Published by De Gruyter

Volume 3 Issue 2

Issue of European Review of Contract Law

Contents
Journal Overview

August 22, 2007

Regulating Breach of Contract – The Right to Reject Performance by the Party in Breach

Stefan Grundmann

Page range: 121-149

Abstract

Regulation of breach of contract can be discussed outside national law only for two set of rules: A coherent model can be found only in the UN Convention on the (International) Sale of Goods (CISG) and in the EC (Consumer) Sales Directive. Both sets of rules deal with the sale of movables, both, however, have been seen by their authors as more general models as well. In German law, this implicit step has been made explicit: With minimal modifications, the Sales Law model is now the model of general contract law. As regards the right to reject performance by the other party this model is discussed for spot contracts like the traditional sales contract and the additional period of time as its core mechanism is compared with the alternative model of the fundamental breach of contract. Then the question is extended and it is asked whether these models can in fact be generalised, i.e. whether they provide adequate solutions also for complex long-term relationships. Résumé Deux ensembles de règles contiennent, en dehors du droit national, une réglementation de l'inexécution contractuelle : un modèle cohérent peut être trouvé seulement dans la convention des nations unies sur la vente (internationale) de marchandise ainsi que dans la directive communautaire sur les ventes (à un consommateur). Les deux ensembles de règles concernent la vente de biens mais les deux ont cependant été perçus par leurs auteurs également comme des modèles plus généraux. En droit allemand, ce pas implicite a été rendu explicite : avec des modifications mineures, le modèle de la loi sur les ventes est à présent le modèle du droit commun des contrats. En ce qui concerne le droit de refuser l'exécution par l'autre partie, ce modèle est discuté pour les contrats d'échange simples comme le traditionnel contrat de vente; et la mise d'un délai supplémentaire comme mécanisme central est comparé au modèle alternatif de la violation d'une obligation fondamentale. La question sera étendue et on se demandera si ces modèles peuvent en fait être généralisés, c'est-à-dire s'ils fournissent des réponses adéquates également pour les relations complexes de longue durée. Kurzfassung Spricht man von Leistungsstörungsmodellen, so kann man im Europäischen Recht und im Internationalen Einheitsrecht zwar auch andernorts verstreut Einzelstücke ausmachen, ein zusammenhängender Satz von Regeln, ein “Modell”, findet sich jedoch jeweils nur für das Kaufrecht: Im UN-Kaufrecht und in der Kaufrechts-Richtlinie. Beide Regelwerke beziehen sich auf den Kauf beweglicher Sachen, wurden jedoch, insbesondere auch von ihren Verfassern, allgemeiner als vorbildhaft verstanden. Das kaufrechtliche Leistungsstörungsmodell stimmt dementsprechend mit minimalen Änderungen im neuen deutschen Recht mit dem allgemeinen Leistungsstörungsrecht und -modell überein. In bezug auf das Recht zur Zurückweisung der Leistung wird dieses Modell für Austauschverträge wie den herkömmlichen Kaufvertrag untersucht und die Nachfristsetzung als Hauptkriterium mit dem Alternativmodell der wesentlichen Vertragsverletzung verglichen. Ferner wird auf die Frage eingegangen, in welchem Maße diese Modelle in der Tat als allgemeingültig zu verstehen sind, und zwar unter Erweiterung der Perspektive vom Austauschvertrag auf den (komplexen) Langzeitvertrag.

August 22, 2007

Mortgage credit contracts and the Green Paper on Mortgage Credit – Controls on Transparency and Fairness

Raffaele Volante

Page range: 150-178

Abstract

Through the 2005 Green Paper on Mortgage Credit the European Commission opened a broad debate about which aspects of secured lending should be subject to uniform regulation throughout the European Union in order to increase the availability for consumers of one Member State of credit offered by lenders of a different Member State, thus achieving a fully integrated Internal Market in this important sector. The opening of national markets might, however, let more unscrupulous lenders issue credit on unfair conditions, in order to get more assets to use for securitization; this financial technique radically changed the US mortgage sector in recent decades and it is of increasing importance in Europe too. This paper examines the issues addressed by the Commission as well as the problems involved in any regulation of mortgage agreements. It suggests that consumer protection with regard to these contracts should be focused on a test of the fairness of their terms, which can be based on the balance of risks the terms create between the parties. Such a balance may be measured upon the relationship the loan has with the deal it aims to fund, which should therefore be considered as part of the mortgage agreement itself. Résumé À travers le livre vert de 2005 sur le crédit hypothécaire, la Commission européenne a ouvert un large débat à propos des aspects des prêts garantis qui devraient être soumis à une régulation uniforme dans toute l'Union européenne, de façon à accroître la disponibilité, pour les consommateurs d'un État membre, des crédits offerts par des prêteurs d'un autre État membre, et à réaliser ainsi un marché interne complètement intégré dans cet important secteur. L'ouverture des marchés nationaux permettrait toutefois à de plus en plus de prêteurs dépourvus de scrupules d'accorder un crédit à des conditions injustes afin d'obtenir davantage de biens à titre de garantie ; cette technique financière a radicalement changé le secteur américain de l'hypothèque dans les dernières décennies et est en train de se développer également en Europe. Cet article examine les questions soulevées par la Commission ainsi que les problèmes engendrés par toute régulation d'accords hypothécaires. Il suggère que la protection des consommateurs dans ce type de contrats devrait se concentrer sur la vérification de la justice des clauses, qui implique une répartition équilibrée des risques entre les parties. Un tel équilibre peut être mesuré par la relation entre le prêt et le projet financé, qui doit dès lors être considéré comme faisant partie du contrat hypothécaire lui-même. Kurzfassung Mit dem Grünbuch Hypothekarkredite von 2005 hat die Europäische Kommission eine breite Debatte darüber in Gang gesetzt, welche Aspekte gesicherter Kredite Gegenstand einer einheitlichen Regulierung innerhalb der Europäischen Union sein sollten, um die Erreichbarkeit von Angeboten von Kreditgebern in anderen Mitgliedstaaten für Verbaucher zu steigern, damit so in diesem wichtigen Bereich ein voll integrierter Binnenmarkt erreicht wird. Die Öffnung der nationalen Märkte würde es jedoch verstärkt skrupellosen Kreditgebern ermöglichen, Kredite zu unfairen Bedingungen zu bewilligen und so mehr Vermögenswerte als Sicherheiten zu erhalten; dieses Finanzgebahren hat den US Hypothekensektor in den letzten Dekaden radikal verändert und gewinnt in Europa nunmehr auch zunehmend an Bedeutung. Dieser Beitrag untersucht die von der Kommission aufgeworfenen Fragen und die Probleme, denen jede Regulierung von Hypothekarkrediten begegnet. Es wird vorgeschlagen, dass der Verbraucherschutz bezüglich solcher Verträge auf einen Fairnesstest der Vertragsklauseln hinauslaufen sollte, der sich an einer ausgewogenen Risikoverteilung zwischen den Parteien orientiert. Eine solche Risikoverteilung könnte an dem Verhältnis des Darlehens zu dem zu finanzierenden Vorhaben gemessen werden, welches deshalb auch als Inhalt der Hypothekarkreditvereinbarung angesehen werden sollte.

August 22, 2007

Case: ECJ – Manfredi v Lloyd Adriatico

Giorgio Afferni

Page range: 179-190

Abstract

I. Introduction The Manfredi judgment of the European Court of Justice (ECJ) deals with the issue of damages for infringements of EC antitrust law. More specifically, it deals with claims for damages brought by consumers against firms that took part in horizontal agreements in restraint of competition. The case at hand of the ECJ is among the many that followed the decision of the Autorità Garante per la Concorrenza ed il Mercato (AGCM), which condemned insurance companies for exchanging information on the Italian market of liability insurance for automobile accidents. The ECJ addresses many aspects of the issue of damages, such as the applicability of EC antitrust law, standing, the availability of punitive damages, the level of compensatory damages, and the prescription/limitation of claims.

August 22, 2007

Case: ECJ – QDQ Media

Mauro Grondona

Page range: 191-193

Abstract

Judgment of the Court of 10 March 2005, QDQ Media SA v Alejandro Omedas Lecha, Case C-235/03 The Court rules as follows: Where is not possible on the basis of national law to include, in the calculation of the costs which an individual who owes a business debt might be ordered to pay, the expenses arising from representation by an abogado or procurador of the creditor in judicial proceedings for the recovery of that debt, Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000 on combating late payment in commercial transactions cannot for itself serve as the basis for the inclusion of such expenses.

August 22, 2007

European Community Legislation and Actions

Rossella Delfino

Page range: 194-197

Abstract

NB: This section presents a series of non legislative actions and legislative acts directly or indirectly linked to contract law, which were adopted at European level between end November 2006 and February 2007.

August 22, 2007

No sense of purpose or direction? The modernisation of European Consumer Law

Christian Twigg-Flesner

Page range: 198-213

Abstract

I. Introduction When this Review last considered developments in the field of European consumer law two years ago, the central issues were questions of scope and competence. At that time, the Directive on Unfair Commercial Practices (UCPD) had just been adopted, and this marked the end of a reform process that had commenced with a Green Paper on EU Consumer Protection in 2001. Since then, however, the reform juggernaut has not come to a halt, and the last two years have seen a lot of activity towards further modernisation of European consumer law, culminating in the publication of the Green Paper on the Review of the Consumer Acquis in February 2007. This note will focus on the Green Paper and discuss the central proposals it contains. It may be observed at the outset that the Green Paper is of concern for several reasons: firstly, for some issues, the Commission has quite clearly already made up its mind, and one cannot help but feel that they were included to pay lip-service to the need for consultation; secondly, many issues are not analysed in sufficient depth, with the result that a distorted or superficial view is given; thirdly, there are gaps in the Green Paper which really ought not to be there if this is to be a thorough review of the current legislation. The presentation and substance of the Green Paper is very worrying, particularly if one bears in mind the desire to create a more coherent acquis .

August 22, 2007

Austria – the Reform of Commercial Law

Daphne Beig

Page range: 214-222

Abstract

The recent reform of Austrian commercial law redefined the scope of applicability of commercial law. Commercial law, which formerly had been restricted to merchants, now addresses all business enterprises. The Austrian “Commercial Code” (Handelsgesetzbuch, HGB) has thus been renamed the “Business Enterprise Code” (Unternehmensgesetzbuch, UGB). Moreover, the reform amended several provisions of contract law in order to harmonise commercial law, general civil law and consumer law. The following article reports on this development.

August 22, 2007

Books Received and Book Reviews

Page range: 223-237

Abstract

Stefan Vogenauer, Stephen Weatherill (eds.), The Harmonisation of European Contract Law – Implications for European Private Laws, Business and Legal Practice, Studies of the Oxford Institute of European and Comparative Law, Hart, Oxford, 2006, ISBN-13:978-1-84113-591-5, pp. 251. (Lesley Jane Smith) The Evolution of European Competition Law – Whose Regulation, Which Competition? (Hanns Ullrich [ed], Cheltenham: Edward Elgar Publishing 2006; vii + 384 pp ISBN 1 84542 701 7) (Giorgio Monti) Contractualism in Employment Services – A New Form of Welfare State Governance (E. Sol / M. Westerveld [eds], Kluwer Law, 2006) (Dr. Amir Paz-Fuchs)

About this journal

This Journal deals with contract law and serves as a pan-European platform for discussion and analysis. The concept of a European Contract Law is still rather recent: the phrase was first coined in the 1990s. Since the early 2000s when this journal was created, European Contract Law has come to encompass an increasingly comprehensive body of law. There were three driving forces behind this development: the EC harmonisation of laws in the area of the internal market, a generally increased interest in comparative law discussions in contract law, and the European Commission’s Communication on European Contract Law, the Commission’s Action Plan and the Common Frame of Reference process. These developments brought about a changed climate of discussion. The foundations of contract law, examined from many perspectives and in view of various national legal systems and an increasing number of disciplines, are currently being discussed in great detail in the European arena. In 10 years contract law may be the first area of European private law to be regulated in a fully fleshed out European Code.

European Contract Law comprises diverse areas of the law such as sales, standard contract terms, distribution chains, marketing practices, research and development agreements, contract law copyright aspects, financial and investment services contracts, insurance contracts and e-commerce as well as non-discrimination within and beyond labour law and more generally, important aspects of labour contracts and other symbiotic contracts.

The importance and breadth of the field and the methods and questions involved are such that ERCL has established itself as the specialised European journal in this area. Since 2004 the standard of information and discussions on this platform have been consolidated: ERCL discusses the body of law in three sections: articles, case law, and literature on EC Contract Law. This takes place mainly in book reviews and, in addition, contains short sections on the most recent EC legislation, sectoral developments, national developments and other news. The Review focuses on existing law at the EC level and all rules influencing the formation, content and execution of contracts from default rules to regulation, from marketing aspects to the content of contracts, from consumer (and also labour) law to general contract law. The Review is open to a variety of approaches and provides the opportunity to read traditional 'dogmatic' explanations of the upcoming and existing law, assessments through comparative law studies as well as economic analysis and discussions of the philosophical foundations and major structural features. The Review is and has been the site of intense discussion of proposals for codification or, more generally, systemisation and comprehensive development of contract law at the EC level. The European Contract Law Code is too realistic an option and much too important not to be thoroughly discussed as transparently as possible with as many competing ideas and approaches as possible. Several special issues have followed this process in great detail. The journal is meant to help in establishing a functional market of ideas in one of the core areas of private law and one of the most important areas of European private law. ERCL is the journal covering this large body of law and the modern solutions to the problems encountered.