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The Continued Resonance and Challenge of the “Ius Commune” in Modern European Contract Law
Published online by Cambridge University Press: 28 February 2019
Abstract
The need for a more consistent and coherent European contract law is a current priority of the EC institutions. Despite decades of pointillistic legal harmonization, cross border transactions within the Internal market of the European Union continue to take place in the shadow of divergent procedural and substantive law rules, differing legal cultures and significant linguistic diversities. Whilst national contract law systems function more or less efficiently internally, it is their partial non-compatibility with other Member States’ private laws that provokes isolated distortions on the market. As a consequence, the European Commission has presented its ‘Common Frame of Reference’ research strategy aimed at fostering common contract law principles, model rules and uniform legal terminology, which, it is believed, will better facilitate commercial actors. The European Parliament has moved a step further by lending institutional credibility to the case for a European civil code. However, this clamour for codification of private laws – an idea premised on two formalisms, legal and economic – has in many respects overlooked the mechanics of modern commercial contracting in particular, the importance of contract drafting and the complex negotiations that lead to deals both domestically and cross border. This paper therefore provides an alternative assessment of the development of a European ius commune, or ‘common law’ of contract, and considers the urgency of improved means of legal information exchange in order to better facilitate the ongoing harmonization effort.
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References
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28 A ‘just’ contract required that both parties were familiar with all relevant terms and conditions, that the parties established a fair price, which created a warranty on the quality of the object of the contract.Google Scholar
29 Grundmann has highlighted the teleological approach of the European legislator over the last decade in introducing contract law rules which focus upon a specific type of transaction and adopt a particular regulatory approach. EC contract law concentrates upon transactions which typically concern large volumes and that are not purely domestic. It is primarily obstacles to these transactions and resultant risks which are eliminated, see Grundmann, S., The Structure of European Contract Law, ibid. The late scholastics similarly adopted a teleological vision of contract arguing that an agreed transaction ought to be upheld, not because it was the expressed will of the parties – though this was evidently an equally important factor – but because of the validity, legal and moral, of the ultimate goal or object of the parties in entering into contractual relations, see Gordley, J., The Philosophical Origins of Modern Contract Doctrine, ibid, at pp.240–1.Google Scholar
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31 Though not completely ‘de novo'. The late scholastic thinkers were evidently building upon the scaffold erected by the Romano-canon lawyers of the fourteenth and fifteenth centuries. The Spanish civilian jurists of the preceding generations had advanced highly innovative and progressive contractual theories. In particular, they had expressly advocated the principle of freedom of contract in Título XVI of the Ordinance of Álcala, of 1345. Whilst the canonists had concluded in principle that contracts were binding because of the consent of the contracting parties, the late scholastics reached the same conclusion by arguing from the standpoint of neo-Thomist and Aristotelian philosophy.Google Scholar
32 See Watson, A, The Making of the Civil Law, Harvard University Press, 1981, pp.83 et seq. Both humanists were undoubtedly familiar with the writings of the Spanish humanists, and Gordley suggests that Grotius in particular was a “late scholastic at heart”. Wieacker adds that, Grotius “… frequently invokes Vitoria, Covarruvias, Ayala and Femando Vázquez: their influence was all the greater because despite the War of Independence the cultural links between Spain and the Netherlands were still strong”, ibid, at p.229. For an alternative analysis see Welzel – who posits the theories of Grotius in the earlier philosophies of stoicism: Welzel, H., Introducción a la Filosofía del Derecho, Aguilar, Madrid, 1971, pp. 128–129. See also Marín López, A., La Doctrina del Derecho Natural en H. Grocio, Anales de la Cátedra Francisco Suárez, Universidad de Granada, núm.2, Granada, 1962, pp.205–211.Google Scholar
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37 Francisco de Vitoria, (1480–1546). Thomas Glyn Watkin views Vitoria as the modem founding father of the European law of obligations, whilst Francisco Suárez (1548–1670) has been singled out by one historian of legal interpretation as one of the most vigorous and sophisticated thinker on issues of legal textual interpretation and meaning of his time, see Lefebvre, C. Les Pouvoirs du Juge en Droit Canonique, Paris, 1938. Lefebvre's study points to the qualities of Suárez's work in comparison with that of his contemporaries, even though it did not form part of the “common stock of ideas and theories in the first third of the seventeenth century, even if it necessarily falls within the conceptual paradigms of that time”. Suárez's Tractibus de Legibus ac deo legislature was published apparently for international consumption in Coimbra, 1612, Antwerp 1613, Lyons 1613 and Mainz in 1619. Yet, Watkin provides illuminating evidence as to why the theories of the scholastic thinkers failed to gain a dominant position within mainstream European legal thought: Suárez was published expensively in folio, whereas many monographs appeared in smaller, cheaper formats; and his work was not included under the rubric libri juridici in the book fair catalogues. Instead his volume, financed initially by the Bishop of Egitania and not, apparently, by a speculative publisher, was produced with the needs of Jesuit colleges in mind, and was addressed to canon, not civil, lawyers”, ibid, at p.48.Google Scholar
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39 “It was at this point that the authority of Aristotle collapsed in the seventeenth and eighteenth centuries and the philosophical foundations of the law of contract were lost”, see Gordley, ibid, p. 161.Google Scholar
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44 It is important to note, however, that the doctrines of the Spanish natural lawyers, premised upon an ideal of justice which formed part of a universal or divine law- Van Caenegem, R.C., An Historical Introduction to the Private Law, p.117, Cambridge University Press, 1994 – failed to find legal expression in practice, either in the courts or in legislative enactments, and are thus largely consigned to history.Google Scholar
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48 Hawkes v Saunders, 1 Cowper 289, 98 Eng. Rep. 1091 (K.B. 1782). In the late eighteenth century Lord Mansfield suggested that in English law, as in the civil law, all promises seriously made should be considered as legally binding, subject to a broad theory of what may be called ‘invalidating cause', which was remarkably similar to the civilian concept of the ‘justa causa'; see also Payne v Cave, 3 Term R. 148, 100 Eng. Rep. 502 (1789) and Cooke v Oxley, 3 Term R. 653, 100 Eng. Rep. 785 (1790) in which distinctly civilian terminology was employed by the courts; yet, as Horwitz notes, “only in the nineteenth century did judges and jurists reject the belief that the justification [for enforcing] a contractual obligation is derived from the inherent justice or fairness of an exchange. In its place they asserted for the first time that the source of the obligation of contract is the convergence of the wills of the contracting parties”, see Horwitz, M.J., The Historical Foundations of Modern Contract Law, 87 Harvard Law Review 917.Google Scholar
49 “The authority of Pothier … is as high as can be had, next to the decision of a Court of Justice in this country”, per Best J, Cox v Troy (1822) B & Ald 474, at 480. Without doubt the generality and abstraction offered by Pothier's analysis was warmly received into an English legal system that had endured since the sixteenth century the uncompromising system of Assumpsit.Google Scholar
50 Carey, “A Course of Lectures on the Law of Contract: Lecture 1”, The Law Times (1845) at 463. As Horwitz notes, “Modem contract law is fundamentally a creature of the nineteenth century”, see Horwitz, M.J., ibid; See also Atiyah, P.S., An Introduction to Contract Law, at p.7. The main corpus of the general principles and theory of the modem English law of contract, including the concepts of offer and acceptance, the intention to create legal relations, the various forms of vitiation of consent etc, were developed and elaborated in the late eighteenth and early nineteenth century via treatise.Google Scholar
51 J.J. Powell's Essay upon the Law of Contracts (1790) developed upon Blackstones’ Commentaries (1765–69) which devoted a mere forty pages to ‘contracts’ and focused primarily upon contracts for land; however it was Pothier's Traite des obligations of 1761 which proved most influential both in the courts and among legal academics, prompting the works of the later treatise writers such as Chitty (1818), Pollock (1875), Anson (1879), etc. In this regard, it is important to highlight the important role of Ibbetson in unearthing Sir Jeffrey Gilbert's unprinted treatise on contract: “which has a good claim to be the first serious work on the subject in England” and which bears a strong imprint of the thinking of Thomas Hobbes social contract theories. Moreover, “Pufendorf's influence is abundantly clear in the first published English work on contract with any pretension to treat the subject on an abstract basis, a Treatise on Equity published anonymously in 1737, but probably the work of Henry Ballow or Bellewe of Lincoln's Inn. For the most part his discussion of contract consists of brief paraphrases of or unattributed quotations from the English translation of Pufendorf's De iure nature et gentium, followed by illustrative material from English case law,” see Ibettson, ibid, at p.73. In similar fashion to the continental legal schools of the Middle Ages, the use of the legal treatise in England and later in the U.S., can be viewed as both the forum and the emerging vehicle for the debate and promotion of contract theories.Google Scholar
52 An importation of a civilian outlook into the common law was the logical result of an acceptance of civilian theories; see Simpson, AWB, The Rise and Fall of the Legal Treatise: Legal Principles and the Forms of Legal Literature, (1981) 48 University of Chicago Law Review 632.Google Scholar
53 The common lawyers “engaged upon an enterprise that was new to the common law … but old to the civilian tradition; they were trying to do what the civilians, the canonists and the natural lawyers had been doing for centuries”, Simpson, AWB, 'Innovation in Nineteenth Century Contract Law' (1975) 91 LQR 254.Google Scholar
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55 (1818) 1 B & Ald 681 – This case is widely regarded in English contract law as constituting the birth of the concept of “offer and acceptance”. Simpson supra suggests that the court relied heavily upon Pothier's “Treatise on the Contract of Sale” which provides that “a contract is affirmed by the coincidence of the will of [the two contracting parties], where one promises something to the other, and the other accepts the promise that he was made” – 'le contrat renferme le concours des volontés de deux personnes, dont l'une promet quelque chose a l'autre, et l'autre accepte la promesse qui lui est faite'.Google Scholar
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62 Haynes v Haynes (1861) 1 Dr & Sm 426, 433 – “when both parties will the same thing, and each communicates his will to the other, with a mutual agreement to carry it into effect, then an engagement or contract between the two is constituted”, per Kindersley VC.Google Scholar
63 (1878) 3 App Cas 459, at 467. Agreement is necessarily the outcome of consenting minds.Google Scholar
64 Smith v Hughes (1871) LR 6 QB 597 – “If, whatever a man's real intention be, he so conducts himself that a reasonable man would believe that he is assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to other party's terms, per Blackburn J. Similar observations were made in Bardell v Pickwick and in the later US case of Hotchkiss v National City Bank, 200F. 287, 293 (S.D.N.Y.) 1911. It is evident however, from this historical analysis, that this conclusion had been reached by the civilian framers of Las Siete Partidas in fourteenth century Spain.Google Scholar
65 Gordley, J., ibid, p. 135.Google Scholar
66 Though his thesis has been rejected by Simpson as being ‘oversimplified’ in Simpson, A.W.B., The Horwitz Thesis and the History of Contracts, 46 University of Chicago Law Review 533, at p.600.Google Scholar
67 See Eastwood v Kenyon (1840) 11 A&E 438, 113 ER 482.Google Scholar
68 See Atiyah, P.S., The Rise and Fall of Freedom of Contract, ibid, pp.388 et seq.Google Scholar
69 39 LQR 163, at 165, per Frederick Pollock.Google Scholar
70 See Atiyah, P.S., The Rise and Fall of Freedom of Contract, pp.375 et seq, and Tillotson, J., Contract Law In Perspective, 2nd ed., p.42, London, 1995., who notes that ‘enthusiasm for freedom of contract went hand in hand with support for the operation of a free market'. See also Freil, R.J., The Law of Contract, 1995.Google Scholar
71 See Collins, H., Legal Theory and Common Law, OUP, 1996, at p.144. As Atiyah stresses, the common belief was that “people could be trusted to look after themselves, to see to their own interests, and this led to a rejection of paternalism” and the adoption of an umpirical or abstentionist position by the courts. See Atiyah, P.S., ‘Freedom of Contract and the New Right', in Essays on Contract, Oxford Clarendon Press, 1996 and Rubin, G.R., Law, Economy and Society, 1980 at pp12–13 and pp.70–71.Google Scholar
72 Cornish, W.R. and Clark, G de N, Law and Society in England, 1750–1950, p.206, Professional Books, London, 1989.Google Scholar
73 In addition, the introduction of the Common Law Procedure Act 1852 further assisted the development of the concept of freedom of contract by abolishing the various procedural forms of action in the courts.Google Scholar
74 See Cornish and Clark, ibid, at p.202. Moreover, as Gilmore notes, ‘the classical theory of contract did not come as the natural result of caselaw development … it represented a sharp break with the past', Gilmore, G., The Death of Contract, Ohio State University Press, 1974, at pp. 17–18. Importantly, the population of London more than doubled in the period between 1800 and 1850 and the social conditions in Britain during the age of classical contract are perhaps best illustrated by Blakes’ poem ‘London'.Google Scholar
75 Rubin, G.R., Law, Economy and Society, London, 1984, p.70. Curiously, Gordley rejects any grander ideological motives on the part of the common law judiciary. He suggests that in practice, ‘we find little direct borrowing from philosophers, economists or political theorists. Only rarely do we find any sign of commitment to liberal values of freedom or individualism. We find almost the opposite: an insistence that the jurist can do his job without taking account of economics, philosophy, politics or values such as freedom … They said almost nothing about any larger principles on which they were building', ibid (1994) at p.215–216.Google Scholar
76 León González, M.A., La evolución histórica del concepto del contrato, Lecciones sobre las obligaciones y contratos, Salamanca, May 12–14, 1998. This analysis of the development of freedom of contract in English law is a minority opinion which evidently questions much of the traditional thinking, though this author finds it highly persuasive.Google Scholar
77 In the nineteenth century, freedom of contract was regarded by many philosophers, economists and judges as an end in itself, finding its philosophical justification in the ‘will theory’ of contract and its economic justification in laissez-faire liberalism. Chitty on Contracts, pp.5 et seq., 27th ed., Vol. I, General Principles, London, 1994. Caselaw in modern times reveals judicial recognition that the operation of an absolutist analysis of freedom of contract cannot be justified and that the doctrine has been reduced to a ‘general principle', see for example Suisse Atlantique Société d'Armement Maritime SA v NV Rotter dams che Kolen Centrale [1967] 1 AC 361, 399 and Photo Production Limited v Securicor Transport [1980] AC 827, 848.Google Scholar
78 As Cornish and Clark note, the common law courts renounced their ‘earlier willingness to rectify elements of unfairness in bargains and instead insisted upon enforcing whatever terms had been agreed'. The common law support for a severely individualistic conception of freedom of contract contrasted with the courts of equity, which constituted ‘a protective jurisdiction of conscience', ibid, at p.203. Evidently, as Horwitz notes, the role of the courts of equity had greatly diminished.Google Scholar
79 Per Friedman in Gilmore, G., ibid, at p.7. Cornish and Clark, ibid, suggest that the decline of the classical vision of contract ought to be traced from the year 1876 onwards; as, following the Judicature Acts of 1873, in 1876, “the liberal hegemony of the mid-Victorian years was threatened by a novel, democratic “collectivism” and in that year a directive was issued giving preference to the rules of equity over the common law rules, at p.203.Google Scholar
80 Gilmore, G., The Death of Contract, p. 18., Ohio State University Press, Columbia, Ohio, 1974.Google Scholar
81 “All these specific, substantive, moral considerations were omitted when this civilian law of contract was received into common law. What was taken on board was only that part of the theory concerned with the parties will, and the categories based on offer and acceptance that were held to be the expression of their agreement. This, as Gordley stresses, was to create problems for the later development of contract law. As a result of stripping away requirements for full understanding the common law had no way of dealing with the implied lack of consent. Contract law in the first half of the century was far from the logical and complete doctrine that is imagined in discourses on liberalism. It also exhibited major lacunae that would later need to be filled”, O'Malley, P., Uncertain Subjects: Risks, Liberalism and Contract, Journal of Economy and Society, pp.460–484, at p. 483. Vol. 29, Number 4, November, 2000.Google Scholar
82 Gordley, J., op cit., p. 160–1, who suggests that having failed to retain these earlier concepts they were unable to make their ‘will theory’ work.Google Scholar
83 As Gilmore notes, classical contract was ‘an ivory tower of abstraction’ whose ‘natural habitat was the law schools, not the law courts', Gilmore, G., The Death of Contract, p. 18., Ohio State University Press, 1974.Google Scholar
84 Van Gerven, W., Codifying European Private Law? Yes, if…! 156 European Private Law Review 2001. See also, Schmid, C.U., The Emergence of a Transnational Legal Science in European Private Law, Oxford Journal of Legal Studies, Vol.19, 1999 and Hesselink, M.W., The New European Legal Culture, Kluwer, 2001. Hesselink detects the emergence of a new European legal culture, characterized by a rejection of the formalism of the past and the promotion of a “more substance-orientated and pragmatic approach”. See, in particular, Chapter IV on 'European private law: Shift from Form to Substance', pp.37 et seq.Google Scholar
85 Indeed, the working methods employed by the Scottish Law Commission and the Law Commission of England & Wales, in bringing forward joint initiatives, deserve further academic scrutiny and may serve as an adequate template for future cooperation at EU level. Both Commissions have produced consistently high grade research and a recent study on the impact of Unfair Terms legislation has received much positive comment from business and consumer associations beyond both jurisdictions.Google Scholar
86 For a suitable example of this problematic conservatism, see Report to the Irish Competition Authority on the Provision of Legal Practice Services in Ireland criticizing the current practices of King's College, Dublin as the sole provider of formal legal practice examinations in Ireland.Google Scholar
87 Brownsword, R., Individualism, Cooperativism and an Ethic for European Contract Law, 64(4) Modern Law Review 628 (2001). See also Truilhe-Marengo, E., Towards a European Law of Contracts, 10(4) European Law Journal 463 (2004).Google Scholar
88 See www.baili.org. Whilst by no means perfect, the BAILI website compiles updated legislation, caselaw and legal commentary from Britain, Ireland and the Commonwealth and provides access to a range of other ‘World resources'.Google Scholar