Legal transactions: form, nullity and contestability

An economy only functions through the conclusion of legal transactions. We buy a car in installments, have shoes repaired, eat in a restaurant, and stay in a hotel room while on vacation. Each of these processes is based on a legal transaction.

Legal transactions as a declaration of intent

A legal transaction consists of one or more declarations of intent. A declaration of intent is a declaration with which the person making the transfer aims at something, e.g. B. wants to sell or rent something at a certain price to another person or want to lend or give something free of charge. In any case, legal transactions trigger a legal consequence. The declaration of intent is therefore always aimed at bringing about legal success.

Legal transactions shape the legal relationships between the natural and legal persons acting in an economy and the state.

Die wohl häufigste Form von Rechtsgeschäften ist der Vertrag. Er verpflichtet beide Parteien und gibt ihnen Rechte. So ist z. B. beim Kaufvertrag der Verkäufer verpflichtet, die Ware pünktlich und mangelfrei zu liefern und dem Käufer das Eigentum daran zu verschaffen während der Käufer seinerseits die Ware abnehmen und pünktlich bezahlen muss. Die Rechte der einen Vertragspartei sind zugleich die Duties der jeweils anderen Partei.

Form of legal transactions

The way, the form in which legal transactions are concluded is largely optional in our legal system. Legal transactions can be concluded as follows:

  • verbally or by telephone
  • in writing or by telegram
  • by simple action (coherent action)

These possibilities are derived from the freedom of contract. It would be problematic if every sales contract had to be concluded in writing before it becomes valid. The freedom of contract enables, among other things, the smooth functioning of our economic system. As is well known, there are exceptions to every rule, including in this area. In order to protect the persons involved, the legislature has prescribed a more or less strict form for a number of legal transactions:

  • Written form means that the relevant legal transaction is drawn up in writing and signed by the contracting parties themselves (e.g. rental agreements with a term of more than 1 year, guarantees between non-traders, promises of debt, purchase in installments).
  • Public authentication includes the written form as well as the notarized or officially certified signature of the parties (applications for entry in the land register, in the commercial register or register of associations).
  • Public authentication not only includes the confirmation of the signatures, but rather the authentication of the entire document, whereby the signatures must also be given in the presence of the confirming person (purchase contracts for land, resolutions of the general meeting of an AG, marriage contracts).

Nullity of legal transactions

In certain circumstances, the legislature has ensured that legal transactions that lack the essential requirements for their validity are ineffective. They do not trigger any legal consequences and are treated as if they were not concluded at all.

Legal transactions are null and void:

  • which were concluded by persons who lack legal capacity
  • which show a deficiency in the legal will, such as:
    • declarations of intent given in appearance
    • Declarations of intent made in jest
    • Declarations of will made in a state of unconsciousness or a temporary disturbance of mental activity
  • which have a defect in the content of the legal transaction, such as:
    • immoral business
    • Business prohibited by law
  • which show a formal deficiency, ie contain a violation of formal requirements

Contestability of legal transactions

Another group of legal transactions can be concluded if it is and remains the firm will of the persons involved. However, there may be reasons that induce individual parties to reverse the legal transaction. Such legal transactions are therefore valid until they are challenged with valid reasons.

Such reasons are:

  • Dispute wegen Irrtums
    • Error in explanation
    • Submission error
    • Error about essential characteristics of a person or thing
  • Avoidance due to fraudulent misrepresentation or unlawful threat.

In the case of the first group (error), the challenge must take place immediately, ie without culpable hesitation, while in the case of the second group the challenge must take place within one year of knowledge of the deception or the end of the predicament.

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