Kausalgeschäft – the abstraction principle

Although we know about the abstraction principle in German contract law, we don’t often have to translate it.

Here is Markesinis on the principle:

We now come to what is one of the most intriguing peculiarities of German contract law. Indeed, Zweigert and Kötz, in their treatise, An Introduction to Comparative Law, p. 71, regard it as so distinctive as to argue that it gives the German legal system its characteristic style. … Many common lawyers, and indeed French lawyers,might be tempted to describe it more than just ‘distinctive’. ‘Un-necessary’ and ‘excessively abstract’ are words that have often been used; and not with(out) some justification.

German law notionally distinguishes between the legal transaction that creates the relationship of obligation (Verpflichtungsgeschäft) from (sic) the legal transaction which transfers, alters, extinguishes, or encumbers rights (Verfügungsgeschäft = disposition contract). This distinction is accompanied by an important sub-rule: the validity of the second transaction is independent from (sic) the validity of the first.The first tenet is known as the ‘principle of separation’ (Trennungsprinzip), while the second is referred to as the’principle of abstraction’ (Abstraktionsprinzip).

Basil S. Markesinis, Hannes Unberath, Angus Johnston, The German Law of Contract. A Comparative Treatise, 2nd ed. 2006, p. 27

Even the act of buying a newspaper, in German law, consists of two stages: the intention and the reciprocal handing over of paper and money.

The closest idea in English law is found in conveyancing, where the parties exchange contracts to buy/sell and some weeks later the property and payment are exchanged.

In my translation, the situation was that the Kausalgeschäft (= Verpflichtungsgeschäft) underlying a gift of money in return for a promise not to seek further payment was invalid, and so the gift was invalid too.

One way to do this would be to add a translator’s note explaining this peculiarity of German law. I decided to translate Kausalgeschäft as ‘underlying obligation’ and ‘obligational agreement’, adding ‘(a peculiarity of German law)’.

ProZ is often helpful here.  As long as you understand the German legal point, you can see which answers are helpful, just as when trying to find help in Dietl or Romain.

10 thoughts on “Kausalgeschäft – the abstraction principle

  1. Very helpful, Margaret, thank you for that! So, if I understand you correctly, you used both ‘underlying obligation’ and ‘obligational agreement’ as translation of ‘Kausalgeschäft’, which, I assume, occurred several times in your text. I understand from the above that ‘Kausalgeschäft’ and ‘Verpflichtungsgeschäft’ are synonyms. Do you think that justifies using ‘underlying obligation’ and ‘obligational agreement’ interchangeably? I’m a bit confused but I am sure there is a very simple explanation.

  2. Thanks, Inge. Yes, a rather hasty post. I don’t insist on variation, but I wrote both ‘underlying obligation’ and ‘obligational agreement underlying…’. It had to be comprehensible, although it wasn’t necessary for the reader to be able to fully think through the arguments in German law. The German text started with ‘das zugrundeliegende Kausalgeschäft’. I think I have seen ‘Verpflichtungsgeschäft’ more often than ‘Kausalgeschäft’. The two elements were also referred to as ‘Verzicht’ and ‘Abfindungsvereinbarung’. But the text did require a more analytical reference to German law than I usually need to do. – So I would say the original text used a lot of variation, and so did I. But I don’t think much about these things unless and until they come up as a concrete problem.

    • That makes a lot of sense, Margaret, considering that the original text also used a lot of variation. And I fully agree with this statement >It had to be comprehensible, although it wasn’t necessary for the reader to be able to fully think through the arguments in German law.< If the reader does not get the overall idea because it is not comprehensible, well, then they just move on hoping that this will get cleared up further down. Although that won't happen in a contract, maybe in a brief or an opinion at the end under the conclusions.
      Thanks again!

  3. Another way the Abstraktionsprinzip had – almost half a century ago – been tiresomely drummed into us students of German law was as a schuldrechtliche Verpflichtung (§ 433 BGB: a contractual obligation operating in personam cf. your inspired exchange of contracts, Margaret, rather than Zahn gloasary’s rather misleading translation of a debt obligation) vs. die dingliche Übergabe or Übereignung > § 929 BGB: the transfer of physical possession operating in rem (your idea of conveyancing completion with physical hand-over of money, documents and the keys to the property – as I used to attend many of pre e-conveyancing).

    One of our German Rechtsanwalt law lecturers always used to hold up his watch in class and claim that the agreement to buy such time piece was the first (verbindliche) schuldrechtliche Erklärung stage and the hand-over was the second Erfüllungsgeschäft stage.

    Funnily enough, he also used to boast that German law had done very well, thank you, without the English Common Law ‘redundancy’ of contract consideration or of using deeds under seal instead, though query: the consideration-like requirement for a ‘causa’ (vs. Kausalität) in the zugrundeliegendes Kausalgeschäft as the underlying transaction supported by a contractual substratum (Verzicht as a disposition operating by way of disclaimer or waiver ?) and the Verpflichtungsgeschäft as, alas, an executory-type contract

    NB ‘There are no true synonyms in (French, Spanish & German) law’: Die meisten Verpflichtungsgeschäfte sind Kausalgeschäfte https://de.wikipedia.org/wiki/Kausalgeschäft. (So odd but understandable that most DE/EN law dictionaries dodge either term).

  4. Surprisingly to me though, students from common law jurisdictions will inevitably be bemused at the distinction. Of course the initial response is always ‘what the hell of a distinction! But sincerely the distinction is duly warranted and helps a lot.

    I think the confusion arises from the Mercantile law regulating sales transaction specifically The Sale of Goods Act which is a statute of general application in Nigeria. Section 20 of that Act specifically provides that ‘ownership rights in any specific goods transfers to the buyer at the time of the making of the contract.

    My lecturer in German Law, Dr Schmitt at Uni Augsburg clearly pointed out the need for the abstraction principle and then a few other researches made it clearer to me.

    • It would confuse not only students from common-law jurisdictions, but those from most civil-law jurisdictions! I am interested to hear that it has positive aspects, and I believe that. I need to read more. I don’t quite unerstand the beginning of your second paragraph – I mean, what does the fact that the 1893 Sale of Good Act still applies in Nigeria (as I read) have to do with this?

      • I think what Callistus is getting at – in the second para. – is that the title to goods (vs. land) in Nigeria passes from seller to buyer on making of the preliminary contract of sale (cf. the § 433 Kaufvertrag of the German BGB as opposed to the § 929 dingliche Übereignung as ‘completion’ on physical hand-over of actual possession).

        Whether the sale ends up duly registered somewhere is a point of actual (mal-)practice, notably in Spain where registration of a conveyance of land is often ‘forgotten’ – triggering, as it does, a whole raft of stamp duties and land taxes.

  5. It is reassuring, Callistus, that the need for the principle of abstraction is supported and advocated by your (ex-)lecturer: Prof. Dr. Emeritus Reiner Schmidt from the University of Augsburg, as in the birthplace of legendary playwright, Bertolt Brecht.

    That Nigerian Sale of Goods Act is a good point, whilst a contract for the sale of land is – as Margaret points out – usually and in most jurisdictions split into two parts: the preliminary contract of sale (Spain: the private contract of sale vs. the escritura pública as a notarised – or, more properly, notarially attested – deed of conveyance), as it is in Nigeria: see clause 9 – the Vendor agrees to execute (sign) the Deed of Assignment (land transfer) prepared by the Purchaser http://www.blog.lawrepository.com.ng/2017/03/sample-of-contract-of-sale-of-land.html

    Perhaps the Doctrine of Merger (of a contract of sale into the conveyance of land) is an ‘abstract’ English Common Law (so, also, part of Nigerian law) equivalent of the German law idea of the Erfüllungsgeschäft outcome.
    https://en.wikipedia.org/wiki/Merger_doctrine_(property_law)

    PS a learned-friend neighbour of mine from the South of England used to teach the English Bar Examination course in both Kenya and Nigeria.

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