December 07, 2011

The 'Chronopost' Saga

This week, we will have a special look at a case which was held in 1996 and became the starting point of a famous a series of decisions, also known as the 'Chonopost' saga. In the first case it was decided that the relevance of an exclusion clause of a contract, limiting the liability of one party, could be controlled by th judges on the basis of article 1131 of the civil code.

Source of a lot of academic works, this case allowed the judges to scruntinize the terms of a contract and to remove those obviously making the contract unbalanced. What has been surprising in this decision was the ground. Using the 'cause' as a basis of a judicial control of the terms of a contract considerably extend its scope of application. In the case the clause was refused because contradicting an 'essential obligation' of the contract, withdrawing the cause of the obligation. We were close to accept such an ability for the judges as soon as in 1996, but several cases came to limit the scope of the input of the first Chronopost case.

The commercial Chamber of the cour de cassation has come to say in 2002, that in the case of a clause of 'legal' origin, the faute lourde was necessary to exclude an exclusion clause, the contradiction of an 'essential obligation' could not intervene. That was confirmed by a decision of the combined Chamber in 2005, gathering both civil and commercial Chamber, which also told that when a clause is not of 'legal origin', the Chronopost input of 1996 was still valid.

The discretion of the judges as to this matter seems restricted compared to the one granted by the section 11 of the Unfair Contract Terms Act 1977, which submits the validity of an exclusion clause to a test of 'reasonableness'.

December 01, 2011

Trust and fiducie

England has been including the concept of trust in its legal system for such a long time that it has been recognized as a key feature of the Common Law. Trough a trust, a settlor transfers a property to a trustee for the benefit of a third party, the beneficiary. It can be created by a written trust instrument signed by the parties, orally, by the will of a de cujus or by court.

Introduced in France by the loi du 19 février 2007, the fiducie has tried to fill the absence off such a concept in French law, trying to adapt it into its civil legal system. Fiducie and Trust are quite different one from another, the French legislator having tried to answer a legal need without copying literally the use or the status of the English legal idea. In fact, it appears that the legislators did not intend to grant the same flexibility to this legal device as granted to trust. Thus, trust can be implied, that is to say created without express will, fiducie cannot. The conditions to create a trust1 are also less heavy thant those to create a fiducie2.

The incorporation of the fiducie into French law has been the subject of a very intense doctrinal debate, of which every French law student has heard of, because it was said to go against the principle of unicité du patrimoine. According to this principle, an unique patrimony is attached to a physical person, that may explain the reluctance of the parliament to accept such a flexible device as trust.

It is really interesting to look at the differences between the two notions because they highlight the differences between French and English broad legal principles.

1 Knight v Knight(1840) 3 Beav 148

2 Article 2018 of the civil code

November 23, 2011

Pre–contractual liability : a comparative perspective

A pre-contractual liability is foreseen by both Principles of European Contract Law and UNIDROIT Principles of International Commercial Contracts for bad faith, or lack of good faith. It is true that the concept of pre-contractual liability is well-known in continental europe, even though not achieved by the same means. Established in Germany through the doctrine of culpa in contrahendo, through the civil code of 1942 in Italy including the concept of good faith and in France through the jurisprudence, a liability during the period of negociation before a contract is absent of the English common law.

Thus, according to the decision of the House of Lords, Walford v Miles, a withdrawal of any of the parties is possible at any time before conclusion of a contract. Surprisingly, Canada has decided otherwise, finding a pre-contractual liability through Estoppel.

The position of English law, though well understandable to keep will, through contract, as the main source of obligation, appears to be outdated. Would an european project of unication of the law of contract see the light, there is few chances that the English position would be kept. As far as I am concerned, I believe this subject is a perfect example of the difficulty of according the different legal traditions in Europe, of putting in a place an uniform contractual regime within the EU.

November 17, 2011

Cause and consideration

The two concepts of cause and consideration evolved parallely in France and in England, as answers to the legal rising of contracts. As checks of the validity of contract, the absence of it, whether consideration in England and cause in France, the contract is void.

Although, the developpement of each was very different. Consideration doctrine is a narrow one, playing a significant role in the formation of contracts in Common law but not as wide as the doctrine of cause, which serves not only the purpose of checking whether a material exchange is made. It is to be understood that nder the concept of cause are gathered many of the functions dealt with by other concepts of the Common law. Thus, under the french concept of cause are solved the matters which would be, in Common law, by the concepts of illegality, public policy, frustration and consideration.

Public policy allows a margin of interpretation for the Common law judge, as does cause for the French judge. Both articles 1131 and 1133 of the civil code, the first one dealing with the objective cause of the contract and the secund one dealing with the subjective cause, allow the judges to evaluate the contract, to scutinize it, so that they appear as 'policemen of the contract'.

Under the concept of consideration, judges do not have but a narrow margin of interpretation. In itself, this makes a big difference between the ways those concepts are used. The question would be, why is it then, that the two concepts are always compared to each other ?

November 02, 2011

'Cause' and Consideration : two different concepts, two sources of headache

During the past few weeks I have struggling with a concept well established in the Common Law system though completely unknown by the civil Law system from which I come : The consideration, one of the key elements of the English contract, because without it a bilateral contract cannot be concluded.

At first sight it would appear that this concept looks like the one of 'cause' known in the French legal system, the 'cause' being also one of the needed elements of a contract in French Law1. They both have been in their legal system a source of intenses doctrinal debates, and still constitute a challenge of understanding for legal students.

In the French civil code no definition of the concept of 'cause' can be found, leaving the matter to the appreciation of the judges. The thing is, the interpretation of it has evolved since the creation of the civil code (1804), from a classical approach for which the cause would be what is expected in return of one's own performance, to a modern approach for which the cause would be the reasons which decided the party to enter a contract. But, the concept could not be reduced to only one of those approches, giving birth to a dualistic and complicated concept.

In the British Common Law as well, no absolutely clear definition of the concept of consideration has arisen, though a famous one has been given in the case Currie v Misa2 : ''A valuable consideration, in the sense of the law, may consist either in some right, interest, profit or benefit accruing to one party or some forbearance, detriment loss or responsibility, given, suffered or undertakent by the other.'' Thus, we can see that consideration would, partly at least, correspond to the classical approach of the French 'cause', without being able to cover every aspect of the dualistic notion.

It would be very intersting to compare the different aspects of law each of those concepts cover, and by what means legal answers are given in one State to the problems solved under its concept in the other one.

1 French civil code, article 1108.

2 Currie v Misa (1875) LR 10 Exch 153, 162

October 26, 2011

The French legal position concerning ARCs concluded by Service providers

Created in 20051 under the impulsion of minister Châtel, the article L136-1 of the code de la consommation deals with the tacit renewal of a contract, concluded by a professional service provider. It imposes a duty from a service provider to its customer, to inform him the earliest 3 months and the latest 1 month before the end of the minimum contract period that the contract will be renewed, in order to leave the time to the customer to switch his provider, should he want to.

This article does not concern merely the communciations market, but all service providers. Although those are yet to be defined by the legislator, it appears that a lot of professionnals are concerned. It is the case of the Internet providers, phone providers, a subscription to a cinema, a theatre or a bus company, would they conclude a contract in which a clause of tacit renewal would be inserted.

Exceptions to this broad domain of application, a fourth alinéa was added in 20062, excluding the water suppliers from this duty of information. A sentence, added to it in 20083, provides that this article applies to the profit of customers, traditionnal protected subject of the code, and, which is more surprising, to the non-professionnals. It would mean that not only customers, physical persons, would be protected by this article, but also whoever legal person not deemed as a professionnal.

The consequences of not respecting this rule are, according to this article, the possibility of ending the contract without penalty for the customer and the refund of his financial advances. As we can see, not going as far as Ofcom does about ARCs in the communication market, the french legislation targets not only this market but tries to put in place a wider principle of protection against the tacit renewal of contract concluded between a professionnal and a non-professionnal.

1 Loi n°2005-67 du 28 janvier 2005 - art. 1 JORF 1er février 2005 in force on the 28th july 2005

2 Loi n°2006-1772 du 30 décembre 2006 - art. 66 JORF 31st december 2006

3 Loi n°2008-3 du 3rd january 2008 - art. 33

October 19, 2011

Does Law protect fools ?

'La loi ne protège pas les imbéciles'1, a well known adage among the french legal community, does not seem to find an application in the decision of the Ofcom2 to ban the automatically renewable contracts in communications market. This type of contract includes a clause so that at the end of a minimum contract period, without proactive information from the consumer saying that he does not want this happen, another minimum contract period is automatically renewed.

In the case the contract is tacitly renewed, the consumer who forgot to inform his communication provider often has to pay a termination fee. Seen as a restriction for the consumer to switch his provider, these contracts will be forbidden on 31st December 2011. This decision of Ofcom is partly based on a directive of the EU3,which aims to modify the comsuption legislation within the member states, and especially on the 30th (6)article which declares :

"Without prejudice to any minimum contractual period, Member States shall ensure that conditions and procedures for contract termination do not act as a disincentive against changing service provider."

As we can see, the members states are given all liberties to regulate contract termination in the matter of electronic communications, so that the consumer would not find himself prisoner of a service provider through the contract. We can ask ourselves if it is really necessary to go as far as banning a so-called 'rollover contract' to protect the consumer. Within the EU, the communications providers are already forced to inform the client before the end of the minimum contract period to leave hime the time to cancel the contract. For instance, in France a provider cannot inform its consumer later than a month before the end of the period, and if he does, or does not even inform him, the consumer is allowed to denounce the contract without any penalty.

This obligation to inform is already a big restriction for the communication providers. The ban decided by Ofcom seems on one hand a step forward in favour of competition but on the other hand a protection of one's negligence.

In my opinion, consumption law in the EU and its member states is a really big issue, but which tends to expand itself as overprotective for the consumer, as far as protecting him against his own foolness, and to limit excessively a 'former' well-established legal principle in Europe, the freedom of contract. The decision of Ofcom constitutes one example of this tendency.

1 "Law does not protect fools"
2 Office of Communications ( United-Kingdom )
3 Directive 2009/136/EC of the European Parliament and of the Council amending Directive 2002/22/EC on universal service and users' rights relating to electronic communications networks and services

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