Post on 27-Jan-2023
10/06/2013
Hannah Mangel I6005839
Anne Konings I6000299
Zoé Perret I6019261
European Contract Law
Bram Akkermans
Tutorial group 1, subgroup 1
Word count (group work): 8640
EUROPEAN CONTRACT LAW
Transfer of ownership
Table of Content
I. Introduction – Anne Konings & Zoé Perret
II. Transfer Systems of France, Ireland and Germany –
Anne Konings, Hannah Mangel & Zoé Perret
III. The existence of European Law on the Issue – Zoé
Perret
IV. The Solution chosen in the DCFR – Hannah Mangel
V. Policy Questions – Anne Konings
VI. Member State Positions - Anne Konings, Hannah Mangel
& Zoé Perret
VII. The Model Rule & Explanation of the Model Rule –
Hannah Mangel
1
I. INTRODUCTION (815 words)
On 11th of October 2011, the European Commission
published the Proposal for a Regulation of the European
Parliament and of the Council on a Common European Sales
Law (hereinafter CESL). Although the most concrete
attempt to come up with European Union hard law on the
harmonization of private law within the Union, this is
only the result of many years of heated debate on this
topic.
The primary aim of the CESL being the facilitation
of cross-border trade in the internal market, the
commission has claimed the differences in national
contract law is one of the main obstacles to intra-union
2
trade.1 The Commission has conducted surveys on this
matter, in which businesses named differences in contract
laws one of the most prominent impediments to them
trading with businesses in other member states.2 However,
this has been contested by member states (c.f. Member
state positions on the CESL in Question 6). This weighs
especially heavy for SMEs and consumers. Therefore, a
high level of consumer protection throughout the EU has
been made a second objective of the CESL. This is due to
the fact that we can witness a great difference in the
standard of consumer protection within the laws of the
different member states. Uncertainties about the
protection awarded under a different sales law have led
to uncertainty among consumers and have undermined trade
in the internal market to a remarkable extent, as the
commission argues.3
It can be argued that the proposal has been stripped
down to a common sales law as the introduction of an
entire civil code for the member states has proved to be
too problematic/controversial. Even though academia has
developed the Draft Common Frame of Reference, which is
deemed to be an example of a civil code for Europe, this
has only been a project of a group of enthusiastic
scholars. Getting a civil code adopted in the whole of
the Union in form of hard law has proved to be a
different story however. A common sales law has therefore
1 Proposal CESL, 2011, page 2.2 Proposal CESL, 2011, page 2.3 Proposal CESL, 2011, page 2.
3
been chosen as a good compromise. But even the proposal
for a common sales law has been subject of heated debate,
as some Member states find it unnecessary and question
whether it might not be more advisable to fix existing EU
law on these matters.
The CESL features a very limited amount of
provisions, which have been deemed necessary for the
operation of a sales law. Recital 27 of the proposal
however reiterates gaps that have been left out on
purpose and that are to be determined by the applicable
law. Most prominently, this includes the entire area of
property law. It appears the CESL has been modelled by
taking into account the German and Austrian example of a
complete separation between property law and the law of
obligations, this has been left to the national
legislators to determine. It has been argued that this is
exactly the weakness of the CESL: it does not cover
enough situations, which can arise under the contract.
So, not like the DCFR, it is not too encompassing but
actually too little. When considering what the property
law aspects of a contract of sale are, it becomes clear
that issues such as revindicatio if the transfer was not
valid, the transfer of ownership and the passing of risk
as well as the retention of title are all property law
issues that have not been regulated under the CESL. The
goal of this course is to come up with model rules for
these issues by first considering the systems of at least
3 member states, then going on a quest for already
4
existing EU or international law, examining the solutions
of those laws and in the end coming up with a feasible
model rule for the assigned topic, which is possible to
be accepted by the member states and all stakeholders and
which serves the identified policy issues.
This paper will deal with the topic of transfer of
ownership. The concept of ownership being one of the most
basic principles of property law, the transfer of
ownership is however deeply intertwined with the central
aspects of contract law. It is the central and defining
obligation of the seller of a thing. It has nevertheless
not been regulated under the CESL. This working group has
compared the transfer systems of the different member
states chosen, the Republic of Ireland, Germany and
France. It has been found out that transfer systems can
be categorized in two distinctions. First, one can
distinguish between causal or abstract systems. Second,
one can identify consensual or delivery/tradition
systems. Lastly, there are different definitions of
ownership, which have been developed throughout Europe: a
functionalist approach, most prominent in the Nordic
countries and second a unitary approach. These notions
will be explained in the following sections. They will be
compared in order to develop a model rule for the
European Union Sales Law.
II. TRANSFER SYSTEMS OF IRELAND, FRANCE AND GERMANY
5
TRANSFER SYSTEM: FRANCE (1400 words) Zoé Perret
Introduction
French legal system does not fit easily into the
predefined model of German and Austrian thinking. The
non-existence of numerous topics in French law, present
in the German model, is due to the simplified rules on
the transfer of ownership in the Code Civil. Moreover,
the French did not follow the more abstract model adhered
to in other Member States.
Very little academic work can be found on the topic of
transfer of ownership. French legal scholars generally
consider the transfer of ownership to be a minor legal
issue, due to the fact that in custom transfer commonly
takes place automatically. Hence, legal work specifically
dealing with the topic of transfer of ownership in the
French legal system is rather limited.
It must be noted that substantive changes in the field
during the 5 year period from 2004 until 2009.
Consequently, some provisions in the Code Civil gave been
amended, changing the numbering of the articles.
Notion of ownership and transfer system in French
property law
General Principles
French law encompasses the rules on rights and ownership
as part of the Droit des Biens (Law of Goods). This “group” deals
6
with the different types of assets and the various ways
in which they can be used. The Code Civil does not define
“Biens” (“goods”). Nevertheless, article 2260 of the Civil
Code provides that “goods” should be understood as
“assets”. “Assets” merely amount to rights that have an
economic value and that can be owned. Hence, French legal
scholars should refer to the transfer of assets, although
generally scholars still use the term “goods”. This is a
minor practice that can be observed in the terminology in
the realm of the topic of transfer of ownership.
The French legal system makes the distinction
between two legal methods regarding the use of assets;
right in rem (known as droits reels in French law) and rights
in personam (amounting to the obligations, known as droits
personels in french law). Both rights are subjective; they
only confer rights to individual parties. Recently, droits
intellectuels (intellectual rights) were also developed in
France.
There is no official numerus clausus in the French property
law rules, however in practice there are actually merely
two rights to be found in statutes
The rules governing property law can be found in the
Code Civil4. Articles 711 and 712 CC provides the
different ways to acquire ownership. Additionally, legal
scholars have added two more ways of acquisition of
ownership, namely by operation of law and by means of
occupation5. Articles 1582-1701 CC govern the rules on
4 Faber & Lurger, 2011, volume 4, page 27.5 Terré et al., 1998, page 313.
7
sale of goods. Moreover, articles 2333-2354 govern
security rights. The Code Civil governs other aspects of
property law, stating all the articles is not relevant
for this part of the paper. Nevertheless, it is
noteworthy to acknowledge that additional rules governing
the transfer of goods/assets are not included in the Code
Civil but in other codes; such as the Code De Commerce
(Commercial Code)6.
Ownership- right in rem
The system of transfer of ownership is governed by the
solo consensus principle. Consequently, the parties involved
conclude transfer of property merely by means of an
express intent7. Nevertheless, a valid legal transaction
is mandatory for the transfer of property; such document
can be a contract. A number of criteria must be fulfilled
in order to arrive at a valid legal transaction; it must
have a valid causa (the French system abides to the causal
principle) and must give effect to the right in rem of
third parties. France has a causal system of transfer.
In accordance with the wording of article 544 CC8,
the right to ownership is the most powerful and extensive
6 Seube, 2005, page 4.7 The ‘uniform’ concept of transfer of ownership. See also Faber &Lurger, 2011, volume 4, page 27. 8 Article 544 Civil Code: “Ownership is the right to enjoy anddispose of things in the most absolute manner, provided they are notused in a way prohibited by statutes or regulations.”
8
right in rem in French property law. Property rights are
absolute, exclusive and perpetual9.
The absolute nature of the right10 entails that the owner
withholds all rights over his/her property, namely usus,
fructus, absusus11 as well as erga omnes effect12. In accordance
with article 545 Code Civil; limits upon the absolute
right to property can only be created by means of law13.
Erga Omnes effect implies that the owner has the right to
claim against all parties, as long as it does not
infringe the right of others (only limitation to this
absolute right)14.
Ownership necessitates that only the owner (or the
several valid legal owners) can make use of the owned
goods, third parties may not transgress this rule; it is
the exclusive characteristic of ownership15.
The third characteristic of the important and
comprehensive right of ownership is the perpetual aspect
of the right16. The perpetual characteristic deals with
two distinct situations. Firstly, the right of ownership
will cease when the good no longer exists, the right last
9 Bouckaert, 2010, page 34. See also Faber & Lurger, 2011, volume 4,page 31. 10 Terré et al., 1998, page 107.11 Bermann & Picard, 2008, page 149.12 Bermann & Picard, 2011, page 33.13 See Article 545 Code Civil: “No one may be compelled to yield hisownership, unless for public purposes and for a fair and previousindemnity.”14 Bermann, 2008, page 305.15 Chabas, 1994, page 84. 16 Chabas, 1994, page 103. See also Faber & Lurger, volume 4, 2011,page 34.
9
as long as the good17. This is also known as the residual
right18. Secondly, the right of ownership does not cease
to exist in cases where the owner does not make use the
good19.
Additionally, another characteristic of the right to
ownership is the principle of droit de suite. The latter
principle allows owners to claim their property
irrespective of who holds the goods20. This principle was
developed by academic writings. Protection of property
rights is available in legislation; actions21 and
remedies22 exist.
System of transfer of ownership in France
General remarks
French property law has a uniform conception of transfer
of ownership. Hence, this theory entails that the
transfer of ownership takes place at ONE moment in
time23. The transfer takes place when both parties
expressly intend to make the transfer of ownership; solo
consensus24. The characteristic of solo consensus is specific to
17 Bouckaert, 2010, page 34.18 Honoré, 1961, page 161-128.19 Faber & Lurger, 2011, volume 4, page 34.20
Larroumet, 2006, page 24.21 Watson, 1968, page 96. See also Faber & Lurger, 2011, volume 4, page 39. 22 Faber & Lurger, 2011, volume 4, page 46.23 François Terré et al., 1998, page 318. See also Faber & Lurger, 2011, volume 4, page 75 and 27.
24 Mircioiu, 2011.
10
French property law; it does not exist in German property
law for example. France has a causal consensual system of
transfer.
An ‘automatic’ transfer takes place during the one moment
in time during which the transferor passes on his right
of ownership onto the other party. Hence, there is no
formal declaration of intent for the transfer of
ownership. Nevertheless, the declarations of all involved
parties to the contract are implied25. However, formal
declarations occur in situations where the transfer of
ownership necessitates being effective against third
parties to the contract26.
Legal requirements and nature of transfer of ownership
There is no single mandatory form of transfer of
ownership under French property law. Generally, the
transfer takes place as a result of the express intent of
both parties; the transferor passes on the right of
ownership to the other party.
25 Zenati-Castaing & Revet, 2008, page 283.
26 Article 1865 Civil Code: “A transfer of shares of capital must bedrawn up in writing. It shall be made invokable against thepartnership under the forms provided for in Article 1690 or, wherethe articles so stipulate, by transfer on the registers of thepartnership.It may be invoked against third persons only after completion ofthose formalities and after recording.”
11
The basis of transfer of ownership in France is the
principle of party autonomy27; parties are free to
transfer property by means of contract under the terms of
their wish, as long as they comply with the legal
requirements. The transferor must evidently own the good
in order to be able to transfer it.
As previously mentioned in this present text, a transfer
of ownership requires a valid contract in line with the
legal conditions laid down in articles 1108-1167 CC.
Articles 1108-1133 CC provide the rules governing the
formation of the contract, and articles 1134-1167CC lay
down the rules regarding the performance of the contract.
Article 1108 CC is the most noteworthy article displaying
the obvious intertwined nature of property law and
contract law together. Article 1108 CC provides four
legal conditions for a valid transfer of ownership. It
noteworthy to state that the four conditions are merely
general contract law conditions; consentement, capacité, objet,
cause28. The relevance and effect of property law on
contract law will further be discussed and developed in
the paper. Hence, the conditions present in both contract
and property law will not be further discussed here.
Under French property law the transfer of ownership
is of a consensual character29. This consensual nature is
27 Terré et al., 1998, page 316.28 Article 1108 Code Civil: “Four requisites are essential for thevalidity of an agreement: The consent of the party who bindshimself; His capacity to contract; A definite object which forms thesubject-matter of the undertaking; A lawful cause in theobligation.”29 Terré et al., 1998, page 316.
12
directly derived from the law, namely articles 1138, 711,
938 and 1583 CC30. Consequently, the right of ownership
and the good are not transferred at the same point in
time31. The right of property is automatically
transferred when the contract is concluded; the good need
not to be transferred at this same moment in time32.
In conclusion, the simplified unitary French transfer
system displays the evident close connection and
interactivity between contract and property law in the
wording and application of the law. However, French
property law counts its independent and distinct rules
from other Member States upon certain elements of
transfer of ownership.
TRANSFER SYSTEM: GERMANY (1187 words) Hannah Mangel
Introduction
German Law depends on, as is characteristic for central
European jurisdictions, a concept of unitary right of
ownership, as is stipulated in §903 BGB. It stipulates
when a transferor is allowed to transfer ownership. All
rights and duties deriving from the right of ownership
are therefore transferred to the acquirer.33 The
transfer of movables is possible without further
30 Terré et al., 1998, page 316.31 Delebecque & Collart-Dutilleul, 2011.32 Faber & Lurger, 2011, volume 4, page 85.33 Faber et al., 2011 , page71.
13
formalities, as oppose to immovable as stipulated in §
929 BGB.
Principle of Separation and Abstraction
Germany’s private law depends on a strict separation
between the law of obligations, whereas a contract is the
willful/voluntary creation of an obligation in accordance
with § 311 BGB, and property law. This is due to the
legal theory of Friedrich Von Savigny. In German legal
theory this is called the Principle of Separation and
Abstraction. The basis of the transfer of ownership is
the agreement on the transfer.34 The principle of
separation has three aspects:
1. The contractual agreement (Verpflichtungsgeschäft) and
the real agreement (in rem = Verfügungsgeschäft) are to
be separated (Separation).
2. The legal basis for the real agreement is contained
in the contractual agreement. As they are separated,
the real agreement as such is without a cause, it is
abstract from the contract (material independence).
3. The validity of the one does not affect the validity
of the other (formal independence).35
The arguments for a doctrine of this sort have been named
as legal certainty and protection of bona fide
purchasers. Also, it relieves the third party bona fide
34 Faber et al., 2011, page 72.35 Wolf, 2005, page 194. See also, Faber et al., 2011, page 5.
14
purchaser from the duty to check whether the seller can
transfer ownership.36The contractual agreement is defined
as necessary to the creation of an obligation in
accordance with § 433 BGB, whereas the real agreement is
defined in § 929 BGB. This separation of regulation
manifests once more the division between the law of
obligation (Schuldrecht) and property law (Sachenrecht).
Basics of the functioning of the transfer system
The central element of agreement in German law is the
declaration of intention (Willenserklärung). Title 3 of the
BGB regulates contracts, which are entered into with the
existence of two corresponding declarations of intention,
c.f. §§145 ff. BGB. Also for the real agreement, an
understanding between the parties is necessary, and
therefore the existence of declarations of intention. For
movables this is usually done following the contractual
agreement immediately, and it may be without form. A
manifestation of this can nevertheless be found in the
paragraph regulating the transfer of immovables, namely §
873, which prescribes an agreement between the parties
with regards to the transfer of the right of ownership.
The agreement in rem is directed not towards creating an
obligation but to the immediate change of the legal
situation. The manifestation of its validity is none
other than the actual transfer of the right.37 This is
36 Füller, 2006, page 127.37 Wolf, 2005, page193.
15
made public by the transfer of possession.38 Here, the
principle of separation and abstraction becomes clear in
its application. The transfer of ownership is not a
consequence of the contractual agreement but of the real
agreement.39 With the contractual agreement one creates
rather an obligation (and a personal claim of the
creditor) directed towards the conclusion of the real
agreement rather than towards the transfer of ownership
as such. This means that the conclusion of the contract
as such does not affect the property rights of the
parties.
Consequences of the Principle of Separation
The principle of separation and abstraction has important
consequences, especially in practice, with regards to
validity and remedies. Firstly, it appears that under
German law a double sale of an object is possible, as the
contractual agreement remains untouched by the nemo dat
rule of property law.40 As the contractual agreement is
neutral, it is possible to contract about an object
twice. However, as the owner cannot transfer ownership
twice, the party to the second contract will have a claim
in tort against the owner. Note that the system of third
party protection arising under the German system is a
direct result of this separation between contract and
38 Faber et al., 2011, page 71.39 Faber et al., 2011, page 73.40 PEL/Lurger & Faber, 2011, page 407.
16
real agreement. It is a very different system when
compared to the French system, for example. 3rd party
protection in its essence is not necessary in such an
abstract system, as the transfer of ownership will be
valid irrespective of the validity of the contract. All
subsequent transfers then also are valid.
Remedies
Further, there are consequences with regards to remedies
due to the fact that the real agreement will remain valid
even when the contract is found to be void. Therefore,
there need to be separate remedies directed towards the
contractual and the real agreement.41 Where the
contractual agreement is subject to (most prominently)
the remedy of avoidance (§143 BGB), such a remedy cannot
be used towards the real agreement. The respective
remedies are found in a different part of the BGB. In
accordance with §812 I BGB the original owner can demand
revindicatio of the object if there has been unjustified
enrichment or on the basis of § 985 BGB if both the
contractual and the real agreement are invalid.
This could be due to a situation of identity of
defects (Fehleridentität), which is however not seen as a
break with the principle of abstraction but rather a
limitation to its effectiveness.42 This is the case when
one party has committed fraud or when one of the parties
does not have the capacity to contract, due to mental
41 Wolf, 2005, page 195.42 Prütting, 2010, page 14.
17
illness or age.43 Identity of defects renders the
contract void, not avoidable. This is also the case under
a (arguably rare) situation of mistake, which affects
both the contractual and the real agreement. Normally,
mistake will lead to the avoidability of the contract,
whereas in the case of Fehleridentität, the contract and real
agreement will be void. Note that usually a real
agreement is not subject to the remedy of avoidance (see
the above section on remedies).44 Other exceptions to
the abstract transfer system are contracts, which are
contrary to bonos mores and if this is in line with the
intention of the parties (Geschäftseinheit), although this
may only be the case for movables, see §925 BGB.45
Eigenständiges Sachenrecht
The German legal scholar Jens Thomas Füller in his
seminal work “Eigenständiges Sachenrecht?” calls the
separation between the law of obligations and property
law an illusionary dualism and calls for an abolition of
the principle of separation.46 He gives several reasons
why contract law should, in his opinion, not be separated
to such an extent from all other areas of private law.
Although he does acknowledge that the principle of
abstraction is superior to the causal system when it
comes to explaining the transfer of ownership and the
43 Prütting, 2010, page14.44 Prütting, 2010, page 15.45 Faber et al., 2011, page 74.46 Füller, 2006, page 526.
18
retention of title but claims that this is only a
question of perspective.47 In causal systems, these
matters can be derived from the principle of party
autonomy instead. A further advantage is that the German
system succeeds in simplifying the sale out of a bulk.
However, the deciding moment can without any problems be
seen as a delivery with an intent directed towards
separation from the bulk and transfer of ownership of
exactly the separated goods.48 Füller concludes that
there is no justification for the existence of a
separation and gives possible solutions for the
integration of contract and property law.
TRANSFER SYSTEM: REPUBLIC OF IRELAND (1042 words) Anne
Konings
Introduction
Ireland, historically, was part of the United Kingdom
until 1922 and was, as England, part of a feudal system.
It should therefore not come as a surprise that their
system of transfer is inherently the same as the English
transfer system. Ireland also is part of the common law
system and its legal system is a mix between the Irish
constitution of 1937, English statute law and English
common law prior to 1922 and Irish statute law and Irish
common law post 1922.
47 Füller, 2006, page 547.48 Füller, 2006, page 548.
19
Ownership and Possession
Ownership and possession under Irish law are classified
as real rights (in rem) as opposed to personal rights.
There is a distinction between property and obligations
in the common law systems; a contract regarding a
transfer of an object is therefore not the same as a
transfer. Ownership is difficult to define in common law
systems but what is clear is that it goes hand in hand
with possession. There is also not an exact definition of
possession, however there is a distinction between
possession in person and possession in law; for the
latter it can be the actual physical possession or the
intention to exclude others from use or control.
Furthermore three different degrees of possession can be
categorized namely actual possession, constructive
possession and custody.49 Acquisition of possession
usually takes place by delivery.
Possession in particular cases can even be seen as
conclusive evidence of ownership. This rule was
established in Haggan v Pasle50 where an owner of a piano,
mortgages it, retained possession and then sold it to the
plaintiff without informing him of the mortgage. The
plaintiff took possession but the original owner’s
landlord seized possession as payment for rent from the
original owner as he pleaded that the piano belonged to
49 Faber et al., 2009, page 180.50 (1878) 2 LR Ir 573.
20
the mortgagee. The court decided that the plaintiff was
the true owner of the goods.
It was determined by Bell that ownership could be seen as
the greatest right that can exist in relation to
property. As ownership is restricted by e.g other
property rights or falls under restrictions of the
private right of others, scholars as what is left after
lesser rights have been granted define ownership.
Consensual v Delivery
In Irish law, generally speaking, the transfer of all
rights happen at one single moment. However there is a
freedom between parties to make other arrangements.
Therefore it is possible that the transferee has
ownership but the possession is still with the
transferor. Under English law, a requirement of delivery
of the goods was necessary for the transfer of ownership
to be complete. Irish law followed this example;
therefore Ireland operates under a unitary transfer
system, which requires delivery (traditio).
Over the years however, two deviations to the delivery
requirement developed. It was acknowledged that gifts
don’t require delivery, but can be made by deed51 and, as
mentioned before, in sales contracts, ownership can pass
from buyer to seller when the contract is made without
the actual delivery of the goods. This has been
incorporated in the Sale of Goods Act (1893) and the
51 Standing v Bowring (1885) 31 ChD 282.
21
Irish Sale of Goods and Supply of Services Act (1980).52
Therefore, only in these two abovementioned situations,
there is a consensual transfer system in comparison to
every other situation where we still deal with a delivery
system.
Abstract or causal?
As was mentioned in the national report on transfer of
movables, the concept of abstract or causal has not been
debated in the common law system nor has there been any
case law on this topic. Van Vliet in his book proposes
that one can determine whether the system of transfer is
either abstract or causal by examining the effect of the
invalidity of the underlying contract on the validity of
the transfer. In that case we can determine that Irish
law falls under the causal system; a void contract does
not transfer title. An avoidable contract does transfer
title but both parties are obliged to return the
situation as it was before, e.g. all benefits should be
returned.53 Wolfgang Farber argued that s. 23 of the SGA
also hints at a causal system since it protects the
acquirer of good faith who bought from a seller with a
voidable title, which indirectly attests the dependence
of the transfer in itself on the underlying contract.54
Party autonomy
52 Sale of Goods Act (1893) art. 17(1).53 Faber et al., 2009, p 197.54 Faber et al., 2009, p 198.
22
In Irish law, party autonomy plays an important role
especially sale of goods. In s. 17 SGA 1892, as mentioned
before, outlines the fact that the intent of the parties
can be found in the terms of their contract especially in
regards to when the transfer takes place. Therefore the
general rule is that ownership passes at that point when
both parties intended it to pass. In other types of
transfers (gifts or property), party autonomy is limited,
in those cases actual delivery must take place55
Unascertained goods
Irish law is pretty clear about unascertained goods, s.
16 of the SGA 1893 provides that in case of a contract
dealing with unascertained goods, no property is
transferred to the buyer unless and until the goods are
ascertained. What exactly falls under ascertained is not
specified but it is generally accepted that it means
‘identified in accordance with the agreement after the
time a contract of sale is made.’56
S. 16 can cause problems in relation to bulk buys. In Re
Wait57, the owner of a cargo of 1000 tons on a particular
ship, sold 500 tons of said bulk. The buyer paid part of
the cargo in advance but before the cargo reached its
destination, the owner became bankrupt. The court decided
that the buyer was unable to claim any of the cargo as
the contract was about unascertained goods which had not
55 Faber et al., 2009, page 200.56 Re Wait [1927] 1 Ch 606.57 Ibid.
23
been separated from the bulk. In order to ascertain part
of the bulk, it must be physically separated from the
bulk.
The passing of property in unascertained goods is laid
down in s. 18 (5), it reads that in order for ownership
of unascertained goods to pass, the goods must be
unconditionally appropriated to the contract by one party
with consent of the other.58 Because no real agreement as
to when the ownership passes is specified, a real
agreement is essential to the parties to agree when the
passing occurs.
III. EXISTENCE OF EUROPEAN LEGISLATION OR CASE LAW
REGARDING THE TRANSFER OF OWNERSHIP? (884 words) (Zoé
Perret)
The transfer of ownership in three different legal
systems (Germany, France, Ireland) has briefly discussed
in the previous part in order to provide an overview of
the status quo and difference between distinct systems of
transfer of ownership. Furthermore, it is of relevance
for the purpose of this paper to observe the existence of
EU legislation or case law governing the transfer of
ownership. For the sake of clarity only the relevant EU
legal instruments will be discussed (i.e. CESL, PECL,
DCFR).
58 Sales of goods act 1893.
24
The Principles of European Contract Law (hereinafter
PECL) was be drafted by a group of independent experts
from each EU Member States; it constitutes a collection
of principles governing certain aspects of private law,
more particularly contract law. The principles govern all
general rules of contract law (i.e., formation, validity,
content, performance, breach, remedies). However, the
PECL does not contain any rule governing the delivery of
goods.
There is a heated debate among scholars regarding the
existence or not of transfer of ownership regulated in
the PECL. Some scholars state the clear and evident
inexistence of transfer of ownership within the PECL; as
a matter of there is no explicit principle on that rule.
Nevertheless, it must be noted that contract and property
can never be entirely independent from another; contract
law and property are intertwined. Contract law effects
property, and vice versa. Hence, other scholars, as well as
the members of this group believe, that the PECL
implicitly governs transfer of property by means of
regulating contract law. Consequently, the principles
would have an effect on the transfer of property although
the instrument does not actually govern this principle.
The Common European Sales Law (CESL) is the result of
fierce negotiations. This instrument is intended to
25
facilitate contracts for the sale of goods and
services59. The CESL’s scope extends to contracts where
at least one party to the contract has its habitual
residence in the EU. Nevertheless, this instrument was
also the topic of heated debate relating to the transfer
of ownership as well as other topics.
The CESL was found to be unclear, scholars and
legislators expressed their worry regarding legal
uncertainty; the CESL did not receive as much support as
was forecasted. Moreover, and particularly relevant to
the topic of this paper is the scope and goal of this
instrument. The CESL did not explicitly regulate upon
general contract law rules such as the transfer of
ownership, as well as illegality, capacity60. Property
law, consequently transfer of ownership, was excluded
from the instrument’s material scope61. Article 91 CESL
can be interpreted as implying the principle of transfer
of ownership62; article 91 CESL lays down the obligations
of the seller. The latter is close to article IV.A-2:101
59 ‘UK Government Response to Common European Sales Law Proposal’,
December 3, 2012. Retrieved via http://www.mwe.com/UK-Government-Response-to-Common-European-Sales-Law-Proposal-12-03-2012/?PublicationTypes=d9093adb-e95d-4f19-819a-f0bb5170ab6d, last visited26/05/2013.
60 ‘UK Government Response to Common European Sales Law Proposal’,December 3, 2012. Retrieved via http://www.mwe.com/UK-Government-Response-to-Common-European-Sales-Law-Proposal-12-03-2012/?PublicationTypes=d9093adb-e95d-4f19-819a-f0bb5170ab6d, last visited26/05/2013.61 Dannemann & Vogenauer, 2013, page 68-72.62Ibid.
26
DCFR63. Nevertheless, this implied notion of transfer of
ownership is also a matter of interpretation as in the
PECL. The members of this group, believe that contract
and property law interact so closely that they must be
read and understood together or in parallel to each
other. The CESL should have expressly included the
transfer of ownership.
Hence, some gaps remain in the CESL, giving rise to the
application of domestic law in order to fill these gaps;
leading to independent domestic interpretations and legal
uncertainty. Consequently, the CESL is not a stand-alone
code of contract law; the CESL did not fulfil its
objective of being able to regulate alone and
independently on contract law64.
The DCFR expressly regulates transfer of ownership
in Book VIII65. The articles are detailed and legal
scholars have attempted to take many issues at hand and
resolve them; such as whether to use a unitary approach
or a functional approach. The DCFR drafters opted for the
unitary system of transfer, this appears to be one of the
most impactful choice of this instrument; it is
noteworthy to take into account that the DCFR was mostly
drafted following an Austrian system. Another important
and shocking choice made by the DCFR drafters is that
63 Dannemann & Vogenauer, 2013, page 591.64 UK Government Response to Common European Sales Law Proposal’,December 3, 2012. Retrieved via http://www.mwe.com/UK-Government-Response-to-Common-European-Sales-Law-Proposal-12-03-2012/?PublicationTypes=d9093adb-e95d-4f19-819a-f0bb5170ab6d, last visited26/05/2013.65 Van Vliet, 2011.
27
there is no ‘real’ agreement; consequently the transfer
is nor a juridical or legal act, which is incompatible
with the existing legal systems of transfer66. Although
the DCFR regulates the transfer of ownership, not all
aspects of the effect of property upon contract were
taken into account. Hence the legislation is not fully
functional yet, gaps remain.
Regarding case law, there have been some ECJ
mentioning the transfer ownership, particularly in cases
revolving around taxes. However, no relevant case law
could be found for the topic at hand.
Hence, there is a limited amount of EU legal
involvement in the transfer of ownership so far. The EU
has rather focused itself on adopting legislation
governing the enforcement of pre-existing Member States’
domestic property laws67. Directives regulating the
enforcement of different specific from of property exist,
such as intellectual property. However, this does not
mean that it would be an impossible task to draft a
common contract law code for the EU. For that goal to be
achieved drafters will have to consider both contract and
property law in order to find coherence and have a
functional system; otherwise the implementation will be
radically dysfunctional with national law doctrines and
principles.
66 Van Vliet, 2011.67 “The Directive on the Enforcement of intellectual propertyrights”. Retrieved viahttp://ec.europa.eu/internal_market/iprenforcement/directive/index_en.htm, last visited 28/05/2013.
28
IV. THE SOLUTION CHOSEN BY THE DCFR (1094 words) (Hannah
Mangel)
The transfer of ownership under the CESL is mentioned in
Art. 91 CESL which regulates the obligations of the
seller. The transfer of ownership of the good is here
mentioned as the main obligation of the seller towards
the buyer. However, one cannot find any solution as to
what transfer will constitute. This will have to be
determined due to national law, which has been determined
as applicable in accordance with the Rome I Regulation.
It constitutes an area where there is gap filling.68
Delivery, which can relate to a transfer of ownership in
the national legal systems is expressly regulated in Part
4 of the CESL, which only relates to digital content.
However, in general no transfer system has been chosen
under CESL.
The authors of this paper therefore have decided to look
at the solution opted for under the DCFR to deduct a
European tendency with regards to a favoured transfer
system. As the DCFR is supposed to function much more as
a complete European civil law code,
The drafters of the DCFR have opted for a unitary
approach to ownership. Book 8 Article 1:202 defines
ownership as the “most comprehensive right a person, the
‘owner’, can have over property, including the exclusive
68 Proposal on a Common European Sales law, 2011, page 19 to 20 atparagraph 27 of the preamble.
29
right, so far as consistent with applicable laws or
rights granted by the owner, to use, enjoy, modify,
destroy, dispose of and recover the property.“ The
ownership will pass in the sense of the given definition,
meaning that partial transfer will not be possible. For
this occasion, the DCFR has designated the possibility of
the creation of limited property rights in Book 8,
Chapter 1. However, the drafters have opted for a
relative approach to unitary ownership. Art. 2:201
outlines the effects of the transfer of ownership. As
Subparagraph 1 prescribes, ownership is transferred with
effect between the parties as well as third parties. A
relative transfer of ownership cannot be found in the
DCFR. However, the unitary nature of ownership has been
put into perspective with regards to its extent.
Exceptions to the unitary nature of ownership can be
found in Book 8 Art. 2:201, subparagraphs 2, 3 and 4
(unpaid interest). One of the exceptions is the transfer
of risk, where it is possible that the risk does not
transfer with ownership. In general the passing of risk
is regulated in Chapter 5 DCFR, and it matches the
delivery approach.
The approach to transfer taken in the DCFR is that
of a causal tradition system.69 The causal nature of the
system manifests itself in Article 2:202 Sub. 1(d) d and
2 where the effect of initial invalidity is the
invalidity of the transfer, and when the contract is
69 Van Vliet, 2011, page 5.
30
avoided, transfer is treated as never having passed
between the parties. The causal system encompasses the
legal unity of the contractual agreement and the
transfer. It is also necessary to note that the transfer
will always need a valid legal ground in a causal
system.70
The DCFR rejects the concept of a separate real
agreement.71 The dogmatic approach to this matter marks
one of the most criticized principles of the DCFR. On the
one hand, the drafters argue that the existence of a
transfer of ownership can be derived from the performance
of the contractual agreement as its result.72 A separate
real agreement is regarded as too dogmatic and therefore
superfluous.73 It is further regarded as over-
protective.74Although it is problematic to assume the
intent of the parties to let ownership pass when the real
agreement has been entered into only “impliedly by
conduct”75, it is not needed as a separate agreement. The
drafters acknowledge practical advantages of the real
agreement, especially with regards to retention of
ownership issues but opt for excluding it, drawing
inspiration from member states laws.76
This approach is heavily criticized in commentaries.
70 Van Vliet, 2011, page 6.71 Van Vliet, 2011, page 7.72 PEL/Lurger, Faber 2011, page 444.73 Van Vliet, 2011, page 7.74 PEL/Lurger, Faber 2011, page 450.75 PEL/Lurger, Faber, 2011, page 444.76 PEL/Lurger, Faber, 2011, page 445.
31
Criticism revolves around the fact that the drafters
acknowledge that in order for ownership to transfer,
consent among the parties is needed, however denying that
transfer is a legal act. This is odd, as the definition
of transfer fits the DCFR’s own definition of a juridical
act in Book II; Article 1:101 sub. 2: a statement or
agreement, which is intended to have legal effect as
such. It is therefore unclear whether transfer is a
result of the contractual agreement or a separate
juridical act. It seems unreasonable that it be a result,
as Van Vliet points out, the handing over of possession
only means transfer of ownership if the intent of the
parties has manifested itself to that end, as the law
attaches different meaning to an act depending on the
intention of the parties.77 The legal meaning of
“delivery” within the causal tradition system can
therefore only be fulfilled when there is intent. The
study group has acknowledged this deficiency in the PEL
Acquisition Ownership78. It is consequently clarified
that the term “transfer” is to mean the effect that
occurs as consequence of the contract.79
The tradition/delivery system manifests itself in
the “delivery default rule”.80 The drafters rely once
again on the party autonomy maxim with regards to the
transfer. This means, if there is an agreement as to when
77 Van Vliet, 2011, page 8.78 PEL/Lurger, Faber, 2011, page 211.79 PEL/Lurger, Faber, 2011, page 407.80 PEL/Lurger, Faber, 2011, page 410.
32
ownership will pass, this will take precedence over the
general rule of Book VIII. This rule is a stepping-stone
for the possibility of retention of title clause in
contracts. However, if there is no agreement the delivery
approach set forth in 2:202 sub. 1 (e) will apply by
default, according to which ownership passes with
delivery of the object or where there is an equivalent to
delivery.
For sale out of a bulk, the DCFR has opted for a
special system, which makes it possible to grant the
buyer co-ownership in the bulk if the goods that will be
transferred have not been identified yet.81 The pre-
condition to this is however that at least the bulk be
identified. This is laid down in VIII. -2:305(1) DCFR.
This system being a copy (if only in parts) of the UK
Sale of Goods Act 1979, differences between the systems
must be mentioned. In the UK we can find a consensual
transfer system, as oppose to the delivery system in the
DCFR.82 This means that in the UK no delivery is needed
for ownership to pass, which gives much more leeway in
the operation of the co-ownership system. On the other
hand, in the UK, consideration (payment) is a pre-
condition for co-ownership, whereas under the DCFR this
is not necessary. This will be important in cases where
more units out of the bulk have been sold than actually
form part of it. Then, payment will be essential in the
UK for rules of third party protection. In the DCFR, this
81 Van Vliet, 2011, page 14.82 Van Vliet, 2011, page 14.
33
is not the case.83
V. POLICY QUESTIONS (744 words) (Anne Konings)
The goal of the proposals CESL and DCRF are ultimately to
design a set of rules, which consumers or businesses can
choose instead of Member State legislation. The main
policy objectives of these proposals are to enhance the
sustainability of the internal market in the EU by aiding
cross-border trade between both B2C and B2B transactions;
to achieve a high and uniform lever of consumer
protection; and to maintain freedom of contract.
In order to achieve this, these rules need to be suitable
for consumers and businesses in all Member States. As we
have seen so far in this paper on transfer of ownership,
out of three legal systems, there is no uniform rule.
Which means that with 27 (soon to be 28) Member States
finding an appropriate set of rules that will be suitable
for any Member State will be quite difficult.
In order to even start making rules on transfer of
ownership, one should debate on a few questions:
A general issue that needs to be taken into consideration
before we start discussing more specific topics is
consumer protection. One of the objectives of CESL is to
secure a high level of consumer protection. In relation
to this we have to address the passing of risk. If we opt
for a high level of consumer protection, at what point
should the risk transfer?
83 Van Vliet, 2011, page 15.
34
More specifically; what system of transfer would be best
suited for all Member States , a unitary transfer
approach preferred by ‘continental Europe’ or a
functional transfer approach favoured by the Nordic
countries. Or is it possible to not decide on a system of
transfer and let this be a gap that can filled with the
national laws of the Member states.
Secondly, should we include a uniform definition of
ownership in the proposal? Ownership has a different
meaning and relates to other aspects of property in
different Member States, in some countries, like the UK,
the right of ownership is not even defined. Therefore
maybe this is another issue that should stay undefined,
and can be determined by the national law of the Member
State. Another related issue to think about is whether it
would be best to separate ownership from transfer of
ownership. Also when considering if a definition of
ownership is needed, we have to take into consideration
limitations to ownership. Therefore we have to take into
account if rules on the passing of risk are needed and
are there going to be rules on retention of title.
Thirdly, should the proposal opt for a consensual
transfer system or a delivery system? If in the proposal
we do opt for a delivery system, another question that
should be answered is whether to include a rule on third
party involvement, e.g. when a carrier is involved.
Moreover, another big difference between European legal
systems is the causal versus the abstract transfer.
35
Should we opt for a system, which requires a transfer to
be based on a valid obligation or entitlement (causal) or
should we opt for the more German approach where the
transfer is based on the ‘real agreement’ (abstract).
Most of the European legal systems have some form of
party autonomy, varying on whether they have a delivery
or consensual transfer system. In that regard we need to
establish if we need to put it in the proposal or would
this be another issue left open for Member States to use
their national laws especially because so many countries
already have it in their national laws. If we do opt for
party autonomy, we need to decide to what extend it
should go especially of we opt for a delivery system. If
party autonomy would prevail in all/most situations, than
transfer of ownership would be left in the hands of the
transferor and the transferee and that would defeat the
purpose of a delivery system.
VI. Member state Positions
MEMBER STATE POSITION: GERMANY (1029 words) – Hannah
Mangel I6005839
The German Government’s position towards the CESL can be
looked at under 3 different aspects. Firstly, the
position towards the CESL as a whole, secondly, with
regards to the focus of this paper, whether Germany would
be in favor of inserting a transfer system and/or a
36
definition of ownership into the CESL and lastly, what
these would look like in their substantive nature.
Position towards the CESL as a whole
With regards to the overall attitude towards the CESL, it
can be said that especially the German Bundestag is not
in favor.84 The institution has issued a subsidiarity
complaint in line with Protocol 2, Art. 6 on
Subsidiarity. It holds that the Proposal for the CESL
violated the Principles of Subsidiarity on 1st December
2011.85 The German Bundestag argues that there is no
separate legal basis to introduce such a Sales law and
that the Commission is violating the principle of
conferral. The correct legal basis should be Art. 352
TFEU instead of Art. 114 TFEU.86 There has, since the
Solange I and II judgments of the BVerfG, been scepticism
with regards to the legitimacy of the exercise of the
competences of the EU institutions, and their supremacy
in the light of democratic legitimacy.87 With regards to
the substantive nature of the CESL, the Bundestag is
sceptical that the CESL will be of enough flexibility to
react to needed factual and legal amendments.88 Further,
the Parliament submits that from the German experiences
with the CISG, the most important barriers to trade are
huge physical differences and language barriers, much
84 Sensburg, 2012, page189.85 Sensburg, 2012, page 198.86 Rüfner, 2012. page 478.87 Halberstam & Möllers, 2009, p. 1243, p. 1247.88 Sensburg, 2012, page 201.
37
more that the different contract laws.89 A CESL must
therefore not be seen as first priority to enhance the
internal market.
Position on inserting rules on (transfer of) ownership
In line with Germany’s approach to property and contract
law, one can deduce its attitude towards introducing a
definition of ownership and a transfer system into the
Common European Sales Law in general. Due to the
principle of separation of abstraction inherent to German
law, two assumptions can be deduced: Firstly, the German
government is, as far as the German experiences with the
principle of separation (see above, question 2) are
concerned, of the opinion that a separation between
contract law and property law does function well. It is
however questionable whether this is the best solution
for a European instrument, which must take into account
the systems of all other member states as well in order
to properly function. There are German legal scholars,
which are of the opinion that the CESL will function well
as a supra-national instrument, albeit its differences to
the national law.90 Secondly, an assumption can be made
with regards to the functioning of the CESL within the
framework of the already existing German legal landscape
in this regard. This is due to the fact that the CESL is
not a standalone code (see Recital 27). It has gaps,
especially with regards to property law issues, which
89 Sensburg, 2012, page 200.90 Leible, 2012, page 5.
38
need to be filled with the national law that has been
determined to be the applicable law. If German law was
chosen to be the applicable law in line with the Rome I
regulation, one must deduce, that in order for the CESL
to function well within the German legal order, it would
actually be better to not insert a definition of
ownership and a transfer system into the Regulation. As
German law already adheres to the Principle of
Separation, the practical consequence of this would be
that only the German contract law will be replaced with
the CESL, and the German property law remains untouched,
which in the German case will actually ensure a better
functioning than a different solution. This would mean
that the German transfer system, due to its abstract
nature, could easily be applied to the CESL.
Position on a concrete system of transfer
Lastly, when one considers a concrete transfer system the
German legal culture would be able to accept, if this
became necessary, it makes sense to take the transfer
system of the DCFR as a reference. Here, the drafters
have chosen for a causal tradition system (see above,
Question 4). The German system can be characterized as an
abstract tradition system due to the fact that the
manifestation of the transfer of ownership is the
transfer of possession. Germany would, if this was chosen
as an example for a transfer system in CESL accept the
delivery default rule, however probably not the causal
39
nature of the system. Although causal does not mean
consensual, German academia will have problems accepting
the contract as legal base of the transfer. With regards
to legal certainty, a delivery system is the safer
solution in the eyes of the German delegation. A causal
system will also render gap-filling more difficult under
the German system. Especially with regards to the
objective (outward) approach to intention in the Common
European Sales law, which can be derived from Article 30
CESL German legal scholars, such as Prof. Dr. Rüfner have
voiced concerns.91 German law adheres to a rather
subjective approach to intention. Academia is therefore
worried about the application of the CESL to German law
and German law concepts. Therefore, the German legal
culture will not accept a consensual approach to the
transfer of ownership. It must be added that this would
also not be consolable with the German remedies
applicable to the real agreement.
As German law adheres to a unitary concept of
ownership, this would also be the one chosen for the CESL
by the German scholars. However, it must be debated
whether it is actually necessary to decide on a
definition (see Question 7 and 8). With regards to the
passing of risk, which is seen as a limitation to the
unitary concept if it does not pass with the transfer of
ownership, Article 142 CESL is in conflict with §447 BGB,
which regulates the passing of risk when carriers are
91 Rüfner 2012, page 481.
40
involved (Versendungskauf). According to German law, the
risk already passes where the seller has given up the
good to the first carrier, whereas ownership passes when
the buyer has possession of the goods. This is a
limitation to the unitary nature of ownership in German
law.
MEMBER STATE POSITION: FRANCE (1009 words) - Zoé Perret
In the sub-paragraph, the position of France regarding
the CESL will be discussed. France has clearly expressed
its general viewpoint concerning the CESL in the report
from the Assemblée Nationale of the 7th December 201192.
However, no specific substantive position could be found
regarding the transfer of ownership due to the fact that
this topic is not covered by the proposed regulation. The
report, deductions drawn from French policies and its
position regarding the optional instrument will be
studied in order to portray France position to the CESL
and transfer of ownership. Depicting and analysing
France’s perspective regarding CESL will aid in assessing
the legal changes to be made in order to adopt such a
ground breaking legal instrument of European law.
92 No 4061, Assemblée Nationale, Constitution du 4 Octobre 1958,Treizieme Legislature, Enregistré a la Presidence de L’Assemblénationale le 7 Décembre 2011. Rapport d’information depose par laCommission des Affaires Européennes sur le droit commun européen dela vente, présenté par Mme Marietta Karamanli. Retrieved viahttp://www.assemblee-nationale.fr/13/europe/rap-info/i4061.asp#P26_252, last visited 30/05/2013.
41
France’s general position regarding the CESL will be
assessed as a means to provide an overview and complete
understanding of France position regarding the CESL;
generally and specifically regarding substantial issues
relating to the transfer of ownership. The more specific
topics relating to France’s position concerning the
transfer of ownership and the CESL have been identified
and limited to; the willingness of France States to
include a transfer system and/or a definition of
ownership. France’s willingness to adopt a causal or
abstract system especially with regards to 3rd party
protection will be discussed. Whether a consensual or
delivery/tradition system will be opted for especially
with the effects it has on transfers out of a bulk.
Lastly, it will be assessed whether the approach to
transfer of risk in the CESL have to be adjusted?
France’s general position regarding the CESL as a whole
France has expressly made its position clear regarding
the proposed regulation as a whole. France has voiced a
number of issues regarding the CESL. For the purpose of
this paper, only the main issues will be discussed;
merely to provide the reader with an overview.
France stressed that the ‘optional’ aspect of the
instrument only applies to the trader93. Hence, consumers93 No 4061, Assemblée Nationale, Constitution du 4 Octobre 1958,Treizieme Legislature, Enregistré a la Presidence de L’Assemblénationale le 7 Décembre 2011. Rapport d’information depose par laCommission des Affaires Européennes sur le droit commun européen dela vente, présenté par Mme Marietta Karamanli. Retrieved viahttp://www.assemblee-nationale.fr/13/europe/rap-info/i4061.asp#P26_2
42
do not have a choice of law once the trader has decided
to make use of the CESL94. Consequently the ‘optional’
nature of this instrument is only one folded.
Moreover, the Regulation provides the possibility for
Member States to also apply the CESL to domestic internal
trade and trade amongst companies. This is a clear step
towards the replacement of national law with the CESL95.
France is opposed to this.
Moreover, one of the main defects of the Regulation in
France’s viewpoint is the choice of Legal basis; art.
114TFEU. France has stressed that the CESL creates
further legal diversity by introducing yet another legal
system in the EU. Hence, the CESL does not harmonize or
approximates law; article 114 TFEU is not the suitable
legal basis for this regulation96. France has also
expressed the issues relating to the proportionality and
subsidiary principle.
52, last visited 30/05/2013. See also Austrian Federal Chamber ofLabour (Brussels Office), ‘EU Sales Law: Disappointment about draft report of theEuropean Parliament. Retrieved via, http://akeuropa.eu/en/eu-sales-law-disappointment-about-draft-report-of-the-european-parliament.html?cmp_id=7&news_id=1586, last visited 30/05/2013.94 Austrian Federal Chamber of Labour (Brussels Office), ‘EU Sales Law:Disappointment about draft report of the European Parliament. Retrieved via,http://akeuropa.eu/en/eu-sales-law-disappointment-about-draft-report-of-the-european-parliament.html?cmp_id=7&news_id=1586, lastvisited 30/05/2013.95 Proposal for a Regulation of the European Parliament and of theCouncil on a Common European Sales Law. Retrieved via, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0635:FIN:en:PDF,last visited 30/05/2013.96 Proposal for a Regulation of the European Parliament and of theCouncil on a Common European Sales Law. Retrieved via, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0635:FIN:en:PDF,last visited 30/05/2013.
43
In the report from the Assemblée Nationale97, France has
made clear that it rejects the instrument as a whole.
Nevertheless, substantial issues relating to the specific
topic of transfer of ownership will be discussed.
France’s position on transfer of ownership and the CESL;
answering the four identified issues
Firstly, assessing France’s position regarding the
inclusion of a transfer system or definition of ownership
within the CESL. France has a causal system; contract and
property are undivided in comparison with German property
law. The causal system requires a valid transaction for
the transfer of ownership. Under such conditions, a
definition of transfer of ownership and ownership are
needed to comprehend whether the transfer was valid. In
light of this, France would opt for a transfer system and
a definition of ownership in the CESL. The definitions
would allow for the CESL to operate as a ‘stand-alone’
code in line with France’s conception of property and
contract law.
Secondly, the choice of transfer system (causal or
abstract) is important to discuss due to the fact that it
influences policy choices extending to other fields of
property law, such as third-party protection. As
previously, mentioned, France operates under a causal
97 No 4061, Assemblée Nationale, Constitution du 4 Octobre 1958, Treizieme Legislature, Enregistré a la Presidence de L’Assemblé nationale le 7 Décembre 2011. Rapport d’information depose par la Commission des Affaires Européennes sur le droit commun européen de la vente, présenté par Mme Marietta Karamanli. Retrieved via http://www.assemblee-nationale.fr/13/europe/rap-info/i4061.asp#P26_252, last visited 30/05/2013.
44
system. Consequently, the original owner enjoys more
protection than bona fidei third parties who merely derive
their ownership from a non-owner party.
Hence, it would be implausible to opt for a causal
system without third-party protection. Nevertheless,
since France would most likely opt for this system of
transfer; the issue then to be resolved will be how more
far-reaching must be the third-party protection? With a
causal system, France’s logical position would be to opt
for extended third party protection. Consequently, the
author believes France would opt for a causal system with
an increased level of third-party protection. France
would not opt for the abstract system due to the fact
that it is not in line with French policy choices,
especially regarding the third party protection.
Thirdly, the issue whether France would opt for a
consensual or delivery/tradition system, especially with
the effects it has on transfers out of a bulk will be
assessed. France operates under a consensual system of
transfer of ownership, hence delivery is still existent,
but is achieve by means of mere consensus. A causal
delivery system would not be in line with the policies
opted for regarding transfer of ownership revolving
around consensus in France. Hence, France would opt for a
causal consensual system of ownership, regarding the
transfers out of bulk the delivery is also a mere
consensus; hence consensual system.
45
Lastly, for the purpose of the question regarding the
transfer of risk in the CESL, it is interesting to look
at the DCFR; like France the DCFR operated under a causal
system. The wording of article Article 2:202 Sub. 1(d) d
and 2 implies the causal tradition system98 of the DCFR.
Consequently, the approach to transfer of risk in the
DCFR would fit and be in line with France’s approach to
the transfer of risk. France would opt for a transfer of
risk system as provided in the DCFR. Hence, the CESL has
to be adjusted to a rule closer to the DCFR to be in line
with France’s position.
MEMBER STATE POSITION: REPUBLIC OF IRELAND (990 words)
Anne Konings
Ireland has not expressly stated their position on the
CESL, so far their consensus seem to be that it could be
both a challenge and an opportunity. Not surprisingly the
government of their neighbors in the UK have called for
evidence and opinion on the CESL and got a huge response.
In this part of the paper I will try and give a viewpoint
of Ireland’s position in regards to CESL in a general way
and based on the 4 topics we have specified.
General disposition on CESL
A big concern in the common law systems, the UK and
Ireland, is that the CESL is too different from their
system. The main argument in Ireland is that CESL is
98 Van Vliet, 2011, page 5.
46
based on different principles. Therefore, for established
businesses, who have been working with the traditional
contract and sales law, CESL won’t be beneficial. Also,
Paul Keane mentioned in an article that suppliers and
businesses will probably not opt for a new instrument in
markets where they have been actively involved with,
however, for new markets with which they haven’t
established a link with, CESL may be an attractive base
to find new businesses99.
Another viewpoint is that it will be a major challenge to
come to a consensus on the different views in relation to
CESL. Another opinion is that maybe instead of focusing
on making a new set of rules, we should firstly
strengthen the already existing directives.
The Law Society’s100 point of view of the CESL was
that for a stand alone code of contract rules, a lot of
things were missing. They mention the lack of property
law (including matters of title), especially regarding
transfer of ownership. They claim that the draft law does
not cover the transfer of title and is therefore not a
complete law on the sale of goods. Another problem they
had is that advice might still be needed on issues
outside the scope of CESL for example on different
99 CESL represents both a challange and an opportunity. Retrieved via:http://www.reddycharlton.ie/fileadmin/user_upload/documents/Article_-_CESL_REPRESENTS_BOTH_A_CHALLENGE_AND_AN_OPPORTUNITY_-_PK.pdf last visited 2-6-2013100 The Law Society Response to CESL Consultation. Retrieved via:http://international.lawsociety.org.uk/files/The%20Law%20Society_Response%20to%20CESL%20consultation_0512_Final.pdf last visited: 2-6-2013
47
approaches to stolen goods and if title can pass or on
the validity and nature of title retention clauses.
Member state position in regards to 4 specified topics
Firstly as regards to whether Ireland would opt for a
transfer system and a definition of ownership. Ireland,
as France, operates under a causal system in contrast to
the German abstract system. But in practice, there is no
legal debate in the UK or Ireland about causal v abstract
or even case law on this issue. Therefore just because
its transfer system is recognized as such by
‘continental’ academics, doesn’t mean that in Irish law
there is a notion of abstract or causal. Ireland might be
comprehensive on actually agreeing to a transfer system
unless it is the one they operate under. In relation to
that, they don’t have a definition of ownership in
itself; they operate under the term ’title’. Therefore it
is highly unlikely that they will approve of a definition
of something they themselves don’t have incorporated in
their laws. However, as we will discuss later, maybe it
is not even necessary to opt for transfer system and let
the national laws of the country fill the gap which would
be in conformity with Ireland’s wishes to maintain their
own identity.
As regards to third party protection or bona fide
parties, common law systems don’t offer any protection.
When a contract is void or avoided, the main consensus in
case law is that transfer of title never happened and
48
that therefore the third party has never been the owner
of the good. As there are no laws specifying third party
protection, it is difficult to say if Ireland would adopt
a set of rules, which does offer it. In case of a high
level of protection they will most likely not agree.
Secondly, the issue of choosing a delivery/tradition
or a consensual system especially in relation to the
effects it has on transfers out of a bulk. Ireland, as
mentioned before, operates mostly under a delivery
system. However, two deviations of the delivery rule have
been established in Ireland; one of them being linked to
sales contracts. In case of sale contracts, parties are
free to choose on when transfer occurs. In those
particular cases it could be said that Ireland operates
under a consensual transfer system. As CESL ultimately
wants to deal with sales law one could say that Ireland
could go either way. In relation to bulk buy, as already
mentioned in the previous part on transfer of ownership
in Ireland, it was established in case law101 that when
one buys a unascertained good in bulk, transfer of
ownership will occur at delivery which is more in
conformity with the delivery system.
Another issue that we identified is party autonomy;
Ireland and the common law systems value party autonomy a
great deal. As was mentioned before, even though at heart
Ireland is a delivery system, it is up for the parties to
decide on the terms of the contract as it is also up to
101 Re Wait [1927] 1 Ch 606.
49
the parties to decide on when transfer occurs. This also
coincides with passing of risk. In the Irish legal
system, risk passes at the point of delivery unless it is
otherwise specified in a contract. In this respect one
could conclude that Ireland would opt more for a delivery
system with a high level of party autonomy.
To conclude, in my opinion Ireland will not go for
CESL as it is now. Most of the principles laid down are
not in conformity with the legal system they have.
Especially related to the topic of transfer of ownership,
which has not even been incorporated in CESL. It has been
mentioned that there is a need for transfer of ownership,
as they find it is detrimental to a set of rules
governing sales law. Optimally, Ireland would opt for a
causal delivery system with a high level of party
autonomy.
VII. New rule and explanation of new rule
QUESTION 7 & 8
THE MODEL RULE AND EXPLANATION OF THE RULE (1429 words)
Hannah Mangel
Delivery
50
(1) Delivery of the Goods takes place when the
transferor gives up and the transferee obtains
possession of the Goods.
(2) If the contract involves carriage of the goods
by a carrier or multiple carriers, delivery takes
place when the transferor gives the goods to the
first carrier.
Transfer of Ownership
(1) Ownership will pass upon delivery.
(2) When a carrier or multiple carriers are
involved, ownership passes upon delivery by the
last carrier.
With regards to the policy questions that have been
identified under Point 5 this group has opted to include
a provision on the transfer of ownership in the CESL.
When considering the consistency with the already
existing CESL, several considerations present themselves.
Firstly, one needs to consider the objective of the CESL,
the facilitation of cross-border trade and consumer
protection. Also, the guiding principle of the CESL,
party autonomy, which is laid down in Article 1 of the
Annex, needs to be taken into account. In recital 30,
this has been named as so important that it should only
be restricted where and to the extent that it is
indispensable, especially to the extent that it ensures
consumer protection. This working group is under the
impression that in the instance of a transfer system and
51
a definition of ownership, party autonomy should be
restricted. To this extent, it disagrees with the
drafting group of the DCFR, which made the transfer
system only a default rule subject to party autonomy.
Given that the CESL is an opt-in instrument, this has
been deemed disadvantageous. Opting in to the CESL is
done only by an explicit choice of the parties and via a
2-step approach. It therefore does not seem reasonable to
design an opt- instrument with such a limited scope, and
then subsequently making this provision subject to party
autonomy. This is also unreasonable with regards to the
fact that it is questionable that it will be practical or
even possible or wanted by the businesses to negotiate
with the consumer. This working group has therefore opted
for the option with the most consumer protection.
Otherwise, we fear that the business will adjust the rule
and the consumer will be forced to comply with this.
Next, the question needed to be answered whether a
transfer system will function without a definition of
ownership inherent to the CESL. This working group has,
for several reasons decided not to include a definition
of ownership. Firstly, the separation between property
and contract law has to be taken into account. The
proposal itself states at Recital 27 that it is not
desirable to deal with issues of property law under the
CESL. These gaps are required to be filled by the law of
the national legislations. This working group has
considered this reasoning. It has found, however, that
52
the transfer of ownership is on the verge of being a
contract law issue, even if it is likely that there is no
consensus on this among the national legal systems.
The exclusion of property law, due to the huge
differences under national law, is deemed reasonable.
However, it is found that as the transfer of ownership
and the definition of ownership can be categorized as
being a crucial part for any sales contract, it is one of
the property law issues that should be considered under
the CESL. It was nevertheless questioned, whether it is
necessary to have a definition of ownership in the CESL.
This working group has opted for not including one. The
reason for this is the fear of the inconsistency of
national law remedies. It can, depending on the outcome
of the other working groups’ be argued that if remedies
will be inserted in the CESL, it might be possible to
include a definition of ownership, however in the light
of the information available to this group it is not
deemed reasonable, especially with regards to the
functionality of the gap-filling. This will make the CESL
compatible with definitions of ownership, whether unitary
or functional, in all member states.
It has been decided to opt for a transfer system,
albeit limited when compared to the distinctions made
under national law. With regards to a causal or abstract
transfer system, no decision has been made. This is due
to the fact that this group has considered this will
create problems with gap-filling under national law.
53
Where the German system would function better with an
abstract transfer system, this does not hold true for the
French system. Again, the main consideration has been the
functionality of the national remedies with the transfer
system. The feared outcome of making a decision of one or
the other is that it will influence the national contract
laws in a way that is inconsolable with national
definitions of exceptions to the regular transfer system
and definitions. This has been deemed a compromise to
make the CESL able to function with not only the Austrian
and German system of law. Consequently, it has been left
open whether delivery may be considered a legal/
juridical act or a consequence/result of the contract.
Where the advantages and disadvantages of delivery
and consensual systems have been considered, it has been
opted for what we would call a “limited delivery system”.
Generally, it is a delivery system, which is why a
provision on delivery was added, which has not been
included in the CESL proposal. The advantage of a
delivery system is that there is a specific point in time
where ownership passes and this is known and perceivable
to the outside world. This has also been considered the
favoured solution with regards to consistency with the
CESL. This is due to the rather objective approach to
intent in Article 30 (3) CESL. It reads, “Whether the
parties intend the agreement to have legal effect is to
be determined from their statements and conduct”. We can
deduce from this that the intention of the parties is
54
determined rather with regards to the outward appearance
of their conduct, which seems reasonable for the
provisions of a sales law. However, It did not seem
reasonable, to make the transfer system a consensual one,
when, due to the intention of the drafters the sales law
should master complicated situations with a cross border
dimension. A delivery system is therefore the safer
option. We feel that a delivery transfer system cannot
function without a separate provision for what delivery
constitutes. This is why a definition of delivery was
also developed. Inspiration was drawn from the national
legal systems.
However, the problem of delivery via one or more
carriers arises. Inspiration was drawn from the national
legal systems where delivery to the first carrier equals
delivery in the sense of the contractual obligation. This
seems fair, as posting an item to another country is
always a rather unpredictable situation. Therefore, it
cannot mean that the seller has only fulfilled his
obligation to transfer when the consumer has gained
control. For the instance of where there are one or more
carriers involved, this working group has therefore
decided to decouple the transfer of ownership from
delivery in the event of carriers involved. This ensures
a balance between the aim of consumer protection and
protection of the seller.
Returning for a second to a conception of ownership,
it has however appeared to the working group that
55
provisions in the CESL relating to the transfer of
ownership take a position with regards to a tendency
towards a conception of ownership. This has been further
adjusted by the model rule proposed by the group. In
concreto this is characterized by a provision on the
passing of risk in Article 142, which is present in the
proposal of the commission. When considering the DCFR as
a matter of reference, one can see that it has introduced
a unitary approach with limits, one of which is the
possibility to decide on the passing of risk and the
retention of ownership. This working group’s proposed
articles for the CESL in addition to the already existing
provision on the passing of risk, formulates a tendency
towards a unitary approach to ownership with limits,
however without expressly defining that the right to
ownership is unitary. This gives the member states leeway
in applying their own conception. We would like to think
of it as no set definition ownership but instead of
creating a limited amount of mandatory rules with regards
to ownership, whereas the rest is still up to the member
states. We would hope that this approach makes it
possible for the member states to operate their own
definition of ownership to the largest extent possible.
The fact that the definition will be contained in a
regulation leads to the fact that the notions “ownership”
and “delivery” will be subject to interpretation by the
CJEU. Therefore, provisions will need to be inserted into
56
the CESL, which require the interpretation of these
provisions in accordance with national law.
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