There is a uniquie characteristic in german law: The abstraction principle (“Abstraktionsprinzip”). Perhaps, as a foreign law-student or lawyer you heard of it and doesn’t understand it? Believe me, it is not as difficult as you might think.
First, you have to understand, that there are two principles:
- separation principle (“Trennungsprinzip”)
- abstraction principle (“Abstraktionsprincip”)
Both principles are not the same and you need to understand both of them to handle german law, especially the way ownership is changed in germany.
This is a standard case to german law students: Go and buy a bread. If you do so, you will contract in three ways:
- You contract with the seller of the bread. With this contract you as the buyer are making a commitment that you will pay the price for the bread. At the same time the seller of the bread is making a commitment that he will transfer the ownership of the bread to you, if you pay the price. But: Only obligations are established, so this is an obligatory law contract.
- The next part is transfering the money. This transfer is a contract of its own.
- At last, you’ll get the bread from the seller. When the seller delivers the bread to you, the ownership of the bread is being transfered: From the seller to you, the buyer. This is a separate contract again. Without this delivery, you are not the owner of the bread. Of course, because of the obligatory law contract (above, Nr.1) you have the right to demand, that the seller transfers the ownership of the bread – but you are not the owner automatically just because of the obligatory law contract.
So you see, there is a difference between the obligatory law contract (Nr.1) and the real contracts (Nr.2 and 3). You can make a contract, but you are not automatically the owner. To become the owner of the buyed item, you have to make another contract. In fact, this is not difficult: The seller just takes the bread and put it in your hands. You only have to realize, that the delivery of the bread is the transfer of ownership and a contract separate from the sales contract as the obligatory law contract.
If you’re living outside of germany, this is perhaps new to you:
- In the Netherlands it works similar to germany: There is an obligatory law contract and separate of this a contract to transfer the ownership.
- It is a different situation in france: If you make a sales contract in france, the ownership is transfered by making the contract.
- In the United Kingdom and the USA it works quite difficult: Because of the Sale of Goods Act (UK) and the Uniform Commercial Code (USA) buyer and seller basically decide, how the ownership is to be transfered. But both laws assume that – unless otherwise agreed – ownership is transfered when the item is delivered to the buyer. The New York Civil Code (written by David Field, base of the civil law in California, Montana, North/South Dakota) expects in §459 that the transfer of ownership is “an executed contract”. It is not quite clear and disputed, but there is a increasing number of opinions that means, that there exists a kind of separation principle in the USA (so: Gestaltungsfreiheit und Verkehrsschutz durch Abstraktion by Astrid Stadler, Page 40ff.).
With the separation principle you distinguish between the different contracts. But what happens, if you contest the obligatory law contract? The separation principle doesn’t give an answer to this question – but the abstraction principle. The abstraction principle assigns, that obligatory contract (above Nr.1) and executed contract (above Nr.2&3) are rigidly separated from one another. So if you contest the obligatory contract, this doesn’t effect the executed contract, which means, that the obligatory contract is void – but the transfer of ownership will not be affected (there are some exceptions). Because of this separation it is called “abstraction principle” – executed contract and obligatory contract are “abstracted” from each other.
The result of this is a situation in which no basic contract exists, but ownership is still transfered. Of course, this result is strange and of course, this is not the final result. Because of the abstraction principle in the german civil code (BGB, “Bürgerliches Gesetzbuch”) you have the right to reverse the transaction (look at §812 BGB). By claiming this right you have to give back the bread and order back the paid money. And if you eaten up the bread, you have to pay compensation (§818 II BGB). Also – if the contract is not about a bread, but a car – if you used the buyed item, you have to pay compensation for your advantages. And if you damaged the car, you have to pay compensation, too.