Property and Contract

Comparative Reflections on English Law and Spanish Law

John Cartwright, Ángel M López y López, John Cartwright, Ángel M López y López

• Publisher: Hart Publishing
• Year: 2022
• ISBN:
  9781509929344
• Edition: 1
• Topic: Derecho
• Subtopic: Derecho científico y tecnológico

This book explores a range of comparative issues in, and in the relationship between, property law and contract law in English and Spanish law. It also draws on other jurisdictions. The purpose is to give readers access to discussions of these areas of private law that are not easily accessible elsewhere. It goes further, however, than simply setting out similarities and differences: it provides an insightful analysis of key points of interest in the comparison of the legal systems discussed.

1

Introduction

JOHN CARTWRIGHT AND ÁNGEL M LÓPEZ Y LÓPEZ*

I.General Scope and Purpose of the Book

The following chapters of this book are based on presentations made at a workshop held at the University of Seville which explored a range of comparative issues in, and the relationship between, property law and contract law in English law, Spanish law and other jurisdictions. The purpose of the book is to make accessible to an English-speaking audience the discussions and comparisons of these areas of private law that are not easily accessible elsewhere.

Chapters 2 to 7 explore various different aspects of the rules for the creation and transfer of property, within particular systems or comparatively across systems.

We begin with a general introduction by Ángel López y López (Chapter 2) to the relationship between contract and the transfer of ownership in Spanish law and Latin American law. This chapter sets the scene for the approach to the transfer of ownership in modern Spanish law, discussed in more detail in Chapters 3 and 4, and the comparative discussion of approaches in other civil law systems in Chapters 5 and 7. López y López illustrates the significance of the historical background to our topic within civil law systems,¹ noting the development from Roman law through to the modern law, and he highlights a number of points which will be key not only for an understanding of the modern Spanish law but also for its comparison with other systems: the system of ‘titulus et modus’, which requires both a legal ground (titulus) for the transfer of ownership and an effective method (modus) of transfer, and takes us to consider the notion of causa (the ‘cause’ for the effective transfer of property, and therefore – at the heart of our topic in this book – the relationship between the (valid) contract and the (valid) transfer of property); differences between movable and immovable property; the role of publicity in the transfer of property (including different concepts and effects of registration systems); and the significance of possession as a source of ownership – and in particular the rule that ‘possession is equivalent to title’ (posesión vale título).

Chapters 3 and 4 both focus on aspects of the transfer of ownership of immovable property within Spanish law.

Manuel Espejo Lerdo de Tejada (Chapter 3) takes the classic case of sale of immovable property and explains the use of a special formal written instrument (escritura pública) as the equivalent of delivery – the modus within the Spanish system of titulus et modus in the transfer of ownership of immovables. He focuses on a number of problematic cases in which there can be difficulties in determining whether (and, if so, when) the escritura pública has the effect of transferring ownership without further physical delivery: where the seller has no title at the time of executing the escritura pública but later acquires it; where there is delivery of possession but subject to a reservation of ownership (for example, subject to a condition as to the payment of the price) but the condition for the transfer of ownership is later satisfied; the sale of a thing which does not yet exist or has not yet been defined, but later comes into existence or is defined; and the sale by a person who is not in fact in possession of the property at the time of executing the escritura pública (and therefore the ‘fictitious’ delivery which is deemed to be effected by the execution of the escritura pública could not have taken place).

In Chapter 4, the principal focus of Juan Pablo Murga Fernández’s contribution is the acquisition of ownership of immovable property from a non-owner – a non domino. The focus on ownership of immovable property takes him to the Spanish land registry system, and the notion under Land Registry law of conclusive title to land in favour of a purchaser in good faith once it is registered, including difficulties which arise in the interpretation of the requirement of good faith, and whether registration of the instrument of transfer has the effect of curing or overriding defects in the contract which forms the ground (the causa – the titulus) of the transfer. This chapter gives a general introduction to the Spanish land registry system; later in this Introduction we draw attention to some of the features of the Spanish system which Murga Fernández lays out, and how they compare with the English system of land registration.²

In Chapter 5, Birke Häcker moves our focus from Spanish law to other legal systems – mainly English, French and German law, but also Austrian law (which bears striking similarities to the Spanish property law, as López y López indicated earlier in Chapter 2) and Swiss law; and her primary focus is the transfer not of land, but of movables, especially in the context of contracts for the sale of goods. She presents a broad comparative discussion of different property transfer systems, drawing out key distinctions between ‘unitary’ systems (where the contractual consent also brings about the transfer of property) and those which adopt a principle of ‘separation’ (where the contract and the transfer are separate legal transactions); and between those which see the validity of the transfer as depending on the validity of the contract (‘causal’ systems) and those where there is no such interdependence of validity (‘abstract’ systems). Within this taxonomy, we see at the two extremes the French system (unitary, causal, consensual)³ and the German (wholly abstract).⁴ For the purposes of our comparison with Spanish law, however, it is important to note Häcker’s categorisation of the Austrian system, which lies between the two extremes of France and Germany: Austria has separation without abstraction, because – as also Spanish law – it adopts the system of titulus et modus, requiring the transfer (traditio) separate from the contract, but making the validity of the transfer depend on the validity of the underlying contract.⁵ Another system which does not belong fully to either extreme is English law which, largely because of its history, has a mix of approaches:⁶ the common law generally adopts an abstract system, certainly for interests in land, and also probably for movables – except for the transfer pursuant to a contract for the sale of goods, which appears to be causal and consensual, although Häcker raises a question about whether even in this case the contract may be separate from the transfer, rather than unitary. She also notes that the picture is complicated by the (proprietary) effect given to the contract in equity, a topic which is then left for more detailed discussion by Cartwright (Chapter 6).

Häcker’s explanation of the different transfer systems is important for us to understand the different choices available to legal systems in devising their property transfer systems, although for the purpose of her own chapter it is designed only to set the context: her main focus is to consider in detail the implications of the choice of transfer system on other parts of the legal order and the interaction between property law and these parts.⁷ What repercussions (if any) does the choice of transfer system have on the legal system’s rules for, or general approach to, the passing of risk? Or on the nature of the buyer’s claim (including the availability of remedies) against seller? Or on security mechanisms and the protection of each party against the insolvency of the other? Or on the effects of rescission (retroactive avoidance) of the contract on the transfer of property? Or on the size and structure of the law of unjust(ified) enrichment within the system? Or on the operation of the system’s rules on bona fide purchase?

In Chapter 6, John Cartwright takes up in more detail some particular aspects of English law which were raised by Häcker in the previous chapter: he discusses the way in which property rights can be created or transferred by contract; and (in that context) the way in which the rules of contract law – and in particular, the (equitable) remedy of specific performance of the contract – have a direct or indirect bearing on the nature and strength of the property rights thereby created or transferred. This picks up the direct link between contract and property, in particular through the operation of equity, peculiar to English law and other systems in the common law world which follow the English tradition in their property law. The main focus of the chapter is the contract for the sale or creation of an interest in land, where the traditional approach of equity is to say that, as long as the contract would be enforced specifically by a court of equity, then equity treats the contract as already transferring or creating the right which the contract has promised. Two aspects of this are worthy of note, especially by lawyers from the civil law tradition. First, this involves the creation of an (equitable) property right in the hands of the transferee concurrently with the (legal) property right that has not (yet) been transferred or disposed of. Second, the existence and validity of the (equitable) property right depends not just on the validity of the contract, but on whether the court would grant the remedy of specific performance of it; and its enforceability depends on matters that other systems would readily recognise: rules of bona fide purchase, and the system of registration in the Land Register. More is said below by way of comparison of the Spanish and English systems of registration of property rights in land.⁸

As a secondary element of his discussion, Cartwright also considers the way in which (legal) property in movables can be passed by contract. Although – as Häcker has already shown in Chapter 5 – the English contract of sale of goods may not de iure pass the property (as in, say, the causal consensual system of French law), in many cases the property will pass when the contract is made, based on the parties’ consent. But the strength of that transferred title to property is not what a civil lawyer might expect it to be. In the case of movables, it is rare that the holder of a contractual right to property can obtain it, either by enforcing the contract, or by enforcing his title that has been passed by or under the contract. There is therefore a sharply different strength of title passed by contract, depending on whether the property is land or movables. But at the heart of this difference we find the different views taken of the remedy of specific performance of the contract in these different cases (ie, specific performance protects interests in land more strongly than interests in movables).

In Chapter 7, Francisco Oliva Blázquez takes us back to the context which Birke Häcker discussed in Chapter 5: the contract for the sale of goods, and comparison of different systems’ approaches to the moment at which the transfer of ownership takes effect. This time, however, the focus is not the national systems, but on whether a universal and common solution can be found, using the provision of the Draft Common Frame of Reference (DCFR, article VIII–2:101) as a model for discussion and analysis, and drawing on the studies published by Lurger and Faber, chairing the ‘Acquisition and Loss of Ownership in Movables’ working group within the ‘Common Principles of European Contract Law’ project.⁹ Given that – as we have seen in Häcker’s review of just a few European systems – there is no common (even functionally equivalent) solution across national systems in the EU, Oliva Blázquez asks which solution should be preferred. He notes that the DCFR solution allows the part...