COMPARATIVE PRIVATE LAW
THE WORK ON A COMMON
CONTRACT LAW
University of Oslo
Prof. Giuditta Cordero Moss
A Common Contract Law?
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Globalisation, Regionalisation
Common regulation of sectors
Contract law not harmonised
Mechansims that permit cross-border contracts
Vision: a common contract law
EU action plan
Does vision solve the percieved problems?
Contract law is not harmonised -I
• Tender for
construction in Italy
• Norwegian contractor
makes a bid
• Bid based on local
sub-contractors’
prices
• Contractor is awarded
the contract
• Tender for
construction in
England
• Norwegian contractor
makes a bid
• Bid based on local
sub-contractors’
prices
• Contractor is awarded
the contract
The subcontractors’ offer
• ”This offer is binding on the offeror and
cannot be revoked before 30 days have
elapsed from the date hereof”
• Subcontractor revokes the offer before the
term (but after the the contract was
awarded)
Consequences
• Italian law:
– Firm offer cannot be
revoked before the
term
– Subcontractor is
legally bound
• English law:
– Firm offer is not
binding unless there is
consideration
– Subcontractor is not
bound
Contract law is not harmonised -II
• Norwegian producer
purchases components
from Italian supplier
• Force Majeure
circumstance reduces
supplier’s capacity
• Supplier has delivery
obligations towards
plurality of creditors
• At reduced capacity
supplier can meet
obligations towards only
one creditor
• Norwegian producer
purchases components
from English supplier
• Force Majeure
circumstance reduces
supplier’s capacity
• Supplier has delivery
obligations towards
plurality of creditors
• At reduced capacity
supplier can meet
obligations towards only
one creditor
Force majeure clause
• ”Non performance by a party hereto of its
obligations hereunder is excused if such
party was prevented from fulfilling its
obligations by an event beyond such
party’s control, that was not foreseeable
and that could not be prevented or
overcome by the prevented party using
reasonable efforts.”
Consequences
• Italian law
– Supplier’s obligations
are reduced pro rata
with the capacity
reduction
– Purchasers can
demand delivery pro
rata with the other
creditors
• English law
– ”Frustration kills the
contract”
– Impossibility to deliver
is deemed to be a
consequence of
supplier’s own fact
– Purchasers can
demand whole
delivery
Mechanisms for cross-border
contracts
• Conflict rules determine the law of what
country governs
• Conflict rules are part of each country’s
own law
• EU has harmonised conflict rules
• Norway has own conflict rules
Mechanisms for cross-border
contracts, cont.
• Judge applies his own conflict rules
• First step: identify forum
• Then: apply conflict rule
• So: conflict rule determines what country’s
substantive law governs the contract
Application of conflict rules
FIRM OFFER
FORCE MAJEURE
• Forum: Lugano
convention, art. 2 or
5.1
• Governing Law:
• Forum: Lugano
convention, art. 2 or
5.1
• Governing Law:
– Italian subcontractor:
Italian law
– English subcontractor:
English law
– Italian supplier: Italian
law
– English supplier:
English law
Vision:
A common (European) contract law
• Assumption:
– Plurality of systems is confusing
– Conflict rules are complicated
– Domestic legal system are meant for
domestic transactions
• Vision:
– An international system deriving from the
parties’ own practice
From lex mercatoria to
general contract principles
• ”Principles rooted in the good sense and
common practice of the generality of
civilised nations”
• Contractual practice
• Model laws, conventions
• Standard contracts
• Private codifications
• Restatements
Restatements
• To improve lex mercatoria’s weaknesses:
– Difficult to determine
– Not systematic
– Too vague
• 1994, UNIDROIT Principles of International
Commercial Contracts
– Not a codification of existing principles
– Systematic set of principles based on consensus
among international academics
Principles of
European Contract Law
• ”Commission on European Contract Law”
• 1995-2002: PECL I,II and III:
http://www.cbs.dk/departments/law/staff/ol/c
ommission_on_ecl/
• Aim of PECL
– Binding for all EU public contracts
– Binding for private contracts, if referred to by
parties
– Long term: binding for all contracts
Commission’s Communication
• Communication from the Commission to the
Council and the European Parliament on
European Contract Law – COM (2001) 398 final,
11.7.2001
• Requests comments on four alternatives:
– Leave it to market forces
– Through research establish general European
principles
– Improve coherence of existing European law
– Enact a European code
The answers to the Communication
• 181 answers
• Each alternative has been supported and
criticised
• Working groups established to develop each
alternative (especially 2 and 4)
• In some academic circles focus on answer from:
– Commission on European Contract Law and Study
Group on a European Civil Code (PECL)
The Commission’s Action Plan
• A more coherent European contract law –
An action plan – COM (2003) 68 final,
12.2.2003:
– Continue sector-based approach
– Increase coherence of existing European law
(CFR)
– Support development of European standard
contracts (webpage)
– Examine possibility of general measures,
such as “an optional instrument”
Action plan’s effect
• Common Frame of Reference for Acquis
Comunitaire
– Does not cover general contract law
• EU Standard contracts
– Must be referred to
– Do not solve interpretation problems
• Optional Instrument
– Must be referred to
– Does not help if vacuum
– Does not totally exclude application of national law
PECL and firm offer
• Italian Law:
– Offer is binding until term
expires
• English law:
– Offer is not binding until it
has been accepted (or
there is a consideration)
• PECL, art. 2:202:
– Offer is not binding until it
has been accepted, but
cannot be revoked if it
contains a term
• PECL, art. 1:103:
– PECL can derogate from
mandatory rules, if
governing law allows it
– PECL cannot derogate
from internationally
mandatory rules
– Consideration?
PECL and Force Majeure
• Italian law:
– Purchasers are
entitled to delivery pro
rata with each other
• English law:
– Purchasers are
entitled to whole
delivery
• PECL, art. 8:108:
– No specific regulation
• PECL, art. 1:106 (2):
– If regulation lacks,
underlying principles
shall be applied. If this
is not possible,
governing law shall be
applied
Conclusion
• Comparative law as a tool towards
unification?
– Unification is not exhaustive
– Even unified wording is interpreted in light of
interpreter’s own legal background
• Different legal systems will continue to
survive long after unification (if any)