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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


Hardship

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


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 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.