All entries for Wednesday 14 November 2012
November 14, 2012
For the essay in European contract law, I decided to work on the hardship in European contract law. This is the situation where the performance of a contractual obligation become more onerous, radically different because of a supervening event.
I will study the rules elaborated by the different groups of research and try to understand which compromises they did, and how. Indeed, the hardship is a particular situation in contract law which is not ruled in the same way in England, and in Germany. Concerning the France, the so-called 'Théorie de l'imprévision' is still refused.
The question is how did the groups elaborated the rule, and is that possible to do something else ? That for I will deal with the three national laws, and I will argue that they did not created a theory as the french theory of 'Imprevision', in which the judge can modify the contract, neither the English theory of frustration according to which the contract is automatically discharged. But that their rule may resemble to the German theory where an obligation of renegotiation stands.
I will choose what we could call the best solution, which can be approved by the national legal orders, including France.
Indicative bibliography :
Beale, H.G., W.D. Bishop, and M.P. Furmston, Contract (OUP Oxford 2007).
H Beale, B Fauvarque-Cosson, J Rutgers, D Tallon and S Vogenauer, Casebook on the Common Law of Europe: Contract Law(Hart, ed. 2, 2010).
Markesinis, B.S., H. Unberath, and A.C. Johnston, The German Law of Contract: A Comparative Treatise (Second Edition) (Hart Pub. 2006).
Terré, F., P. Simler, and Y. Lequette, Droit civil: Les obligations (Dalloz-Sirey 2005).
Zimmermann, P.R., The New German Law of Obligations: Historical And Comparative Perspectives (Oxford University Press 2005).
Hay, P., ‘Frustration and its solution in German law’ (1961) 10 The American Journal of Comparative Law, 345–373.
Rösler, H., ‘Hardship in German Codified Private Law: In Comparative Perspective to English, French and International Contract Law’ (2007) 15 European Review of Private Law (ERPL), 483–513.
There are some cases where a contract between a seller and a buyer is avoided even though the latter sell it again to a bona fide third party. Is the second contract voidable ? Does the third party have to return the object ?
The questions introduce two issues. The first issue concerns the equity, do we have to protect the bona fide third party, and consider the second contract is still valid ? It would be fair to ensure a protection, but it would be against the contractual principle under which the first transfer has not been executed, so the buyer would not have been entitled to sell the object again.
The second issue concerns the principle of stability of the transaction. According to this principle, everything must be done to ensure the validity of a contract, and its consequences. To void the second contract makes the contractual relationship in generally unstable because a chain reaction can start.
The abstract transfer system will all the time protect the bona fide third party and ensure the stability of the transaction, because the legal act of transfer is independent from the contract. The void of the contract does not have consequence on the transfer of rights, so the seller is still entitled to sell the object again.
The causal transfer system is not as clear as the abstract. A strict application of this system makes both contracts avoided. But in few national laws (as in France), there is an exception when the third party acted in good faith (But in any case, there is an exception to ensure the stability of the transaction.). In Common law, the exceptions are more strict.
I think the abstract transfer system is the system which provides the best solution regarding to the fact that it protects the bona fide third party, and ensure the stability of the transaction.
Source : Erp, S. Van, and B. Akkermans, Property Law: Ius Commune Casebooks for a Common Law of Europe (Hart Publishing Limited 2012)