§ 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.96 § 912. Exceptio non adimpleti contractus. 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 96 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. will doubtless be construed with reference to the common law existing before the statute. The discussion of the common law 98 has for the most part turned rather on the theoretical nature of the defence than on its practical applications. The main point in dispute has been whether it is part of the plaintiff's case to allege and prove performance. It seems to have been generally conceded from the outset that the plaintiff in order to win his case must prove performance, and it has been general practice at least for the plaintiff's declaration or complaint to contain an allegation of performance.99 The natural inference would be that the allegation of performance is essential to the plaintiff's case and that such performance is a condition precedent to any actionable right on his part. Such was the prevailing doctrine in the early part of the nineteenth century.1 It was a consequence of this doctrine that the so-called exceptio was not a proper exceptio but merely a denial of an allegation in the plaintiff's declaration. In 1824 an essay by Heerwart 2 supported by new reasoning a contrary view. His theory was that the plaintiff, in proving that he had performed, was proving matter which, if the pleadings were fully carried out, would be alleged not in the declaration, but in the replication. He maintained that the plaintiff makes out his original case by proving the defendant's matured promise; the defendant in turn makes out his defence by proving the plaintiff's counter promise. This gives rise to a cross-claim equivalent to, and A complete and to some extent annotated bibliography of the German literature relating to the subject till the year of publication (1890) may be found in André, Die Einrede des nicht erfüllten Vertrages, 3-13, 23-27. A less complete but good bibliography, especially of more modern writers, is contained in Windscheid, Lehrbuch des Pandektenrechts (7th ed., 1891), II., § 321, note 2. By far the most complete and satisfactory discussion of the common law is contained in the book of André. The best short treatment is still that of Heerwart, Archiv f. d. Civil. Praxis, VII. 335 (1824). All the general handbooks of German law deal with the subject. Among the best of these, so far as the point in question is concerned, are Dernburg, Pandekten, II. §§ 20, 21, and Windscheid's Lehrbuch, cited above, II. § 321. The effect of the codification in the Civil Code is discussed in Staudinger, Kommentar zum Burg. Gesetzbuch, and reference is made before Art. 320 to the literature of the subject. 99 André, 27, 45. 1 André, 24, and authorities cited. 2 Archiv f. d. Civ. Praxis, VII. 335. counterbalancing the plaintiff's right; as if to an action on a debt the defendant should plead in set-off an equal debt due him by the plaintiff. In order to meet the defence of a counter promise set up by the defendant, the plaintiff should by replication allege that he has fulfilled his own promise; just as in the case of set-off it would be the duty of the plaintiff to allege in a replication that he had paid the debt claimed by the defendant, not the defendant's duty to allege that the plaintiff had not paid the debt. So it would be matter for replication if the plaintiff's promise was discharged in any other way than by being performed, as by release, waiver or prevention by the defendant or by impossibility of which the defendant bore the risk. Exceptio non adimpleti contractus is a misnomer for the defence, upon Heerwart's theory, as the words imply that the plaintiff's non-performance is part of the defendant's exception. Exceptio prius adimplendi contractus has been suggested as a more appropriate name. 3 This theory of the defence became the prevailing one, both with legal writers and with the courts. But whether the 4 The burden is universally on the debtor to prove that he has performed. Dernburg, II. § 21, I. 1. means André, 24, marshals the writers. But legal opinion is by no unanimous. The method of argument ordinarily followed is to establish by historical or analytical reasoning the nature of a bilateral contract and then deduce the consequences. Two views have divided most of the writers: (1) Two independent obligations are created by a bilateral contract but each is to perform not in any event but in return for counter performance. Each obligation is, therefore, conditional on the performance of the other. (2) Two independent obligations are created, but on grounds of justice a defence is given to each party by means of which he can compel performance by the other party precedent to or concurrent with his own. For the first of these views Keller is regarded as the ablest cham 5 pion. The second is supported by 5 André, 17. And see the case stated in the following note. |