COMPARATIVE PRIVATE LAW

Week 1 - Introduction
24 October 2014
Resit: 25 January 2015
f.m.j.verstijlen@rug.nl
050 363 5773

Comparative Private Law

An introduction to comparative law

WEEK 1
Frank M.J. Verstijlen

Programme
Study Materials

I.
The material in the syllabus:
L.P.W. van Vliet, Transfer of movables in German, French, English and
Dutch Law, Nijmegen 2000, pp. 31-71 and 91-132.
K. Zweigert & H. Ktz, An Introduction to Comparative Private Law,
Oxford 1998, pp. 180-204.
L. Ho, Trusts: the essentials, in: L. Smith (ed.), The worlds of the trust,
Cambridge 2013, pp. 1-20.
M. Grimaldi and F. Barrire, Trust and Fiducie, in: A.S. Hartkamp et al.
(eds.), Towards a European Civil Code, Fourth Revised and Expanded
Edition, Alphen aan den Rijn/Nijmegen 2011, p. 1085-1100.

II.
Westdeutsche Landesbank Girozentrale v Islington London Borough
Council [1996] 2 All England Law Reports, pp. 961-1022 (available in
library, text available via Nestor).

III.
Everything that is discussed during the classes.

IV.
Additional material to be announced and/or distributed during the classes
and/or via Nestor.

Information on the Course

Comparative law is...
The comparison of the different legal systems of the world.
Macrocomparison
Spirit and style
Microcomparison
Specific legal institutions or problems

The primary aim of comparative law is knowledge.

Comparative law is an cole de vrit which extends and enriches the
supply of solutions and offers the opportunity of finding the better solution
for the comparatist's time and place.

Week 1 An introduction to comparative law

Week 2 An overview of some legal systems
Week 3 Transfer systems, in particular in respect of movables

Week 4 Transfer of movables in France, England, Germany and the

Netherlands
Week 5 Security rights
Week 6 Trusts, general characteristics
Week 7 Trusts in civil law systems
Critical comparison and reinterpretation of own system
Examples:
What techniques of legislation are used?
With what techniques are statutes interpreted?
Is there judicial review?
How are disputes resolved?
What is the authority of precedents?

Examples:
What specific protection exists for victims of traffic accidents?
Under what circumstances can an offer be withdrawn?
What factors are relevant in determining which party has the onus of
proof?
What are the requirements for a transfer of property?
Under what circumstances can a director of an insolvent company be held
liable by the creditors of that company?
But...
What is comparative law?
Why practice comparative law?
Functions of comparative law
Aid to the legislator
Tool of construction
Component of the curriculum of universities
Contribution to the systematic unification of law

http://hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-82172

Example
http://ec.europa.eu/justice/contract/files/european-private-law_en.pdf
Draft Common Frame of Reference
Development of a private law common to the whole of Europe

But...

15a

InsO

Antragspflicht

bei

juristischen

Personen

und

Gesellschaften ohne Rechtspersnlichkeit

(1) Wird eine juristische Person zahlungsunfhig oder berschuldet, haben
die Mitglieder des Vertretungsorgans oder die Abwickler ohne schuldhaftes
Zgern,

sptestens

Zahlungsunfhigkeit

aber
oder

drei

Wochen

berschuldung,

nach

einen

Eintritt

der

Insolvenzantrag

zu

stellen. [...]

Artikel 6:162 BW
1. Hij die jegens een ander een onrechtmatige daad pleegt, welke hem
kan

worden

toegerekend,

is

verplicht

de

schade

die

de

ander

dientengevolge lijdt, te vergoeden.

2. Als onrechtmatige daad worden aangemerkt een inbreuk op een recht
en een doen of nalaten in strijd met een wettelijke plicht of met hetgeen
volgens ongeschreven recht in het maatschappelijk verkeer betaamt, een
en ander behoudens de aanwezigheid van een rechtvaardigingsgrond.
3. Een onrechtmatige daad kan aan de dader worden toegerekend, indien
zij te wijten is aan zijn schuld of aan een oorzaak welke krachtens de wet
of de in het verkeer geldende opvattingen voor zijn rekening komt.

Article L653-3 Code de Commerce

I.-Le tribunal peut prononcer la faillite personnelle de toute personne

mentionne au 1 du I de l'article L. 653-1, sous rserve des exceptions
prvues au dernier alina du I du mme article, contre laquelle a t
relev l'un des faits ci-aprs :
1 Avoir poursuivi abusivement une exploitation dficitaire qui ne pouvait
conduire qu' la cessation des paiements ;
2 Abrog.
3 Avoir dtourn ou dissimul tout ou partie de son actif ou
frauduleusement augment son passif.

s 214 Insolvency Act 1986 - Wrongful trading.

(1) Subject to subsection (3) below, if in the course of the winding up of a
company it appears that subsection (2) of this section applies in relation to
a person who is or has been a director of the company, the court, on the
application of the liquidator, may declare that that person is to be liable to
make such contribution (if any) to the company's assets as the court
thinks proper.
(2) This subsection applies in relation to a person if-(a) the company has gone into insolvent liquidation,
(b) at some time before the commencement of the winding up of the
company, that person knew or ought to have concluded that there was no
reasonable prospect that the company would avoid going into insolvent
liquidation, and
(c) that person was a director of the company at that time;
but the court shall not make a declaration under this section in any case
where the time mentioned in paragraph (b) above was before 28th April
1986.

How to practice comparative law?

Functional approach
Question not posed in terms of national legal concepts but in functional
terms

Legal Families
Romanistic legal family (France and all the systems which adopted the
French Civil Code, along with Spain, Portugal and South America);
Germanic legal family (Germany, Austria, Switzerland and a few affiliated
systems);
Anglo-American legal family;
Nordic legal family;
Law in the Far East (China, Japan);
Religious legal systems (Islamic law, Hindu law).
Categorization of systems
Historical development
Mode of legal thinking
Legal institutions
Sources of law
Ideology
Choosing legal systems to compare...
The functional method is not without theoretical problems (R. Michaels,
The Functional Method of Comparative Law, SSRN-id839826)
It is doubtful whether it can provide a 'blueprint for just law'
It takes a reductionist approach of legal culture
But it can provide a tool for interpretation and improvement of law
See however the criticism of
R. Michaels, The Functional Method of Comparative Law, SSRN-id839826
It is a poor instrument for evaluation

It is designed to 'look behind the rules' and not suited to build a system of
rules
It focuses on the functional equivalence of legal institutions and therefore
unification of the law has little to add

Claudias notes below.

COMPARATIVE PRIVATE LAW

Manual: check Nestor: An introduction to comparative law (in syllabus)

Ppt: Nestor
Study material: check syllabus
Exam: 24 oct 2014
Resit: 25 jan 2015

Lecture 1

What is comparative law?

It is the comparison of the different legal systems of the world. Critical comparison and
reinterpretation of own system.
It can be divided in two:

macrocomparison (spirit and style of one legal system; look at the whole system -->
questions: what tehniques of legislation are used? are there laws for these techniques?
with what techniques are statutes interpreted?Most countries also allow to look at the
intent of the legislator, but others say that you must abide by the law and not look at the
intent of the legislator. Is there judicial review? How are disputes resolved

(jury/proffesional judges; do you need a leave to take someone to court)? What is the
authority of precedents? what courts are bound by previous decisions? can courts do as
they please?) and

microcomparison (you look at specific institutions, not the whole system. Questions> Is
there any specific protection for victims of traffic accidents? Some participats in traffic
are more vulnerable. Under what circumstances can an offer be withdraw? What factors
are relevant in determining which party has the onus of proof? What are the requirements
for a transfer of property? Under what circumstances can a director of an insolvent
company be held liable by the creditors of that company?).
Ecole de verite = school of truth. Comparative law enriches and extends the supply of

solutions and offers the oportunity of finding the better solution for the comparatist's time and
place. you have a wider range of solutions to choose from. See in advance how a certain
solution workss, plays in practice.

Why practice comparative law?

Aim:

knowledge --> what is comparative law?

(use comparative law to improve your own law)

more practical reason: legislators and courts use it< if you dont know it, you shut yourself
out of your own system.

Functions of comparative law (how to reach the aim)

aid to the legislator: when the legislator decides there should be some law for a certain
area of society

more strategic or technical reasons: in some areas of law there is sort of competition
between legislator (ex. competition law, company law, property law)

tool of construction: you already have a rule, a law, but it is unclear; you use comparative
law to find the actual meaning of that rule; example> http://hudoc.echr.coe.int/sites/eng
--> J.A. Pye (Oxford) Land Ltd v. United Kingdom, The European Court of Human
Rights, Grand Chamber (2007?) chapter 4 point 70,71, 72

component of the curriculum of universities

contribution to the systematic unification of law --> development of private law common
to the whole Europe -- > example Draft Common Frame of Reference (DCFR)

How to practice comparative law?

Functional approach --> the most common method.
There are other techniques, but they are not practiced very often: historical approach,
comparison of legal transplants, comparative study of legal studies, etc.
Question not posed in terms of national legal concepts, but in functional terms. The
legal systems may not have the same use for the same terms, or the same terms for the legal
concepts (e.g. in German law some concepts like possession have a different meaning than in
the Dutch/French legal system; trust).
Under what circumstances can a director of an insolvent company be held liable by the
creditors of that company? if a German lawyer asks this question in his national concepts, he
misses a lot of concepts, case law that are not included in those German concepts, but are
included in them in other countries. there are different concepts, but they all deal with the
question how do you protect the creditors that deal with this issues.
The functional method is not without theoretical problems (R. Michales -- Nestor).
It is doubtful whether it can provide a 'blue print for a (the right) law'. the fact that it is
applied in 10 countries, does not mean that is perfect.
It takes a reductionist approach of legal culture. Law is not only rules, but also culture.
Taking a rule from one country ant applying it in another it's bound to go wrong. (e.g. the
European Civil Code)

Critics by R. Michales:

it is a poor instrument for evaluation. The advantage as an instrument of evaluation is

that you not only see the rule, but also how it works in practice.

it is designed to 'look behind the rules' and not suited to build a system of rules. It is
not designed to draw up new rules.

it focuses on the functional equivalence of legal institutions and therefore unification

the law has little to add.

Advantage: But it can provide a tool for interpretation and improvement of law.

Choosing legal systems to compare...

Week 2
8th Sept, 2014
9h-11h
Mr. Dr. Rosalie Koolhoven
R.koolhovel@rug.nl

The Legal Families - "the world's law"

How do we divide these systems into families? There are only 6 or 7. Or maybe not? In the
end of the course we will discuss that specifically - "C. Relativity of all this" (not compulsory,
however).

A. An overview of some legal families

1. Legal system vs. Legal family

4 main legal systems:

- Common Law system (we don't have a codification as the main source of law, but yes the
judge's decisions)
- Civil Law system (somewhat roman frame)
- Religious legal system
- Combined legal system

"Legal system": System for interpreting and enforcing law - there as many as there are
countries
"Legal family": a group of systems that are somehow comparable or similar. Zweigert and
Kotz went back to the first main civil codes, like for instance the German Code or the
Napoleon Code, and tried to understand the changes. They looked a lot at the influence of
Roman law.

But... How do we distinguish it or classify?

2. Distinction through taxonomy
Look at the sources? Look at legal institutions or the way the court system is built? The
historical development?

B. The six families, according to K. Zweigert & H. Kotz

I. Romanistic legal family
II. Germanic legal family
III. Nordic legal family
IV. Law in the Far East
Civil Law
V. Anglo-American legal family

VI. Religious legal family

Common Law
VII. Hybrid legal system as a group (not a family but they share the fact that they are a
mixture)
- Common + civil
- Common + religious
- Civil + religious

I. Romanistic legal family

1. Historical development and mode of legal thinking & ideology

- Droit crit + Roman law of the South
- Droit coutumier (customary law) + Germanic influence of the North
After 1400, French kings started writing down the laws that were applied. They sent people to
report the laws and found over 300 different systems of only one area in between French
frontiers. And, of course, legal diversity equals legal uncertainty.
2.
Code civil: "Esprit of Revolution"
With the Revolution, Feudal institutions were abolished - people wanted more freedom. With
this intellectual revolution as well, a civil code was not as traditional but a marking point for a
change of society as well.
Napoleon already had his Constitution approved and what he did was he tried to make it
closer to people, with non-lawyerish words.
He was a military man and wasn't a lawyer. His personal interest was to be able to divorce
and adopt children. That was his closer-to-people Napoleonic Constitution.
Of course, if we look at it now, men and women were not equals at all. And the style of the
Statutes - it should have been easily accessible - but overtime Doctrine has become more and
more important and Case Laws as well. In the style of the Court decisions, there aren't many
references to Case Laws and prior decisions.

3. Style of statutes
He wanted it to be near to the reality of life and nothing like the German Code. This is
mainly why it is considered a legal family.

II. Germanic legal family

1. Historical development and mode of legal thinking & ideology

Whereas in France we had several kings searching for people to write down all of the
decisions, in the Germanic legal system we had very diverse customary legal systems and all
of these were governed by few little Barons (not kings) - Feudals but just not Kings. There
was no central authority.
The Germanic laws that were in use were very diverse like in France but very much not a
result of reason but more of intuition or practical wisdom.

2. BGB
With the wish for a Civil Code spreading through Europe, also the Germans wanted one.
Instead of writing down every decisions, they felt that if you'd write Roman law in a very
structured way, it would be a written down conceptual world that you could use to always find
la.
They studied law not from a historical perspective but they took the Roman law and
organized it a very structured way and adopted it as a whole.
That created a logical Code, result of wisdom and not chance. This way it was the most
certain Code.
What's very important to distinguish: it was imperial and not grown into the society.
Why was it not adopted by other countries? If it was newer? Because lots of countries that
had the belief that they needed a civil code, they just adopted the French code - but why?
The French imperial power was much accelerated, and the Germans didn't have many
colonies. And for instance, regarding Holland, the French code was simply enforced.

3. Style of Statutes
Characteristics: Very abstract concepts; categorizing Roman law form a non-historical way;
whereas the Napoleon Code was very close to people, the German law is very professional
and exact/accurate/precise.
For example: In German law we need to know when to use a certain claim, whereas in
Holland we can vindicate something but at the same time can ask for damages. If something
doesn't work, make other claims until something works.
In Germany, if something doesn't work, it doesn't.

III. Nordic legal family

1. The laws of Sweden, Norway, Denmark, Finland and Iceland: one family through
political and cultural ties
They are put into one group due to a geographical reason.
Special note: There are no foreign elements. The basis is all German laws.
There is a very strong emphasis on Case Law. They have some codifications but not one civil
ode like BGB or the Napoleon Code.
They do however, work with a lot of analogies: if we have a sails contract and need to know
something about damages, they would apply analogies. They don't have a more abstract Civil
Code, they just use analogies and focus on Case Law.

2. Background of tiny bit of Roman law and customary law together with partial
codification
3. Emphasis on judicial decisions

IV. Law in the Far East

Eventhough the laws are different, they adopted the German Code. There is a tendency to
solve disputes through settlements, rather than going to Court. Usually, if you go to Court,
then you will stay anonymous and the judge won't make a decision like winning and losing they send it to be negotiated so that "no one loses their face", they try to solve it in a more
gentlemanly kind of way, maintaining the relationship that is already there.

1. China & Japan

2. Connected through tendency to resolve disputes otherwise than by courts
3. Mediation / their focus is to maintain a balance
4. Arbitral committee
5. Legal transplants from other systems

V. Anglo-American family

1. Historical development
It's the only Common Law Family - that's what makes it different.
It's an action based family. They have no civil codes, just the decisions/case laws.
It has no Roman influences because, in the Middle Ages, by the time that the Roman law was
rediscovered, the English already had their understanding of what was The Law.
"The binding force of precedent" - that's the distinctive characteristic.
Besides the long tradition, there is something else that is special:

2. Common law & equity

They are merged into one united Court, the claims are united.
It was to fill a gap - in England, the common law claims were very rigid, and there was no
flexibility, like in Germany.

3. Judgments: stare decisis - 1966 declaration

The system became too rigid - you had to be very specific on what you wanted. If you didn't
get it totally right, you'd be lost. Then people started petitioning the King himself. All of those
who didn't get justice would petition him and he would decide in Equity - a different Court
from the Common Law Court.
Also, there were too few remedies.
In the end, the Courts merged. Also, this doctrine of Precedent was somehow more flexible
over the years. In 1966, all the Law Lords concluded that it should be possible, in some cases,
when Judges were sitting all together, there could be a different decisions - more just. That
was a necessary development! Because if you're too strict, you might not find justice after all.

4. Countries?
USA, Canada, New Zealand, UK.

VI. Religious legal systems

Law revealed by God

1. Halakha - the Jewish path of life
2. Canon law (Christian): codification of Catholic and Orthodox law, comparable to civil law.
3. Sharia (Islamic law): path to be followed, to the source
4. Hindu law

VII. Hybrid legal systems

Created to do justice to all of those systems that aren't just one type. Everything is temporary,
in life.

C. Relativity: legal transplants

Legal transplants:
The transplanting of law and legal institutions from one system to another, Alan Watson

Relativity of legal families in a stricter sense:

Belgian and French law have separated developments whereas Dutch law is no longer as
different from German law as under the old Code Napoleon

Week 3
15th Sept
9-11h
Frank. M. J. Verstijlen

Transfer systems, in particular in respect of movables

This week we'll analyse the different systems of transfer of movables within part of Europe
and then next week we'll be comparing those systems.

We will focus on 3 systems:

Romanistic legal family - France

Germanic legal family - Germany

Anglo-American legal family - England

For instance, about The Netherlands: Originally they belonged to the Romanistic legal Family
because France ruled TN for a while. After that, when they had their own Civil Code, it was
kind of a translation of the French civil code still.
However, when you look at it, it looks like the Germanic system had much more influence.

Now, it's sort of a mixture between Romanistic and Germanic.

It's important to keep in mind that transferal of movables is in the middle of Property Law. It's
a certain part of law in which the position of 3rd parties are very important - it describes the
rights that a person has towards a certain thing: I own this book. And this right of ownership
can be enforced towards the whole world!
This means that my right of ownership is important, eventhough we have no contract. It's an
absolute right and therefore we need to keep in mind 3rd parties.

Concepts and principles of the law of property

Law of property: concerned with legal relationships between a person and an asset;
concerned with legal relationships between persons with respect to assets.
The position of third parties must be kept in mind vs. Absolute rights

If you wanted that book, what would you do?

If there is no delivery required, it is a consensual system. Ex: Poland, Portugal
The conclusion of the contract grants you ownership.
However, in Germany, this would not be enough. We need a "real agreement".

We can make 2 types of distinctions:

Tradition system vs. Consensual system

Ex. Germany vs Poland

Abstract systems vs. Causal system

How do we distinct?
Well, according to Roman Law, the requirements for transfer are:

Causa: e.g. contract of sale and purchase

A reason, a cause, it has to be based on something. Usually one person sells the thing to
another person

Traditio: transfer of possession

Delivery - the thing needs to be handed over in order to have the transfer taking place.

Entitlement transferor

If I do not own this book, I cannot transfer it to you. This is basically common to all systems,
at least as a primary point - there are exceptions to this rule.

When it is not necessary to have a legal reason - causa - to have a transfer, in those systems,
we speak of an abstract system, because the transfer is seen abstractly, separately, from the
underlying contract.

THE CONSENSUAL SYSTEM

You don't need a delivery - it's very easy to transfer it. We only need to conclude a contract. In
those systems, the transferal is complete the moment the contract is concluded. It happens
immediately.
"Solo consensu rule" - Ownership in principle passes the moment the contract of sale is made.

Which problems can arise?

Imagine that the buyer is insolvent. The ownership has already been transferred...
Usually there is a remedy for this kind of problems: probably in most systems I will be able to
invoke a right of protection - I'm obliged to hand over the book because I do not own it
anymore, but I can postpone my obligation until the buyer fulfils his part of the bargain.

"Retention of title" - you can agree that ownership will only pass upon payment of the price.
And this is part of an European directive - in every member state you should have such a
protection of title clause.

Actually, the differences are mitigated. You get ownership immediately but it doesn't mean
you can enforce your right until you yourself fulfil your end of the bargain. The end result
will be nearer the delivery system.

TRADITION SYSTEM
The transfer of ownership in principle requires traditio, transfer of the possession of the
thing.

Usually because the thing is actually handed over. At least in some systems - the German
system, for instance - just handing over the thing is not enough, you need an additional
agreement aimed at ownership actually passing // "the real agreement"

You have 2 forms of contract:

Frist step: contract of sale, on the basis of which the other party is obliged to transfer
ownership

Second step: to actually transfer ownership you need too actually hand over the thing.
Or, in addition: there has to be a meeting of the wills and at that moment, ownership
is to pass.

Whereas in a consensual system the contract, that is, consensus between the parties suffices,
in a tradition system the contract merely creates an obligation to transfer the thing. In the
latter system ownership will pass only after the legal act of transfer/traditio has taken place.

Second distinction:
ABSTRACT AND CONSENSUAL SYSTEM

The cause for the transfer, the underlying reason for the transfer to take place - usually a
contract of sale - needs to be valid.
Also, a trade or a gift. It is not necessary to have a quid pro quo - there's nothing wrong with a
person actually donating a thing without requiring a purchasing price.

The distinction is: The existence of this cause is crucial for the transfer.
In an abstract system, it isn't. If there is something wrong with the underlying contract, it

means that the transferal doesn't take place / on the other hand, in an abstract system, the
transferal remains valid, when it comes to the abstract system.

A causal transfer system demands that the transfer be based on a valid legal ground, a valid
causa traditionis.
In a consensual system, where the contract of sale itself is said to pass ownership, it is
obvious that avoidance of the contract will lead to ownership reverting to the seller with
retroactive effect.
In a consensual system the transfer of ownership depends on the validity of the contract.
A consensual system therefore is a causal system.

There are cases in which something different than a contract can function as a valid legal
basis:
For instance, based on a wrongful act - person A concludes a contract of sale with person B,
they sell a house or 100.000. And person C is willing to pay more than that and puts pressure
on A to sell it to him, instead of transferring it to B. The fact that C is provoking, forcing A to
commit breach of contract can be an unlawful act. Eventhough A has transferred ownership to
C, the Court will decide that it has to go to B, because the original contract is valid and has to
be enforced.

In a consensual system, the transfer of ownership depends on the validity of the contract.
A consensual system therefore is a causal system.

In a tradition system the act of transfer is considered as a distinct legal act.

Having made the distinction between the underlying contract, which serves as causa
traditionis, and the transfer, a legal system is confronted with the question how the latter act
relates to the former one.
Does invalidity of the underlying contract affect the validity of the transfer?

Because in a tradition system, the second stage - traditio - is a different act; therefore, there
can be something wrong with the underlying relationship. But if the second step has been
taken, there are 2 solutions:

When the delivery has been made and the object has been handed over, the fact that
the delivery has taken place is decisive. We speak of abstract systems, if it transfer is
still valid.

If eventhough delivery has taken place, the fact that the underlying relationship is
flawed or even has never existed, in that case, that means that the transfer becomes
invalid, then we speak of causal systems.

So... does the invalidity of the underlying relationship affects the contract?
If the answer is no, we have an abstract system. If yes, we have a causal system.

Legal systems in which the validity of the transfer does depend on a valid causa traditionis,
for example the Dutch system, are called causal tradition systems.
If in such a system the contract is avoided with retroactive effect - the transfer is invalid and
ownership is deemed never to have passed to the buyer.
So
Example of the causal system: Dutch system
If the underlying contract has been avoided, then there is no transfer. And eventhough if the
thing has been delivered, no transfer has taken place and I will remain the owner eventhough
the thing is actually in your possession.

In an abstract system, this is different. The underlying contract does not actually affect the
transfer once there has been a valid traditio.
Ex: the German system

But what happens if the transfer has taken place, remains valid and the underlying contract is
invalid?
The end result is not very appealing because, for instance: if I traded a book (10) for a
computer (300; 290 difference) - it could be a valid contract, there is no reason for it not to

be; however, if I told you it was a very expensive book, very special book, and it is not true, if
I've lead you to believe in something false, then according to Dutch law, I would be able to do
something about it - I could invalidate this contract.

But how would it be in the abstract system?

In Germany, there is an institute which in this case would help transfer the object back. To put
it simple: you have something you're not supposed to have. Basically what we have is that
from the view of property law, the acquirer remains the owner but there is unjustified
enrichment. He should transfer the thing because eventhough he has ownership, there is no
justification for this transferee to remain the owner. So, therefore, by law, he needs to
retransfer it. However, until this retransfer takes place, he will still be the owner.

Conclusion: In an abstract system, the position of the seller who sells with an invalid basis is
much weaker than it is in a causal system. Because if the same thing happens in The
Netherlands, the fact that the contract has been avoided, means that there is no underlying
legal grounds. It has retroactive effects. The contract is deemed to never have happened.
So I can claim my computer and you can claim your book. I still own my computer and so I
have a much stronger claim - I have an absolute right, whereas in Germany it's just a personal
right.

Example: A contract of a sale of a bicycle between A (seller) and B (purchaser) is concluded

on 1 January, the bicycle is delivered on 5 January, the contract is avoided on 10 January.

What are the consequences in the three systems?

The 3 different systems we have discussed so far:
- Consensual system (always a causal system)
- Causal tradition system
- Abstract tradition system

What are the consequences?

On the 1st January

1. Consensual system
B owns the bike. The contract itself transfers the ownership.
2. Causal tradition system
A owns the bike. Because it's a tradition system - it has happened. Delivery is required to
have a transfer of property.
3. Abstract tradition system
A owns the bike

On the 5th January

1. Consensual system
B owns the bike
2. Causal tradition system
B owns the bike
3. Abstract tradition system
B owns the bike

On the 10th January

1. Consensual system
A owns the bike.
2. Causal tradition system
On the 10th of January, A owns the bike. The definition of causal is that the transfer
DEPENDS on the underlying contract and it does not exist!
3. Abstract tradition system
The transfer is completed - B will own the thing. But by January 10th, there is a retroactive
effect - the contract is deemed to never have happened. There is no contract, there is no
transfer.

German Law: Abstract tradition system

French Law: Causal consensual system

English Law:

Common Law: tradition system

English Sale of Goods Act 1979: causal consensual system

Dutch Law: Causal tradition system

The requirement of power of disposal

It is required that the transferor has the actual power to dispose of it. I own this thing so I
have the power to transfer ownership of this book.
The main rule is: if I don't have ownership, I cannot transfer it - Principle of Disposal.

Nemo plus iuris ad alium transferre potest, quam ipse habet nobody can transfer more right
than he himself has.
Nemo dat quod non habet no one gives what he does not have
In order to transfer a thing the transferor must have the power to dispose of the thing in
question.

But it does not say that we have to own it - there are circumstances in which someone else is
authorized to transfer ownership. The basic rule is that the one person to transfer ownership,
is the owner himself.
The exception is that by law we can do almost anything - we can give someone else the power
to transfer ownership. For example, the trustee in bankruptcy.

Third party protection

An act of disposal executed by a person not having the power to dispose is invalid and the
intended acquirer of the right does not acquire the right in question.
However, exceptions to the rule exist.

We have to put ourselves in the position of the person who thinks he his the owner upon
concluding the contract.
Since it is very difficult to find out who actually owns the book, we need to protect 3rd parties
somehow. Usually the law does this.
We put our trust in this person and then he turns out to be someone else? No. "Third party
protection" is supposed to fight that.

E.g.:
Transfer of movables in German law
> 929, 1st sentence BGB:
Zur bertragung des Eigentums an einer beweglichen Sache ist erforderlich, dass der
Eigentmer die Sache dem Erwerber bergibt und beide darber einig sind, dass das
Eigentum bergehen soll.
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. (translation:
Bundesministerium der Justiz)

The German abstract system distinguishes between the contract obliging to make the
transfer (Verpflichtungsgeschft) and the transfer itself (bereignung, Veruerung).
The transfer is valid even if the preceding contract is void or has been avoided with
retroactive effect.
If ownership has been transferred under a voidable contract avoidance will not automatically
revert ownership to the transferor.

The second stage is "both agree that ownership is to pass" - the real agreement

Exceptions to the abstraction

Fraud and duress will in principle affect the validity of both the contract and the transfer. Such
a common defect is called Fehleridentitt (identity of defect).
The abstraction is ius dispositivum: the parties may make the transfer depend on the validity

of the underlying contract.