All entries for February 2010

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 2010

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