Showing papers in "European Review of Contract Law in 2006"

Pre-contractual information duties in the acquis communautaire

Abstract: Abstract Both authors are members of the Acquis Group. As part of the work towards a Common Frame of Reference on European Contract Law (CFR), the Acquis Group is examining the existing rules of EC private law to identify which (if any) principles may form the basis of these measures. This work will complement the comparative work undertaken by the Study Group. In this paper, the authors analyse the challenges posed by the “acquis approach”, and illustrate this with their work on establishing principles on pre-contractual information duties. Having set out the fundamental aspects of the acquis approach, the authors examine the nature and purpose of pre-contractual information duties, before turning to identifying the specific sources in the acquis communautaire. They then suggest a number of possible principles which may be derived from the acquis, but also highlight some of the unresolved questions. Résumé Les deux auteurs sont membres du groupe de l'acquis communautaire. Participant au projet global d'établissement d'un “Cadre commun de référence” (en anglais “CFR” pour Common Frame of Reference) sur le droit européen des contrats, le groupe de l'acquis communautaire examine pour sa part les règles existantes de droit privé communautaire pour identifier s'il existe des principes sous-jacents qui pourraient en constituer le socle. Ce travail complète le travail comparatif pris en charge par le Study Group (“SGECC”, Study Group on a European Civil Code). Dans le présent article, les auteurs analysent les défis posés par l'approche du groupe de l'acquis communautaire et illustrent ceci avec leur travail sur les principes gouvernant les obligations précontractuelles d'information. Ayant présenté les aspects fondamentaux de leur approche, les auteurs examinent la nature et le but des obligations précontractuelles d'information, avant d'entreprendre d'identifier les sources spécifiques de l'acquis communautaire. Ils suggèrent ensuite un nombre de principes possibles qui pourraient être déduits de cet acquis, tout en mettant en lumière certaines questions encore non résolues. Kurzfassung Beide Autoren sind Mitglieder der Acquis Group. Ein Teil der Arbeit an einem Gemeinsamen Referenzrahmen für europäisches Vertragsrecht (GRR) wird durch die Acquis Group, die sich mit den Grundregeln des bestehenden Gemeinschaftsprivatrechts befasst, durchgeführt. Ziel ist es, die jeweiligen Grundregeln herauszuarbeiten und darzustellen. Diese Arbeit wird die Ergebnisse der rechtsvergleichenden Forschung der Study Group ergänzen. In diesem Beitrag schildern die Autoren, welche Herausforderungen der ‘Acquis-Ansatz’ bereitet, und illustrieren dies anhand ihrer Arbeiten zu den Grundregeln zu vorvertraglichen Informationspflichten. Nachdem die Grundlagen des Acquis-Ansatzes analysiert und die Funktion von vorvertraglichen Informationspflichten diskutiert worden sind, wenden sich die Autoren den relevanten Quellen im Gemeinschaftsrecht zu. Darauf werden mögliche Grundregeln entwickelt und noch zu lösende Fragen aufgeworfen.

‘Capacitas’: Contract Law and the Institutional Preconditions of a Market Economy

Abstract: One of the principal tasks for legal research at the beginning of the 21st century is to reconstruct the understanding of the relationship between the legal system and the market order. After almost three decades of deregulation driven by a belief in the self-equilibrating properties of the market, the financial crisis of 2008 has reminded everyone of the fundamental truth that markets have legal and institutional foundations, without which they cannot effectively function. The chapters in the present volume are the result of work by a group of legal scholars which began in the mid-2000s, at a time when the shortcomings of deregulatory policies were becoming clear in a number of contexts. The chapters address the question of how the language of contract law describes or conceptualises the market order and the relationship of the law to it. The perspectives taken are, in turn, historical, comparative, and context-specific. The focus of the book is on a foundational idea, the concept of capacitas, which signifies a status conferred upon citizens for the purpose of enabling them to participate in the economic life of the polity. In modern legal systems, 'capacity' is the principal juridical mechanism by which individuals and entities are empowered to enter into legally binding agreements and, more generally, to arrange their affairs using the instruments of private law. Legal capacity is thereby the gateway to involvement in the operations of a market economy.

The Old and the New Limits to Freedom of Contract in Europe

Abstract: Abstract The structure of the relationship between the individual and the community or the state is not definite at the European level. However this is a crucial point for the definition of the ground-rules in private law, considering, in particular, that European jurists normally ascribe to private law a constitutive role both in the functioning of the integrated market and in the construction of a European citizenship. In contract law the relationship between the individual and the community or the state is mainly designated by the definition of freedom of contract and its limits. On the scene of European law, however, the question of the limits of freedom of contract finds very different and contrasting solutions. This article identifies three different modes of approaching the question, which we have experienced and are currently experiencing in Europe; they are respectively described as the paternalistic, the social and the perfectionist model. Although recent developments in the harmonisation process show a propensity for a combination of the first and the third model, this paper argues that the social model still has a chance to achieve a key role in European contract law.

The Unfair Commercial Practices Directive: a Law and Economics perspective

Abstract: Abstract Directive 2005/29 on unfair commercial practices constitutes an ambitious attempt at building a general regulatory framework for the conduct of businesses towards consumers in the marketplace. The declared objectives of the Directive, namely consumer protection and eliminating barriers for the internal market, do not seem to provide enough support for such an overreaching legal intervention. The paper explores whether other rationales can justify the new rules and critically examines the scope and the tools to determine unfairness in commercial practices. From an efficiency perspective, Directive 2005/29, although not devoid of merit and interesting solutions, is lacking both in terms of over-optimism in regulating practices that differ widely across markets for a whole range of goods and services, and disregarding several factors that greatly affect the necessary cost-benefit analysis for the major regulatory options. Résumé La directive 2005/29 sur les pratiques commerciales déloyales constitue une ambitieuse tentative de construire un cadre général de régulation des comportements des entreprises vis-à-vis des consommateurs. Les objectifs déclarés de la directive, en particulier la protection des consommateurs et l'élimination des barrières du marché interne, ne semblent pas soutenus par des moyens à la hauteur d'une telle ambition législative. L'article explore les autres raisons qui peuvent justifier les nouvelles règles et procède à un examen critique du but et des moyens employés pour caractériser la déloyauté dans les pratiques commerciales. Dans une perpective d'efficacité, la directive 2005/29, bien que non dénuée de mérites et de solutions intéressantes, pèche à la fois par son optimisme excessif dans la régulation de pratiques qui diffèrent largement d'un marché à l'autre pour toute une série de biens et de services, et aussi par le fait qu'elle ignore plusieurs facteurs qui affectent l'analyse coûts/avantages nécessaire pour choisir entre les principales options de régulation. Kurzfassung Die Richtlinie 2005/29 über unlautere Geschäftspraktiken stellt einen ambitionierten Versuch dar, einen allgemeinen Regelungsrahmen für das Geschäftsgebaren von Unternehmern gegenüber Verbrauchern aufzustellen. Den erklärten Zielen der Richtlinie, namentlich Verbraucherschutz und Hindernisse für den Binnenmarkt zu beseitigen, scheinen jedoch nicht ausreichend Anlass für solch ein überzogenes gesetzgeberisches Vorhaben zu bieten. Der Beitrag untersucht, ob andere Gründe eine solche Neuregelung zu rechtfertigen vermögen und setzt sich kritisch mit der Zielsetzung und den Grundsätzen, nach denen die Unlauterkeit von Geschäftspraktiken bestimmt wird, auseinander. Obgleich ihr einige Verdienste und interessante Lösungen nicht abgesprochen werden können, krankt die Richtlinie unter Effizienzgesichtspunkten doch an ihrem übersteigerten Optimismus, Praktiken, die für eine ganze Reihe von Gütern und Dienstleistungen in den Märkten voneinander abweichen, zu vereinheitlichen. Darüber hinaus lässt sie einige Faktoren für eine Kosten-Nutzen-Analyse zur Bestimmung der wesentlichen Regelungsoptionen auβer Acht.

The Alchemy of Deriving General Principles of Contract Law from European Legislation: In Search of the Philosopher's Stone

Abstract: Abstract The Manifesto on Social Justice in European Contract Law proposes to derive European private law principles, including principles of fairness in contract law, from the acquis communautaire. This task encounters the difficulty of the predominant regulatory character of the acquis, which resists reformulation in the traditional general and abstract principles of private law. This problem cannot be ignored or dismissed, but it can be accommodated once it is appreciated that European private law will itself comprise a modern hybrid of law and regulation in its logic and modes of governance.

The Constitutional Competence of the EU to Deliver Social Justice

Abstract: Abstract The paper seeks to provide the constitutional background to the debate about the place of ‘social justice’ in European contract lawmaking. It examines, first, the constitutional justification for the EC's intervention into contract law; second, the legal criteria governing the content of the EC's rules affecting contract law; and, third, the effect exerted by the EC on residual national competence. Its fundamental aim is to elucidate the dynamic and, in places, ambiguous nature of the relationship between the EU and its Member States, and to show how this impinges on contract law in particular.

Social Justice, Constitutional Principles and Protection of the Weaker Contractual Party

Abstract: Abstract the Manifesto emphasises that European private law ought to propose a model of distributive justice that is in alignment with constitutional principles. According to this perspective, this article analyses, firstly, the idea of social justice that is embraced in the Charter of Rights. Secondly, the idea of social justice that is ascribed to private law in the current EC acquis and in harmonisation projects like the PECL is considered.

Social Justice and European Identity in European Contract Law

Abstract: Abstract To examine the link between social justice and our European identity, the paper proceeds in three stages. First, I argue that social justice is not only concerned with the distributive aims and effects of contract law but also the cultural aspects of law, by drawing an analogy between a contested economic and cultural dichotomy. Secondly, the paper explains how the idea of European identity is connected to a cultural identity and is deeply rooted in social justice. Finally, the paper examines the idea that both dimensions of social justice concern European contract law. A parallel between the construction of European contract law and the identification process for European citizens can be drawn; the two go hand in hand.

Social Justice and the Market in European Contract Law

Abstract: Abstract European contract law must be developed along lines which are different from those proposed by free market enthusiasts. To this end, it must be based upon the principles enshrined in national constitutions and developed by national courts, in accordance with various technical expedients, but which are all the natural consequence of one political design: to have courts acting as a counterweight in situations where contracting parties are structurally weak. The contract law model contained in the European Constitution is quite different from this. It is based upon the ordoliberal principle of social market economy, which permits contractual freedom only in so far as it contributes to the stability of markets. To devise contract law in line with the doctrines enunciated by national courts does not entail opposition to the market: it merely requires markets to function according to different principles than those currently valued at EC-level, such as those which involve promoting social dialogue as a means for re-examining the current economic model.

The Constitutionalization of European Contract Law: Judicial Convergence and Social Justice

Abstract: A form of contract law constitutionalization known by most European legal systems is the horizontal effect of fundamental rights and constitutional principles. This paper presents a comparative overview of fundamental rights adjudication in the private law of ten EU Member States. It draws attention to the spontaneous judicial convergences in contract law, which enable us to speak of the common ‘fact patterns’ of horizontal effect. This paper aims to demonstrate two theses: first, this horizontal effect is a pan-European phenomenon, not necessarily linked to a particular national legal culture. Second, horizontal effect in contract law is not politically neutral but inspired, at least in its application by national courts, by policies of social justice.

Recent developments in the law governing the free movement of goods in the EC's internal market

Abstract: This report surveys recent developments in the law governing the free movement of goods in the EC. This covers both the application of Articles 28–30 EC to control national measures that obstruct inter-State trade and Article 95 EC as the source of the EC’s programme of legislative harmonisation. It shows how and why private law in general and contract law in particular have come to be affected by the law of the EC’s internal market. The report demonstrates that the judgments of the European Court in Keck and in Tobacco Advertising are significant for their recognition that the mere fact of diversity between national laws is not of itself an adequate reason for EC law to intervene in local regulatory autonomy. This may, in short, assist arguments designed to shelter national contract law from the effect of EC law, but it is explained that, despite a degree of unavoidable ambiguity in the state of the law, there are nonethless circumstances in which national private law and EC trade law must seek a modus vivendi. More generally it is argued that the growth of a ‘European contract law’ provides an excellent case study for examination of constitutionally and culturally fundamental questions about the desirable degree of centralisation in Europe.

An Optional Instrument and Social Dumping

Abstract: In the European Commission's documents on the future of a European contract law freedom of contract is the leading principle of both a CFR and an optional instrument. In this paper, it is argued that an optional instrument as proposed by the European Commission will result in social dumping. However, this can be prevented, if the leading principle of an optional instrument will be a balance between freedom of contract and social justice or fairness. If not, it will be relevant to assess to what extent more stringent national mandatory rules can still be applied if parties have selected an optional instrument to govern their contract. In order to do so, first it is considered whether the optional instrument may be regarded as harmonization, if so, what type of harmonization it fits best. Finally the technique by which an optional instrument may be rendered applicable will be discussed.

The European Commission's Common Frame of Reference Project: a progress report

Abstract: Abstract Readers will be familiar with the European Commission's plan to create a Common Frame of Reference (‘CFR’). The aim is to provide ‘fundamental principles, definitions and model rules’ that can assist in the improvement of the existing acquis communautaire, and that might form the basis of an Optional Instrument if it is decided to create one. Meanwhile there is to be a parallel review of eight consumer Directives. Readers will know that a ‘Network of Excellence’ has been funded under the Sixth Framework Programme (‘FP6’) to produce a draft CFR by the end of 2007. They will have read an account of the network of stakeholders (the ‘CFR-net’) established to comment on the researchers' drafts. This paper is one ‘researcher's’ personal report on progress since the first stakeholder workshop in March 2005.

On the Development of European Standard Contract Terms

Abstract: Abstract This article considers the desirability of the development of sector-specific European standard contract terms. This idea was put forward by the ECCommission in a series of communications between 2002 and 2004, and while in September 2005 it appeared to back-peddle on its earlier proposals, it nevertheless advanced something rather similar, though couched in the more regulatory language of a sector-specific ‘26th regime.’ The author argues that there are four main reasons why the development of European standard contract terms should be given a cool reception: reasons stemming from the language or languages by which such standard terms would be expressed, from the different normative contexts in which they would take effect, from differences in national approaches to contractual interpretation and from differences in the national regulation of unfair contract terms. While the last of these reasons would not apply if such European standard terms were able to override national controls on the fairness of contract terms, it is argued that this abandonment of established national and EC controls would be unjustified given the likely nature in practice of the process by which such standard terms would be agreed. Résumé Cet article s'interroge sur l'opportunité de développer en droit européen des clauses-types par secteur. L'idée a été avancée par la Commission européenne dans une série de communications entre 2002 et 2004, et alors qu'en septembre 2005 elle avait semblé revenir sur ses précédentes propositions, elle a néanmoins persévéré en ce sens, bien que la proposition soit rédigée dans le langage plus réglementaire d'un <26ème régime> spécifique à un secteur. L'auteur soutient qu'il y a quatre raisons principales pour lesquelles le développement des clauses-types européennes devrait recevoir un accueil réservé: des raisons tenant à la langue ou aux langues dans lesquelles de telles clauses-types seraient exprimées, aux différents contextes normatifs dans lesquels elles prendraient effet, aux différences dans les interprétations nationales, et enfin aux différences dans les réglementations nationales des clauses abusives. Tandis que la dernière raison ne s'appliquerait pas si de telles clauses-types européennes pouvaient échapper aux contrôles nationaux sur le caractère abusif des clauses contractuelles, il est soutenu que cet abandon des contrôles nationaux et communautaires seraient injustifié compte tenu du processus probable par lequel de telles clauses-types seraient en pratique acceptées. Kurzfassung Der Beitrag behandelt die Entwicklung sektorspezifischer Allgemeiner Geschäftsbedingungen auf europäischer Ebene. Den Anstoß lieferten Mitteilungen der Kommission in den Jahren 2002 bis 2004. Obgleich diese im September 2005 von ihren früheren Vorschlägen Abstand zu nehmen schien, legte sie doch etwas ganz Ähnliches vor, freilich eher als Regulierung in Form eines sektorspezifischen „26. Regimes“. Der Autor beurteilt die Entwicklung solcher Allgemeiner Geschäftsbedingungen aus vier wesentlichen Gründen eher zurückhaltend: Fraglich ist schon, welche Sprache(n) zu wählen ist (sind); sodann ist auf die Unterschiede in den normativen Zusammenhängen, in denen solche Allgemeinen Geschäftsbedingungen Wirkung entfalten würden, hinzuweisen; hinderlich sind außerdem unterschiedliche Ansätze der Vertragsauslegung und die unterschiedlichen nationalen Regelungen zu unangemessenen Allgemeinen Geschäftsbedingungen. Zwar würde der letzte Grund nicht entgegen stehen, wenn solche Allgemeinen Geschäftsbedingungen auf europäischer Ebene die nationale Kontrolle unangemessener Geschäftsbedingungen außer Kraft setzen würden. Dagegen wird aber gerade eingewandt, dass es ungerechtfertigt wäre, die bestehenden nationalen und europäischen Kontrollen abzuschaffen, wenn man die Art und Weise bedenkt, wie in der Praxis solche Geschäftsbedingungen vereinbart werden.

Fundamental Rights and Contract Law

Abstract: Originally, contract law was considered to be immune from the effect of fundamental rights, the function of which was limited to being individual defences against the vigilant eye of the state This traditional view, however, has recently been put under pressure as a result of fundamental rights increasingly becoming relevant for (European) contract law The relationships between private parties under contract law have started losing their immunity from the effect of fundamental rights It is argued in this essay that the major question at present is no longer whether fundamental rights may have an impact on contract law, but to what extent this will occur, and that the answer to this question will determine the future of (European) contract law

ECJ – Freiburger Kommunalbauten v Hofstetter

Abstract: Abstract Judgment of the Court (Fifth Chamber) of 1 April 2004, Freiburger Kommunalbauten GmbH Baugesellschaft & Co KG v Ludger Hofstetter and Ulrike Hofstetter, Case 237/02 [2004] ECR I-3403

Case: House of Lords – Fair Trading v National Bank

Abstract: Abstract Judgment of the House of Lords of 25 October 2001, The Director General of Fair Trading v First National Bank plc, [2001] UKHL 52.

Protection Against Discrimination in European Contract Law

Abstract: Abstract Protection against discrimination in European contract law stands at the point of tension between the principle of freedom of contract and the principle of equal treatment. Both principles will be examined separately. One must distinguish between substantive and formal models of freedom, on the one hand, and conceptions of anti-discrimination based on ‘defensive rights’ (Abwehrrechte) and ‘participation rights’ (Teilhaberechte), on the other hand. The appropriate degree of protection can be better determined by employing this analysis. In so doing, it is demonstrated that protection similar to that against discrimination based on reasons of ‘race’ and gender is also required to address the problem of discrimination based on disabilities. Therefore, a further directive that corresponds to the Council Directives 2000/43/EC and 2004/113/EC should be enacted and provide protection for people with disabilities. The article closes by looking at the EU's competence to regulate in the field of contractual protection against discrimination. Résumé La protection contre la discrimination en droit européen des contrats se situe au milieu d'un conflit fondamental entre le principe de liberté contractuelle et le principe d'égalité de traitement. Dès lors, les deux principes seront d'abord présentés séparément tout en distinguant entre les concepts de liberté matérielle et formelle d'un côté et les conceptions anti-discriminatoires fondées sur des ‘droits de défense’ (Abwehrrechte) et des ‘droits de participation’ (Teilhaberechte) de l'autre côté. Sur cette base sera déterminé le niveau de protection adéquat. L'examen révèlera la nécessité d'instaurer une protection contre la discrimination en raison du handicap en plus de l'interdiction de la discrimination en raison de la ‘race’ et du sexe. Pour l'accomplissement de cette protection, une directive européenne pour la protection des personnes handicapées devrait être prise, en correspondance avec les directives 2000/43/CE et 2004/113/CE. Finalement, la contribution éclairera les compétences normatives de l'UE en matière de non-discrimination en droit des contrats. Kurzfassung Der Diskriminierungsschutz im Europäischen Vertragsrecht bewegt sich im Spannungsverhältnis zwischen den Prinzipien der Vertragsfreiheit und der Gleichbehandlung. Es werden daher zunächst beide Prinzipien separat dargestellt, wobei einerseits zwischen materialen und formalen Freiheitsmodellen und andererseits zwischen abwehrrechtlichen und teilhaberechtlichen Antidiskriminierungskonzeptionen zu unterscheiden ist. Auf dieser Grundlage kann sodann das sachgerechte Schutzniveau näher bestimmt werden. Dabei zeigt sich, dass neben dem Schutz vor Diskriminierungen aus Gründen der ‘Rasse’ und des Geschlechts auch ein Schutz vor Benachteiligungen aufgrund von Behinderungen indiziert ist. Analog zu den Richtlinien 2000/43/EC und 2004/113/EC sollte daher noch eine weitere Richtlinie zum Schutz von Menschen mit Behinderungen erlassen werden. Der Beitrag schlieβt mit einem Blick auf die Regelungskompetenz der EU im Bereich des vertraglichen Diskriminierungsschutzes.

Abuse of Dominant Position: A System of Undistorted Competition or Social Protection?

Abstract: Abstract This paper aims to demonstrate that, even if Article 82(2)(a) of the EC Treaty does not replace the market measure with a political measure with respect to contractual clauses, nonetheless it pursues social justice, whatever conception of social justice one accepts. According to a vast majority of Economics scholars, such regulation is wholly inefficient. The rule, as it stands, is supported by evidently equitable reasons: it is designed, in fact, to protect a specific class of consumers, particularly those who cannot afford innovation at a monopolistic price. This regulation has been harshly criticised, and has undergone several attempts to reduce its scope of application. I believe that a group that is concerned about social justice in European contract law cannot allow this norm to be disregarded and should, instead, invoke its application.

The Directive on Unfair Commercial Practices: A Law and Economics Perspective

Abstract: Directive 2005/29 on unfair commercial practices constitutes an ambitious attempt at building a general regulatory framework for firm actions towards consumer in the marketplace. The declared objectives of the Directive, namely consumer protection and eliminating barriers for the internal market, do not seem to provide enough support for such an overreaching legal intervention. The paper explores whether other rationales can justify the new rules and critically examines the scope and the tools to determine unfairness in commercial practices. From an efficiency perspective, Directive 2005/29, although not devoid of merit and interesting solutions, is lacking both in terms of over-optimism in regulating practices that differ widely across markets for a whole range of goods and services, and disregarding several factors that greatly affect the necessary cost-benefit analysis for the major regulatory options.

The Evolution of Public Contracts in European Law

Abstract: Abstract The report describes how regulation of public contracts is increasingly being influenced by European law, particularly in the light of European directives Nos. 17 and 18/2004, and provides an overview of the main trends of this regulation. The analysis of the most significant aspects of the law of European public contracts shows that EC regulations are in a state of flux. Other policies are being added to the traditional one of safeguarding competition. These policies include, for example, the proper management of public finance and the efficiency of public authorities' activities. Following the increased and diversified intervention of EC institutions, it can be foreseen that European provisions will regulate not only the tendering procedure for the selection of the contracting party, but also the whole relationship between the public authority and the company being awarded the public contract.

The Eye of the Storm: on the Case for Harmonising Principles of Damages as a Remedy in Contract Law

Abstract: Abstract Taking the current work on refining the contract law acquis as its starting point, this article considers whether there is a case for greater harmonisation of the law of damages in contract law within the EU. The law of damages is a platform for enforcing contractual interests. As long as remedies in general and damages in particular remain subject to divergent national solutions, the Community will have difficulties in achieving its goal of coherency in contract law. By demonstrating the complexities surrounding this area of law and discussing recent decisions of the European Court of Justice, it argues that the current inconsistencies in the law of damages justify action at community level. The article outlines possible options for the Community that are consistent with the current climate of political, legal and social integration within the EU. It concludes by demonstrating that Europe could use the medium of contract law and the law of damages to deliver social and economic justice.