Information, Party Autonomy and Economic Agents in European Contract Law

Abstract

Party autonomy – in the sense of freedom of contract, or self-arrangement of legal relations by individuals according to their respective will – and the limits of party autonomy comprise one of the fundamental questions of national contract and private law, perhaps even the most fundamental. Today the limits of party autonomy are fixed mainly at the European level, especially ifmarket structure is the issue and not somuch individualweakness. The question has to be discussed at the European level anew (see below 2). Diverging views of 15 Member States must be considered. It is not just the level at which the question is regulated which has changed, but also the approach. This theme will be developed in the remaining sections. In Europe, mandatory rules prescribing disclosure prevail, but the substantive choice of contract contents is left to the parties’ autonomy (see below 3). In construction, these rules are similar to the traditional mandatory rules regulating the content of the contract. In their scope, however, they differ fundamentally from traditional mandatory rules: they are designed to enable party autonomy, they do not restrict the variety of products and contractual conditions available. It will be argued that these rules thus remedy market failure in the case of unavoidable information asymmetries, but at the same time do not unnecessarily restrict market mechanisms (see below 4). It is therefore an important development that the European Court of Justice holds, on the basis of the fundamental freedoms, that information rules must be preferred to mandatory rules prescribing substance, whenever meaningful information of the client is possible (see below 5). It will be argued that indeed the bulk of contract-related secondary EC legislation is about finding intelligent information mechanisms and thus extending the area of party autonomy (see below 6). Information is even an overriding principle in core internal market issues such as the interplay between legal orders (see below 7).