law – understand-culture

Holschuld. Bringschuld. German law.

Holschuld: get obligation. Bringschuld: deliver obligation.

What is the difference between a debt to collect, a debt to bring and a debt to send?
In the case of a debt to be collected, the place of performance is with the debtor – the owed item must be picked up there by the creditor.

In the case of an obligation to deliver, the place of performance or fulfillment is with the creditor. The debtor must therefore pay at the domicile of the creditor. If there is a debt to be sent, the debtor must also send it.

The distinction is particularly important when it comes to the question of transport or shipment costs and the question of the transfer of the risk of the loss of the goods (e.g. if a package is lost in the post).

“fair and reasonable”

German law is characterized by its structure, precision, and comprehensive nature, emphasizing the protection of both parties in commercial transactions. The German Civil Code codifies principles of fairness, transparency, and contractual integrity. The principle of good faith under Section 242 of the BGB requires that prices be fair and reasonable, reflecting actual value rather than speculative market conditions. Consumer protection laws further reinforce the notion that prices should be objectively justified, not arbitrarily set based on market demand or negotiation skills.

right to negotiate

American law, particularly contract law, emphasizes the freedom to negotiate and bargain without state interference. The principle of caveat emptor, or let the buyer beware, underscores the expectation that both parties in a transaction are responsible for establishing a fair price. Unlike German law, which may emphasize fairness and transparency, American law prioritizes individual autonomy and the right to negotiate based on perceived value.

Contingency Planning: Family, Business

In the middle of an active, busy (working) life, many families and business owners are reluctant to even consider the possibility of an accident or illness. As a result, contingency planning tends to be neglected. When something does happen, it often turns out there is no general power of attorney or enduring power of attorney for care or healthcare in place, and nobody thought of a living will or final will.

Proactive contingency planning helps to ensure that your family or family-owned business has legal capacity at all times. Our Private Clients experts help you draw up an emergency planning checklist that covers all the key legal and financial aspects.

If a partner or shareholder is incapacitated for an extended period, it could paralyse the entire company, depending on the provisions in the articles of association. Accordingly, (managing) partners or shareholders should draw up a contingency plan that addresses the following questions, in addition to their personal affairs.

Contingency Planning with proxies

In Germany, proxies are used for contingency planning, especially general proxies (Generalvollmachten) and precautionary proxies (Vorsorgevollmachten).

The general proxy entitles the authorised representative to take decisions for the principal in a large number of cases. The precautionary proxy focuses on decisions which have to be taken if the principal is no longer able to take care of his financial or personal matters, e.g. due to an illness.

caveat emptor

The Americans have a Latin term caveat emptor. It means “Let the buyer beware.” When persuading, presenting, convincing, selling Americans present the positive picture: what works. Americans do not feel obligated to present or to reveal what doesn’t work, what is negative. In the U.S. business culture the audience is obligated to expose what doesn’t work by asking critical questions. Persuasive is selling what works, and not what doesn’t work.

caveat emptor

caveat: may he/she beware. emptor: buyer. caveat emptor is Latin for “Let the buyer beware”. Generally, caveat emptor is the contract law principle that controls the sale of real property after the date of closing, but may also apply to sales of other goods.

The phrase caveat emptor and its use as a disclaimer of warranties arises from the fact that buyers typically have less information than the seller about the good or service they are purchasing. This quality of the situation is known as information asymmetry. Defects in the good or service may be hidden from the buyer, and only known to the seller.

caveat emptor is a short form of Caveat emptor, quia ignorare non debuit quod jus alienum emit: “Let a purchaser beware, for he ought not to be ignorant of the nature of the property which he is buying from another party.”

A common way that information asymmetry between seller and buyer has been addressed is through a legally binding warranty, such as a guarantee of satisfaction.

A Latin term

obligation to inform

The Germans have a legal term called Auskunftspflicht. Auskunft means information. Pflicht means obligation. Auskunftspflicht: the obligation to inform. When Germans persuade, convince, present, sell, the consciously Germans present the full picture: what works and what doesn’t work. Anything less is unprofessional, dishonest, and most certainly not persuasive.

Litigation

Given their litigation-heavy culture, it may seem ironic that Americans are so quick to say yes to an agreement. After all, saying yes and then not following through should make it easier for the one party to file a lawsuit.

However, the reality is the opposite. By having a culturally soft yes Americans make it more difficult for others to successfully sue them. In the U.S. it takes far more than a simple yes to indicate an oral agreement, which offers Americans protection from legal claims.

Gianni vs. Russell Supreme Court of Pennsylvania 1924 – Gianni, who owned a small store, claimed that his landlord told him that he could have the exclusive right to sell drinks in the building.

The landlord then rented another space in the building to a company that sold drinks, and Gianni attempted to sue. However, because Gianni had entered into a written lease, and there was no mention of this right in the lease, the oral contract was said to be nonexistent.

Power Entertainment Inc. v. National Football League Properties, Inc., United States Court of Appeals, 5th Circuit, 1998 – the plaintiff and defendant orally agreed that Power Entertainment would take over a licensing agreement between the NFL Properties and another company in exchange for Power Entertainment assuming the $800,000 debt between the two original companies. However, after the debt was paid, NFL Properties did not transfer the license, and the oral contract was found to be invalid.

Additionally, oral agreements in the US are sometimes called handshake deals. Although an actual handshake isn’t necessary to make the agreement binding, this still shows that it takes more than a ‘yes’ to enter into an agreement.