IB Law Students 2017-W

International Business Law
IB 1st Semester
Prof. Dr. Bernd Banke

Hochschule Reutlingen
Prof. Dr. Bernd Banke ▪ www.esb-reutlingen.de

The Curve of Forgetting
Ebbinghaus 1850 - 1909
Source: http://www.adm.uwaterloo.ca/infocs/study/curve.html
Prof. Dr. Bernd Banke ▪ © 2017

Content
Part 1: Civil Law and Common Law
German Civil Code - an example for a civil law system
English Law and Legal Method
Part 2: Case Studies: Conflict Solving in Civil Law Systems
Principles of German Civil Code
Part 3: European Conflict of Laws
Rome I and Rome II Regulations
Part 4: European Civil Procedure
Part 5: CISG
CISG as source of international unified law
Content of CISG
Classification of Business Law
Private Criminal
Law Law
Business
Law
Public Law

Types of Law Sources
Procedural Law Material Law

If yes:
• Which Court? • Claim?

• Who may sue? • Objections?
• Time limits? • Evidences?
• … etc. • … etc.
Classification of Courts
Ordinary Courts (Ordentliche Gerichte)

Administrative Courts
(Verwaltungsgerichte)
Labour Courts (Arbeitsgerichte)
Financial Courts (Finanzgerichte)
Social Courts (Sozialgerichte)
Working Techniques (Civil Courts)
I. Conclusiveness of the claim?

II. Relevance of objections?
III. Evidence - Who has to give evidence?
IV. Decision (for example: Judgement)

What is a legal claim?
Claim
To demand or assert as a right. Facts that combine to give rise to a
legally enforceable right or judicial action. Demand for relief.
A claim is something that one party owes another. Someone may

make a legal claim for money, or property, or for Social Security
benefits.
A claim also means an interest in, as in a possessory claim, or right

to possession, or a claim of title to land.
http://legal-dictionary.thefreedictionary.com/claim

Types of Claims
I. Contractual Claims =
legal consequences caused by declarations of
intention
II. Claims based on rights in rem
III. Statutory Claims
1. Negotiorum gestio (EU) or Agency of Necessity
2. Law of Torts
3. Unjust enrichment

Contractual Claims
Fulfillment of Contracts:
For Example:
Delivery of the goods and Property
Payment of the Price
Tax Consultation and Preparation of the Declaration
Secondary Claims:
For Example
Damages
Reduction of Price
What is a contract?
contract
1) n. an agreement with specific terms between two or
more persons or entities in which there is a promise to do
something in return for a valuable benefit known as
consideration. …
The existence of a contract requires finding the following
factual elements: a) an offer; b) an acceptance of that offer
which results in a meeting of the minds. …
Contracts can be either written or oral.
http://legal-dictionary.thefreedictionary.com/claim

Formation of the contract
min. 2 Declarations of intention
Offer Acceptance
Negotiations
only in case of Agreement
Valid contract

Declaration of Intention
Declaration of intention
Objective Subjective
Noticable acitivity 1. Conscious activity

2. Awareness of legal
consequences

Formation of the contract
Declarations of Intention
(binding)
Invitatio ad offerendum
(not binding)
Offer: Acceptance:
- „Essentilia negotii“ - Agreement (mostly no form)
- Submit / Reception - Submit / Reception
Silence does not show consent!

- Few exemptions -

Interpretation of Declarations
Reasonable Person Reasonable Person
Decide about
Content !
understands understands
Party A negotiate Party B
Environment Environment
A B
Seemingly consenting
can cause legal consequences!

Structure of the BGB
5 Books
1. General Part
2. Law of Obligations
3. Law of Property
4. Family Law
5. Law of Succession
http://www.gesetze-im-internet.de/englisch_bgb/

Making Business in Spirits
more than 15% missing!
Seller (Sam Seam) Buyer (United Buyers)

10.000 Gallons Whiskey
US UK
Price: 20 $ per Gallon

200.000 $

Consensus – or not?

German Code of Civil Procedure
Section 23 Specific jurisdiction of assets and of an object

For complaints under property law brought against a person who has no
place of residence in Germany, that court shall be competent in the
jurisdiction of which assets belonging to that person are located, or in the
jurisdiction of which the object being laid claim to under the action is located.
Where claims are concerned, the debtor’s place of residence and, in cases in
which an object is liable for the claims as collateral, the place at which the
object is located shall be deemed to be the location at which the assets are
located.

Conflict of Laws Methodology
1. International aspect? Art. 3 EGBGB

2. Qualification
3. Renvoi Art. 4 EGBGB
Art. 20 Rome I
4. Ordre public Art. 6 EGBGB

Art. 21 Rome I

Art. 3 EGBGB
Art. 3 Scope; Relationship with rules of the European Community and with international
conventions
(1) Unless 1. immediately applicable rules of the European Community in their respective
pertaining version, particularly a) the Regulation (EC) No. 864/2007 of the European Parliament
and of the Council of 11 July 2007 (OJ EU L 199 of 31.7.2007 p. 40) on the law applicable to
non-contractual obligations (Rome II), and
Service provided by the Federal Ministry of Justice and Consumer Protection
in cooperation with juris GmbH – www.juris.de
Page 2 of 13
b) the Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June
2008 (OJ EU L 177 of 4.7. 2008 p. 6) on the law applicable to contractual obligations (Rome I),
and c) the Council Decision of 30 November 2009 (OJ EU L331 of 16.12.2009 p. 17) on the
conclusion by the European Community of the Hague Protocol of 23 November 2007 on the
Law Applicable to Maintenance Obligations,
c) the Council Decision of 30 November 2009 (OJ EU L331 of 16.12.2009 p. 17) on the
conclusion by the European Community of the Hague Protocol of 23 November 2007 on
the Law Applicable to Maintenance Obligations

REGULATION (EU) No 1215/2012 OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL
of 12 December 2012
on jurisdiction and the recognition and enforcement of
judgments in civil and commercial matters
Article 4
1. Subject to this Regulation, persons domiciled in a
Member State shall, whatever their nationality, be sued in
the courts of that Member State.
2. Persons who are not nationals of the Member State in
which they are domiciled shall be governed by the rules
of jurisdiction applicable to nationals of that Member
State.

SECTION 2
Special jurisdiction
Article 7
A person domiciled in a Member State may be sued in another Member State:
(1) (a) in matters relating to a contract, in the courts for the place of performance of the
obligation in question;
(b) for the purpose of this provision and unless otherwise agreed, the place of
performance of the obligation in question shall be:
— in the case of the sale of goods, the place in a Member State where, under the
contract, the goods were delivered or should have been delivered,
— in the case of the provision of services, the place in a Member State where, under
the contract, the services were provided or should have been provided;
(c) if point (b) does not apply then point (a) applies;
(2) in matters relating to tort, delict or quasi-delict, in the courts for the place where the
harmful event occurred or may occur;
(3) as regards a civil claim for damages or restitution which is based on an act giving
rise to criminal proceedings, in the court seised of those proceedings, to the extent that
that court has jurisdiction under its own law to entertain civil proceedings;
(4) as regards a civil claim for the recovery, based on ownership, of a cultural object as
defined in point 1 of Article 1 of Directive 93/7/EEC initiated by the person claiming the
right to recover such an object, in the courts for the place where the cultural object is
situated at the time when the court is seised;
(5) as regards a dispute arising out of the operations of a branch, agency or other
establishment, in the courts for the place where the branch, agency or other
establishment is situated;
(6) ……. (continued)

Types of Claims
I. Contractual Claims =
legal consequences caused by declarations of
intention
II. Claims based on rights in rem
1. Negotiorum gestio (EU) or Agency of Necessity
2. Law of Torts
3. Unjust enrichment

Transfer of Property
Two Systems
Abstraction Consensus
Principle Principle

French CIVIL CODE
Art. 1138
An obligation of delivering a thing is complete by the sole consent of
the contracting parties.
It makes the creditor the owner and places the thing at his risks
from the time when it should have been delivered,
although the handing over has not been made, unless the debtor
has been given notice to deliver; in which case, the
thing remains at the risk of the latter.

Seller´s securities (German Law)
Sale §433 BGB

Seller Buyer
Transfer of property §929 BGB (good)
Transfer of property § 929 BGB(money)

Abstraction
Principle (D) almost only

German Civil Law Code (BGB)
Section 433 Typical contractual duties in a purchase agreement
(1) By a purchase agreement, the seller of a thing is obliged to deliver the thing to the buyer and to procure ownership
of the thing for the buyer. The seller must procure the thing for the buyer free from material and legal defects.
(2) The buyer is obliged to pay the seller the agreed purchase price and to accept delivery of the thing purchased
Section 929 Agreement and delivery

For the transfer of the ownership of a movable thing, it is necessary that the owner delivers the thing to the acquirer
and both agree that ownership is to pass. If the acquirer is in possession of the thing, agreement on the transfer of the
ownership suffices.
Section 158 Conditions precedent and subsequent

(1) If a legal transaction is entered into subject to a condition precedent, the legal transaction that is subject to the
condition comes into effect when the condition is satisfied.
(2) If a legal transaction is entered into subject to a condition subsequent, the effect of the legal transaction ends when
the condition is satisfied; at this moment the previous legal situation is restored.

Seller´s securities
Seller Sale §433 BGB Buyer
Transfer of property §929 BGB (good)?

Transfer of property only if §929, 158 BGB?
“Title to the goods shall remain vested in the seller and shall
not pass to the buyer until the purchase price for the goods
has been paid in full and received by the seller.”

Seller´s securities
Seller Sale §433 BGB Buyer
Transfer of property only §929, 158 BGB

Sale §433 BGB
Transfer of property §929 BGB
1. Title to the goods shall remain vested in the seller
and shall not pass to the buyer until the purchase
price for the goods has been paid in full and received
Consumers
by the seller.
2. The reservation of ownership also extends to
processed objects and in the event of onward selling,
to the purchase money claim (extended
reservation of ownership)
Retention of Title Clauses I
A shorter form clause:

Title to the goods shall remain vested in the seller
and shall not pass to the buyer until the purchase
price for the goods has been paid in full and
received by the seller.

Retention of Title Clauses II
A longer form clause:
Title to the goods shall remain vested in the seller and shall not pass to the buyer
until the purchase price for the goods has been paid in full and received by the
goods. Until title to the goods passes:
the seller shall have authority to retake, sell or otherwise deal with and/or dispose
of all or any part of the goods;
the seller and its agents and employees shall be entitled at any time and without
the need to give notice enter upon any property upon which the goods or any part
are stored, or upon which the seller reasonably believes them to be kept;
the buyer shall store or mark the goods in a manner reasonably satisfactory to the
seller indicating that title to the goods remains vested in the seller; and
the buyer shall insure the goods to their full replacement value, and arrange for the
seller to be noted on the policy of insurance as the loss payee.
Irrespective of whether title to the goods remains vested in the seller, risk in the
goods shall pass to the buyer upon delivery

Retention of Title
A contractual provision by which, in its simplest form,
the passing of title in goods supplied under the
contract is made conditional on payment of the full
purchase price by the buyer.
Also known as a Romalpa clause, following the Court of
Appeal decision in Aluminium Industrie Vaasen BV v
Romalpa Aluminium Limited, the first leading case
concerning the device ([1976] 1 WLR 676).
Source: http://www.practicallaw.com/8-107-7160

Qualification in conflict of laws
I. Contractual Claims Rome I / CISG
II. Claims based on rights in rem National / Art. 43 EGBGB
1. Negotiorum gestio (EU) or

Agency of Necessity Rome II
2. Law of Torts Rome II
3. Unjust enrichment Rome II





CISG contracting states (2016 November)
+Vietnam

Structure of the CISG
Applicability Art. 1 - 6
General provisions Art. 7 - 13
Formation of the contract Art. 14 - 24
General provisions for contracts Art. 25 - 29
Obligations for the seller Art. 30 - 52
Obligations for the buyer Art. 53 - 65
Passing of the risk Art. 66 - 70
Provisions for seller and buyer Art. 71 - 88
Provisions for contracting states Art. 89 - 101
Claims of the Parties
I. Buyer:
1. Possession and Property Art. 30 CISG
2. Breach of Contract Art. 45 - 52 CISG
3. Damages Art. 45, 74 - 77 CISG
II. Seller:
1. Payment Art. 53 CISG

Exercise cases on Qualification in
conflict of laws
1. Build Groups
2. Work on the cases
3. Present the results!

Legal Systems Worldwide
Applicable Law in International Transactions
National Law: Law of the national legislator

National Law: Law of the national legislator
Internationally Unified Law
Internationally Unified Law
The legal systems in the world are different: There are common law legal systems
(lavender) and civil law legal systems (orange). There are some legal systems that mix
elements of common and civil law (green).
Applicability of Laws
Internationally Unified Law National Law
Internationally unified law consists of multilateral Law of the national legislator

treaties fixing substantive law. The most
important examples are:
- United Nations Convention on Contracts for

the International Sale of Goods (abbrev. CISG)
- Convention on the Contract for the
International Carriage of Goods by Road
(abbrev. CMR)
Applicability depends on the wording of the Applicability depends on the conflict of law
treaty rules at the place of the deciding court

Types of Contracts
Types of Contracts
(not terminatory)
Transfer of Surrender of Miscellaneous

Property Possession Contracts
Sale Rent Retention of Title
Barter Loan Services
Leasing ? Corporations
Marriage
Structure of the CISG
Applicability Art. 1 - 6
General provisions Art. 7 - 13
Formation of the contract Art. 14 - 24
General provisions for contracts Art. 25 - 29
Obligations for the seller Art. 30 - 52
Obligations for the buyer Art. 53 - 65
Passing of the risk Art. 66 - 70
Provisions for seller and buyer Art. 71 - 88
Provisions for contracting states Art. 89 - 101
Checklist: Applicability of the CISG
Art. 1 a CISG:
both parties are located in contracting states of the CISG?
YES => CISG is applicable (subject to exclusion – Art. 6)
No => continue with Art. 1 b CISG
Art 1 b CISG:
national „Rules of Conflict of Laws“ lead to the application of the CISG?
Yes => CISG is applicable
No => continue with the next step
Parties´ choice of CISG?
Yes => CISG is applicable
No => CISG is not applicable
Art 6 CISG:
Did the parties exclude the application of the CISG?
Topics not governed by the CISG
Rescission and others Art. 4 a) CISG
Transfer of property Art. 4 b) CISG
Product liability Art. 5 CISG
Standard Business Conditions
CISG applicable for the CISG not applicable for the
integration into the contract control of the clauses
Topics not ruled by CISG will follow the principles

of the IPL / Conflict of Laws Art. 7 (2)
Formation of the contract -2-
Offer and Acceptance

Declarations of Intention ≠ Invitation to offer
Art. 14 to 24 CISG
Agreement/Interpretation of declarations of
intention
Art. 8 CISG

Claims of the Parties
I. Buyer:
1. Possession and Property Art. 30 CISG
II. Seller:
1. Payment Art. 53 CISG

Warranty
Claims of the Buyer Art. 45 – 52 CISG
Structure for the expert opinion
1. Sales contract
2. Breach of Contract when indicated: fundamental?
3. At the time the risk passes
4. Giving notice in time – others: loss of rights

Standard Business Conditions
Standard contract clauses and terms set by one of
the contracting partners
Not individually negotiated
Special risks for the other party (confronted

with these terms and clauses)

Enforcement of Rights
Ways to enforcement of Rights
National Jurisdiction / Courts Arbitration
National Procedural Laws Agreement of parties
e.g. German Civil UN Convention on the Recognition

Procedure Code and Enforcement of Foreign
Arbitral Awards (149 states)

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International Business Law

Prof. Dr. Bernd Banke

Prof. Dr. Bernd Banke ▪ www.esb-reutlingen.de

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

Procedural Law Material Law

• Which Court? • Claim?

Ordinary Courts (Ordentliche Gerichte)

I. Conclusiveness of the claim?

Prof. Dr. Bernd Banke ▪ © 2017

A claim is something that one party owes another. Someone may

A claim also means an interest in, as in a possessory claim, or right

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

min. 2 Declarations of intention

only in case of Agreement

Prof. Dr. Bernd Banke ▪ © 2017

Noticable acitivity 1. Conscious activity

Prof. Dr. Bernd Banke ▪ © 2017

Silence does not show consent!

Prof. Dr. Bernd Banke ▪ © 2017

Party A negotiate Party B

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

more than 15% missing!

Seller (Sam Seam) Buyer (United Buyers)

Price: 20 $ per Gallon

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

Section 23 Specific jurisdiction of assets and of an object

Prof. Dr. Bernd Banke ▪ © 2017

1. International aspect? Art. 3 EGBGB

4. Ordre public Art. 6 EGBGB

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

Sale §433 BGB

Transfer of property § 929 BGB(money)

Prof. Dr. Bernd Banke ▪ © 2017

Section 929 Agreement and delivery

Section 158 Conditions precedent and subsequent

Prof. Dr. Bernd Banke ▪ © 2017

Seller Sale §433 BGB Buyer

Transfer of property §929 BGB (good)?

Prof. Dr. Bernd Banke ▪ © 2017

Seller Sale §433 BGB Buyer

Transfer of property only §929, 158 BGB

A shorter form clause:

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

Prof. Dr. Bernd Banke ▪ © 2017

II. Claims based on rights in rem National / Art. 43 EGBGB

III. Statutory Claims