracts • Innominate contracts - Contracts explicitly regulated in the CO or another Code v. not in the law
• Exchange relationships  • Continuous obligations - Duration in which goods and services are exchanged
• Disposal contracts  • Transfer for use  • Service  • Distribution and security contracts  - Categorization according to contract content
 

Innominate Contracts:

-Mixed Contracts:
Combination Contract
Double Typical Contract
Contracts with a Merger of Different Types

-Contracts Sui Generis  

Ex.: architect – construction plans and supervision (comb)
Ex.: employment in exchange for a rent-free apartment (doubl)
Ex.: mixed donation (merger)
Ex.: exclusive distribution contract (sui generis)

Interpretation of innominate contracts: Real intent – normative will

Mixed contracts: • Absorption theory: the provisions of the predominant contract type should be applied to mixed contracts • Combination theory: each element of a contract must be allocated to one of the contract types

Contracts sui generis: • Contract must be supplemented according to the principle of good faith  

Objectively essential elements of a sales contract:

• Object of sale • Purchase price

Objectively essential elements of a sales contract must be at least determinable

• Object of sale • Purchase price (money; parties may agree on alternatives)

Conclusion of a Sales Contract

• Applicability of the general provisions (art. 1 et seq CO) • Special provisions for the contract for the sale of goods for auctions (at. 229 et seq. CO)

Object of Sale
• Sale of chattel or immovable property • Specific or generic object
Time
• One-time exchange • Multiple delivery contract
Place of Performance                                                                                                                                                    • Local sale • sale by delivery to a different place than the place of sale
Payment
• Cash • Credit • Payment before purchase

Contract of Exchange                                                                                                                                                               Counterperformance is not money, but an object • Analogous application of sales law

Gift
• No counterperformance • One-sided contract

Work Contract

• Construction of a work • Specifically for principal • Serial or mass products = sale contract

• Freedom of form

• Exceptions:
Simple written form: • Merger contracts • Contract on the transfer of assets
Notarization: • Sale of real property • Objectively and certain subjectively essential elements • Correct, truthful, complete

Breach of form leads to nullity of contract (art. 11 para. 2 CO), save certain exceptions

Delivery of the object
• Movable objects: • transferring the object itself • transferring the means through which the buyer obtains control of the object • Immovable objects: • transferring the means by which the buyer can dispose of the property
Transfer of Title
• Movable objects: • Valid contract • Parties’ will to transfer the title to the buyer • Transfer of possession • Real estate: entering the buyer in the cadastral register • Claims: Assignment • Aggregates of rights or objects: individual transfer

Payment of the purchase price
Duty to accept the purchased object
Ancillary obligations

Non-Performanc,  Late Performance, Qualitatively Deficient Performance, Quantitatively Deficient Performance

Generally: art. 102 et seq. CO

• Seller’s default: art. 190 et seq.(only for contracts for the commercial sale of goods)   
• Buyer’s default: art. 214 et seq. CO

Requirement: Valid sales contract, Transfer of goods, No exclusion of liability, Defect in title, Deprivation of buyer.

Legal consequences: • Buyer is entirely deprived: contract is terminated (art. 195 para. 1 CO) -> restitution of price paid, damages • Buyer is partially deprived: buyer can demand compensation for his loss (art. 196 CO)  

Requirements: Valid sales contract, delivery of goods, defect in quality, no exlusion of liability, no knowledge of defect, inspection of goods, notice of defect.

Discrepancy between the actual state of the goods and the state either agreed upon or the normal condition of the goods.  

Other Defects in Quality • Physical or legal defect • No defect: • Financial losses • Deficiencies in quantity • Faulty packaging or assembly (art. 97 CO) • Different object: • Sale of specific object: nonperformance / default • Sale of generic object: often difficult to decide if different

Breach of Warranty • Promise of an objectively determinable characteristic • Physical, legal, or economic characteristic • Warranty must have influenced buyer decision to buy • Warranty after conclusion of contract = Guarantee

Inspection
• @ place of delivery • «As soon as it is feasible in the ordinary course of action» • Only open defects • Large deliveries: random samples

Notice of Defect
• Notice must show kind, content, and extent of defects • Open defects: immediately • Hidden defects: immediately after discovery • No notice of incorrect notice: seller is not liable for defects  

Performance:

-of the wrong thing: Default (art. 107 seq. CO)
-of the right thing, but defective: Liability for Defects (art. 197 seq. CO);
Compensation for Losses (art. 41/97 CO) Substitute Delivery of Generic Goods (art. 206 para. 1 CO) Rescission and Compensation for Losses (art. 208 CO) Reduction of Purchase Price (art. 205 CO) and Compensation for Losses (art. 97 CO)

Seller has right to deliver substitute goods (art. 206 para. 2 CO)

Liability with regard to title transferred: art. 127 CO (10 years)

Liability with regard to defects in quality: • 2 years after delivery (art. 210 para. 1 CO) • 5 years if the goods have been integrated in a work of an immovable construction and caused this work to be defective (art. 210 para. 2 CO) • 5 years for defects in the quality of a building (art. 219 para. 3 CO) • 10 years if the seller has prevented the buyer from asserting his rights by willful deception (art. 210 para. 6 CO)

Contractual amendment of the period of limitations: • Invalid in circumstances described in art. 210 para. 4 CO (consumer contracts)

Right of the seller to payment of the purchase price: • 10 year limitation period (art. 127 CO) • 5 year limitation period in certain cases (art. 128 sec. 2 & 3 CO)

 Contracts for the International Sale of Goods (CISG)

• Effectivity of the offer as soon as it reaches the offeree (art. 15 CISG) • Offer may be revoked after it has reached the offeree (art. 16 CISG), with exceptions • Conclusion of the contract when an acceptance of an offer becomes effective (art. 23 et seq. CISG) • Form freedom  

Obligations:

• Deliver the goods & hand over the documents relating to them • Transfer property of the goods • Deliver goods that conform to the requirements of the contract • Conformity of the goods: o Individual contractual agreement o otherwise art. 35 para. 2 CISG: o Goods are fit for the purposes for which goods of the same description would ordinarily be used o Goods are fit for any particular purpose made known to the seller at the time of conclusion of the contract o Goods are packaged in the manner usual for such goods; in other words, flaws in the packaging are defects of the good  

Breach:

Remedies through: performance, substitute goods, repair, avoidance of the contract, reduction of purchase price, right of retention, damages

Requirements

- Non-performance
• No differentiation between nonperformance, malperformance and late performance • With substitute performance and avoidance of the contract: fundamental breach of contract (art. 25 CISG)
-Examination
• Art. 38 para. 1 CISG: „short“ period, as is practicable according to the circumstances • Circumstances of the concrete situation: type of goods, possibility to examine the goods
-Notice of defects
• Form free, but written form is better for reasons of proof • Notice must detail defects • Reasonable period after discovery of the defect, observation of the time limit by timely dispatch of the notice • Absolute forfeiture period: 2 years after goods were handed over (art. 39 para. 2 CISG) • If buyer fails to give notice of the defect: he loses all remedies

• Non-performance when performance is due (art. 46 para. 1 CISG) • Limits: o Art. 28 CISG o Buyer exercises a remedy that is not compatible with performance (avoidance of the contract, damages for non-performance) o Seller is freed from performance because of impossibility (art. 79 et seq. CISG) • Performance, but not in accordance with the contract: o Right to demand substitute performance (art. 46 para. 2 CISG) o Right to require repair of the goods (art. 46 para. 3 CISG)

Requirements
• Delivery not in accordance with the contract: fundamental breach of contract • Non-performance: set a period of grace • Declare avoidance of the contract
Legal Consequences
• Obligations to perform expire for both parties • Restitution of performances already rendered • Pay back purchase price plus interest

Requirements
• Non-conformity of the goods (art. 35 CISG), only defective goods • Timely and substantiated notice
Calculation
• Proportional computation
Legal Consequences • Reduction of the purchase price • Claim for the return of the excess amount plus interest • Can be combined with damages  

• Liability: regardless of fault (art. 45 para. 1 (b) CISG) • Combination with other remedies according to art. 46-52 CISG • Exemptions (art. 79 para. 1 CISG): o Impediment beyond the obligor’s control that could not be taken into account and o Reason for impediment of performance not within the obligor’s area of risk • Includes costs for replacement of damaged goods, lost profits, cost of repair etc. • Limit: foreseeability rule (art. 74 para. 1 CISG)  

• Seller may remedy any failure to perform (art. 48 CISG) o Defect must be completely rectified o Several attempts to cure possible o Seller must bear costs • Must be reasonable for the buyer: • Legal consequences: o Successful cure: rights of the buyer expire o Unsuccessful cure: remedies according to art. 45 para. 1 CISG

art 53 CISG

Payment of price
• Determined by the contract • Otherwise: market price (art. 55 CISG) • Method of payment: cash, bank transfer,  • Place of payment (art. 57 CISG): seller’s place of business or where goods are handed over • Due date: concurrent with delivery
Take delivery of goods
• Physically taking delivery (art. 60 CISG), including unloading, organizing transport
Consequences of breach

• Seller may exercise the rights in art. 6265 CISG • Claim damages