European Contract Law Research Articles

Have the PECL Been a Success or a Failure?

The article treats the impact of the Principles of European Contract Law (PECL), which were published in 2000 and 2003. They have had a considerable influence on law reforms in various European Countries, and has prompted the Commission of the EC to sponsor the bringing about of a Common Frame of Reference which is being prepared by the Study Group of a European Civil Code and other groups, and which is intended to operate as soft law. However, the author’s ambition that the PECL would bring about a binding European Civil Code of Contract applicable in the European Union and replacing the national laws will probably not be realised for a long time to come.

European Tort Law: Five Key Questions for Debate

Abstract: Recent years have seen the publication of the Principles of European Tort Law, the principles on Non-Contractual Liability Arising out of Damage Caused to Another, and in 2008, the Draft Common Frame of Reference (DCFR) containing principles, definitions, and model rules not only on the law of contract but also the law of tort or delict. Although primarily academic exercises, these publications raise the possibility of the introduction of some form of harmonized European tort law as a practical reality. This article will not examine the substance of these texts but will instead focus more generally on a number of fundamental questions that require consideration prior to any possible move toward harmonization. Despite the lively debate in the context of European contract law, less attention has been given to the potential operational difficulties facing any future harmonization of the law of tort or delict, which, it is submitted, require particular attention in the light of its inclusion in the DCFR. This article will therefore highlight the need for a broader debate if these projects are to form the basis of any future instrument.

The European Economic Constitution, Freedom of Contract and the DCFR

Abstract In the literature on European Contract Law and German contract law, a number of authors claim that the free movement of goods (Article 28 EC), services (Article 49 EC), capital (Article 56 EC) and persons (Article 39 EC) guarantee party autonomy and freedom of contract. In this paper, the opposite will be argued. It is submitted that ‘freedom of contract is taken for granted’ within the European Union. However, it is also generally accepted that there are restraints to freedom of contract to protect societal interests, as for instance protection of weaker parties, the environment and the capital market. Thus, the real question concerns the balance between on the one hand, freedom of contract and, on the other, restrictions to freedom of contract. The issue whether freedom of contract is a constitutionally protected right within the European Union is relevant, since if freedom of contract is taken as point of departure ‘… collective interests [are put] to the background’. In order to show that the free movements do not guarantee freedom of contract, first, the origin of the claim that the free movements guarantee party autonomy will be explored and will be placed against a historical background. Then, it will be discussed to what extent the Treaty provisions reflect the idea that the free movements guarantee freedom of contract and whether it can be inferred from the ECJ case law.

Harmonisation of European Contract Law and Legal Translation: A Role for Comparative Lawyers

The problem of harmonizing the contract in Europe has caught the interest of law professors, researchers and the European institutions. After years of debates, the European Union is aware that a lack of uniform legal terminology prevents any kind of unification and harmonization of European Contract law. The need for a uniform legal terminology clashes with the multilingual legal terminology of European law. In Europe there is not just one, but many legislative and administrative languages, and each of them is an official language of the European institutions. In accordance with the principle of linguistic equality, the European Community (EC) recognizes that all legal instruments have to be drawn up and published in all the official languages of the Member States. But every linguistic version of the same European legal instrument has not a functional and teleological equivalence of meaning, since every language reflects the legal culture of a specific legal system. Instead of suggesting a solution to the conflict between linguistic equality and the need for uniform legal terminology, the article focuses on the dangers of legal translation and claims a role for the comparative lawyer in the process of harmonization of European Contract law.

The Present State of European Private Law

The Article attempts to assess where we stand today in our endeavors to create a common European private law. General contract law and sales law have been, and will continue to be, at the center of attention. Today we are faced with a bewildering variety of documents purporting to establish common ground, among them the Principles of European Contract Law, the Acquis Principles, the Draft Common Frame of Reference, the Consumer Sales Directive, a Proposal for a Directive on Consumer Rights, the United Nations Convention for the International Sale of Goods, and the Principles of European Sales Law. The Article examines the relationship between these documents and asks to what extent they reflect a coherent and satisfactory picture of acquis communautaire and acquis commun. In other fields (special contracts other than sale and extra-contractual obligations), the search for doctrinal structures which are both recognizably European and teleologically adequate has only just begun. Finally there are subjects, such as the law of succession, where the very legitimacy of legal harmonization has been questioned. The Article concludes that all areas of private law should become the subject of genuinely European, as opposed to national, scholarship but that none of them is ready to be cast into an official European instrument, whether under the name of Code, or Common Frame of Reference.

Externalities & European Contract Law - Capabilities as the Minimum Standard of Social Justice

The subject of this paper is the question whether contracts that fundamentally damage the quality of life and capabilities of others should be invalid under European contract law. Two short case descriptions show the relevance of this question in light of globalization. An economic view of these cases emphasizes problems of social justice. The paper discusses the capabilities approach as a possible minimum standard of social justice for European contract law. For the capabilities approach to be accepted as such it needs to overcome critique from legal scholarship with regard to its relevance for contract law as well as critique with regard to the theory itself as a standard of justice. The latter is addressed by contrasting the approach with other traditions such as utilitarianism and the social contract. The relevance of the capabilities approach for European contract law is discussed in the remainder of the paper: why should European contract law incorporate a standard of social justice and how does the capabilities approach translate into rules of contract law? This paper aims to offer a convincing argument for the capabilities approach as a minimum standard of social justice in European contract law.

Fundamental Rights in the DCFR

The development of a 'Common Frame of Reference for European contract law' coincides with the search for a 'lasting constitutional settlement' within the European Union. This paper analyses the CFR drafted by a group of academic experts (DCFR) from a constitutional perspective, paying particular attention to the impact that fundamental rights may have on the application of its general clauses ('good faith', 'reasonableness'). It is submitted that, although the constitutionalisation of the DCFR has not yet been completed, the document does deserve admiration for the explicit manner in which it recognises the relation between contract law and constitutional law. It thus presents an excellent framework for elaborating the debate on both a European Civil Code and a European Constitution.

The European Economic Constitution, Freedom of Contract and the DCFR

In the literature on European Contract Law and German contract law, a number of authors claim that the free movement of goods (Article 28 EC), services (Article 49 EC), capital (Article 56 EC) and persons (Article 39 EC) guarantee party autonomy and freedom of contract. In this paper, the opposite will be argued. It is submitted that 'freedom of contract is taken for granted' within the European Union. However, it is also generally accepted that there are restraints to freedom of contract in order to protect societal interests, as for instance protection of weaker parties, the environment and the capital market. Thus, the real question concerns the balance between on the one hand, freedom of contract and, on the other, restrictions to freedom of contract. The issue whether freedom of contract is a constitutionally protected right within the European Union is relevant, since if freedom of contract is taken as point of departure '.. collective interests [are put] to the background'. In order to show that the free movements do not guarantee freedom of contract, first, the origin of the claim that the free movements guarantee party autonomy will be explored and will be placed against a historical background. Then, it will be discussed to what extent the Treaty provisions reflect the idea that the free movements guarantee freedom of contract and whether it can be inferred from the ECJ case law.

The Common Frame of Reference (CFR) of European Insurance Contract Law

in its Action Plan of 12 February 2003 (the “communication from the commission to the European Parliament and the council – A more coherent European contract law – An action plan”)1 and its communication on “European contract law and the Revision of the Acquis: the Way Forward” of 11 October 20042, the European commission announced the establishment of a common Frame of Reference of European contract law. According to the commission’s Action Plan of 12 February 2003, the CFR shall comprise Definitions and Rules and both shall be accompanied by comments and Notes. the comments will contain explanations and illustrations of the proposed Rules. the Notes will give reference to the status quo of contract law in the Member States as well as the existing acquis communautaire. the cFR will be drafted in order to establish a set of rules which provide the definitions, structure and contents of European contract law developed through a comparative legal analysis of national contract laws.3 Strictly speaking, these

From Consumer Contracts to Asymmetric Contracts: a Trend in European Contract Law?

The author discusses two questions. The first is a question in fact: do ‘consumer contracts’ still represent the central and privileged category they used to be in European contract law? A tentative answer is given, by pointing out the increasing number of contract regulations where the party given protection against a dominant business is not (necessarily) a consumer, but is a (weaker) business himself (unbalanced business-to-business contracts), or more often a client purchasing goods or services in the market (supplier-to-customer contracts). Evidence of this is taken from a number of Directives and Regulations, as well as from the DCFR and PECL, and also from national regulatory experiences, such as that relating to the reform of unfair terms legislation in the UK. The conclusion is that European legislator is more and more focusing on asymmetric contracts rather than on consumer contracts, whereby asymmetric contracts are all contract relationships between a dominant business and another market player (be he a consumer or a non-consumer) who suffers inequality of bargaining power depending on his objective market position. The category of consumer contracts tends therefore to lose its traditional centrality and predominance in the frame of European contract law. The second question implies evaluations as to whether such process is desirable or not. The author argues that it is desirable both politically and technically: from the political standpoint, it broadens the scope of market regulation oriented to justice and efficiency goals; from the technical standpoint, it may help the contract law system to face the increasing risk of fragmentation induced by the special regime of consumer contracts, and recover unity and coherence.

Legal Innovation in European Contract Law: Within and Beyond the (Draft) Common Frame of Reference

The Europeanization of contract law has continuously developed over the past 25 years. It is now at a defining stage, with the Draft Common Frame of Reference (DCFR) recently being published. This article is not primarily concerned with the substance of this instrument, but with the process of legal innovation it might trigger. The hypothesis is that the adoption of such a rulebook will have a significant impact on the future development of European contract law. Yet the nature and likely effects of such impact are difficult to predict, given that functions, elements and purposes of the new instrument still need to be identified and defined. In any event, the DCFR will modify the pattern of future legal change in European contract law. The crucial question is: Will it provide a dynamic framework for legal innovation?

The Function of European Contract Law – An Economic Analysis

This paper aims at addressing a fundamental but somewhat neglected issue regarding the discussion of the function of European Contract Law. At a time when both academics and political actors show their interest in drafting a comprehensive body of rules meant to be available to market operators across Europe, a thorough analysis of the aims of such legal instrument is fundamental and cannot be sufficiently addressed by an all-encompassing list of values that European Contract Law is expected to pursue. The work tries to show how using an economic method can be of help at the core of European Contract Law, to identify its function(s) and to provide guidance as to the appropriateness of the rules set to become part of it. Such guidance includes both suggestions as to the appropriate regulatory level, going beyond the incomplete cross-border transaction costs argument, as well as indications as to what constitutes contract law of good quality.

Bargaining Within the Shadow of Fairness: Economic Analysis of Article 4.109 of the Principles of European Contract Law

The problem of unequal bargaining power has been widely analyzed within the philosophical and economic literature. In this article I would like to concentrate on the issue of “excessive benefit or grossly unfair advantage” as envisaged in Article 4.109 (ex art. 6.109) of The Principles of European Contract Law (PECL). The normative significance of PECL indicates that the codification may be applied by parties as a supranational system of general principles of law or international commercial law (lex mercatoria). The economic analysis of European contract law will be divided in two parts. The first part will include the traditional economic analysis of contract law under an unrealistic assumption of zero transaction costs. It could be argued that even then contract failure may occur. This part concerns the so-called “contract failure”. The second will be focused primarily on contracts made in a positive transaction cost world, where the presence of transaction costs leads to a “market failure”. Both parts pertain to the regulation of contracts by courts within a framework of judicial governance. The main instrument of such judicial governance seems to be the concept of a hypothetical bargain or hypothetical contract. The most appropriate tool to be implemented in these cases seems to be game theory. Whether the benefit is excessive or not, it should be compared with the hypothetical division of surplus from the exchange stemming from the face-to-face ideal bargaining process. Thus the problem of a “market failure” may be analyzed from the perspective of a potential solution to the bargaining problem. In conclusion I would like to address the question of whether and under what conditions it is possible to construct any plausible and generally accepted criteria of fairness in order to restore contractual equivalence in case of gross inadequacy in bargaining power.

The Consumer Rights Directive and the CFR: two worlds apart?

At present, the proposal for a Consumer Rights directive and the draft Common Frame of Reference are almost entirely disconnected. This is surprising in the light of the Commission's original plans. It is also unfortunate in the light of the CFR's potential for making European contract law more coherent.

A European Legal Method? On European Private Law and Scientific Method

AbstractThis article examines the relationship between European private law and scientific method. It argues that a European legal method is a good idea. Not primarily because it will make European private law scholarship look more scientific, but because a debate on the method of a normative science necessarily has to be a debate on its normative assumptions. In other words, a debate on a European legal method will have much in common with the much desired debate on social justice in European law. Moreover, it submits that, at least after the adoption of the Common Frame of Reference by the European institutions, European contract law can be regarded as a developing multi‐level system that can be studied from the inside. Finally, it concludes that the Europeanisation of private law is gradually blurring the dividing line between the internal and external perspectives, with their respective appropriate methods, in two mutually reinforcing ways. First, in the developing multi‐level system it is unclear where the external borders of the system lie, in particular the borders between Community law and national law. Second, because of the less formal legal culture the (formerly) external perspectives, such as the economic perspective, have easier access and play an increasing role as policy considerations.

The Common Frame of References for European Private Law - Policy Choices and Codification Problems

At the beginning of the year, the Draft Common Frame of Reference (DCFR) has been published. The text is the result of the work of a broad range of private law scholars from the Member States of the European Union, and it presents itself as an document, committed to the precepts of scholarship rather than politics. Notwithstanding its unwieldy name, the text is nothing less than the draft of the central components of a European Civil Code. The following article aims to inform the reader about this milestone in the development of European private law, and to initiate further academic debate about it. Following an overview of the genesis and content of the DCFR (1), the discussion focuses on the question whether, and to what extent, it is based upon consistent and convincing core aims and values (2). The article then proceeds to address, more specifically, the significance of private autonomy, and it examines the extent to which the proposed rules satisfy the requirements of legal certainty and legal clarity (3). Thereafter, the DCFR is measured against the criteria of internal consistency and systematic integrity (4). Also (5) the question is asked whether the Draft critically reflects and convincingly integrates the sources on which it is based (that is the Lando Commission's Principles of European Contract Law and the Acquis Principles, as well as the private law traditions of the Member States). Also deserving of attention is the inclusion of more than 120 definitions of central concepts of private law, which are not to be found in this form or level of detail in either the Lando Principles or the national private laws (6).

The CISG, European Contract Law and the Development of a World Contract Law

The United Nations Convention on Contracts for the Interna tional Sale of Goods (CISG), though promulgated more than a quarter of a century ago in an entirely different socio-economic and political environment, remains a landmark in the international unification process. Adopted by seventy countries, including most of the major trading nations, the CISG has not only achieved the status of a verita ble world sales law but has also led a number of States to modernize their domestic sales laws. In addition, it heavily influenced the EC Consumer Sales Directive in Europe and is a source of inspiration to the current work on a possible European Civil Code. Moreover, at a universal level, the CISG has prompted UNIDROIT to prepare the UNIDROIT Principles of International Commercial Contracts, a sort of restatement of the law of international commercial contracts in gen eral. The present article is intended to explore these developments fur ther, focusing in particular on the potentialities of legislative instruments such as the CISG and the EC Consumer Sales Directive as opposed to non-binding or soft law instruments such as the UNIDROIT Principles.

European contract law: Odysseus the Hero or Muffin the Mule?

An academic group with funding from the EU has published a “Draft Common Frame of Reference” (DCFR), a document indistinguishable from a European contract code. Is this DCFR the Trojan Horse from which will issue forces that will overwhelm the common law, the Code Napoleon and the other national contracts laws of Europe? Or is it more like a mule, the barren progeny of perplexed parents doomed to have no issue at all? Or is it something else altogether?Only the EU can decide, but the EU has so far sent out mixed – not to say incoherent – signals as to what it wants to achieve and therefore what it will do with the DCFR. Before any further time is spent on its European contract law project, the Commission must clarify its aspirations. If the Commission does not do this, the result will be continuing suspicion and the lack of any proper debate as to the future direction, if any, of the project.

Negotiating [In the Shadow of a] European Private Law

Clear and predictable rules act as a shadow in which parties can negotiate. European Private Law cannot offer such a shadow because its rules are too diffuse and incoherent. Nor can national laws provide this in a cross-border context. The European Commission's initiative to review the consumer acquis and create a more consistent body of rules through a CFR must therefore be supported. However, to the extent that the CFR goes beyond the revision of the consumer acquis and envisages the creation of a European contract law, it is argued that a fundamental step is lacking. Before drafting technical rules, an open, transparent and political dialogue is needed about the values underpinning such a contract law. This dialogue can benefit from a diversity of views, including more radical welfarist ideas. Negotiation theory shows how to set up a more open process of developing a European contract law. As in any negotiation, several tensions must be managed: between distribution and creation of value, empathy and assertiveness and between the interests of the European constituency and its political agents. New processes of empowered deliberative democracy with a consensus model of decision making may inspire a means for handling this much needed dialogue on European contract law.

The Common Frame of Reference (CFR) of European Insurance Contract Law

in its Action Plan of 12 February 2003 (the “communication from the commission to the European Parliament and the council – A more coherent European contract law – An action plan”)1 and its communication on “European contract law and the Revision of the Acquis: the Way Forward” of 11 October 20042, the European commission announced the establishment of a common Frame of Reference of European contract law. According to the commission’s Action Plan of 12 February 2003, the CFR shall comprise Definitions and Rules and both shall be accompanied by comments and Notes. the comments will contain explanations and illustrations of the proposed Rules. the Notes will give reference to the status quo of contract law in the Member States as well as the existing acquis communautaire. the cFR will be drafted in order to establish a set of rules which provide the definitions, structure and contents of European contract law developed through a comparative legal analysis of national contract laws.3 Strictly speaking, these