Published online by Cambridge University Press: 10 August 2009
After negotiations, A and B reach agreement on the sale of A's house to B, but do not comply with the formality requirements necessary within their legal system to make the contract valid. B does not know of the formality requirements. Soon afterwards, A tells B that, because of the lack of formality, he (A) is not bound. B has already incurred expenses in coming to the agreement (such as estate agents' fees and travel expenses). B complains that this was the house of his dreams, and he will now only be able to find a less satisfactory property, given the properties available in the market. What liability (in contract, tort, restitution, or any other form of liability), if any, does A have to B? Does it make a difference if:
A knew of the formality requirements?
A is a professional?
B raised the question of the formality requirements at the time the agreement was concluded, but A misled him about it?
It is not entirely certain whether these facts would constitute a case of precontractual liability.
Under Austrian law a party is expected to know the law. §2 ABGB states that ‘[a]s soon as a law has been properly published, no one may be excused on the ground that he had no knowledge of it’.