All entries for March 2010

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

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