In 2001 the German legislator passed a law for the ‘Modernisation of the Law of Obligations’ (Schuldrechtsmodernisierungsgesetz—SMG). It encompassed new rules on breach of contract, a wholly new law of limitation of actions and new provisions for contracts of sale, contracts for services and loan. By the same Act the existing statute on standard contracts (Gesetz über Allgemeine Geschäftsbedingungen) and various other statutes for the protection of consumers were integrated into the German Civil Code (Bürgerliches Gesetzbuch—BGB). It was the most extensive amendment of the BGB since its enactment in 1900. Many of the legislative measures bundled together in the SMG had an EC-law background. We shall here consider only one aspect of the reform statute, namely the new rules on breach of contract and their relationship with European law.

The fourteenth amendment to the US Constitution, adopted in 1868, provides in relevant part: ‘All persons born or naturalised in the United States … are citizens of the United States and of the State wherein they reside.’ A similar passage in the Treaty of European Union (TEU or Maastricht), Article 8 (now Article 17(1)), declared: ‘Citizenship of the Union is hereby established. Every person holding the nationality of a Member State shall be a citizen of the Union.’

The convention on the Future of Europe, which came together in the spring of 2002, completed its work in June 2003. In the event, the various tasks that were set for the Convention by the Laeken Declaration of December 2001 on the Future of the European Union came to be subsumed in the overall task of devising a Constitution for the Union. A sufficient degree of consensus was achieved by the Convention to enable its President, Mr Valery Giscard d’Estaing, to present the outcome of the deliberations of the past 15 months, in the form of a Draft Treaty Establishing a Constitution for Europe, to the European Council of Thessaloniki. So it is through the proposed Constitutional Treaty (referred to hereinafter as ‘the Convention text’) that the specific objectives identified in the Nice and Laeken Declarations, such as those of re-legitimating the Union order and rendering the primary law of the Union more comprehensible to its subjects, now fall to be achieved.