All entries for Wednesday 30 November 2011

November 30, 2011

Tort and contract

Interestingly enough I was expecting reading on the tort systems of France, Germany and England to have distinct objectives. As the reading revealed to me, the goals are quite similar and can even be considered common to all legal orders: compensation, deterrence and loss-spreading.

However, as I suspected and as the text proved, the weighting given to each of these is differs from country to country. Thus, French tort law is a lot more paternalistic and focuses much more on preventing the occurrence of socially undesirable behavior. By contrast, German law has a more rights-based speech, a trait well-engrained in the German legal culture.

Seemingly the fact French law does not recognize either a neighbor principle or a fixed list of protected legal interests. At first hand it would appear as being extremely broad and highly susceptible to the English “floodgates” argument. Without having specific knowledge of any precise cases or classes of torts (such as defamation or trespass to the person), I suspect French law answers the “floodgates” concern with a stricter interpretation of the other requirements for a successful tort action. Hence notions such as damage or causation can be interpreted in ways that would limit the number of claimants.

Distinct to this general regime of tortious liability, in French law, is the tort of defamation. Defamation in French law is mostly governed by provisions of criminal law. The civil liability however is dealt with in the law concerning defamation rather than the general principle of liability. Again, without having looked into it too deeply, I believe it stems from a desire to provide a better balance between freedom of speech and protection of one’s honor and reputation. I think a comparison of all three legal systems and their approach to defamation would give a solid insight in how they conduct the right-interest balancing act.

Good faith

It is an often repeated mantra that English law knows no doctrine of good faith. Since drafts of proposed European private law contain provisions regarding good faith or use good faith as an instrument, is its absence in English law detrimental to the possible success of these drafts?

I think the doctrine of good faith does not exist in English law on a purely semantic level. The law is shy to impose an obligation on contracting parties to operate in good faith, maybe because they fear it would be an additional burden on them. In addition to being reasonable, parties would have to negotiate in good faith, a general requirement whose scope they would be unsure of. The uncertainty argument has been used by the court in Walford v Miles. The case itself limits itself to pre-contractual situations: an agreement to use best endeavours to agree on the terms of the contract is equated to an agreement to negotiate, which courts are reluctant to enforce because it is uncertain.

But as Walford v Miles shows, this does not exclude the ‘best endeavours’ principle from applying to the performance of a contract. In that sense, it is similar to Article 1134 of the French Code Civil. In the former case it is subject to an express or implied, often by courts giving due regard to the circumstances of the contract, agreement to perform using ‘best endeavours’. In the latter case it is a State-imposed duty. Furthermore, regulation 5 of the Unfair Terms in Consumer Contracts Regulations, although only limited to B2C transactions, makes explicit reference to good faith and offers aids to interpretation in Schedule 2. Subsequent cases have shown courts are not hesitant or reluctant to effectively interpret this provision.

No overview of good faith in English law would be complete without reference to Equity. As a legal tool it is very much anchored around unconscionability, fairness and justice. Much like the notion of continental good faith.

I think, beyond the idea that strict adherence to a no-good faith policy is purely a belief, there is an economic argument. Businesses with little or poor legal advice will jump at the occasion to do business in a country which, at first hand, does not recognize a duty to negotiate in good faith, because it is a system that is portraying itself as placing paramount importance on freedom of contract.

To answer my initial question, I do not believe the absence of a notion of good faith is detrimental to a future implementation of harmonized European private law. If the argument is that good faith is too uncertain, surely it is overcome by precise definition of its content and scope in instruments such as the PECL.

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