in some of the states of Germany, notably Prussia,85 the rule of the common law was changed prior to the enactment of the Imperial codes.

§ 909. Provisions of the commercial codes.

Imperial legislation, whenever it has dealt with the subject, has enlarged the scope of the right in question. Thus the commercial code (Handelsgesetzbuch), in force until 1900, contained important provisions in regard to contracts of sale coming under the head of commercial transactions.86 If, in such contracts, the buyer was in default with the price and the goods had not been delivered, the seller had among other remedies that of acting as if the contract had never been entered into. If the seller was in default the buyer had a similar right, and in this case it was not essential that the contract should not have been fulfilled by the party also who was not in default.88 Whatever had been given under the contract was required to be returned.89 If a party wished to avail himself of this right he was required to give the other party notice of the fact after performance was due, and if the nature of the case allowed, grant a specified term for performance. This was unnecessary where the contract itself provided that the goods should be delivered at a time certain or within a fixed period; and in such a case prompt notice was required if it was intended to compel the defaulting party to specific performance, rather than to the payment of damages or the dissolution of the contract.91 If performance on both sides was divisible, a party could only withdraw from the unfulfilled portion of the contract.92

90

chen, 21 July, 1856, Seuff. Arch. XI. No. 141. The court, distinguishing the case from a contract in regard to land, say the non-performance is not simply mora but breach of contract.

85 Förster-Eccius, Preussisches Privatrecht (4th ed.), II. 90 (note 75), 307, 318; Entsch. R. G. XXXVI. 222; Seuff. Arch. XXIV. No. 228; Ibid. XXI. No. 114.

86 Such contracts are substantially contracts for the purchase and sale of

personal property in order to resell it, whether in the same form or not. Handelsgesetzbuch, Arts. 271, 272; Hahn, Commentar zum Handelsgesetzbuch, II. 3-42, 76.

87 H. G. B. Art. 354; Hahn, II. 352. 88 H. G. B. Art. 355; Hahn, II. 359. 89 Hahn II. 358.

90 H. G. B. Art. 356; Hahn, II. 363. 91 G. H. B. Art. 357; Hahn, II. 375.

92 H. G. B. Art. 359; Hahn, II. 390But he may withdraw from perform

Besides being applicable to but a limited number of cases, the value of the remedy of withdrawing from the contract or treating it as dissolved was much decreased by the rule that one who adopted this remedy not merely freed himself from any obligation to perform, but discharged the other party from liability in damages for failure to perform.93 The remedy was, therefore, of practical value only when the party seeking it had made a bad bargain, and was consequently not damaged by the loss of it. Further a party who had received anything under a contract could not treat it as dissolved unless able to return uninjured what he had received.94 Since January 1, 1900, statutory rules have become of wider application. On that day a practically complete codification of German law took effect. The then existing Commercial Code was superseded by a new one, and the Civil Code, which had been in process of formation for nearly twenty years, became operative. Owing to the general provisions of the Civil Code the new Commercial Code does not contain the special provisions of the previous one. Commercial contracts are thus made, so far as the matter in question is concerned, subject to the same rules as other contracts. One special provision, however, is retained. If a commercial sale provides for delivery at a fixed time or within a fixed period, the buyer may withdraw from the contract if delivery is not made promptly; and if he desires specific performance instead of damages or dissolution of the contract, he must notify the other party promptly.95

ance of all the remaining instalments. Failure by either the buyer or seller to perform as to any instalment justifies the other party in refusing to deliver or receive any further instalments. Reichsoberhandelsgericht, 7 Mar. 1871, Entsch. II. 84; 14 Mar. 1874, Entsch. XIII. 78; 21 Mar. 1874, Entsch. XIII. 102; 5 Apr. 1875, Entsch. XVI. 190, 193; Oberlandesgericht, Braunschweig, 9 Jan. 1891, Seuff. XLVI. 339.

In a decision of the R. O. H. G. 25 Jan. 1873, Entsch. VIII. 423, it was even held that failure on the part of the seller to deliver the stipulated quantity,

justified refusal to pay for what had been delivered until the remainder was delivered, though the price was not a lump sum.

93 Hahn, II. 358; Entsch. des R. O. H. G. XVII. 422, 13 Feb. 1875; Entsch. des Reichsgerichts, XXXIX. 170, 11 May, 1897.

94 Thus temporary use of a machine debars the buyer from returning it after it has proved unsatisfactory. Case last cited.

95 § 376. This corresponds to § 357 of the present H. G. B.

§ 910. Provisions of the German Civil Code.

The following are in substance the sections of the German Civil Code relating to the subject:

320. One, who is bound under a bilateral contract, may refuse the performance due from him until the counter-performance is effected. If the performance is to be rendered to several parties, the part coming to any one may be withheld, until the entire counter-performance is rendered.

If one party has partially performed, the counter-performance cannot be refused if under the circumstances, particularly in view of the proportionate insignificance of the part in arrear, the refusal would be a violation of good faith.

321. One, who is bound under a bilateral contract to render the first performance, may, if after the conclusion of the contract the means of the other party have suffered an essential deterioration, by which the claim for counter-performance is endangered, refuse the performance due from him until the counter-performance is rendered or until security is given for the same.

322. If one party brings suit for the performance due to him under a bilateral contract, the right belonging to the other party to refuse performance until counter-performance is rendered has only the effect that the other party is to be adjudged to perform move for move (Zug um Zug).

If the party plaintiff has to perform first, and if the other party defaults in the acceptance, the plaintiff may, upon receipt of the counter-performance, sue for perform

ance.

323. If the performance which one party owes under a bilateral contract becomes impossible through a circumstance for which neither he nor the other party is responsible, he loses the right to the counter-performance; in case of partial impossibility the counter-performance is reduced in conformity with §§ 472, 473.

If the other party, according to § 281, demands delivery of the compensation [received from a third person] for the thing due or assignment of the claim to compensation, he remains liable to counter-performance; the latter is, however, reduced in conformity with §§ 472, 473, in so far as the

value of the compensation, or of the claim for compensation, is less than the value of the performance.

In so far as the counter-performance, not due under these provisions, already has taken place the re-delivery of that, which has been rendered, may be demanded according to the provisions relating to the surrender of an unjust enrichment. 324. If the performance owing by one of the parties under a bilateral contract becomes impossible through a circumstance, for which the other party is responsible, he retains the right to counter-performance. He must, however, consent to be charged with what he saves by reason of being freed from performance, or with what he acquires by other use of his resources, or wilfully omits to acquire.

The same is applicable if the performance to be rendered by the one party, owing to a circumstance for which he is not responsible, becomes impossible at a time when the other party is in default as to acceptance.

325. If the performance owing by one of the parties under a bilateral contract becomes impossible through a circumstance for which he is responsible, the other party may demand damages for non-performance or may withdraw from the contract. In case of partial impossibility, if the partial performance of the contract is of no interest to him, he has the right under § 280, par. 2, to demand compensation by reason of the non-performance of the entire obligation or to withdraw from the whole contract. In place of the claim for compensation and of the right to withdraw (Rücktrittsrecht), he may also enforce the rights applicable to the case of § 323.

326. If in case of a bilateral contract, one party delays the performance owing from him, the other party may for the purpose of obtaining performance fix a reasonable time and give notice, that he will refuse performance after the expiration of the time fixed. Upon the expiration of that period he is entitled to demand damages for non-performance or to withdraw from the contract, if the performance is not rendered in time. A claim for performance is barred. If no part of the performance has been rendered before expiration of the time, the provision of § 325, par. 1, sentence 2, is correspondingly applicable.

If the performance of the contract in consequence of the delay is of no interest to the other party, he is entitled to the rights designated in par. 1, without the necessity of fixing a term.

§ 911. Effect of the statutory provisions.

The provisions of the German Civil Code will generally enable a party to a contract to treat it as dissolved for nonperformance by the other side. Unless he himself has parted with something under the contract which he wishes to recover, his attitude if he avails himself of the remedy will be that of a defendant, not as in France that of a plaintiff. In some cases, however, no such right is given. Certainly where the plaintiff's default in performance whether total or partial may still be made good, time being of the essence neither from the nature of the contract, nor because of notice given as provided by § 326, the defendant must protect himself in some other way. And even where the contract may be treated as dissolved, here as in the case of the provisions of the Commercial Code, there is no right given the party aggrieved to assert a claim for damages. Nor can he, presumably, treat the contract as dissolved if he cannot return what he has received, except in the single case of its chance destruction.

§ 912. Exceptio non adimpleti contractus.

96

The remedy of dissolving the contract or withdrawing from it will not, therefore, in Germany have the same almost exclusive importance as in France. The negative right of refusing to perform unless or until the other party shall do so retains and is likely to retain its importance. It has been a well recognized right for a long time, and for more than a century there has been active discussion in regard to it under the name of the exceptio non adimpleti contractus.97 Article 320 of the Civil Code adopts the principle and the article

Bürg. Gesetzbuch, § 350, expressly provides that chance destruction of an article received shall not prevent rescission.

97 The use of this name for the de

fence, or of exceptio non impleti contractus, the earlier form, and that still used in Italy-dates from the end of the seventeenth century.