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May 12, 2010

Non–pecuniary loss

Non-pecuniary loss is mainly framed by in France and in England. Whereas in German law there are some provisions related to this notion but case-law remains important.

In France, it is possible to get damages awarded even if the claimant has no blood relationship or a relationship by marriage. I was during a long time only the case in criminal law. But since the Lunus, it is possible to recover in civil and in criminal law. It was an injustice in regards of fiancé(e) and foster parents.

In England, it is possible to get damages on the basis of a contract (Jarvis v Swans Tours). Before Jarvis v Swans Tours, the case law allowed to award damages only in cases where the plaintiff suffered physical inconvenience (Bailey v Bullock). The case-law seemed to be indecisive at the scope to give to non-material damages. Finally, Ruxley upheld Swans Tours by permitting a claimant to get damages for the breach of a swimming pool building contract. The court considered that a contract can be intended to provide enjoyment as providing works or goods. This approach may be made in order to take into account the psychology of a claimant who has the feeling to suffer an injustice.

In German law, damages are only allowed on the basis of a specific statutory authorization (§ 253 BGB). But because this provision would let many plaintiffs without remedies, courts usually allowed damages in order to overcome this issue. Parties can even substitutes themselves to the courts by inserting damages clause in their agreements or by bringing evidence to the court.

German law may be the legal system which is the keenest to allowed damages by giving several possibilities to courts and parties in case of non-pecuniary loss compare to French and English law.

Pierre-Patrice TIFI MAMBI


The mechanism of hardship varies from one country to another.

Attempts of harmonization have been made at European level with the PECL.

The French legal system does not admit “revision pour impévision” as said in the judgement of principle Canal de Craponne. But this doctrine is challenged by Terré’s Draft and the Government’s Draft which are following the recent evolution of the PECL. Only the Avant-projet Catala keep with the French tradition. It is maybe distancing his self from his initial aim: becoming the reference tool for companies which are mainly using common law.

The English legal system is alike the French system by not allowing the judges to intervene on the contract and by preferring the parties to include hardship clauses in their agreements. That is what Lord Radcliffe said in Davis Contractors. Its characteristic is the doctrine of Frustration which applies only in cases of impossibility, illegality or when the contract becomes radically different. This doctrine applies rarely but its consequences are drastic. Its application entails disappearance of the contract not only revision as in German law.

In case of inflation a contract would not bring to an end as in French Law.

The German legal system is forged around the “doctrine of disappearance of the basis of the transaction” (Wegfall der Geschäftgrundlage) created by Oertmann. In 1922, the Reichsgericht invoke for the first time the unwritten clausula rebus sic stantibus in order to adapt the price agreed by the parties. Then on the 27th June 1922 the Reichsgericht recognizes judicial revision to rescission on the basis of Oertmann Theory). In the Bundesgerichtshof decision of the 16th of January 1953, the court will seek to adapt the contract equitably. The German reunification case renew the theory of disappearance but in regard of good faith in § 242 BGB.

Pierre-Patrice TIFI MAMBI

The places and sources of contract law

In comparison with the BGB, the code civil is less structured. The main principles are split in different codes as the Code de consummation, the code de commerce or other specific legislation. The Code has been relatively little altered since 1804, thanks to its term’s flexibility. Nonetheless, it was thought that it needs a modernization in order to restore his place inside French law and to preserve its influence outside France. This idea led to the Law of 17 June 2008 reforming the law of prescription. The Code civil is better structured and has several innovations. But, it still keeps the concept of cause. Whereas the Chancellerie’s reform and the Terré’s group dropped this concept of their project.

The BGB is more structured. It is organised in five books. The approach of the BGB is systematic. That renders the using not obvious for non-lawyers. Althought its codification is consistent and coherent. Its wording avoids repetition and is a good tool for lawyers. Gaps are filled by case-law and legal writings like the Wegfall der Geschäftsgrundlage. These doctrines were incorporated in the BGB in 2001 by the Schuldrechtsmodernisierungsgesetz and entered into force on 1 January 2002. This reform did not change the substance of the law compare to the French projects.

English depart from German and French law by basing on the common law and not mainly on legislation. It is framed by a unique concurrence between common law and equity. Equity could sometimes supersede the common law. The English law of contract is less structured because it is judge-made law. The will theory did not penetrate the English law because it was not influence by Roman law.

Maybe, thanks to its huge flexibility, English law is much keen to adapt itself to legal evolution than the civil law countries which codes are all written.

Pierre-Patrice TIFI MAMBI

May 07, 2010

Why to study comparative law

As we have learned in the ICP Workshop, comparative law is the only true juridical science. Because instead of just noticing actual law as it is, by studying comparative law you understand that law is no absolute given fact that is to learn by heart.

It becomes very clear that law is relative. Law is made by human beings to satisfies the needs of society. It therefore varies from country to country and even from community to community (where there is an Selbstverwaltungsrecht der Gemeinden at least, coercively less in an État centraliste). There is no absolute law we should obey as the foundation of ultimate justice.

Looking at other countries law helps understanding other cultures. Comparative lawyers seek to understand the reasons for a certain legal system or a certain norm. When you are surprised about the apparent unfairness or exaggerated protective effect of a single norm you will find that this norm is perfect as it is when put into its contextual legal system. There is a harmony of norms inherent to each legal system.

Searching the reasons for the existence and the content of a norm is maybe the most important quality a lawyer should have. Because juridical skills like interpreting a norm and apply it in a dogmatically and logically correct sense and in the respect of fairness and justice are skills that derive from the ability to understand the background of a norm and what this norm is meant to effect.

With the skills of understanding the relationship between norm and objective, to critically wonder whether a norm fulfills the aim, you are competent to create law that is reasonable and understandable, because you thought a lot about terms and notions also.

Comparing your national legal system to the law of another country helps understanding your own legal system. When you place terms and instruments in the context of different regulations the differences between the instruments appear and therefore the characteristics proper to each instrument become evident. It is like a negative definition, a a contrario description. How describe black? It`s very dark. And it is the opposite of white.

And when you know black and white you can understand what grey is like. Or PECL or UNIDROIT, a mixture. You can then proceed to try to find common points and even harmonise different systems.

Although I have sometimes the impression that studying different legal systems at the same time lead to me not knowing any norm anymore due to confusion, I found it helpful to study parallely French and German law. Not only the law itself but also the method . The French have a very strict binary approach -based on the philosophy that everything in the world can be split into two, like ying and yang or male and female or good and bad- putting the answer to every problem into two parts. It seems strange at the beginning, but somehow it is just the same as the German "es kommt darauf an", the so typical answer of lawyers who then differentiate their answer. "ja, aber" or "nein, aber". There`s always a principle and always an exception. But often there is an exception of the exception and this fits not easily into a binary plan. Anyway, the combination of different methods has turned out to be very helpful. One can adapt the approach to the nature of the problem. And the most acceptable solutions, acceptable by all parties, are those based on compromises, on combinations of solutions.

Therefore it is worth getting a bit confused by doing comparative law. In the end there are moments when you notice that you have actually learned something. And I think the ICP Workshop was useful, because it brought together once the three different regulations about specific legal problems and clarified confusions.

Assessment VIII – Privity of Contract

The concept of privity of contract exists in the French, English and German legal system. But the extent of its application is different. This can be shown by comparing the quantity and nature of the exceptions to the principle of privity of contract. I would like to focus on three legal instruments being listed as exceptions to the principle of privity in England, that exist also in the other 2 countries but are classified differently. We will see why they are not exceptions in the strict sense of the principle that is : a contract can not impose obligations on a third party and a contract can not create a benefit for and be enforced by a third person.

Land law, agency and assignment are mentioned as some of the exceptions to the principle of privity in Common Law. In my opinion these instruments are no exceptions in a narrow sense.

Because the the effect of agency is that he contract is formed between the represented party and its co-contractor, and not between the agent and the co-contractor. For me, this problematic is more about the subject of formation of the contract and the question "who is party to the contract?" than about the effect of a formed contract.

As to assignment, there is usually a substitution of at least one of the parties. The contract itself stays bilateral between two parties, only the parties will be others. Only when ot the whole contract but one of the rights out of the contract is conferred I would eventually say that there is a trilateral situation presenting an exception to the principle of privity. Because two parties, say A and C, can  invoke one contract, the original one, say the one between A and B, in order to obtain performance of B. But still C needs t invoke in combination his or her contract of assignment with A. The original contract does not directly create a right for him or her. 

As to land law, the fact, that the rights third persons have concerning a territory can not be rescinded by a contract of the owner of the territory with his or her co-contractant, appears to be logical from the German and French pont of view. In France and Germany this question belongs to droit de biens or Sachenrecht, that English lawyers do not know. Due to the distinction droit de biens or Sachenrecht makes between usus, fructus and abusus, between pure property (nue-proprieté/Eigentum) and possession (Besitz) and exploitation. Une servitude (637-710 Code civil), administrative (there are for instance Baulasten in German Baurecht) or private, that exists as a right another person or the State has concerning a territory, sticks to the territory when it is, for example, sold. If third persons have the right of usus and fructus, then the Eigentümer can only transfer to a co-contractant the nackte Eigentumsrecht, without Besitzrecht und Ertragsrecht. I don`t see these land law rules as exceptions to the principle of privity. Because, having studied law in Germany and France first, it is dogmatically completely different from contract law (Vertragsrecht, droit des obligations). In German law concerning property and possession there is also the protection of possession (e.g. of the Mieter) by the Grundrechte. Because the Grundgesetz protects the privacy of the Mieter as if he or she were the owner. Also there is also the principle Eigentum verpflichtet playing a role it situations where the owner might be obliged to respect another party having usus, for example a poor citizen living in one of the owner`s houses. In my opinion in land law or in  a wider approach in droit de biens in general, existing rights, founded by contracts or by law, are more faits juridiques. For me they are not cases where a third party benefits from a contract formed between other parties or that an obligation is imposed upon a third. There is rather an existing right or an existing obligation that has to be respected by the contracting parties. So it`s more the application of the principle of privity of contract, because the contracting parties (e.g. owner and buyer of a house) can not by their contract oblige a third party to do something, for instance the tenant to leave his flat. And it is not an exception to  the principle.

Although for English lawyers, without distinction between law of obligations and law of things, land law might to be treated as an exception to the principle of privity of contract.

April 01, 2010

Assessment VII – Théorie de l`Imprévision

The projects for the reform of French contract law give three different solutions as how to overcome the strict refusal of the theory of imprévision by the civil law courts. Compared to the Projet-Catala and the Propositions de réforme du droit des contrats under the direction of F. Terré, the Avant projet du gouvernement de décembre 2008 suggests the institution of the theory of imprévision a minima.

Although the theory of imprévision is not unknown to the French legal system (e.g. in administrative law, but also in the Code civil: the heir can ask for judicial revision of the charge affecting the donation or heritage, art. 900-2 or the possibility for the divorced husband/wife debitor of a compensatory prestation to demand its revision or suppression, art. 275, al. 2 and 276-3, or the right of the conferrer to take the object, art. 1889, or the right of the mandatoryto terminate the mission, art. 2007, al. 2, or in the Code d`assurance: art L. 113-4 the right to terminate the contract in case of aggravation or disappearence of the risk or art. L. 49-420 du 25 mars 1949, art. 4, al. 4, rédact. L. 63-628 du 2 juill. 1963 the power of the juge to revise the rentes viagères). The French fear too much power of the judge to intervene. In the French legal system the autonomie de la volonté des contractants is to be protected as the heart of contract law. For French lawyers, the possibility for the judge to re-establish the contractual balance may be a form of justice, but is not droit. The other extreme of justice made by the courts, often argued by anti-imprévisionistes, is a system completely subordinated to the free appreciation of its judges, what also leads to incertainty and injustice. Some French authors warn clearly about the risk of the dissolution of the norm and of 500 million Europeans being subordinated to arbitrary decisions of judges.

Art. 136 of the Avant projet of the government regards these concerns. According to the projet de réforme the court can adapt the contract but only under the condition of the consentement des deux contractants. This is the highest degree of innovation realisable in France at the moment, not heurting the autonomie de la volonté as a révision judiciaire even limited to the sole réfaction of obligations, and not expanded to refection, would. The majority of French lawyers seems to admit that even if the parties have not included a hardship clause, they might not have omitted to do so intentionally. French authors appear not to exclude anymore the possibility of the existence of a clause résolutoire sous-entendue, the condition rebus sic stantibus, as the parties can not want what they don`t know or think will happen. But for the moment, the French legislator finds it extravagant enough to introduce the possibility of adaption by the judge subject to the consent of the parties. My explication for art. 136 disposing that the judge "may put an end to the contract from a date and on conditions that the court may determine" is, that there is a difference between allowing the court to terminate a convention and giving him the power to force parties to continue performing a modified convention to which they haven`t given their consent. For now it is acceptable to confer to the judge the power to terminate the contract after failed renegotiation, even the power to impose the conditions and the datre of termination. But still the mistrust of harmonisation of juridical systems and the fear of a deterioration persists. New legal instruments, as the power of the judge to adapt conventions as in the German juridical system, will continue to be examined suspiciously. But nevertheless the reform is the first step of a change that might lead to further legal developments that are at the moment unforseeable...  April, april!

March 30, 2010

Assessment VI – Unlawful Threat

I like the approach of the BGH in the judgement of the 23rd September 1957 "The threatened wife" in determining constitutive elements of unlawfulness of a threat allowing to avoid a contract under § 123 BGB. The BGB reasons according to the very German principle of proportionality (Verhältnismäßigkeitsgrundsatz) in taking into account the values of both sides: the interests of the person whose freedom of action has been taken away and the Schutzbedürftigkeit (extent to what a person deserves protection) of the party issuing the threat. The Court also states that all circumstances which chartacterise the events which occur have to be taken into consideration. There is no rigid definition of the term unlawful threat. There are rather indices that may characterise an unlawful threat. The terms given by the BGH need further interpretation are are flexible to adapt to the actual public opinion. For example the reasonableness of the threat has to be seen "in the view of all fair-minded and right-minded persons". "Considerations of public policy" play a role rather than the question whether the legal order confers an enforceable right to the threatening person or not. Unlawful means contrary to bonos mores (morality). I think that these guidelines allow a case-to-case approach which equates to the Common Law. Thanks to the fact that the definition of "unlawful threat" underlies the content of the actual morality of the society and depends on all unique elements of a case, legal uncertainty arises to some degree, but there is also an important chance to achieve justice between the threatening and the threatened party.

--------end of assessment V entry-------------

Mothers and children 1950 and 2010

The case "The young mother" decided by the BGH on the 14th of June of 1951 illustrates how a threat issued by parents against their pregnant daughter can be seen to be relativised by other person`s influence on the threatened person. And how a temporal difference of two weeks between the threat and the signing of the declaration can be the the reason to distinguish an action under § 123 BGB. I agree that in general if there is a laps of time between the two events, one might doubt the causality. But I would critisize this judgment on the basis of wrong evaluation of facts. Because a threat of this nature once spoken out by the parents does not cease to have effects on the daughter during the course of two weeks. In reality the pressure continues until the reason for the threat disappears (the abortion or adoption of the child) unless the parents change their opinion fundamentally.

However, my principal critic against the case is another, although it leads away from the original subject: The question whether the declaration to give the child free to adoption can be avoided or not due to unlawful threat issued against the mother is not the important point (though it is for the sake of an example of where there is no causal unlawful threat). What counts is the well-being of the child! Even if there was unlawful threat and causality, the child would eventually not be returned to the mother. What makes cases where children are involved so complicated is that even the natural principle saying that a child belongs to its biological mother ceases to be an absolute, imperative principle. Morally it seems unholdable to deny a mother the wish to raise her child. But what if the child has already lived for the first couple of months or years with other persons who the child regards as his or her parents? Such an emotional rupture as the complete change of the child`s keyperson in the early childhood can be as cruel as for the mother to renounce her child. The main objective should always be the well-being of the child and not the enforcement of adults`rights (neither the rights of the biological mother nor those of adoptive parents).

The case makes me think of today`s version of "The young mother": the affair "Baby Donna". A conflict between the biological mother, the couple that had been promised the baby and that had given the sperm and the couple that was going through the adoption procedure after having bought the child from its biological mother. This is an interesting case for international civil lawyers in which the norms of Brussels I about juridictional competence play a role as the parties are of different nationalities of the EU (Dutch and Belgian). "Baby Donna" is also interesting in the sense of comparative law. The case shows how citizens of the European Union benefit of their fundamental freedoms in order to derogate more restrictive norms of their Member State of origin and take the advantage of more liberal laws of another Member State. If it is difficult to find common principles of contract law, it is almost impossible for the Member States to agree upon common principles of family law. This is because family law depends directly on the cultural form of a state, on its traditions and morality and historical relationship to the church. Therefore within the EU there is a wide arrange of different legal dispositions -opposing for example conservative Italy and Ireland on the one hand to the liberal Netherlands on the other hand- as to homosexual marriage (NL), abortion (prohibited in Ireland), carrying mothers, in-vitro-fertilization, anonymous accouchement ("accouchement sous x" in F), Babyklappenregelung (D). 

Leaving the European frame international comparative family law shows that adoption is prohibited in Islamic Law. At least formally because some scholars think the Qu`ran prohibits it. But adoption does exist in practice. Only not in the form of a European adoption where the child`s familiar rootes are completely replaced by the relationship to its adoptive family. The Qu`ran requires to maintain the original identity of the "adopted" child, mainly its name, as far as possible.

March 28, 2010

Assessment V – Critics of the Doctrine of Gentleman Agreements

Refering to the ICP-presentation about the English concept of Gentleman Agreements, these are agreements that are no contracts. Often because they are not precise and clear enough. Sometimes they seem to be performed without any words spoken by the actors. According to the presentation, there is no written document.

In my point of view (conform to the French and German legal system) the fact that there is an agreement means that there IS a contract. The written form or any other criterium of behaviour of the parties is not required for the existence of a contract. It seems obvious to me that there is a contract determining precisely the obligations of the parties, otherwise they wouldn`t act in the way the other party expects him or her to perform.

In my opinion the problem is not that the agreements are not clear enough and that there`s no written evidence for the contract, but that in most of the cases the object of the agreement is of such a nature that a state does not want it to be executed. This might be the case for daily life promises between familiar persons, where a state doesn`t want to intervene due to the privity of the affair and/or because of the triviality of the content of the contract. The rest of the so-called gentleman agreements are not wished to be qualified as executory contracts on behalf of the illegality of their object. Taking the example of a contract about dealing smuggled diamonds against arms, I wouldn`t say that there is no contract because the acting parties behave in a dubious manner that isn`t clear for an objective observing third person. I would say the simple reason why there is no valid contract is that the agreement is about an illegal deal, hence an affair that a state doesn`t want to be executory but prohibited if possible. The same is true for agreements between huge supermarket chains fixing identical prices for products. This is not a non-contract because its hidden. It is rather a contract that is void because it infringes laws prohibiting price-fixing.

I prefer identifying things as what they are as far as possible, therefore I dismiss the concept of gentleman agreements as far as it denies the contractual character to agreements that are clearly contracts fulfilling requirements as the essential elements offer and acceptance and a very French certain object but also, refering to the Common Law, consideration/ quid pro quo. Their only failure consisting in being in its essence against the law or more directly spoken against the volition of the state.

My approach is consequently applied positivism. As problems that so-called failed-states with unjust norms, suppression and violence against humans, may present are not solved by denying their character of a state, deals with immoral content do not vanish by refusing naming them contracts. The existence of law and legal structures should be determined in a scientifical, moral-neutral way.

Assessment IV – Good Faith/ Culpa in Contrahendo

(Led by the suggested questions about the subject of Good Faith...)

1. Why might the judgment of the ECJ Tacconi v Wagner (C-334/00) have only limited impact for the purposes of substantive law?

The question raised by the Corte Suprema di Cassazione in the reference for a preliminary ruling of the ECJ is about the classification of an action for pre-contractual liability under the regime of Brussels I. In Tacconi v Wagner the application of either art. 5.1 or 5.3 of Brussels I determines the competent jurisdiction, either the courts for the place where the harmful event occurred or the courts for the place of performance of the obligation in question. This means that either the Italian court, that happens to be the court of the domicile of the claimant, or the German court, here also the court of the domicile of the defendant, is competent to judge in the subject matter.

For the purposes of the main proceedings, the answer to the above mentionned legal question should not be decisive for the outcome of the substantive conflict between the parties (unless the judges would apply the applicable law in a discriminative way, for example in favor of the party of their nationality) because it only determines the competent jurisdiction, but not the applicable law on the original litigation concerning the obligation to deliver the moulding plant.

2. In contrast, the reference to Rome II might be conclusive for the outcome of the conflict between Tacconi and Wagner, because Rome II determines the law applicable to non-contractual relationships. (Whereas Rome I does not play a role in Tacconi because it applies to contractual relationships). And the solution to legal problems depends on the applied law rather than on the competent jurisdiction! Article 4.1 of Rome II says that the law applicable to a non-contractual obligation arising out of a tort/delict (and the action for pre-contractual liability in Tacconi has to be qualified as such according to the preliminary ruling of the ECJ) shall be the law of the country in which the damage occurs. The applicable law would be the Italian one. But even Rome II might have a limited impact on the case, because of the similarities of Italian and German law in the area of pre-contractual liability:

"In Italian law Article 1337 of the Codice Civile contains a specific provision governing pre-contractual liability. Parties must act in good faith during negotiations over and the formation of a contract. A party who breaks off negotiations without just cause, having created an expectation that a contract will be entered into, is liable for the negative contractual interest. Fault is not required.

In German law a party who culpably breaks off negotiations without just cause or on irrelevant grounds, having created an expectation on the part of another party that a contract will certainly be entered into, is liable for the negative contractual interest. Usually the liability is based on the doctrine of culpa in contrahendo: a party who suddenly breaks of negotiations is liable for the culpable non-fulfilment of the obligation to take account of the other party's interests. Therefore, in German law almost the same criterion applies as in Italy, except that the requirement relating to fault has a role to play" (see paragraphs 59 and 60 of the Opinion of Advocate General Geelhoed in the litigation).

In contrast to the Common Law there is a doctrine of Good Faith in Civil Law systems, namely in Italian and German law that show many similarities as both derive from Roman law.

Interestingly Rome II also contains para. 30 of its preamble saying that culpa in contrahendo is to be treated as an autonomous concept and should not necessarily be interpreted within the meaning of international law.

March 27, 2010

Assessment III – Mistake and Misrepresentation

Comparing the solutions to problems of mistakes made in contractual terms and in the formation and expression of the volitions of the parties given by different legal systems is indeed complicated as conflicts are not dealt with under the same legal figures.

The vices de consentement of the French Code Civil are erreur, dol and violence. These figures can be compared quite easily to the cases considered by the authors of the German BGB: erreur being Inhaltsirrtum, dol -the provoked error- being Irrtum aufgrund arglistiger Täuschung and the role of violence played by the dispositions of Drohung. With the exception of the concept of the Erklärungsirrtum that doesn`t find its pair in the Code civil. So other legal systems can do without the German purely juridical, not psychologically justified, construction based on an artificial distinction between Erklärungswille, Erklärungsbewusstsein and Handlungswille. Having always had difficulties with the juridically correct determination of cases of Irrtum, it feels like foreign lawyers would finally give me the consent that the mentionned German classification is to be abolished.

As pair for erreur and Irrtum (which one ? ;) ) there is the institution of mistake in English law. And as French law contains fraude/dol and German law arglistige Täuschung, there`s fraudulous misrepresentation in Common Law. But how does English law deal with forced expression of volition? I think that declarations induced by threat or violence could never be considered as being susceptible to form a valid contract, because this is fundamentally contrary to the principle of contractual liberty implying logically the free expression of volition. As Common Law emphasizes contractual liberty and autonomy, there is the concept of "duress" meaning that if a person was forced to enter a contract, he or she was not bound by it.

The real problem lawyers in all legal systems face is that there is no certainty about whether human beings do have a freewill or not. Though legal systems -from the idea of democracy over criminal law to contract law- are based on the presumption that there is such a thing as a freewill. This presumption is a practical necessity for the functioning modern social organisations. The same applies for rules of mistake/misrepresentation. They are required to facilitate inter-human relationships (there`s a human behind every legal entity).   For the same reason of the object of  well-functioning society rules tend to aspire to relative justice between the parties. Modern legal systems fulfill these exigencies. There might be different solutions to individual legal problems between the French, English and German system, but there`s coherence between the entireness of norms of each legal system. A norm appearing to induce a lack of justice is compensated by the interference of another legal disposition, always creating relative justice between humans no matter which nationality the parties are and no matter if it`s English, French or German law that applies. Examples can be find by considering the interplay of all the norms of the BGB that is famous for its systematic interaction of rules and then also by placing the BGB in its jurisprudential context adding adequate interpretation of terms. Examples about how to find relative justice by combining norms of different national legal systems are the compromises suggested in PECL or UNIDROIT.

The conclusion is that a to a certrain degree objective approach as to the evaluation of the behaviour of persons is indispensable in order to obtain legal security. This might in some cases lead to a person being bound to terms he or she didn`t mean to agree upon. But in my opininion extreme subjectivism carries more risks as to legal security needed to found a stable economy, source of wealth of a society. Let aside the impossibility to determine without doubt if a person really wanted (to declare) something or not and if yes, what. But concerning the case where one party is mistaken and the other does not know it, I wouldn`t favour the very objective approach of English law saying that the mistaken party was bound. Here I would prefer the German solution allowing the mistaken party to void/anfechten the contract and putting into place the mechanism of an obligation compensate the other party for her reliance losses (unless the other party ought to have known of the mistake). The BGB is a highly sophisticated civil code covering nearly all eventual cases, unfortunately to the detriment of an easy reading and understanding of the text.

March 10, 2010

Impossibility of performance

Three countries, three notions of impossibility:

In France, impossibility is called ‘force majeure’ and defined in the articles 1147, 1148 and 1722 C.civ. Traditionally, the notion has to satisfy three conditions to be applied: be irresistible, unforeseeable and be external to the debtor. But French case-law made some adjustment to the theory of force majeure to solve legal disputes like in Cass. Civ 1re 9 March 1994 which qualifies an event which is unavoidable as constituting a case of force majeure even if it could be foreseen. It is also the case with Cass civ 1ère 24 January 1995 which told that an internal event as a strike can have an extraneous character if it affects the public.

In Germany, the relevant notion is the subsequent impossibility (“Unmöglichkeit” in general). This notion is much wider and flexible than the French force majeure. The BGB does not require the event to be unforeseeable, nor a fault on the part of the debtor. Thus a party can merely be discharge on the ground of impossibility like in OLG Düsseldorf, 30 December 1964. German law has the particularity to treat all cases of impossibility in the same way whether the impossibility is caused by the debtor or by an extraneous event. In other jurisdiction, it would be called a “breach of contract”.

In England, impossibility is labelled frustration and it is between the French ‘force majeure’ and the German ‘Unmöglichkeit’. Impossibility is perceived less narrowly than under French law since the notion that something rendering the contract “radically different from what was in the contemplation of the parties” as in the Suez Canal case. But English law does not permit judges to adapt contracts in the event of frustration as in Germany. Consequence: The distinction between breach of contract and impossibility is clearer.

Pierre-Patrice Tifi Mambi

March 04, 2010

Liability test

For pre-contractual negotiations the test for liability for breaking off negotiations seems to be the same. The aim is the same but the routes are different.

Concerning the provocation of reliance there are two requirements: The belief that the conclusion of the contract was certain for the other party and the justification of the reliance in the circumstances.  

For the first element, the only difference comes from Germany having a different test which is asking more requirements compare to other civil law countries (BGH, 19 October 1960). Or, English cases are relying on the proprietary estoppel doctrine (Thornton v Majors): the promise is to grant the claimant an interest in property.

The objective circumstances are taken into account by every Court. In Italy, the Cassazione set a requirement that there can be liability only if the parties have taken all essential elements of the contract into consideration. In the English Cobbe’s case the doctrine of proprietary estoppel can only apply if the proprietary interest is precisely defined. As the Bundesgerichtshof has no requirement.

In case of a formal contract parties are not liable because it could undermine the purpose of the form requirement. But the BGH said the contrary because the fault lies in inducing reliance. It will use the same argument in the situation of an agent lacking power.

Finally in France when professionals are dealing together there is liability because the costs of unsuccessful negotiations are supposed to be part of the parties’ general expenses. While in England the status of the parties seems relevant in matters of misleading (Cobbe's case).

We can notice the originality of the doctrine of proprietary estoppel in England for its singularity and the other way taken by the BGH inducing reliance where the other countries do not.

Pierre-Patrice TIFI MAMBI

February 24, 2010

Mistakes and misunderstandings as to the terms

In order to get a comparative overview it is better to look at the main common grounds between the different legal systems.

Firstly, there are three situations: firstly, in cases of misunderstandings the contract will be interpreted to show their actual intention like told in the article 1156 of the Code civil or in the German Shark meat case (8 June 1920) were the court applied the falsa demonstratio non nocet principle or in the English New Hampshires Ins. Co v MGN Ltd case but by using the remedy of rectification

Secondly in cases of dissensus: There will be no contract because neither party’s interpretation is more reasonable than the other. It was the case for Raffles v Wichelhaus: the contract was too ambiguous. In Bottle openers (28 November 1973) the Cour de cassation considered that a consent has to exist first before assessing his validity according to the conditions asserted in article 1108 Code civil.

Thirdly, in cases where there is a slip of pen or the wrong word used, the contract is interpreted as to give effect to the intention of the first party.

But there are differences as to the outcomes when the other party does not know that there was a mistake.

In German and French law the mistaken party may avoid the contract but for the earlier according to article § 119 I BGB and he will have to compensate the recipient of the mistaken declaration and the latter under article 1110 Code civil as to the error as to the substance like in Wine to Algiers (15 February 1961). But in English law, the party is bound by what he wrote because a mistake is irrelevant where the other party had no reason to know of the mistake like in Centrovincial.

Pierre-Patrice TIFI MAMBI

February 09, 2010

assessment II – Cause and Consideration

The cause in French law or the consideration in the Common Law are requisities to the validity of a contract according to the French/ English legal system. Whereas such a notion is unknown to the BGB.

What is cause? What means consideration? Are the concepts identical? Does it make sense at all to say that a lawful cause or consideration is a condition to the validity of the contract?

According to the French lawyer Marcel Planiol, there is no unique definition of the cause, due to the multiplicity of the notions.

The cause can be firstly the counter-prestation or the delivery of the res.

Secondly it can be the advantage for the parties or the objective, the quid pro quo. This definition is close to the doctrine of the consideration.

Thirdly it can be the happiness as a resulting emotion of the giving party of a contrat de bienfaisance. In contrast, English law doesn`t include a moral consideration for past service.

In my opinion, it may be good to take the reason for which the parties enter into a contract into consideration in order to protect the party without a cause e.g. in the form of an advantage. But the conception can also turn out to disadvantage the co-contractor of the protected party when there s no Rechtssicherheit to rely on, because the parties do not always know the existence and nature of the cause of the other party.

February 03, 2010

Cause and consideration

Whereas all system requires agreement and intention to create legal relations in order to create a contract, English and French law each impose additional requirements: consideration and cause. Consideration consists in the requirement of a counterpart in exchange of the promise. Cause in a synallagmatic contract is the prospect of the counter-performance to by the other party (objective cause) There is also the individual motive that prompted another party to commit himself (subjective cause) both traditions inspired article 1131. But their definitions seem to overlap. The difference is that French lawyers have to distinguish cause and object whereas consideration is undefined. Consideration is made to prevent bare promise and cause controls freedom of contract.

Both notions are subject to changes in their countries. Three groups (Catala, Terré and the Chancellerie) decided to reform the notion of cause through the reform of the French code civil. At the same time, the notion of consideration is subject to various interpretations in Courts because its inconvenience to subsequent amendments to contracts. The concepts may need to evolve if they still want to protect the parties at the conclusion of a contract.

German law recognizes neither consideration nor cause. It attaches a great importance to the act abstracted from its underlying cause. The doctrine of unjust enrichment restores balance in the contract.

Even if each legal system has different requirement, the aim remain to find a balance between the parties.

Pierre-Patrice TIFI MAMBI

February 02, 2010

Cause and Consideration ; Intention to create legal relations

All systems require agreements and intention in order to create a contract. Although PELC and German law do not have further requirements, English law and French law respectively require the contract to have a good consideration or a cause.

The French law has a dualist conception of the cause. Following the objective one, a counter-performance or an interest for each party must exist otherwise the contract would be null and void. The subjective cause is the individual intention which prompted the party to enter into the contract.

Similarly, consideration in English law consists of a requirement of a counterpart in exchange for a promise. Consideration is essentially an objective concept and does not include psychological aspects. There is consideration as soon as the parties have made an exchange even if there were not conscious of that. (Bere v Pearson).

German Law does recognise neither the doctrine of cause nor the one of consideration. It attaches importance to the act abstracted from its underlying cause or consideration. However the ‘cause’ could be found in

§ 812 BGB deals with matters that would be seen as a false cause; ‘a person who, through an act performed by another, or in any other manner, acquires something at the expense of the latter is bound to return it.” They must be a common assumption of the two parties. This might be seen as an objective approach of the doctrine of cause. The doctrine of unjust enrichment is applied in order to restore the balance between the two parties.

Recently the French courts have taken a more concrete approach to the cause (Chronopost case) and have strengthened its use and sanctions. It can be justified by the will to protect the interests of each party. The projects Catala ( Article 1125(2) ) and Terré seem to have consecrated the Chronopost solution.

The doctrine of consideration has been renewed as well. For example, Lord Russel stated in the case Williams v Roffey Bros that consideration should reflect the real intentions of the parties. The courts also use the doctrine of “promissory estoppel” to avoid the effects of consideration.

January 27, 2010

The offer's revocability

In French law it is a principle that an offer is revocable (Cass. civ. 1ère, 3 February 1919). Unless the offer expressly contains a period within it has to be accepted, the offeror has the obligation to keep the offer open during that period.

In German law on the ground of the concept of zugehen, when you are the offeree it is sufficient (i.e. a letter containing an offer delivered at your house). The offer can be withdrawn until that moment and after that it becomes irrevocable (RG, 25 October 1917). The presence or absence of the offeree at the reaching of the offer is not important (§ 130 BGB).

In English law, an offer is revocable on the basis of the doctrine of consideration (Dickinson v Dodds) except it is a case of a unilateral contract (Daulia v Four Millbank Nominees). According to this concept the offeror is free to revoke the offer until the offeree has not performed the condition.

So it is interesting to observe that the French and the English law are reach the same result but through different legal concept. Indeed an offeror is free to revoke his offer if no condition or limit is adjunct to it. While in the German law system an offeror has to be much careful by making an offer than in our both aforesaid legal system because it will be for him impossible to revoke it. The Geman point of view is also different than article 2:202 (1) of the PECL and article 2.1.4 subsection 1 and article 2.1.4 subsection 2 of the Unidroit Principles which are much alike the French legal system.

Pierre-Patrice TIFI MAMBI

January 26, 2010

Notions of Contact

In the three legal systems (French, German and English), there will be a contract as long as there has been an agreement between the parties.

The different systems present similarities to consider whether or not an agreement has been reached: it is usually asked whether there has been an offer made by one party and an acceptance of the same offer by the other one.

However the three systems use different approaches.

The English law has an objective approach that examines what the parties said and did as it has been stated in Smith v. Hughes.

On the contrary, the French law uses a subjective test that focuses on the intention of the contracting parties. The french Code Civil has been influenced by national schools of legal thought that were adherent of the liberal principle and therefore placed importance on the will. This is called the will theory.

The German system seems to be a “mixture” of the two approaches. It took originally a subjective approach ( § 133 BGB ). In the 19th century, German jurists, such as Windscheid, considered that the essence of the contract was the order or command of an individual. Nevertheless, recent doctrine and case law have been taken a more objective approach.

Article 2:102 of PECL seems to give a preference to the objective approach as it focuses on 'what has been reasonably understood by the other party.'

A second difference between the legal systems is to be found in the notion contract.

In order to determine whether there is a contract or not, the continental sytems put emphasis on the voluntary nature of contractual liabilty. German and French laws refer to obligations created by the agreement of the parties. This can be explained by the fact that Roman law and canon law had lots of influence on the continent, leading to the voluntarist approach.

Common law put emphasis on whether the law creates liability. A remedy has to be provided, otherwise the agreement is seen as a social agreement. The approach is therefore more objective.

Finally, the English law, unlike the French and German law in some circumstances, regards the “agreement in principle” devoid of any effect.

January 20, 2010

assessment I – Notions of European Contract Law

French, German and Common Law Contract Law are different in some points, but are also quite similar, at least in the solution, if not in the reasoning, of some juridical problems. In addition to the introduction of the French, German and English notions of contract law by Hugh Beale, I would like to focus on one basic difference between French and Common Law on the one hand and German law on the other hand. Furthermore I would like to highlight one practical similar but not identical solution of a juridical problem according to the three systems.

Lawyers in the three juridical systems use different terms for "contract". But in spite of different vocabulary and specifical conditions for the existence of a valid contract, the terms are comparable in the essential characteristics of a contract, the minimum common content would be an agreement about the essentalia negotii between two parties willing to create a legally binding relationship. Instead of a comparison of every single condition for a contract according to each system, I would like to underline a fundamentally different approach to the determination whether or not a valid contract exists by German lawyers in contrast to French and English lawyers. Contrary to the other legal systems, the system of the BGB uses the Willenserklärung as principal element. The reasoning about the formation of a valid contract is based on the determination of the validity of the Willenserklärung. The Willenserklärung is the decisive block. The logical construction of the contractual structure is based on a smaller unit than in the system of the Code civil or the Common Law. In the latter systems the contract might also be invalid for reasons related to a default of the expression of the will like dol, erreur or misrepresentation. But the departure point is a different one, it is the contract as a whole that is contested and not the single Willenserklärung. In German law it is the Anfechtung of the Willenserklärung for different reasons previewed by the BGB that may only consequently logically lead to the invalidity of the whole contract.

By reading the case Eccles v Bryant [1948] about the question of the importance of the exchange of signed engrossment, it appeared to me that there are similar solutions for the legal subject of the sale of land. It is the solution that is comparable in the presence of three different methods. To reach certainty about the sale of land that is evaluated as important by all three legal systems, the Common Law insists on the exchange of the written and signed exemples of the contract as in the above mentioned case. The Code civil contains the rule about the lésion suitable to determine the invalidity of a contrat de vente d`immeuble in the case of an inadequate price. And the German system puts the validity of the sale of land under the regime of a notary.