Table of Contents

The Author 3

List of Abbreviations 15 A. Selected Periodicals 15 B. Other Abbreviations 16

General Introduction 19

§1. THE GENERAL BACKGROUND OF THE COUNTRY 19 I. Geography 19 II. Political System in the Past and Present 19 III. Political System 22 IV. Economic and Social Values 26

§2. AUSTRIAN LAW BELONGS TO THE GERMAN LEGAL FAMILY 27

§3. PRIMACY OF LEGISLATION 28

§4. THE POSITION OF THE JUDICIARY 29

§5. DISTINCTION BETWEEN PUBLIC AND PRIVATE LAW 32

§6. DISTINCTION BETWEEN CIVIL LAW AND ENTERPRISE LAW 33

Introduction to the Law of Contract 35

§1. BASIC CONCEPTS AND GUIDING PRINCIPLES 35 I. Legal Transaction (Juristic Act) in General 35 II. Classification of Legal Transactions 36 III. Declaration of Intent (Willenserklärung) 37 IV. The Definition of ‘Contract’ 38

§2. HISTORICAL BACKGROUND OF THE LAW OF CONTRACT 38 I. Sources the Draftsmen Had to Consider 38 II. Influence of Roman Law 39 III. Influence of the Natural Law School 39

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IV. Confusing Heritage 39

§3. CLASSIFICATION OF CONTRACTS 40 I. ‘Consensual Contracts’ 40 II. ‘Real Contracts’ 40 III. ‘Synallagmatic Contracts’ 41 IV. Categories of Statutory Contracts 42 V. Contracts Subject to Formal Requirement 43 VI. Standard Form Contracts 43

§4. CONTRACTS AND TORTS 44 I. No Clear Structural Distinction 44 II. No Rule of ‘Non-cumul’ 46 III. Recent Legislation 46 IV. Third Parties 46

§5. CONTRACT,UNJUST ENRICHMENT AND OTHER LEGAL OBLIGATIONS 47 I. Contractual and Legal Obligations 47 II. Unjust Enrichment 47 III. Negotiorum Gestio 49 IV. Avoidance of a Fraudulent Transfer of Property by a Creditor 50

§6. CONTRACT AND THE LAW OF PROPERTY 50 I. The Notion of ‘Real Rights (Rights In Rem)’ 50 II. The Law of Ownership (Property) 51 III. Conveyancing 52

§7. CONTRACT AND TRUST 53

§8. GOOD FAITH AND FAIR DEALING 54

§9. STYLE OF DRAFTING 56

§10. SOURCES OF THE LAW OF CONTRACT 57 I. Areas of Austrian Law, Important Codes and Statutes 57 II. Sources of the Law of Contract 60 III. Finding the Law 61 A. Legislation 61 B. Case Law 62 C. Periodicals, Commentaries, Treatises and Monographs 63 IV. Literature on Austrian Contract Law in English 64

Part I. General Principles of the Law of Contract 67

Chapter 1. Formation 67

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§1. AGREEMENT AND ‘DO, UT DES’ 67 I. Offer and Acceptance 67 A. The Offer 68 B. Pre-contractual Fault 69 C. Offer and Promise of a Reward 69 D. Offer or Invitation to Treat 70 E. The Acceptance 70 F. Contract by Correspondence 70 II. Intention to Create Legal Relations 71 III. Consideration 72 A. Consideration Is Not a Requirement of the Austrian Law of Contract 72 B. Gratuitous Promises 73 C. Natural Obligations 73

§2. FORMAL REQUIREMENTS 74 I. Reasons for Statutory Formal Requirements 74 II. Legal Forms in General 75 III. Relevant Forms 75 A. Writing 75 B. Notarial Contract under Seal 76 C. Formal Requirements for Consumer Transactions 76 IV. The Notary and His Function 77

§3. LIABILITY AND NEGOTIATIONS 77 I. Pre-contractual Liability 78 II. The Legal Framework 78 III. General Principles and Types of Pre-contractual Duties 81 IV. The Field of Legitimate Application of Culpa in Contrahendo 82 A. Violation of the Duty to Inform about Legal Obstacles for Valid Conclusion of Contract 82 B. Violation of the Duty to Inform about Attributes of the Object of the Intended Contract 82 C. Arbitrarily Breaking Off Advanced Contract Negotiations 83 D. Acting on Behalf of Another without Having Authority to Do So 84 V. Unsound Expansion of Culpa in Contrahendo Rules 85

Chapter 2. Conditions of Substantive Validity 88

§1. CAPACITY OF THE PARTIES 88 I. Minors 88 II. Insanity 89 III. Spouses Managing the Family Household 90 IV. Aliens 90 V. Legal Persons 91

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§2. DEFECTS OF CONSENT 91 I. Mistake (Error) 92 A. Error as to the Motive 93 B. Error as to the Substance in a Narrow Sense 94 C. Mistake of Expression 94 D. Mistakes in Calculation and Errors as to the Legal Consequences 94 E. Essential and Non-essential Errors 95 F. Statutory Requirements for Avoidance or Correction 95 1. Causation of Error 96 2. Negligent Failure to Disclose Error 96 3. Prompt Disclosure 96 II. Deceit 97 III. Duress (Illegal and Well-Founded Fear) 97 IV. Laesio Enormis 97

§3. OTHER CONDITIONS OF VALIDITY 98 I. Cause 99 II. Possibility 100 III. Permissibility 100 IV. Compliance with Public Morality (Good Morals) 104

§4. THE CONSEQUENCES OF A DEFECT OF CONSENT OR OF A LACK OF SUBSTANTIVE VALIDITY 106 I. Avoidance or Adaptation of the Contract 106 II. Partial Avoidance 108

Chapter 3. The Contents of a Contract 110

§1. THE DIFFERENT CLAUSES 110 I. Express Terms 110 II. Implied Terms 111 III. Exemption Clauses and Limitation Clauses 111 IV. Penalty Clauses 113 V. Arbitration Clauses 114

§2. INTERPRETATION 115

§3. CONDITIONAL CONTRACTS 118 I. Suspensive and Resolutive Conditions 119 II. Affirmative and Negative Conditions 119 III. Casual, Mixed and Potestative Conditions 120 IV. Possible and Impossible, Illicit and Permitted Conditions 120 V. The Effect of a Condition 121

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Chapter 4. Privity of Contract 122

§1. THE RULE OF PRIVITY OF CONTRACT 122 I. Third Parties and the Contract 122 II. Contract for the Benefit of a Third Party 122 III. Contract Implying the Protection of a Third Party 124

§2. TRANSFER OF CONTRACTUAL RIGHTS 124 I. The Formalities 126 II. Effects of the Assignment 127 III. The Transfer as against Third Parties (Other than the Debtor) 129

§3. DELEGATION OF CONTRACTUAL DUTIES 129

§4. TRANSFER OF AN OBLIGATION 131

§5. SUBCONTRACTING 131

Chapter 5. The End of the Contract 132

§1. FROM PERFORMANCE TO DEATH:STATUTORY REASONS FOR THE EXTINCTION OF A DEBT 132 I. Payment 132 A. Who may Pay? 132 B. Whom should One Pay? 133 C. What to Pay? 134 D. Special Rules as to Payment of Money Debts 134 II. Deposit of a Debt in Court 137 III. Performance in Lieu of Payment 137 IV. Set-off 137 V. Waiver 138 VI. Merger 138 VII. Lapse of Time 138 VIII. Notice of Termination 139 IX. Death 139

§2. IMPOSSIBILITY AND FRUSTRATION 139 I. Impossibility 139 II. Relevance of Unforeseeable Circumstances 141

§3. NOVATION,SETTLEMENT AND RECOGNITION 142 I. Novation 142 II. Modification of an Obligation 142 III. Settlement 143 IV. Recognition 144

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Chapter 6. Remedies 145

§1. GENERAL INTRODUCTION 145

§2. REMEDIES IN CASE OF NON-PERFORMANCE BY THE OTHER PARTY 146 I. Rescission 147 II. Exceptio Non Adimpleti Contractus 148 III. Debtor’s Remedies when Creditor cannot Perform 148

§3. REMEDIES IN CASE OF DELAYED PERFORMANCE BY THE OTHER PARTY 149 I. Rescission 149 II. Granting a Grace Period 150 III. Exceptio Non Adimpleti Contractus 151 IV. Debtor’s Remedies when Creditor is in Delay 151

§4. ENFORCED PERFORMANCE 152

§5. WARRANTY REMEDIES 153 I. Types of Warranty 153 II. Repair and Replacement (Primary Remedies) 155 III. Price Reduction and Rescission (Secondary Remedies) 155 IV. Common Characteristics of Warranty Remedies 156

§6. DAMAGES 157 I. Damages in Case of Non-performance and Delay 158 II. Damages for ‘Positive Violation of a Contract’ 158 III. Concurring Remedies: Warranty and Damages 159

§7. REMEDIES IN CASE OF LAESIO ENORMIS:RESCISSION 161

§8. LIMITATION 162

§9. SPECIFIC REMEDIES UNDER SPECIFIC STATUTES 164 I. Consumer Protection Act 164 II. UNCITRAL-Convention on the International Sale of Goods (CISG) 164

Part II. Specific Contracts 167 Introductory Remarks 167

Chapter 1. Donation 168

§1. THE CONCEPT OF DONATION 168

§2. DOUBTFUL AND MIXED FORMS OF DONATIONS 169

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§3. FORMAL REQUIREMENTS 170

§4. DUTIES OF THE DONOR AND REMEDIES OF THE DONEE 171

§5. DONOR’S RIGHT OF REVOCATION 172

§6. DONATION CAUSA MORTIS 172

Chapter 2. Bailment 173

§1. THE CONCEPT OF BAILMENT 173

§2. OBLIGATIONS OF THE BAILEE 174

§3. OBLIGATIONS OF THE BAILOR 174

§4. LIABILITY OF THE BAILEE 175

§5. RIGHTS OF THE BAILEE 175

§6. DISTINCTION OF RELATED TYPES OF CONTRACT 176

§7. MIXED AND SPECIAL FORMS OF BAILMENT 176

§8. PROFESSIONAL LODGING OF GUESTS 176

Chapter 3. Contract of Lending 177

§1. CHARACTERISTIC ELEMENTS 177

§2. RIGHTS OF THE BORROWER 178

§3. OBLIGATIONS OF THE BORROWER 178

§4. OBLIGATIONS OF THE LENDER 179

§5. RIGHTS IN REM OF THE BORROWER 179

§6. LIABILITY OF THE BORROWER 179

§7. SHORT LIMITATION PERIOD 179

§8. PERMISSION FOR USE UPON PETITION 180

Chapter 4. Loan Contract 181

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§1. CHARACTERISTIC ELEMENTS 181

§2. TYPES OF LOAN:GRATUITOUS AND FOR INTEREST 182

§3. RELATED TYPES OF CONTACTS 182

Chapter 5. Agency 184

§1. MANDATE,AUTHORITY AND AUTHORIZATION 184

§2. THE MEANING OF MANDATE 185

§3. CONCLUSION OF AN AGENCY CONTACT 186

§4. CASES OF IMPLIED POWER OF ATTORNEY 186

§5. CATEGORIES OF POWERS OF ATTORNEY 188

§6. FORMAL REQUIREMENTS 188

§7. RIGHTS AND DUTIES OF THE AGENT 189

§8. RIGHTS AND DUTIES OF THE PRINCIPAL 189

§9. EXCESSIVE USE OF AUTHORITY BY THE AGENT 190

§10. THE END OF AGENCY 190

§11. SPECIFIC FORMS OF COMMERCIAL AGENCY 191

Chapter 6. Barter 192

§1. BARTER AND SALE:RELATED CONTRACTS 192

§2. RIGHTS AND DUTIES OF THE PARTIES 192

§3. DISTINCTION OF BARTER AND SALE 193

§4. RISK OF LOSS 194

Chapter 7. Sale 196

§1. THE CONCEPT OF SALE 196

§2. TYPES OF SALES CONTRACTS 197 I. Regular Sales 197

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II. Commercial Sales 198 III. International Sales 198 IV. Interrelation of the Legal Rules on Sale 199

§3. OBLIGATIONS OF THE SELLER 199

§4. PASSING OF RISK 200

§5. OBLIGATIONS OF THE BUYER 201

§6. SELLER’S WARRANTY OF TITLE AND QUALITY 201 I. Sale by a Non-owner 202 II. Warranty against Defects in Quality 203

§7. REMEDIES OF UNPAID SELLER 205

§8. COLLATERAL AGREEMENTS 205 I. The Right of Redemption 206 II. The Right of Resale 206 III. The Right of Preemption 206 IV. Sale on Approval 207 V. Sale with the Option to Resell for a Higher Price 207

§9. PRODUCT LIABILITY 207

§10. THE SALE ON INSTALMENT 209

Chapter 8. Tenancy, Lease and Leasing 210

§1. THE CONCEPTUAL FRAMEWORK OF THE CODE 210

§2. TENANCY IN GENERAL 210

§3. BEARING OF RISK AND WARRANTY 211

§4. RIGHTS AND DUTIES OF THE PARTIES 212

§5. TERMINATION OF THE CONTRACT 213

§6. LEASE 214

§7. LEASING 215

Chapter 9. Service Contract 216

§1. THE CONCEPT OF SERVICE CONTRACT 216

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§2. RIGHTS AND OBLIGATIONS OF EMPLOYER AND EMPLOYEE 217

§3. TERMINATION OF CONTRACTS OF EMPLOYMENT 217

§4. INDEPENDENT EMPLOYMENT CONTRACTS 218

Chapter 10. Work Contract 219

§1. CHARACTERISTIC ELEMENTS 219 I. Creation of a Result 219 II. Consideration 220

§2. OBLIGATIONS OF THE PARTIES 220 I. Duties of the Contractor 220 II. Duties of the Principal 221

§3. RISK OF LOSS 222

§4. THE END OF THE CONTRACT 223

§5. THE RELATION OF WORK AND SALES CONTRACTS 223

Chapter 11. Civil Partnership 224

Chapter 12. Gambling and Wagering Contracts 226

Chapter 13. Consumer Transactions 228

Chapter 14. Commercial Transactions 234

Selected Bibliography 237

Index 255

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