Page - 94 - in Austrian Law Journal, Volume 1/2019

ALJ 2019 Wolfgang Faber/Claes Martinson 94 In a case like this the real issue is the first seller (A) typically not wanting the car back. He wants to get paid. The second buyer (C) does, however, want to keep the car. Of course, C will prefer keeping the car without paying a second time, but even if this should turn out to be impossible – and if the claim that A has against B is smaller than the value of the car – C would prefer to pay A that amount, rather than handing over the car to A.35 The real issue is, therefore, whether A’s interest to get paid or C’s interest to keep the car without paying should be given priority? Hence, the matter to decide is whether C should pay A what A has contracted for or whether C can keep the car without paying. (The party who loses can of course claim the loss from B, but there is typically a substantial risk that B will never be able to pay his debts.) If we place this issue in the Swedish jurisdiction it would be solved by using the Swedish legislation on good faith acquisition. Due to the wording of the legislation, the easily available public Swedish car register and Swedish case law, the requirements for good faith are rather high. It is particularly hard to be in good faith when buying a car from a seller (B) who himself bought the car under a contract clause that gave the seller’s seller (A) the right to terminate the contract if the car was not paid. The information concerning these contract clauses is available through the public vehicle register. Therefore, C would most probably be regarded to be in bad faith. Because of C’s bad faith, the issue would probably be solved by obligating C to pay A the remaining price of what B should have paid, as well as giving A the right to take the car back if C does not pay. The solution described is not in itself remarkable. What we would like to point out is that the concept of ownership is not at all used when dealing with the issue. Instead, the question of law to decide concerns only the real problem, or real issue. The real issue is the conflict of interests that typical parties like A and C have in such situations. With a functional approach lawyers do not care about who owns the car. Ownership is not important for creating a solution to the ‘real problem’.36 Example 2: Another example concerns the situation where a debtor (D) is not able to fulfil his obligations because of insolvency. When insolvency occurs, D has sold, but not yet delivered, goods to a buyer (B). This situation can be understood as a matter of ownership: What the debtor does not own should not be drawn into his bankruptcy estate because the property of others should be handed over to them. Hence, the issue can be perceived as a question of whether the buyer had become the owner before the seller went bankrupt. From a functional perspective this is, however, not the way to think.37 With a functional approach this case is not seen as an issue of ownership. One does not 35 This is because C’s overall loss will be smaller in that case. 36 This does not mean that lawyers who use the functional approach could not say that A won ownership if he wins the case. Actually the Swedish legislation, somewhat surprisingly, uses the word ‘ownership’ to describe the claim that A has and what A or C wins if they win. Since the word ‘ownership’ is understood relationally and relatively, the term is, however, only used to express priority in the particular type of relation. This can be illustrated by the fact that the circumstances of the Swedish Supreme Court decision NJA (Nytt juridiskt arkiv) 1975 p. 222 were the same as the circumstances in the example we have given. The case was probably accepted by the Supreme Court because the judges wanted to make a precedent concerning terminology. They wanted to decide how clear a contract must be concerning the seller’s right of termination, and they decided that other words than ‘ownership’ were fully acceptable. The seller had written, in Swedish, that “the car shall fall back to me if payment is not made in time”. For this particular case, see also Martinson, in RULES FOR THE TRANSFER OF MOVABLES, supra note 25, at 82– 84. 37 See, e.g., Torgny Håstad, Äganderättens övergång i en gemensam europeisk rättsordning, (2009) TIDSKRIFT UTGIVEN AV JURIDISKA FÖRENINGEN I FINLAND 327. Claes Martinson, Ejendomsrettens overgang – Norden kontra verden, in FÖRHANDLINGARNA VID DET 39:E NORDISKA JURISTMÖTET I STOCKHOLM 18–19 AUGUSTI 2011 821 (Kavita Bäck Mirchandani and Kristina Ståhl eds., 2012).