The courts have defined good morals as that which is founded in the moral consciousness of the public, and is in harmony with the ideas of proper conduct held by all honest and upright-thinking people. An absolute rule for determining what constitutes an act repugnant to good morals does not and can not exist. Many acts are not "immoral" in one case while clearly so in another. Consequently the question always is not whether an act of itself is contrary to good morals, but whether, as an act of competition, it is so considered.

The important differences between sections 1 and 826 are as follows: (1) Section 1 relates only to unfair competitive acts in business, while section 826 relates to all acts repugnant to good morals; (2) section 1 does not require the proof of wrongful intent, which is required by section 826; and (3) section 1 provides for both an injunction and the recovery of damages, while section 826 provides only for the latter. In the application of section 826, however, the courts have applied injunctive relief. Furthermore, in the case of section 1, an injunction can be had if only ground for apprehension exists, while, as stated above, an action can not be brought under section 826 until the injurious act has actually begun. Section 826 of the Civil Code has one important advantage over section 1 of the new law against unfair competition. The statute of limitations does not apply to cases brought under the former until the expiration of three years, whereas in accordance with section 21 of the law of 1909 the statute of limitations applies to cases brought under section 1 at the expiration of six months after the injured party has knowledge thereof.3

The adoption of section 1 of the new law does not exclude sections 823 and 826 of the Civil Code from application to cases of unfair competition. This has been affirmed by the courts on several occasions.* As a result there are three general provisions available for all cases to which the special provisions of law do not apply. They may, however, be used conjointly with the special provisions.

An examination of the principal court decisions shows that section 1 of the law of 1909 and section 826 of the Civil Code, either separately or conjointly, have been applied to a variety of cases which are not covered by special provisions of law. Among these are the cutting of fixed resale prices, enticing customers, etc. These two provisions have also been applied frequently in conjunction with various provisions of the trade-mark law and the law against unfair competition to cases of confusion, fraudulent advertising, disparagement, etc. All such unfair acts, although covered by special pro

1 Fuld, op. cit., p. 48; Finger, op. cit., p. 20.

2 Fuld, op. cit., pp. 24-26, 49.

Allfeld, op. cit, pp. 161, 162; Das Recht, 1914, Beilage No. 767.

⚫ Entscheidungen des Reichsgerichts in Zivilsachen, Bd. 74, S. 434; Bd. 79, S. 326; Das Recht, Bellage No. 767.

visions, are, apparently, regarded by the courts as repugnant to good morals and, therefore, in contravention of these two general sections. Section 826 appears to be little used now except in conjunction with section 1 of the new law in the prosecution of unfair practices in business, since the latter offers the advantages noted above. Section 826, however, has been frequently applied to strikes, lockouts, boycotts, black lists, etc. Since the passage of the law of 1909 section 823 has also been little used alone in the prosecution of unfair competitive practices. It is occasionally found used in conjunction with one or both of the other general provisions. Following are some of the trade practices to which these general provisions against unfair competition have been applied.

CUTTING FIXED RESALE PRICES.—The act of selling below the price fixed by the manufacturer for resale is not of itself considered to be unfair competition in Germany. Recent decisions of the courts have definitely affirmed this view. Prior decisions were not clear on this point, for the reason that in the cases prosecuted the act of cutting prices was usually accompanied by other acts of a fraudulent or injurious nature which constituted unfair competition. In opposition to the position taken by the courts it has been argued that the cutting of fixed resale prices of itself should be considered unfair competition, since by so doing dealers convey the impression to consumers that their competitors who maintain prices are selling too dear.2

Contracts by which producers bind the persons to whom they sell not to resell at less than a fixed minimum price are considered legal in Germany, and the breach of such contracts constitutes an act of unfair competition, which affords a ground for an injunction and the recovery of damages under section 1 of the law of 1909 and section 826 of the Civil Code. Such contracts, however, are not binding upon third parties.

Whenever unfair means are used in procuring goods to sell below the price fixed by the producer or supplier, the courts consider the act of selling such goods or of offering them for sale below the fixed resale prices repugnant to good morals, even when there is no breach of contract involved.3

The following cases will illustrate these principles:

A dealer sold some cigarettes below the price fixed by the Austrian Government monopoly. Suit was brought for damages under section 1 of the law of 1909. The court held that the sale of an article of commerce, such as the cigarettes in question, below the fixed price

1 Gewerblicher Rechtsschutz und Urheberrecht, April, 1914, S. 111.

2 Ibid.

For a list of cases involving such practices, see Markenschutz und Wettbewerb, Bd. XIII, S. 592.

need not in itself be repugnant to good morals, but may become so if particular circumstances accompany it which are recognized as unlawful. In this case the defendant had bound himself to maintain the fixed price. It was only on this condition that the goods were delivered to him. Therefore, by breaking his contract, he committed an immoral (unsittlich) act, making him liable for damages.1

A retailer who was not bound by contract sold some goods below the resale price fixed by the factory. The factory brought suit under section 1 of the law of 1909 and section 826 of the Civil Code on the ground that the defendant was cognizant that all the customers of the factory were bound not to sell below a fixed price. The court rejected this view and held that a factory could not prohibit a third party with whom it had no contract from selling its products at a lower price than the minimum which it had fixed, for the goods might have been secured from some middleman who was not bound by the party that bought the goods from the factory, or the goods might have been purchased at a bankrupt sale. The court said in part:

In any case we can not agree with plaintiff that an act repugnant to good morals is involved merely in the reselling of the goods for less than the price imposed by the plaintiff upon his customers. The defendant has the right to sell the goods, which he has procured in an honest way, at any price satisfactory to him. If he is to act in a manner contrary to good morals, an element of unfairness must be involved, such as causing the party from whom the goods were purchased to break his contract with the plaintiff. In the absence of such an element, such agreements between manufacturers and wholesalers would, from the standpoint of the plaintiff, have, so to speak, a material effect, and a shackling of business would result which would be altogether unendurable, and which in certain cases might itself even be considered as repugnant to good morals.

Plaintiff, who had secured the exclusive agency in Germany for the sale of the products of the Austrian Government tobacco monopoly, obligated all purchasers not only to maintain the established prices, but also to bind, in turn, every subdealer to do the same. A retailer, who purchased from the vendee of plaintiff, advertised and sold some cigarettes of this make at less than the minimum price. The court enjoined him from advertising or selling these cigarettes below the fixed price, unless obtained from a sheriff's sale, on the ground that under the conditions of sale imposed he could only procure the goods in an unusual manner which was repugnant to good morals in violation of section 1.3 The court, however, declined to accept the view that price cutting itself constituted unfair competi

1 Beschluss des Kammergerichts v. 22, November, 1913; Gewerblicher Rechtsschutz und Urheberrecht, 1914, S. 198,

Hamburg, Urt. v. 26. Juni 1914; Das Recht, 1914, Beilage No. 2445.

Oberlandesgericht Jena, Urt. v. 4 Mai 1913; Gewerblicher Rechtsschutz und Urheberrecht, 1914, S. 89, 90, 91.

Barras eer in the firm that the dealer Del as I alle lor de asonry fiber for dates the misleading penis ir di il las pas le offers more ač ̃ultagevus prices than other den and a te eet Lill Lass i amear as if the scher dealers (who Der Lotereins an the prizes fied by the suggler) TZT came an inte ng me The who bid this view see an T 2- I«tus 1 the deserum mused therety. From this Slider her len i Ivan. ULĒ LIST HUMILITI, whether the party that seils Lors de PVIDAČ Dhe gumis tiringi his own er sme rideman's OT VİZİO SIL percilave fra a tazkrupt sale

Bar de nieuw that far. I rather sugers the current view of the courts the the ILecz in de ve su 1 11 17 ið ermpetition is to be found n the miles that de jumy that sells cherzer not oy takes advantage of the armsure the Lis songernes are bound by contract, bat does this CHOOVE THE AT 1 joacă if eintract emilies him to underbed other dealers vin alude 17 der eaters, di muner whether he himself breaks the conVOLATUL TEOLg ma la e some mileman does this by not in THI MUGUE LA Post que té a agêy with the price agreement. For such profiting from a town of matrit by others, in order thereby to drive out of the fend metenties vi, ein 16 ) wer their prices less they also are willing to Jowk their scrwtent is seneding to the views of all reasonable and fair Lienharts Bernity to business propriety, and therefore repugnant to good The intempestate of the evort leaves, of course, the possibility open Market,, it kel) may be sold below the fixed resale price without being recruit to god morals if the resale, which took place without inposing in od lati e to maintain the price, presented no breach of contract. This is the case if the goods are sold at a forced sale or from a bankrupt stock.

In another case of the same kind the defendant, in selling cigarettes at a discount, removed the identifying number, so that it was impossible for the exclusive agent to ascertain which middleman was breaking his contract by not binding subdealers. The court held that the defendant had committed an act repugnant to good morals by wilfully abetting the breach of contract of his suppliers, by buying at various times from them the cigarettes of the plaintiff sold in violation of the agreement made with the plaintiff, by removing the identifying number in order to prevent anyone from finding out his source of supply, and by selling the goods at less than the fixed price. Such acts, the court held, were not in harmony with the rules of propriety observed by all just and reasonable men and were a violation of section 1.1

An association of manufacturers of pharmaceutical products sold its trade-marked or identified articles to middlemen only on condition that they should not resell to the public below a fixed minimum price, that they should impose this same condition upon all dealers and

1 Oberlandesgericht Breslau, Beschluss y 12 Den, 1913; Gewerblicher Rechtsschutz und Urheberrecht, 1914, 8. 123,

should not deliver goods to certain firms which the association blacklisted. A retail druggist in Danzig sold these articles below the established price. Suit was brought under section 1 of the law of 1909 by the manufacturers' association, and also by an association of retail druggists organized for the purpose of fighting unfair competitive methods. It was shown that the defendant was fully cognizant of the conditions which attached to these identified articles, that he had procured his supply by unfair means, especially by deception and by causing a breach of contract on the part of certain middlemen. In answer to these charges the defendant claimed that the prices fixed by the manufacturers' association were excessively high and that the means used to maintain these prices were unfair. The court enjoined the defendant from securing these articles by unfair means and permitted the manufacturers' association to publish the judg ment in five different papers for a period not exceeding two months.1 COMPELLING PRICE MAINTENANCE BY BOYCOTT OR INTIMIDATION.— The boycott is the weapon most frequently used to compel price maintenance. Intimidation is also used for this purpose. Both acts may be prosecuted as unfair competition under the general provisions. The following cases illustrate its application:

A book dealers' cartel sought to maintain the prices fixed by the publishers by binding its members not to give rebates. To compel nonmembers to maintain the fixed prices it entered into an agreement with a large number of publishers not to deliver to those dealers who were designated by the cartel committee as having cut prices, or to deliver to them only at a reduced discount. The cartel also issued a circular letter at stated intervals containing the names of dealers to be boycotted. A dealer who was thus discriminated against brought suit against the cartel on the ground that the boycott was repugnant to good morals in the sense of sections 823 and 826 of the Civil Code and the circulation of his name as a price cutter was a disparagement in the sense of section 824 of the Civil Code and section 6 of the law against unfair competition of 1896. The Imperial Court refused to accept this view of defendant's acts. It said, however, that if the plan adopted by the cartel had threatened the existence of plaintiff's business, to the extent of weakening or undermining it and of substantially injuring his credit or his standing in the business world, it would have been repugnant to good morals and contrary to section 826 of the Civil Code.

An association of merchants in Dresden addressed a circular letter to the proprietors of certain concerns which gave special price reductions, announcing that it would publish the names of such proprietors and would expose the unfairness of this practice. In the newspapers

1 Landgericht Danzig, Urt. v. 6. Juli 1911; Markenschutz und Wettbewerb, Bd. XI, S. 17. * Urt. v. 14. Dez. 1002; Entscheidungen des Reichsgerichts in Civilsachen, Bd. 56, §. 271.