In the original article there are several formatting errors in Appendix B. Due to these errors, elements of the output examples of the chatbots appear as subheadings that are indistinguishable from genuine subheadings. The corrected appendix is shown below, displaying only the genuine subheadings in boldface font.
1 Appendix 2: Example Case with prompts and Model outputs
1.1 Prompt
Solve the following case of a business law exam in the area of ‘Trade Law’ in the style of a legal opinion:
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Wine wholesaler Suffke grants his employee Pfeifer proxy. Suffke agrees with Pfeifer that the latter may not take out loans for Suffke. The granting of proxy is duly entered in the commercial register. During a vacation-related absence of Suffke, a short-term financing gap arises. Pfeifer closes this gap by taking out a loan of EUR 100,000 from Universal Bank. When the repayment of the loan becomes due, Suffke refuses to pay. Rightly so?
Academic tone. Precise writing style, Master-Level.
Translated from the original German-language version with DeepL.com (free version).
1.2 Output of ChatGPT-4
Expert opinion:
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Introduction
The question arises as to whether Mr. Suffke is obliged to repay the loan that Mr. Pfeifer took out during his absence. In particular, the legal questions to be clarified are whether a proxy entitles the holder to take out loans and whether a contractual restriction to this effect is legally effective.
Analysis of the facts of the case
According to the facts of the case, Mr. Pfeifer was granted proxy by Mr. Suffke, a wine wholesaler. It was agreed that Mr. Pfeifer may not take out loans for Mr. Suffke. The proxy was duly entered in the commercial register. However, Mr. Pfeifer took out a loan of EUR 100,000 from Universal Bank during Mr. Suffke’s absence.
Legal assessment
Prokura and its effect.
Prokura is an authorization under commercial law and, in accordance with Sect. 49 (1) of the German Commercial Code (HGB), entitles the authorized signatory to all types of judicial and extrajudicial transactions and legal acts that the operation of a commercial business entails. In principle, this also includes taking out loans.
Contractual restriction of the proxy.
It was agreed between Mr. Suffke and Mr. Pfeifer that Mr. Pfeifer may not take out loans for Mr. Suffke. According to Sect. 49 (2) HGB, however, such internal restrictions on the proxy cannot be asserted against third parties who are in business dealings with the authorized signatory. According to § 51 HGB, such third parties can assume that the authorized signatory is authorized to represent the company without restriction.
Case-related application.
In this case, Mr. Pfeifer took out the loan in his capacity as authorized signatory. Since Universal-Bank was aware of the proxy, it could assume that Mr. Pfeifer was authorized to take out the loan. The restriction agreed between Mr. Suffke and Mr. Pfeifer could not be enforced against Universal Bank.
Conclusion.
In view of the legal provisions and taking into account the circumstances of the case, Mr. Suffke is obliged to repay the loan. The agreement between him and Mr. Pfeifer is merely an internal agreement that is not effective vis-à-vis third parties. Therefore, the loan agreement that Mr. Pfeifer entered into with Universal Bank is valid and enforceable, and Mr. Suffke must repay the loan.
Translated from the original German-language version with DeepL.com (free version).
1.3 Short comment
ChatGPT-4 succeeds in finding the correct solution to this legal problem, which can be achieved solely on the basis of the legal regulation.
1.4 Output of Google Bard
Question.
Was Suffke right to refuse to pay the loan to Universal Bank?
Legal situation.
An authorized signatory is an authorized representative of a merchant. He is authorized to carry out all transactions that the operation of a commercial business entails (§ 50 HGB). However, the proxy can be restricted by the merchant (§ 51 HGB).
In the present case, Suffke has agreed with Pfeifer that the latter may not take out loans for Suffke. This agreement is effective and also binds Pfeifer vis-à-vis third parties. By taking out the loan from Universal-Bank, Pfeifer has therefore authorized himself beyond the scope of his proxy.
Universal Bank can therefore not demand repayment of the loan from Suffke. Suffke is not obliged to answer for Pfeifer’s actions.
Conclusion
Suffke rightly refused to pay the loan to Universal Bank.
Translated from the original German-language version with DeepL.com (free version).
1.5 Short comment
Google Bard misapplies the legal regulations, even after quoting them.
1.6 Output of Google Gemini
Expert opinion.
Case:
Wine wholesaler Suffke grants proxy to his employee Pfeifer. It is agreed with Pfeifer that he may not take out loans for Suffke. The proxy is duly entered in the commercial register. A short-term financing gap arises during Suffke’s vacation. Pfeifer closes this gap by taking out a loan of EUR 100,000 from Universal Bank. Suffke refuses to repay the loan.
Examination:
First of all, it must be clarified whether Pfeifer could effectively take out a loan for Suffke. The proxy as a commercial authorization must be taken into account here.
Procuration.
The proxy is a comprehensive authorization to represent a merchant in all judicial and extrajudicial transactions that the operation of a commercial business entails (§ 49 HGB). It can only be granted by express declaration (§ 50 HGB) and must be entered in the commercial register (§ 53 HGB).
Power of representation of the authorized signatory.
The authorized signatory generally has comprehensive power of representation (§ 49 para. 1 HGB). However, the power of representation can be limited by the holder of the proxy (§ 50 Para. 2 HGB). In relation to third parties, however, such restrictions are only effective if they are entered in the commercial register (§ 53 Para. 2 HGB).
Effectiveness of the loan agreement.
In the present case, Suffke granted Pfeifer proxy and the proxy was entered in the commercial register. Pfeifer was therefore in principle authorized to conclude legal transactions on behalf of Suffke.
The agreement between Suffke and Pfeifer that Pfeifer may not take out loans is an internal restriction of the power of representation. This restriction has no effect in relation to Universal Bank, as it is not entered in the commercial register.
Pfeifer has therefore effectively concluded a loan agreement with Universal Bank on behalf of Suffke.
Result.
Suffke is obliged to repay the loan to Universal Bank.
Supplementary information.
However, it should be noted that Suffke can assert claims for damages against Pfeifer in the internal relationship if Pfeifer has breached his obligations under the employment contract by taking out the loan.
It should also be noted that the above examination was only carried out on the basis of the facts described. A legal examination of the individual case can only be carried out by a lawyer.
Translated from the original German-language version with DeepL.com (free version).
1.7 Short comment
While Google Gemini recognized the problem, it mistakenly stated that Pfeifer should be entitled to conclude the contract because of the entry in the commercial register. The entry of the power of proxy in the commercial register only has a declaratory and not a constitutive effect, though. Therefore, points were deducted and Google Gemini scored 66%.
The original article has been corrected.
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