Errors in Calculation – German Law

Generally, it is clear that an internal (i.e. not on the face of the document) calculation that the other party did not and could not have known of will not be relevant.584 _{If the document does not provide any evidence that there has been a} mistake (because the mistake was made off the face of the document, e.g. when calculating the wages of the workers), then the mistake must be an error in

motive.585 _{Errors that then appear on the face of the document (e.g. 2+5+8= 10) are} mistakes in declaration under § 119 (1) BGB.586 _{The LG Hannover held that where} the seller in a shop makes a mistake by typing in a lower price from the price tag into the till this would also be considered a mistake in declaration.587

The BGH has gone so far as to hold that where the recipient of the mistaken offer clearly knew what the mistaken party meant to offer, then they would be held to

582 _{Though it should be remembered that in cases of innocent misrepresentation the English system}

will also provide a remedy.

583 _{Though may have to compensate under § 122 BGB.}

584 _{E.g. RGZ 55, 369 , 369 ff. and Pawlowski, ‘Die Kalkulationsirrtuemer: Fehler zwischen Motiv und}

Erklaerung’ (1997) JZ 741, at 741.

585_{BGHZ 139, 177 and BGH NJW 2002, 2312 .}

586 _{See obiter RGZ 64, 266 , 266 ff.}

168 what the party meant and not what they wrote (see the three cases below).588 _The interesting case relates to where the other party could or possibly should have known of the mistake589 _{and this is where it seems that the courts have taken} several approaches. The approach that has been advocated by Flume was that the mistake in calculation should be corrected on the basis of the agreement and the will of the parties. In other words Flume advocates that in cases where the actual will of the parties is clear (e.g. the Rubel case590_{), the will of the party should take}

precedent over the written document. However, it seems that not all the cases in which the courts wanted to provide relief could be covered by Flume’s approach and three further approaches appeared: the general duty of good faith, mistake and abuse of law, fraud and the trust relationship.

The calculation as the basis of the agreement – party intention

The idea here goes back to the basics of contract law – the will of the parties. In the

Rubel case591_{a loan had been provided in roubles but was to be repaid in marks. An}

error was made in calculating the exchange rate and the wrong amount was entered into the contract. The court held that this was a legally relevant error as both parties had negotiated on the basis of the exchange rate even though the calculation had not been included in the contract. This was merely a matter of falsa demonstration non nocet and the agreement could be rectified on the basis of the

588_{BGH NJW RR 1996, 1458 .}

589 _{This was left open in BGH NJRW RR 1986. 569 .}

590_{RGZ 105, 406 (Rubel Case) .}

169 correct exchange rate. However, in many calculation cases the non-mistaken party may be agreeing to the total price but there has been a mistake that they should have noticed. For example in the Builder’s Bill case592 _{where a builder had}

calculated that the price for the materials was to be DM 54,60 and the cost of labour to be DM 19,23. He then charged a total of DM 54,70 instead of DM 73,93. The court held that this was a legally relevant error due to the fact that the

calculation was clearly displayed on the face of the document.

If the court were of the opinion that the other party knew of the mistake or shared the misunderstanding, in other words they said DM 54,70 but clearly both meant DM 73, 93, the court could use the principle of falsa demonstration non nocet.593 Here though the courts is dealing with cases where there is an error in declaration and if the other party did not know of the mistake then they will still have to compensate under § 122 BGB. The underlying value would still be that the courts are giving way to the parties’ original intention.

A general duty of good faith

One of the problems that the courts have not addressed is the case where A makes it clear on what basis the calculation will be made (i.e. he will be using the

minimum wage for a total of 30 man hours but then inserts a much lower amount into the contract). There is a mistake off the face of the document which the other party could have known. A difficulty here is that the other party may well have known (or at least should have known) of the mistake but that essentially the

592_{LG Aachen NJW 1982, 1106 (Builder's Bill Case) .}

170 mistake is one in motive. Where for example the father informs the seller that he is buying the dress for his daughter’s wedding it is questionable whether this

additional information (in the previous cases the father had not expressed why he was buying it but the other party nevertheless knew) should lead to any relief for the father – it is essentially an error in motive.594

In a case from the 1970s595_{the defendant had been invited to submit a tender to a} local council. The council estimated the costs to amount to around DM 80.000. The defendant submitted a tender for DM 63.000. The second lowest tender was for DM 85.000. The defendant claimed that there had been an error in calculation and that according to § 242 BGB the council had a duty to take the other parties’ interests into account. For that reason the claimant should have warned the defendant of their mistake. The court agreed that there was a general duty to inform the other when the non-mistake party identified that there was a mistake but that in this case the claimant had neither recognised the difference in price (30% was not a significant enough mismatch) nor had they noticed that there had

been an error in calculation.596 _{It would seem then that a duty to warn the other}

party of their mistake arises from § 242 BGB. However, in another case from

1985597 _{the council had asked for tenders for the building of a bridge. The}

contractor had forgotten to factor in the costs of the structural analysis (despite the

594 _{Pawlowski, ‘Die Kalkulationsirrtuemer: Fehler zwischen Motiv und Erklaerung’ (1997) JZ 741, 742.}

595_{BGH NJW 1980, 180 .}

596 _Ibid.

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council providing a disclaimer in the call for tenders to the effect that the cost must be included). The court held here that there was no indication that the council knew of the mistake before the contract had been made and that therefore the contractor was bound to the original contract. Both cases indicate that the threshold for a duty to arise under § 242 BGB is very high. It seems it must be obvious to the other party that there was a mistake.

In 1998598 _{a case reached the German Supreme Court which concerned the building} of a house by the local authorities. The authorities asked for tenders from

carpenters for the interiors of the new building. The offers were to be handed to the local authority (the claimant) no later than 15 April 1993, and the acceptance of the tenders were to be made by 15 May 1993. The claimant had estimated the costs at around DM 350,758.00. The defendant handed in an offer for DM

305,812.60. On 28 April 1993 the defendant wrote to the claimant explaining that they had forgotten to include the price of transportation and construction. They asked for their offer not to be considered.

On 13 May 1993 the local authority explained that they were accepting the offer. The second closest offer had also been withdrawn due to an error in calculation. Even though there was a significant difference in price (the next lowest tender was for 349,014.10 DM and the highest tender was for the sum of DM 476,209.83) the court held that (contrary to the Court of Appeal) an internal error in calculation will always be not legally relevant even in cases in which the other party knew or should

598_{BGHZ 139, 177 .}

172 have known of the error. The German Supreme court indicated there may be

liability under § 242, even though not in this case, in cases where the other party accepted the offer and insists on the contract even though he knows (or should have known) of the error in calculation.

Mistake and the duty of good faith

In the 2002 the First Class Holiday Case599_{reached the OLG Munich. The claimant}

was an avid online shopper who had found a first-class ticket online for the price of 728.30 Euros return from Germany to Bangkok. He booked the ticket and received a confirmation at 18.00 hours on 14 July 2002. On the same day at 20.07 hours the company sent an email explaining that there had been a mistake and that the price was in fact meant for the Economy Class. They offered the claimant a first-class ticket for 3676.30 Euros. The claimant insisted on his order and in fact booked the same ticket again in the morning of 15 July 2002. The claimant then offered to compromise the claim if they wished. The court addressed the case on two grounds. The first was that because with regard to the second booking the airline had not disputed the booking (as against the claimant at the time), there was no possibility of addressing the second booking via § 119 BGB. The court held that the claim for the second booking could not succeed on the basis that it was a misuse of the law and was contrary to the principle of good faith (§ 242 BGB). The reasoning was that the claimant knew the market and in comparison to the other airlines must have known that there was a mistake. Especially the fact that he booked a second ticket and then wanted to compromise the claim was evidence of his

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knowledge. With regard to the first booking the court held that this was a

declaration mistake (§ 119 (1) BGB and that due to the knowledge he would not be able to recover (§ 122 (2) BGB). It would seem therefore that in a case where the other party knows there has been a mistake simply because of the discrepancy between the price and the market value they cannot take advantage of that offer.

Fraud and the trust relationship

This category has already been discussed above (Ch. 4.6) and includes cases such as the Daktari Film Case600_{and the Thor Steinar Case.}601 _{It is conceivable that one of} the parties may have made a mistake on the basis that the other party did not disclose vital information (i.e. the mistake was really one of motive) but that therefore there was a duty of disclose (due to the relationship). This would mean that non-disclosure is a breach of the pre-contractual duty and therefore amounts to fraud under § 123 BGB.