The rule under section 1760 of Act no. 89/2012 Coll., the Civil Code (the “CC”) does not distinguish between a situation where the legal title to an object is transferred by an effective contract alone, and one where an additional transaction is needed to convey that title.
In both scenarios, the rule is that even if a seller is not the owner of the purchased object on the date when the sale contract is concluded, this does not – on its own – mean that the sale is invalid by reason of the initial impossibility of fulfilment under section 580(2) and section 588 of the CC.
Similarly, if the seller transfers the object of sale to a third party after concluding the purchase agreement, this will not render the seller’s duty under the purchase agreement (i.e. the duty to enable the buyer to acquire the purchased object) unfulfillable under section 2006 of the CC, and nor will it invalidate that duty based on the (subsequent) impossibility of performance. This is all the more true in the case of replaceable objects.
In general, the seller must fulfil the duty that it assumed under the purchase contract. In other words, it must deliver the purchased item to the buyer and allow it to acquire the legal title to that object. If the seller is not the owner of the purchased object, it will first need to acquire that ownership or otherwise ensure the performance promised under the contact. The consequences of default are set out in section 1968 and subsequent provisions of the CC. More details about the effects of a change of circumstances and the economic impossibility of performance can be found in sections 1764 to 1766 of the CC.
For more information, see Czech Supreme Court judgment file no. 29 Cdo 2601/2016 dated April 26, 2018.