Comparative Contract Law

An Introduction

Ermanno Calzolaio

• Publisher: Routledge
• Year: 2022
• ISBN:
  9781000522150
• Edition: 1
• Topic: Droit
• Subtopic: Droit des contrats

National legal systems have their own principles and rules on contract law. The trans-nationalization of trade and legal practice involves acting in the context of legal diversity.

This book provides an introductory overview of the main issues of contract law from a comparative perspective, focusing on the legal traditions of civil law and common law.

Featuring short theoretical overviews, followed by cases selected from various jurisdictions, the book shows the concrete application of the principles and rules involved.

Civil law and common law represent two different models of dealing with contract law issues. The book focuses on the French, German, and Italian experiences and on the English legal system, the latter being the main source of inspiration for other common law countries, with some significant exceptions. Topics covered include the structure of contract law and the rules about its formation and interpretation, the role of pre-contractual negotiations, the consequences of mistakes, and breach and supervening events (including the impact of the Covid-19 pandemic). Readers will learn about common problems that are faced when contracting with parties coming from different jurisdictions, whilst also acquiring a deeper understanding of the approach of their own legal system.

This book will be key reading for undergraduate and postgraduate students of comparative contract law, and contract law more generally.

1 Introduction

DOI: 10.4324/9781003251606-1

1.1 Why study comparative contract law?

Used both in daily life and in economic activities, contract is perhaps the most widespread legal institution. In every legal system, contract law rules are often very complex and they cover a large spectrum of issues, from the beginning of the life of the contract until its end.

In the contemporary world, transactions are frequently entered into on a cross-border basis. Consequently, the trans-nationalization of trade and legal practice involves acting in a context of legal diversity. Contract law principles and regimes differ from one country to another and legal education cannot ignore the need to go beyond one’s own legal system when dealing with each legal issue.

The word ‘contract’ itself has not the same legal meaning everywhere. It would be a mistake to assume that one’s own legal system understanding is necessarily the same as another one. For instance, English law has no formal definition of contract and has not needed one,¹ whereas all the continental legal systems (France, Germany, Italy, etc.) define contract in their civil codes. Moreover, even when definitions do exist and they seem similar, one should be aware that reality could be very different from appearance. A simple example can illustrate this point. Imagine that an Italian student meets a Chinese colleague and asks him about the definition of contract in China. His answer will be simple, quoting Article 464 of the new Chinese Civil Code approved on 28 May 2020 and in force from 1 January 2021: “A contract refers to an agreement between the parties to civil legal relations for the establishment, modification, termination of a civil legal relation”.² The Italian student will immediately think of the Italian Civil Code definition, according to which “a contract is an agreement between two or more parties in order to establish, regulate or terminate a patrimonial legal relationship” (Article 1321). The similarity is evident and the two students could conclude that their legal systems share a common understanding of contract. Such a conclusion would be inaccurate and misleading.

1 E. McKendrick, Contract Law. Text, Cases and Materials, 9th ed., Oxford University Press, Oxford, 2020, p. 3. 2 Art. 464 of the Chinese Civil Code reflects the definition adopted by the Contract Law PRC 1999 ( “a contract means an agreement on the establishment, alteration or termination of a civil right-obligation relationship between natural persons, legal persons or other organizations as subjects with equal status”).

It is intuitive to realize that a disagreement about ‘what’ a contract is can create obstacles while entering into cross-border transactions. Hence, it is unavoidable for a jurist of the 21st century to adopt a comparative approach in order to broaden the sometimes too narrow national horizons of legal studies and to unveil where differences and similarities lie.

1.2 The comparative approach

What does ‘comparative approach’ mean? This is not the place to focus on the much-debated issue concerning the aims and methods of comparative law, which has always attracted the attention of comparatists, engaged in giving reasons concerning the utility of their field of study. Neither is it possible to show the contribution of history, too often neglected, which shows to what extent a comparative approach to the legal phenomenon is inherent in the development of the Western legal culture.

More simply, the following remarks aim at reminding readers that comparative law is a ‘strange’ subject in legal studies.³ It is a way of looking at legal problems, legal institutions and entire legal systems based on the acknowledgment that the legal phenomenon is universal and relative at the same time. It is universal because every community of human beings implies at least a minimum level of normativity. It is relative, because the ways in which each community conceives and applies its rules can vary, even substantially, according to the different social, historical, political, religious and economic contexts.

3 As pointed out in the well-known textbook Schlesinger’s Comparative Law, 7th ed., New York Foundation Press, New York, 2009, p. 2.

In this sense, comparative law is a cognitive process having a circular movement. It goes from one legal system to another and from the latter it comes back to the former, enriching the knowledge of the specific features of each of them, together with the aspects they have in common. The study of one specific foreign law, seen as ‘other’ in relation to one’s ‘own’ law, leads not only to the knowledge of the foreign law under scrutiny, but it also has an added value, designated as the ‘reflective quality of comparison’.⁴ It means that through the comparative method “it becomes possible to make observations and gain insights which would be denied to one whose study is limited to the law of a single country”.⁵ Recalling the incisive words of the outstanding Italian comparatist Gino Gorla, “an ‘individual’ does not exist without the ‘other’”.⁶

4 L. Moccia, Comparazione giuridica e Diritto europeo, Giuffrè, Milan, 2005, p. 95 ff. 5 Schlesinger, p. 2, ibid. 6 G. Gorla, ‘Diritto comparato’ in Enciclopedia del Diritto, vol. XII, Giuffrè, Milan, 1963, p. 928.

In the 20th century, the distinguished French comparatist René David stated that it is “superficial and false” to conceive law simply as a set of norms in force in a given country. He noticed that each legal system uses a specific vocabulary, it regroups its rules in specific categories and is connected with a particular conception of the social order. ‘Difference’ in law has to do with all this and therefore it is not to be reduced to the variety of legal rules in force in a specific territorial ambit.⁷

7 See R. David, I grandi sistemi giuridici contemporanei (R. Sacco ed.), CEDAM, Padua, 2004, p. 16.

Accordingly, the theory of legal systems (or legal traditions) was shaped in response to the need to study law as a phenomenon that varies in time and in space. It aimed at setting criteria in order to define the identity of a legal system or of a group of legal systems (a legal style), in relation to some durable elements that characterize a specific legal experience, beyond the differences existing in the various national legal orders.

Many classifications have been suggested, but each one is relative and approximate, so it has to be taken cautiously, as it only has a descriptive value. However, with this note of caution in mind, one should not underestimate the merits of the theory of legal systems. It played a decisive role against the self-referentiality of the legal discourse, accentuated by the trend of legal positivism and its dogmas, with the result of enclosing the role of jurists in a sterile exercise of analysis and application of legal rules enacted by the legislature of each country. The consequences of this approach have not completely disappeared and still now, especially in the civil law countries, it is often taken for granted that law is to be identified by the rules enacted by the legislature.

1.3 The common law/civil law distinction

Among the various legal traditions (or ‘families’), within the ‘Western’ world comparative law scholars traditionally distinguish (and often oppose) civil law and common law. Civil law embraces all the legal systems sharing the Roman law heritage and having adopted civil codes (France, Germany, Italy, Spain, Latin-American countries, etc.). Common law refers to the English legal tradition, having influenced many legal systems, such as the United States, Australia, Canada, New Zealand, etc., being not codified.

The differences between the two legal traditions are commonly summarized as follows. First, the legal mentality tends to be more deductive in the civil law countries and more inductive in the common law ones. Second, in the civil law countries statute law continues to be the ‘sole’ source of law, in contrast with the common law world where case law is a source of law alongside statute law. Third, judicial styles differ consistently, to the point that nothing comparable to the attention to the facts given by common law judges in their decisions can be found in any civil law country.

The civil law/common law distinction is questioned nowadays. Their differences are often over-emphasized. Moreover, they are seen as representative of a geographical dimension of the legal phenomenon that does not fit anymore with the contemporary world. It is no longer possible to consider civil law and common law in terms of a geographic dichotomy, because not only are both traditions outstanding expressions of a common history of European law⁸ but also because their study leads to the discovery that some specific attitudes that characterized each of them in terms of separation have now become integrated. Just to give an example, the relationship between statutory law and case law is changing both in the civil law tradition (where judges are no longer, if they ever were, the ‘mouth of the law’, as assumed the French jurist Montesquieu) and in the common law tradition (where legislation is growing and reaching almost every field of law).

8 G. Gorla, L. Moccia, ‘A “Revisiting” of the Comparison between “Continental Law” and “English Law” (16th–19th Century)’, The Journal of Legal History 1981, 2(2), p. 143.

However, echoing again René David’s words, it would be “superficial and false” to draw the conclusion that no difference exists at all between the civil law and the common law systems. In particular, some argue that they are converging because in the common law countries judges are increasingly urged to interpret and apply statutes, whereas their civil law colleagues are enlarging their field of action as a consequence of the increase in legislation. This conclusion is clearly contradictory. From the same phenomenon (increase of legislation), it draws two opposite results: the bureaucratization of the role of judges in the common law systems and a more creative role in the civil law ones. The truth is that in both legal traditions one can find evidence of new ways to conceive the role of judges and shape the techniques of judicial interpretation and legal reasoning.

Without entering into further details, the distinction between civil law and common law continues to be relevant, at least in the field of contract law. Both legal traditions move from the idea that a contract arises if the parties want to be bound, but the role attributed to the parties’ will is different, sometimes with significant outcomes. For this reason, we will assume the distinction for didactic purposes being emblematic of two different attitudes that somehow co-exist in both legal traditions.

Another preliminary methodological point needs to be clarified. Nowadays, it is more and more difficult to consider the civil law and common law traditions as a whole. Within the civil law systems, the rules on contract law often differ substantially and thus elude a unitary consideration. We will concentrate our attention mainly on the French, German and Italian experiences, being the most influential also in other countries. In a specular way, within the common law world, English law of contract was the model to which Australia, Canada, New Zealand, Singapore and the United States were heavily indebted until the first half of last century. Now, these legal systems have gradually adopted original and specific solutions.⁹ In particular, in the United States, despite the fact that private law is not a federal matter (being within the competence of each state) the rules tend to be quite homogeneous and they sometimes differ markedly from their English origins. For this reason, even if we will mainly consider English contract law, it being the common source of inspiration of the common law way of reasoning, we will also try to highlight the main differences in respect of other common law countries.

9 E. Descheemaeker, ‘Comparative Common Law’, Revue Intern. Droit Comparé 2020, 4, p. 915 ff.

1.4 Aims

The idea behind this book arises from a pedagogical need. Literature on comparative contract law is impressive. One could easily desist from setting out on a risky adventure as approaching such a wide field of study. However, textbooks and treatises on comparative contract law are either very long (not suitable for an academic course) or they focus on theoretical issues, which are indeed extremely important, but not appropriate for a preliminary approach.¹⁰

10 Cf. T. Kadner Graziano, Comparative Contract Law. Cases, Materials and Exercises, 2nd ed., Elgar Publishing, Cheltenham, 2019, p. 5 ff.

This book does not cover the various contract law regimes in the entire world. Studying comparative contract law is unavoidable, as we previously observed. However, it would be impossible to embrace all the legal systems. Nevertheless, a short introduction can be useful to suggest a method to face the different conceptions, together with providing basic information about the most relev...