Case 3 - Mistake about ownership of land to be sold

Summary

Case 3

B enters into negotiations with A about a piece of land that B wants to buy from A on which to build a house. A thinks he is the sole owner of the land. When the parties have reached agreement they make an appointment to sign the sale contract on 2 December. On 1 December A finds out that the land of which he thought he was the sole owner by inheritance from his father is in fact owned jointly by him together with his two sisters who do not agree to the sale of it. A therefore does not sign the sale contract. B has incurred expenses in negotiations (estate agents' fees, travel tickets to visit the land) and has had an architect make drawings for the house. What liability (in contract, tort, restitution, or any other form of liability), if any, does A have to B?

Discussions

Austria

Under Austrian law there would be no liability, either under the rules of contractual or delictual liability, or under those of culpa in contrahendo. The expenses B has incurred lie within his sphere of risk, since it was his decision to buy travel tickets and to consult an architect at a time when it was not clear that the contract would be concluded. A's conduct does not amount to chicanery, nor have the rules of dealing in good faith been violated by A. In a decision of 1976 the OGH refused to grant recovery on the grounds of culpa in contrahendo in a decision concerning a similar factual situation.