Cases, Materials and Text on Contract Law

Hugh Beale, Bénédicte Fauvarque-Cosson, Jacobien Rutgers, Stefan Vogenauer

• Publisher: Hart Publishing
• Year: 2019
• Print ISBN: 9781509912575
• eBook ISBN: 9781509912582
• Edition: 1
• Topic: Derecho
• Subtopic: Derecho comparado

This is the third edition of the widely acclaimed and successful casebook on contract in the Ius
Commune series, developed to be used throughout Europe and beyond by anyone who teaches, learns or practises law with a comparative or European perspective. The book contains leading cases, legislation and other materials from English, French and German law as the main representatives of the legal traditions within Europe, as well as EU legislation and case law and extracts from the Principles of European Contract Law. Comparisons are also made to other international restatements such as the Vienna Sales Convention, the UNIDROIT Principles of International Commercial Contracts, the Draft Common Frame of Reference and so on. Materials are chosen and ordered so as to foster comparative study, complemented with annotations and comparative overviews prepared by a multinational team. The third edition includes many new developments at the EU level (including the ill-fated proposal for a Common European Sales Law and further developments linked to the digital single market) and in national laws, in particular the major reform of the French Code civil in 2016 and 2018, the UK's Consumer Rights Act 2015 and new cases. The principal subjects covered in this book include: An overview of EU legislation and of soft law principles, and their interrelation with
national law
The distinctions between contract and property, tort and restitution
Formation and pre-contractual liability
Validity, including duties of disclosure
Interpretation and contents; performance and non-performance
Remedies
Supervening events
Third parties.

PART 1

INTRODUCTION

CHAPTER 1

GENERAL TRENDS IN MODERN CONTRACT LAW

1.1National Contract Laws Within the European Union

1.1.AGradual Convergences of National Legal Systems

1.1.BLegal Certainty

1.1.CThe Protection of the Weaker Party

1.1.DContract, Constitutional Law and Human Rights

1.2Contract Law in a Digital Environment

1.2.AContract Law and Innovation

1.2.BNew Legal Issues for Contract Law

1.3Contract Law in an International Environment

1.3.AThe Promotion of Party Autonomy with Regard to Choice of the Applicable Law

1.3.BNotion of International Contract

1.3.CArbitration Agreements and Agreements on Choice of Court

1.3.DChoice of Law Clauses

1.3.EThe Limits to Party Autonomy

In the absence a unified European or international contract law, the study of the various laws of contract is one of the core subjects of comparative law. Its practical importance is great. ‘Of all areas of law, perhaps none has been subjected to comparative study as consistently, frequently, and intensely as contract law’.¹ According to Allan Farnsworth, there are three main reasons for this: ‘First, the origins of modern comparative law lie in the civil law world (ie in Western Europe) of the late nineteenth and early twentieth centuries, and in that world, contracts have been widely considered the pre-eminent area of law. … Second, modern comparative law soon began to focus particularly on the study of the similarities and differences between the civil law and the common law, and contract law turned out to be an enormously fertile field for such studies. … Third, contract law is a favourite topic for comparative study because it is among the practically most salient areas of law, both in terms of economic importance and in terms of the realities of international negotiation and litigation’.²

National legislators, when reforming the law of contract, are more and more inspired by what has been done abroad as well as by transnational norms. Gradual convergences occurred, which enabled scholars from around the world to elaborate soft law instruments on a worldwide and European scale. These instruments, in turn, have provided guidance for converging developments of national contract laws. Competition between legal systems has dramatically developed. As measuring how friendly each system is towards foreign investment has become a constant trend worldwide, demonstrating the potential political explosiveness of comparative studies (the ‘Doing Business’ approach which ranks economies according to various sets of indicators based on the ease of doing business is typical of such an approach),³ legislators are eager to modernise their own national laws of contract and this may lead them to make a determined effort to forge an alliance between their legal tradition and the construction of a European and international legal order. As we shall see in the subsequent chapters of this book, the recent French contract law reform (2016, with slight modifications in 2018) is a prime example of this trend.

Over the decades, contracts have become more numerous, more sophisticated and also more international. As surprising as this may seem, most cross-border transactions are still governed by national laws of contract. However, the constant development of party autonomy, characterised by the parties’ freedom to choose the applicable law in an international setting, increases the need for contracting parties (in particular business operators) to be well informed of the content of national contract laws. Whereas only large companies used to be active in international markets, an increasing proportion of parties to a contract (suppliers, customers, employees, students, retired persons, migrants, tourists) are now engaged in international transactions.

The first part of this chapter will present the main trends that affect national contract laws within the European Union, the second part will deal with contract law in a digital environment and the third part with contract law in an international environment.

1.1NATIONAL CONTRACT LAWS WITHIN THE EUROPEAN UNION

1.1.AGRADUAL CONVERGENCES OF NATIONAL LEGAL SYSTEMS

Establishing a European contract law in the twenty-first century would not be an easy task. The biggest problem in this respect is not just, as we shall see further, the divide between the civil law tradition prevailing in continental Europe and the common law tradition prevailing in England and Ireland,⁴ but rather the political implications of such a project, in terms of European integration, as the idea of a unified European contract code goes along with the idea of a unified Europe and the creation of the European Union.⁵ In spite of the major European and international developments that our legal systems have experienced, there is no general common European contract law and so far the arguments in favour of a European unification of contract law have not been considered sufficiently strong. There is, however, an ever-increasing doctrinal framework and gradual convergence towards shared principles.

1.1.A.1ARGUMENTS IN FAVOUR OF A EUROPEAN UNIFICATION OF CONTRACT LAW

There are various arguments in favour of a European unification of contract law.

First, the subject of contracts lends itself to unification because contracting parties develop their activities in an international context and this unification would lead to more legal certainty.

Secondly, some areas, or ‘sectors’ of contract law have been harmonised by the European legislator, while others have been left as a matter of national law. This so-called ‘sectorial approach’ has many disadvantages. They include, for example, the difficulty of transposing directives into national laws and the resulting fragmentation of the national laws. A more coherent and more complete set of European rules to govern contracts would be welcome (see Chapter 2).

Thirdly, consumer protection has led, within Europe, to the enactment of many specific uniform rules which are mandatory in the sense that the parties cannot contract out of them. Fundamental rights, particularly those linked to privacy and data protection, reinforce this trend.

Fourthly, establishing a European law of contract has a symbolic dimension for Europe.

However, the idea of a European codification, which would be complete, coherent and structured, gave rise to strong criticism, not only because it tended to embody the civil law tradition to the detriment of the common law, but also because it exceeded the scope of the powers held by the EU. The European system of conferred powers implies that both the principles of subsidiarity and proportionality are respected, and the arguments regularly put forward by the Commission, which focused on the fragmented legal framework in the area of contract law and its obstacles for cross-border trade,⁶ were not judged sufficient to confer the necessary powers on the Commission. It also needed to be demonstrated that the diversity of laws does indeed create barriers, and the Court of Justice was of the view that a Community act must genuinely have as its objective the improvement of the conditions for the establishment and functioning of the internal market.⁷ It is therefore not sufficient to find disparities between national rules, or to point out the abstract risk of obstacles to the exercise of fundamental freedoms or of distortions of competition likely to result therefrom to justify the process of European unification of law. Furthermore, and perhaps more importantly, such a task is charged with strong symbolism: codifying contract law is a significant step towards a European Civil Code, a project that can only be achieved if there is a strong desire for it within Europe.⁸ This is not the case.

1.1.A.2SHARED PRINCIPLES

There is a common legal basis across Europe, inherited from history and rediscovered in the second half of the twentieth century, with the effect that, in the last decades, a substantial doctrinal European framework has emerged. Even systems which share little by way of common origin, such as the common law and the French Civil Code, have influenced each other and often produce results that are not too dissimilar. Beyond the wide variety of national contract laws, there are indeed striking convergences, and a strong doctrinal framework forms part of what is currently called ‘European private law’. The comparative law method, used in this book, has become ‘a valuable interpretative tool that serves to strike the dynamic balance’ between unity and diversity upon which the future of Europe and its law should be built.⁹

Principles which are found in the laws of the Member States have been elevated to the European level by the Court of Justice, which recognises general principles of EU law on the basis of the constitutional traditions of the Member States. Cross-fertilisations and reciprocal exchanges are thus facilitated. Principles which have been first affirmed in one State and then recognised at the level of the European Union subsequently spread across other countries; and they may also often be found in the law of the European Convention on Human Rights. As explained by French conseiller d’État¹⁰ Bernard Stirn, these shared principles ‘structure the European legal system’. Bernard Stirn identifies four of these, which ‘make up the keystone of the construct of European law—these are the principles of equality, proportionality, subsidiarity, and legal certainty’.¹¹

This comparative approach is rapidly spreading within the EU. And the decisions of national judges are contributing to the convergence of national legal systems.¹² Alongside the principles of equality, proportionality, subsidiarity and legal certainty, national contract laws share other guiding principles, notably contractual freedom, the binding force of contracts and, to a certain extent, good faith and legitimate expectations. These principles also belong to a common corpus of general principles in transnational instruments. As Stefan Vogenauer shows, while in the past general principles of contract law were neither codified in civil codes, nor so well-established that they could be regarded as self-evident, transnational instruments have greatly contributed to a major shift in this respect.

General principles of contract law in transnational instruments¹³

1.1 (INT)

Stefan Vogenauer

General principles of contract law at the outset of these texts help us better understand the general nature of the instruments. Their presence or absence, their exact formulation and their position within the overall context of a given instrument provide us with an idea as to how their black letter rules will attempt to strike the balance between freedom and social justice. Such guideposts are particularly useful in a transnational context where there is no shared background legal culture, as it exists in national jurisdictions … [Transnational instruments] will be applied by lawyers with very different understandings of the role and...

Table of contents

• Cover
• Title Page
• Preface
• Contents
• Abbreviations
• Table of Cases
• Table of Legislation
• Part 1 Introduction
• Part 2 Formation
• Part 3 Fraud, Abuse, Immorality
• Part 4 Content of Contracts
• Part 5 Remedies for Non-Performance
• Part 6 Supervening Events
• Part 7 Third Party Consequences
• Index
• Copyright Page