The Bürgerliches Gesetzbuch (or BGB) was the civil code of the German Empire and continues to act as the central law for german civil law. Put into effect on January 1, 1900 it had been in development since 1881 and was considered at the time of its creation to be a massive piece of work that was years ahead of its time.
In 1871, the various German states were united into the German Empire. In the beginning, the single states had the right of legislation on the field of civil law, not the Empire ("Reich") that comprised those states. An amendment to the constitution passed in 1873 transferred this legislative competence to the Reich, which installed various committees to draft a bill that was to become a civil law codification for the entire country, replacing the civil law systems of the states.
After decades of work, which included contributions from many of the best reputated lawyers of their time and benefitted heavily from the work previously done by other codifications thus as the French Code Civil, the BGB was passed by the Reich legislature in 1896. It was put into effect on January 1, 1900 and has been the central codification of Germany's civil law ever since.
In Nazi Germany, there have been plans to replace the BGB with a new codification that was planned to be titled "Volksgesetzbuch" ("people's code"), which was meant to reflect Nazi ideology better than the libertarian spirit of the BGB, but those plans did not become reality.
When Germany was divided into a democratic capitalist state in the West and a socialist party-led state in the East after World War II, it continued to regulate the civil law in both parts of Germany. Step by step, however, the BGB regulations were replaced in East Germany by new laws, beginning with a family code in 1966 and ending with a civil code in 1976 and a contract act in 1982. Since Germany's reunification in 1990, the BGB has again been the codification encompassing the civil law of entire Germany. The BGB has been amended many times since it came into existence. The most important changes took place in 2002, when the law of obligations, one of the BGB's five main parts, was largely reformed. Besides, the way the courts construe and interpret the regulations of the code have changed in many ways, and continue to evolve and develop. This is particularly due to the high degree of abstraction throughout the code.
The BGB contains five main parts ("books"):
The General Part ("Allgemeiner Teil"), sections 1 through 240, comprising regulations that have effect on all the other four parts; the Law of Obligations ("Recht der Schuldverhältnisse"), sections 241 through 853, describing the various forms of contracts and other obligations between persons, including tort law; the Law of Things ("Sachenrecht"), sections 854 through 1296, describing possession, property, other rights persons have relating to things, and how those rights can be transferred; the Family Law ("Familienrecht"), sections 1297 through 1921, describing marriage and other legal relationships among family members; and the Law of Legacies ("Erbrecht"), ruling what happens to the fortune of deceased persons.
The Principle of Abstraction
One particularly important and distinguishing element in the system of the BGB is the principle of abstraction (in German legal terminology “Abstraktionsprinzip”, although the word does not appear anywhere in the statute itself), which dominates the entire code and is vital for the understanding of how the BGB treats contracts. One example to clarify this: In the system of the BGB, ownership is not transferred by a contract of sale, as in most other jurisdictions. Instead, a contract of sale merely obliges the seller to transfer ownership of the good sold to the buyer, but the buyer does not automatically gain ownership by virtue of the contract of sale. Section 433 of the BGB explicitly states this obligation of the seller, as well as the buyer's obligation to pay the negotiated price. For transfer of ownership, another contract is necessary which is governed by sections 929 et seq. Thus, in a simple purchase of goods paid immediately in cash, German civil law interprets the transaction as (at least) three contracts: The contract of sale itself, obliging the seller to transfer ownership of the product to the buyer and the buyer to pay the price; a contract that transfers ownership of the product to the buyer, fulfilling the seller’s obligation; and a contract that transfers ownership of the money (bills and coins) from the buyer to the seller, fulfilling the buyer’s obligation.
Although the principle of abstraction is not to be found in jurisdictions outside the German one and contradicts the usual common sense interpretation of commercial transactions, is is undisputed among the German legal community. The main advantage of the principle of abstraction is its ability to provide a secure legal construction to nearly any financial transaction however complicated this transaction may be. A good example is the well known retention of title. If someone buys something and pays the purchase price by installements the system faces two conflicting interests: The buyer wants to have the purchased goods immedeatly whereas the vendor wants to secure full payment of the purchase price. The BGB has with aid of the principle of abstraction a simple answer to that: The purchase contract obliges the buyer to pay the full price and requires the vendor to transfer property upon receipt of the last installment. As the obligations and the actual conveyance of ownership are in two different contracts it is quite simple to secure both parties interests. The vendor keeps property right to the last payment and the buyer is only the mere owner of the purchased goods. If he does fail in full payment the vendor may reclaim his property just like any other owner.