Skip to content
BY 4.0 license Open Access Published by De Gruyter November 28, 2022

Jan M. Smits: Contract Law: A Comparative Introduction

  • Michele Graziadei EMAIL logo

Reviewed Publication:

Jan M. Smits, Contract Law: A Comparative Introduction (3 rd ed, Cheltenham: Edward Elgar, 2021 ) 288 pp, ISBN 1800373120.


1. This is the third edition of a very successful textbook on contract law, designed to satisfy the learning needs of international students. The approach chosen by the Introduction relies on two basic assumptions, presented in the Preface. First, contract law is no longer the preserve of national legislators as it was in the last two centuries. Contract law has acquired international and European dimensions, and they are both evident and important. Indeed, most of today’s students will spend their professional life in a world in which knowledge of the law of a single jurisdiction will not be enough. Second, contract law as a set of specific solutions is bound to evolve and change over time: it does so every day under our eyes. Any study solely based on a detailed knowledge of statutes or specific rules thus becomes rapidly obsolete. Hence, there is a necessity, on which Smits insists, to develop a method to approach the internationalisation of contract law. That method focuses on the policies and arguments made in and about contract law, and on the principles governing the matter. Approached in this way, contract law is not necessarily the law of a specific jurisdiction. The textbook provides a comparative introduction to contract law because those principles, arguments, and policies are best examined by analysing the similarities and differences existing among the laws of the various jurisdictions. The Introduction distils for the reader what is learnt by developing such an outlook on the subject.

In writing this book, Smits carefully considered the learning needs of students. As a pedagogical tool, this is the best comparative law textbook available on the market for contract law. A rigorous scholarly treatment of the problems and the substance of contract law is combined with several features aimed at facilitating the use of the book by students, such as outlines and chapters overviews, lists of topics for review, further readings, a glossary, and 32 textboxes encapsulating essential notions, cases, particular contract techniques, or doctrines. Students can thus quickly get the gist of the story, with the benefit of often colourful illustrations of the main lines of argument made in the text. This is an eminently accessible textbook. The sustained effort to present to the readers key issues arising in core areas of contract law in a lucid way has paid off, and thus every chapter of the textbook is stimulating and thought provoking.

2. The matter covered by the text falls into six parts: (1) Contracts; (2) The formation of a contract; (3) The contents of a contract; (4) Vitiating contracts; (5) Contractual remedies; (6) Contracts and third parties. Each part is subdivided into chapters, with the exception of the last one, consisting of a single chapter. The national laws reviewed under the comparative lens are the laws of several continental countries (mostly France, Germany, The Netherlands) English law, and EU law. The laws of other jurisdictions, and religious legal systems, are occasionally considered, but the most frequent references to other normative materials are to the usual suspects, i.e. international conventions and those soft law instruments elaborated to find common grounds across different legal systems and advance the cause of harmonisation (PECL, the Unidroit Principles of International Commercial Contracts, and the DCFR). For Smits, these texts, in particular the PECL and DCFR, represent the true common frame of reference for teaching contract law in Europe. Meanwhile, the harmonising effects of EU law remain sector-specific, because the withdrawal of the CESL proposal in 2014 marked the end of more ambitious plans by the Union.

A book like this cannot avoid some shrewd moves. The first is to studiously refrain from offering a definition of what a contract is, beyond the reference to contracts as legally binding agreements. The introductory chapter (p. 3–15) thus presents contracts as the engines of market economies, and a picture of everyday life events involving contract making is set forth to make the point, from buying a house to getting insurance coverage. The prevailing idea is that ‘people and companies should make their own bargains on the basis of a voluntary exchange of goods and services’ (p. 3). In this respect, contracts are simply the ‘cement of modern society’, as an avowedly functional approach puts it. The extra-patrimonial effects of contracts seem to be marginal from this angle, and they are not discussed in general, although they do come before the courts, as the reader eventually learns (see, e.g., p. 225). An element of differentiation among contracts is then presented by introducing different categorisations of contracts, according to the parties involved in this conclusion, the type of performance involved, and the various reasons why the parties are bound (p. 5–6).

That principal statement – contracts are made by the parties, for the parties – is balanced by the remark that regulated contracts are beyond doubt a reality of modern economies as well. Therefore: ‘most contracts relevant to the average person are heavily regulated by the public authorities’, and this is for good reasons, namely to ensure general access to basic services and to avoid abuse of position by suppliers (box 1.5, p. 13). Still, the focus of the book is mostly on contract law as part of private law (and the author makes clear what that concept stands for in civilian systems). Obviously, private law is not a pure technique to turn individual preferences into contracts, because it has several overarching principles, reflecting a plurality of values and purposes.

The tensions pervading contract law are properly highlighted by recognising that no single principle currently governs contract law. After clarifying what a principle is in a concise, helpful way (p. 9–10), Smits lists and discusses four main principles of contract law: freedom of contract; the binding force of contracts; informality; fairness. The four principles reflect broad fundamental standards, they may contradict each other, and they are not without exceptions. Once this stance is taken, contract law turns out to be a complex balancing act, where one principle is never systematically prioritised over the competing others. The last of the above-mentioned principles – fairness – seems to be the one most ridden with problems. Although the distinction between procedural and substantive fairness is by now widely acknowledged, the Introduction acknowledges that notions of contractual justice differ widely and are subject to lively debate. On this last point, the author sides with Hein Kötz, whose outstanding work on comparative contract law must have provided inspiration for a similar intellectual enterprise. Together with Kötz, Smits holds that the mission of supporting a fairer distribution of wealth is more a matter of tax law, the social services, and the taxpayer, rather than of contract law itself, although he does not deny that there are cases in which contract law contains elements of substantive fairness (p. 14).

The second chapter of the book further engages with the complexity of contract law by discussing the multiplicity of normative sources – national, European, supranational, informal, – governing it (no hint of the European Court of Human Rights or to the ongoing constitutionalisation of contract law is to be found here). The parties’ agreement is presented as a first source of contractual norms, because the parties themselves decide to a great extent what rules govern their bargain. The asymmetrical position of the parties in standard form contracts shows that this power needs to be controlled, however (p. 17).

Chapter 3 opens the second part of the Introduction, dedicated to the formation of contracts, with a discussion of the meeting of offer and acceptance, their revocation, the role of silence and conduct in the process, the battle of forms, and the policies associated with the relevant rules. Despite the widely shared view that a contract requires an agreement of the parties, the laws under comparison present certain differences. These concern, for example, the effects of offers to the public and advertisements. In England and Germany an advertisement to bring about a bilateral contract does not amount to an offer, while French and Dutch law hold that it does (p. 45). Yet this first conclusion must be nuanced; both German and English law can make such an offer binding by treating it as a promise to the public (BGB § 657), or as a unilateral contract with a member of the public, as it happened in the famous Carbolic Smoke Ball case (p. 47). Furthermore, as Smits rightly notes, antidiscrimination rules, applicable across the Union, would in any case rule out the seller’s decision not to sell, if vitiated by a discriminatory bias. Freedom of contract implies that the parties themselves may choose to regulate how to reach an agreement (e.g. by agreeing on an option contract), but the chapter does not really cover this possibility, nor does it extend to the issues relating to pre-contractual liability, although good faith and pre-contractual information duties find a place in subsequent chapters.

The following chapter (ch. 4) on the intention to create legal relationships is rather complex. Smits is clearly alert to the variety of problems that are covered by that broad label, and the chapter therefore tackles both agreements in the social sphere and gratuitous promises in familial and commercial contexts. No matter how much that label is stretched, it does not really make much sense to present the English rules on consideration, or the requirement of causa under the laws of countries like Italy, as pertaining to the intention to create legal relationships.

The truth is that the two approaches to contract law are at loggerheads. The first approach has a certain Kantian flavour, because it relies exclusively on individual will as a source of binding commitments. The second requires more than the intention to be legally bound to have a binding contract. Therefore, if lacking a consideration, even a seriously intended promise is not binding under English law – other elements must be present as well to make it binding. Incidentally, this also explains why an English ‘contract’ is much narrower than a German ‘Vertrag’. This is a difference that should be kept in mind, not the least to facilitate cross border communication. Legal systems requiring causa as a necessary element of a valid contract refrain as well from considering the mere (bilateral) willingness to be bound as expressed by declarations sufficient to have a contract (and, in any case, as the Introduction clarifies, causa performs a plurality of functions compared to consideration, p. 87–88). Hence, to consider consideration and causa as mere indicia of seriousness is, in the final analysis, quite misleading. The Introduction does not ignore the problem, and thus ends up concluding that both causa and consideration have an uneasy relationship with the intention to create legal relationship. Therefore, they should be considered superfluous in the light of the latter requirement, but – the author concedes – historical accidents are far from unknown in the law (p. 79). The Dutch civil code of 1992 and the 2016 reform of the French law of obligations indicate the prevailing tendency. Both have abandoned the requirement of causa, but the French civil code now has a few provisions that perform some of functions previously assigned to it. In any case, donative transactions are everywhere subject to requirements of form, and an action in reliance of a gratuitous promise may require protection of the promisee, as it does on the basis of the prohibition venire contra factum proprium and promissory estoppel in England.

To enter into a valid contract a party must be legally capable of doing so. Here again, this obvious proposition does not lead to a uniform set of solutions across Europe. In chapter 5, the Introduction highlights different approaches to the (in)validity of contracts concluded by minors, legally incapacitated adults, or people suffering from a mental disorder.

English and French law attach great importance to the circumstance that the contract was beneficial for the minor. German law, on the other hand, relies more heavily on parents’ consent to what their child did, whereas Dutch law follows a middle course between these opposite poles. While contracts for legally incapacitated people are everywhere voidable – but the relevant judicial measures may be different, namely more or less invasive – contracts by people troubled by a mental disorder that has not been judicially declared are not always invalid. Here there are different approaches to the possibility of protecting a good faith contracting party, rather than the mentally ill. This is hardly surprising because there are good reasons for both one or the other solution.

Chapter 6 on formalities explores the different functions associated with form requirements (warning function; information function; evidentiary function), the types of ‘classical’ forms known in each legal system, the rise of pre-contractual information duties in certain contexts, and of formalities required to conclude contracts over the internet, or by telecommunication means. Contracting in the cyberspace or by means of instant communication involves additional protections, and thus the right of consumers to withdraw from a contract concluded remotely – within a definite period of time – has become one of the best know features of EU contract law, serving both as a device to contain aggressive sales techniques, and to overcome the difficulty of getting all the information needed about an object when contracting remotely for it.

The third part of the textbook on the contents of the contract starts with a chapter on interpretation (ch. 7). Words are a slippery matter, and many contract disputes revolve around what the parties intended, what they said or wrote and understood, and what should be done if their agreement does not cover a point now disputed. The tension between more subjective and more objective interpretation techniques, attested in the codes, runs through every textbook on contract law in Europe. The Introduction shows that the difference between the civil law and the common law approach revolves around the choice to give prominence to the interpretation of a reasonable commercial person as an English court would do, rather than to the interpretation that reasonable parties would hold, as a Court based in France or in Germany would do (p. 124). Maxims on interpretation are not considered to be of great help in this context, although they feature in some contemporary codes close to the French tradition (p. 128–129). If a contract is incomplete, gap-filling intervenes in all jurisdictions, but the techniques used for his purpose are far from being the same everywhere. In functional terms, the key distinction is between ad hoc gap-filling, namely providing a solution tailored to that specific contract, and gap-filling through default rules applicable to all contracts of the same kind (p. 130–135).

Chapter 8, on the principle of good faith and on unfair contract terms, is one of the core chapters of the book. Good faith performs various functions in continental legal systems, while English law rejects an overriding principle of good faith as a component of the law of contracts. The prevailing considerations for this contrarian stance are that good faith is a vague standard, capable of undermining legal certainty and restricting a party’s autonomy. It is not tailored to the specific contexts in which contract law operates either. These arguments can be rebutted, and there are visible inroads of that principle in several areas of English law, typical in the area of contracts uberrimae fidei and across the whole area of fiduciary relationships, which are by no means a minor field of English law. These are fields that are not dominated by the adversarial ethos which shaped English contract law. Recent cases appear to advance a view according to which at least with respect to relational contracts a duty of good faith can be implied as part of the contractual obligations, although this can still be excluded by an ad hoc contractual stipulation. Good faith plays a role in policing unfair contract terms too. Here the EU directive on unfair contract terms provides a minimum set of solutions with a substantial impact on the law of several European jurisdictions that did not have anything similar to it, contrary to Germany, the Netherlands, or the Nordic countries. Contractual fairness is also protected by other EU instruments, such as the directive on unfair commercial practices, now supplemented by a new set of rules on the private enforcement of that legislation (directive 2019/2161). All these instruments are changing the rules of the game, and contribute to making the discussions over contractual fairness more important than ever.

Contracts may be invalid either because consent is vitiated (ch. 9), or because they are prohibited (ch. 10). Consent is vitiated when the contracting party operates under the effects of a misapprehension, or is the victim of a threat, fraud, or abuse. Both threat and fraud are relatively easy cases, because the other party to the transaction is blameworthy, though where to draw the line in the particular case sometimes is challenging. Finer distinctions typically emerge with respect to undue influence, which is essentially a form of oppressive conduct, consisting in the deliberate exploitation of a vulnerable party. Here an element of excessive advantage often comes in, and elements of procedural and substantive fairness may thus be joined to make the contract invalid (p. 170). On the other hand, mistake and misrepresentation are more problematic cases. A first issue is whether one party should have disclosed information to the other party concerning a salient feature of the contract, or whether one party provided misleading information that affected the other party’s consent. In these cases, the misinformed party can set aside the contract, but not all legal systems provide for extensive pre-contractual information duties to begin with. The following chapter, on prohibited contracts, covers matters that are familiar to any lawyer well versed in contract law, such as statutory illegality and public policy. Morality has changed fast across Europe in recent decades to the point that the reference to bonnes moeurs has been abandoned by the French reform of the law of obligations in 2016 (a point overlooked by the Introduction). One of the most controversial issues today is what rules should govern contracts over body parts or the human being itself. The Netherlands and the UK allow altruistic surrogacy agreements within limits, while most European countries prohibit them in general. By reporting Posner’s provocative comments on the famous Baby M case (p. 185–186), Smits argues that morality is not the only point to consider in such controversial matters.

The fifth part of the book on remedies covers performance (ch. 11), damages for non-performance (ch. 12), and termination of the contract (ch. 13).

Civil law and common law approaches to contracts show a degree of diversity on several issues concerning performance, ranging from the preference for specific performance over damages, to the way to deal with the effects of unforeseen supervening circumstances on existing contracts (ch. 11). In discussing the relevant rules, Smits shows that many broad propositions hardly reflect the complex reality of the law. The operative differences among legal systems are much narrower than those detected by a bird’s eye view of the matter. Once more, the law on these issues has changed over time in every jurisdiction. For example, Directive 2019/17 on consumers’ rights brought English law nearer to the civilian approach with respect to the problems raised by delivery of defective goods in consumers sales, and this legislation is still in force in the UK despite Brexit. The Dutch civil code of 1992 and the reforms of the French and the German civil code on the effects of an unforeseen change of circumstances also replace older, dysfunctional solutions.

Damages for non-performance (ch. 12) are discussed by introducing distinctions belonging the general law of obligations in civilian jurisdictions. English law did not develop similar distinctions and rules, and tends towards more objective forms of liability, although fault makes its appearance here as well, under the garb of the notion of a duty. The measure of damages owed in case of breach of contract is everywhere discussed by drawing the distinction between the expectation and the reliance interest. This uniform approach shows what a learnt treatment of the subject can achieve. Causation and foreseeability issues relating to the loss that is to be compensated can also be covered by applying similar distinctions across the legal systems under comparison. Immaterial damages are treated differently across Europe, but convergence emerges in certain areas covered by EU law, such package travel. Contract law allows the parties to govern the consequences of a breach of contract by stipulating in advance the compensation which is due by the defaulting party. If the predetermined sum that the debtor must pay in case of non-performance is higher than the damage actually suffered by the creditor, all the legal systems under comparison are concerned that fairness be respected, with some significant variations. Once more, EU law introduces more uniformity. The Unfair Contract Terms Directive bans any term requiring a consumer to pay a disproportionately high sum in compensation for the non-fulfilment of an obligation. Under the Directive any such sum is simply not due, rather than to be reduced proportionately, as many civil codes still provide with respect to penalty clauses.

The proposition that one must be able to cancel a contract if the promise to perform is not fulfilled seems obvious, and yet the law in every jurisdiction is rife with subtle distinctions, and tends to be casuistic, depending on the nature of the contract (ch. 13). This is one of the areas of contract law in which history has the upper hand over principle. The reform of the French law of obligations of 2016 has marked some progress towards common solutions in Europe, because business efficacy everywhere favours the extrajudicial termination of contracts. Nonetheless, differences among the various legal systems remain alive, even in matters of detail, including the formalities that must be observed to terminate a contract.

Contracts and third parties is the theme covered in the last part of the book, which consists of a single chapter, bearing the same title (ch. 15). The axiom that only the contracting parties themselves incur rights and obligations under the contract is actually honoured more in the breach than in the observance. Contracts for the benefit of third parties are now generally admissible, just like the transfer of contractual rights through an assignment or a factoring agreement, and an exemption clause may protect a third party, even if not mentioned in it. That general proposition emphasising the relative effects of contracts is then often little more than a rule of thumb. The English undisclosed principal doctrine provides an extreme example of how it can be sidestepped without much ado. The time-honoured notion of privity of contract is therefore under stress in the presence of linked contracts, and may be reversed in certain cases, e.g. with respect to linked credit agreements in consumer contracts (p. 251), or under the pressure of fundamental concerns, such as respect for human rights or the environment (see the proposed directive on Corporate sustainability due diligence launched by the commission in 2022). Therefore, as Smits argues, fresh thinking is required in similar matters (p. 253).

3. Jan Smits is one of the most perceptive and astute observers of the evolution of private law in Europe. Contract law, more than any other field of private law, has been exposed to the force of European integration. This textbook is firmly placed in that context, but reflects as well the conviction that the national legal systems of Europe will not experiment with total harmonisation of the field in the foreseeable future. Hence, to address contract law on the basis of a broad comparative approach will remain a necessity in Europe for all those who do not intend to perpetuate isolationist tendencies. Choosing this approach does not dispense scholars and students from debating the aims of contract law and exploring the tensions over the fundamental values that animate it. It may be interesting to note that, although US law is seldom mentioned in this book, the author has clearly benefited from a knowledge of it to colour his study of comparative contract law. But, as the book shows, it is one thing to have in mind a general frame to approach the subject, and quite another to grasp it in detail, on a comparative basis. Matters of style, language, and local knowledge remain important for understanding how the law goes about its business. Nonetheless, readers of the Introduction will not miss the forest for the trees, and for this they must thank its author.


Corresponding author: Michele Graziadei, Law Department, University of Torino, Lungo Dora Siena 100\A, 10153, Torino, Italy, E-mail:

Published Online: 2022-11-28
Published in Print: 2022-12-16

© 2022 the author(s), published by De Gruyter, Berlin/Boston

This work is licensed under the Creative Commons Attribution 4.0 International License.

Downloaded on 29.3.2024 from https://www.degruyter.com/document/doi/10.1515/ercl-2022-2052/html
Scroll to top button