Electronic copy available at: http://ssrn.com/abstract=1269270Electronic copy available at: http://ssrn.com/abstract=1269270

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Horst Eidenmüller (München), Florian Faust (Hamburg), Hans Christoph Grigoleit(Regensburg), Nils Jansen (Münster), Gerhard Wagner (Bonn), Reinhard Zimmermann(Hamburg)�

The Common Frame of References for European Private Law- Policy Choices and Codification Problems -

At the beginning of the year, the Draft Common Frame of Reference (DCFR) has been published. The text is the result of the work of a broad range of private law scholars from the Member States of the European Union, and it presents itself as an “academic” document, committed to the precepts of scholarship rather than politics. Notwithstanding its unwieldy name, the text is nothing less than the draft of the central components of a European Civil Code. The following article aims to inform the reader about this milestone in the development of European private law, and to initiate further academic debate about it. Following an overview of the genesis and content of the DCFR (1), the discussion focuses on the question whether, and to what extent, it is based upon consistent and convincing core aims and values (2). The article then proceeds to address, more specifically, the significance of private autonomy, and it examines the extent to which the proposed rules satisfy the requirements of legal certainty and legal clarity (3). Thereafter, the DCFR is measured against the criteria of internal consistency and systematic integrity (4). Also (5) the question is asked whether the Draft critically reflects and convincingly integrates the sources on which it is based (that is the Lando Commission’s Principles of European Contract Law and the Acquis Principles, as well as the private law traditions of the Member States). Also deserving of attention is the inclusion of more than 120 definitions of central concepts of private law, which are not to be found in this form or level of detail in either the Lando Principles or the national private laws (6).

� Professor Dr. Horst Eidenmüller, LL.M., Professor of Private Law and German, European and International Company Law at the Ludwig-Maximilians-Universität München; Professor Dr. Florian Faust, LL.M., Professor of Private Law, Commercial Law, Business Law, and Comparative Law at the Bucerius Law School, Hamburg; Professor Dr. Nils Jansen, Director of the Institute for Legal History at the Westfälische Wilhelms-Universität Münster; Professor Dr. Hans Christoph Grigoleit, LL.M., Professor of Private Law, Commercial and Company Law, and European Private Law at the University of Regensburg; Professor Dr. Gerhard Wagner, LL.M., Professor of German and European Private and Procedural Law at the University of Bonn; Professor Dr. Dr. h.c. mult. Reinhard Zimmermann, Director at the Max Planck Institute for Comparative and International Private Law in Hamburg. The original German version of this article has appeared in [2008] Juristenzeitung 529 ff. We would like to thank Michael Friedman, Hamburg, and Matthew Dyson, Hamburg/Cambridge, for their help in preparing the present English version.

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1 The Common Frame of Reference Project

A Background

The formation of a European private law is one of the most important legal

developments of the present day. It is being accomplished through legal scholarship,

legislation and court decisions.1 Legal historians such as Helmut Coing have helped us

to recognize the common ground shared by Europe’s modern national legal systems;2

and comparative lawyers such as Hein Kötz have demonstrated that it has become

possible, once again, to identify common problems in contract law and to seek

appropriate solutions based upon a common understanding.3 From these beginnings, a

body of legal scholarship has developed which is rich and genuinely European in spirit.4

The European legislator has enacted almost twenty Directives in the traditional core

areas of private law and many more in fields such as labour law and company law.

These Directives have, in turn, become the subject of scholarly elaboration. The

European Court of Justice, too, is crafting rules and terminology determining not only

the law of the Community but also of its member states. None the less, there are narrow

boundaries, at present, for the harmonization process. Thus, the European Court of

Justice does not constitute a Supreme Court for the adjudication of private law matters

for the European Union. The European legislator lacks a general competence in the field

of private law; instead he must, in the cryptic words of the relevant Directives, rely “in

particular” upon Art. 95 of the EC Treaty. Moreover, alongside the textbooks,

handbooks, casebooks and monographs on European private law, and largely

uninfluenced by these and by each other, there is still the legal literature from around 30

national and regional (Scotland and Catalonia!) jurisdictions.

In view of this, the establishment of an authoritative European reference text promises

to constitute a significant step forward. Such a reference text may secure its authority

1 On these three protagonists of legal development in the tradition of European law, see RC van Caenegem, Judges, Legislators and Professors (Goodhart Lectures 1985-1986, CUP, Cambridge 1987).2 H Coing, Europäisches Privatrecht (Beck, München, vol 1 1985, vol 2 1989).3 H Kötz and A Flessner, Europäisches Vertragsrecht (Mohr, Tübingen, vol 1 1996).4 For further information, see R Zimmermann, ‘Comparative Law and the Europeanization of Private Law’ in M Reimann and R Zimmermann (eds), The Oxford Handbook of Comparative Law (OUP, Oxford, paperback edition 2008) 539 ff.

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either imperio rationis or ratione imperii,5 that is, on the basis of its academic quality

and persuasiveness or by virtue of the European Community adopting it in one form or

another. To date, the reference text that has gained the greatest degree of success

imperio rationis are the Principles of European Contract Law (PECL), prepared by the

so-called Lando Commission.6 Comprising a body of rules on general contract law (in

part, however, also extending into the general law of obligations), the PECL are the

product of many years of comparative analysis and international cooperation; and they

offer an authoritative point of reference for the interpretation and development of the

national legal systems in Europe.7 In fact, the PECL have begun to play a key role in an

incremental and “organic” harmonization of European private law.8

In contrast, the European Parliament has long favoured the most potent form of a

reference text ratione imperii, a European Civil Code.9 For some time the European

Commission, too, has flirted with this idea, albeit limited to the field of contract law.10

At present, however, such a European Code of Contract Law is neither practically

attainable nor – as is very widely held – legally possible for lack of a general

competence of the EU in private law matters. Hence, the notion of an optional

instrument has been brought up, i.e. of an additional contract law regime (alongside the

approximately 30 already existing ones in Europe) which the parties may choose to

5 For a discussion of the problem of legal authority under the ius commune, see N Jansen,‘Traditionsbegründung im europäischen Privatrecht’ [2006] Juristenzeitung (JZ) 536 and N Jansen and R Michaels, ‘Private Law and the State – Comparative Perceptions and Historical Observations’ (2007) 71 Rabels Zeitschrift (RabelsZ) 345.6 O Lando and H Beale (eds), Principles of European Contract Law, Parts I and II (Kluwer, The Hague 2000); O Lando and others (eds), Principles of European Contract Law, Part III (Kluwer, The Hague 2003).7 See R Zimmermann, ‘The Principles of European Contract Law: Contemporary Manifestation of the Old, and Possible Foundation for a New, European Scholarship of Private Law’ in F Faust and G Thüsing (eds), Beyond Borders: Perspectives on International and Comparative Law. Symposium in Honour of Hein Kötz (Heymann, Köln 2006) 111, 141 ff. 8 See, as far as Germany is concerned, Bundestag Drucksache 14/7052 v 25.9.2001, easily accessible in C-W Canaris, Schuldrechtsmodernisierung 2002 (Beck, München 2002) 1051 ff, 1066 ff; for Spain and Holland see, respectively, the contributions of C Vendrell Cervantes and D Busch in (2008) 16 Zeitschrift für Europäisches Privatrecht (ZEuP) Issue 3.9 For the first time in a resolution of May 1989; on which see W Tilmann, ‘Entschließung des Europäischen Parlaments über die Angleichung des Privatrechts der Mitgliedstaaten vom 26.05.1989’ (1993) 1 ZEuP 613.10 On the sequence of the relevant Communications by the Commission, see N Jansen, Binnenmarkt, Privatrecht und Europäische Identität (Mohr Siebeck, Tübingen 2004) 2 ff; R Zimmermann, ‘General Report: European Contract Law’ [2007] Europäische Zeitschrift für Wirtschaftsrecht 459.

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govern their contract.11 Yet since 2003, when it first appeared in a Communication from

the Commission to the European Parliament and the Council, the enigmatic concept of a

Common Frame of Reference (CFR) has increasingly assumed centre stage and now

dominates the debate.12 It remains unclear, however, exactly what legal status the CFR

is to possess and just which objectives it is ultimately designed to pursue. The

Commission itself has repeatedly characterised it as a “toolbox” for future legislation in

the area of general contract law.13 But which areas of contract law does the Commission

intend to regulate in the future? For the time being, the revision of the acquis

communautaire in the area of consumer contract law appears to be of central concern.14

If the Commission intends to limit its future activities to this area, a CFR would not

seem to be required that covers not only general contract law but also special types of

contracts, non-contractual obligations and a number of areas of property law. Yet the

Draft Common Frame of Reference (DCFR), published at the beginning of this year,15

11 See D Staudenmayer, ‘European Contract Law – What Does It Mean and What Does It Not Mean’ in S Vogenauer and S Weatherill (eds), The Harmonisation of European Contract Law (Hart, Oxford 2006) 236 ff.12 The Commission’s proposals were debated at a Symposium in Graz, see R Zimmermann, ‘Der Gemeinsame Referenzrahmen – ZEuP-Symposium Graz’ (2007) 15 ZEuP 109, with contributions fromA Flessner, U Blaurock, R Schulze, V Trstenjak, N Reich, G Wagner, D Martiny, F Zoll, E Kramer, U Magnus, J Basedow and W Tilmann. The Association of German professors of private law dealt with the CFR-project at its meeting in September 2007; see also T Pfeiffer, ‘Methodik der Privatrechtsangleichung in der EU’ (2008) 208 Archiv für die civilistische Praxis (AcP) 227 ff; W Ernst,‘Der ‘Common Frame of Reference’ aus juristischer Sicht’(2008) 208 AcP 246 ff. The CFR also played a prominent role in the course of the discussions in Section 1 of the 4th European Jurists’ Forum (European Contract Law) in May 2007 in Vienna; the presentations and the general report are published in: 4th

European Jurists’ Forum (Manz, Wien 2008), with contributions from S Weatherill, J Smits, L Vékás, MJ Bonell, T Wilhelmsson, B Fauvarque-Cosson, B Lurger and R Zimmermann. See also the contributions in (2007) 3 European Review of Contract Law (ERCL) 239; R Schulze (ed), Common Frame of Reference and Existing EC Contract Law (Sellier, München 2008); A Vaquer (ed), European Private Law Beyond the Common Frame of Reference (Europa, Groningen 2008) 43 (a volume containing – in spite of its title – a number of contributions on various parts of the DCFR, among them K Lilleholt, ‘A European Law of Lease?’ 55 and M Schmidt-Kessel, ‘At the Frontiers of Contract Law: Donation in European Private Law’ 79).13 See, e.g., Commission (EC) ‘European contract Law and the Revision of the Acquis: the way forward’ (‘Way forward’) COM(2004) 651 final, 11 October 2004. 14 Commission (EC) ‘First Annual Progress Report on European Contract Law and the Acquis Review’ COM(2005) 456 final, 23 September 2005; Commission (EC) ‘Green Paper on the Review of the Consumer Acquis’ (‘Green Paper’) COM(2006) 744 final, 8 February 2007; cf. Commission (EC) ‘Second Progress Report on The Common Frame of Reference’ COM(2007) 447 final, 25 July 2007.15 C von Bar, E Clive, H Schulte-Nölke (eds), Principles, Definitions and Model Rules of European Private Law: Draft Common Frame of Reference (DCFR) (Interim Outline Edition, Sellier, München 2008). The initial publication is a “black-letter-only” version; thus, it does not contain any commentary or comparative annotations but only the text of the proposed articles. However, the volume contains an Introduction, authored by C von Bar, H Beale, E Clive and H Schulte-Nölke, in which the aims, content, underlying values, structure, language, and also the development of the DCFR have been outlined.

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does exactly that.16 Although, so far, it is only a discussion draft of a group of legal

scholars, the DCFR has been presented as a blueprint for a future “political” CFR.

B Content

At present the draft comprises seven books and two annexes. The somewhat

heterogeneous Book I contains only six rules. They cover the field of application, and

the interpretation, of the DCFR; they set forth the definition of the terms “in writing”,

“textual form”, “signature” and similar expressions; and they refer to the two annexes.

One of the annexes provides a catalogue of 122 definitions (many of which reappear in

the text of the DCFR),17 the other a detailed set of rules for the computation of time,

including a small catalogue of definitions applicable only to this annex. According to

the authors of the DCFR, the provisions contained in Book I serve as a short and general

guide concerning the use of the text.18

Books II and III contain what would be designated in Germany as the doctrine of legal

acts, and the general law of obligations. Thus, one finds in Book II rules on formation,

representation, validity (especially defects of consent, infringement of fundamental

principles and mandatory rules), interpretation, and the content and effects of contracts.

Book III, in contrast, deals with performance, remedies for non-performance, plurality

of debtors and creditors, transfer of rights and obligations (assignment of rights,

substitution of a new debtor, transfer of contractual position), set-off and prescription.

Analytically, this subdivision of material is premised upon the concepts “Contracts and

other juridical acts” (the caption for Book II) and “Obligations and corresponding

rights” (Book III).19 An obligation is defined as “…a duty to perform which one party to

16 For criticism of the DCFR in the light of its broad thematic scope, see R Schulze, ‘The Academic Draft of the CFR and the EC Contract Law’ in Schulze, above n 12 at 10 ff.17 See Part 6 below.18 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [45]. See also O Lando, ‘The Structure and the Legal Values of the Common Frame of Reference’ (2007) 3 ERCL 245 at 246, 249: “One could have wished for a more appealing start”.19 For criticism even by actual members of the two Groups who prepared the DCFR, see Schulze, above n 16 at 13 ff; Lando, above n 18 at 250: “…stringent and incomprehensible logic...borrowed from German Law”. In the Introduction to the DCFR one finds, indeed, remarkably dogmatic statements such as: “Similarly, a contract is not terminated. It is the contractual relationship, or particular rights and obligations arising from it, which will be terminated”: von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [52].

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a legal relationship…owes to another party” (Art. III.-1.101); the definition, therefore,

encompasses contractual and non-contractual obligations.

As might be expected, contracts stand in the foreground of Book II as the most

significant juridical act. Other juridical acts (unilateral promises, the granting of

authority, notices of set-off, termination and ratification) are sometimes governed by

special rules (formation, interpretation); in other cases they are subjected to the same

rules set forth for contracts (form, partial invalidity), or those rules are declared

applicable by analogy (usages and practices, validity). It is also noteworthy that both

Book II and Book III begin with a general part containing definitions and fundamental

principles (party autonomy, freedom of form, good faith and fair dealing) but also a

potpourri of rules addressing specific legal issues that could not be adequately located

somewhere else (mixed contracts, conditional and time-limited rights and obligations,

variation by agreement, change of circumstances).

Book IV is dedicated to specific contracts and comprises, in its present state, six Parts:

sales, lease of goods, services (excluding employment relationships), mandate,

commercial agency, franchise and distributorship, and personal security. In the

preparation of the Part on sales, the United Nations Sales Convention and the Consumer

Sales Directive have naturally played a very significant role;20 in this respect the authors

of the DCFR could draw upon field-tested models in addition to an extensive

comparative discussion dating back to Ernst Rabel’s famous monograph on the

international sale of goods.21 The same is not true for the other contract types which

have been mentioned. The extent to which the DCFR is venturing into uncharted

territory in the field of comparative law and legal harmonization becomes immediately

apparent on reviewing the structure of the rules on the provision of services. After a

Chapter on rules applying to service contracts in general (which is, in fact, preceded by

another Chapter with provisions of an even more general nature), the text contains

particular Chapters covering Construction, Processing, Storage, Design, Information

and advice, and (medical) Treatment. For many of these particular types of (in the

20 V Heutger, Ein gemeineuropäisches Kaufrecht: Vision oder nahe Zukunft? (Lang, Frankfurt am Main 2007) 171 ff; cf. A Veneziano, ‘A Common European Law of Sales’ in Vaquer, above n 12, 41 ff. On the relevance of the CISG, see, most recently, MJ Bonell, ‘European contract law and the development of a world contract law’ (2008) 56 American Journal of Comparative Law l.21 E Rabel, Das Recht des Warenkaufs (de Gruyter, Berlin vol I 1936, vol II 1958); G Kegel, ‘Ernst Rabel, Werk und Person’ (1990) 54 RabelsZ 1.

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terminology of German law:) contracts of services or contracts for work we do not find

any self-contained regulations within the existing European codifications. An English

jurist will probably think it quite odd to find the lease of goods classified as a

contractual obligation; the German jurist will be surprised to learn that a mandate is, on

the one hand, not a gratuitous legal transaction, and on the other, limited to the

regulation of the internal relationship between a principal and his representative.22 The

regulation of personal security is subdivided, in a manner characteristic for the CFR,

into a general Part and specific Chapters covering dependent and independent personal

security. Books V, VI and VII address Benevolent intervention in another’s affairs23,

Non-contractual liability arising out of damage caused to another24 and Unjustified

enrichment respectively.25 Especially with regard to the last two fields, the draftsmen

display a striking zeal for detailed regulation; thus, the Book on Unjustified enrichment

contains more than twice as many rules as the respective part of the German Civil Code

(Bürgerliches Gesetzbuch, BGB).

Inserted into this system of traditional private law rules is the ius novum of the acquis

communautaire (sometimes in a generalized form): non-discrimination, information

duties, unsolicited goods or services, rights of withdrawal (all in Book II), the rules on

consumer goods guarantees, and a variety of further consumer protection measures in

sales law (Book IV. A.) as well as a chapter containing special rules for personal

security of consumers (Book IV. G.). Special consumer protection regulations, though

not assembled in an independent chapter, are also found in Book IV. B. on the lease of

goods.

22 See below, 4 A.23 For detailed criticism, see N Jansen, ‘Negotiorum gestio und Benevolent Intervention in Anothers Affairs: Principles of European Law?’ (2007) 15 ZEuP 958.24 On this Book, and on the European Group on Tort Law’s competing Principles of European Tort Law(Springer, Wien 2005), see N Jansen, ‘Principles of European Tort Law? Grundwertungen und Systembildung im europäischen Haftungsrecht’ (2006) 70 RabelsZ 732; M Schmidt-Kessel, Reform des Schadenersatzrechts vol I: Europäische Vorgaben und Vorbilder (Manz, Wien 2006).25 See C Wendehorst, ‘The Draft Principles of European Unjustified Enrichment Law Prepared by The Study Group on a European Civil Code: A Comment’ 7 (2006) Europäisches Rechtsakademie-Forum (ERA-Forum) 244; for a more detailed presentation of her own views, see C Wendehorst, ‘No Headaches over Unjust Enrichment: Response to Daniel Friedmann’ in K Siehr and R Zimmermann (eds), The Draft Civil Code for Israel in Comparative Perspective (Mohr Siebeck, Tübingen 2008) 113 at 121 ff; cf. also J Smits, ‘A European Law of Unjust Enrichment? A Critical View of the Law of Restitution in the Draft Common Frame of Reference’ in Vaquer, above n 12, 153.

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The DCFR is not yet complete, the current draft constituting only an “Interim Outline

Edition”. The final version of the DCFR is to be published at the end of 2008. The

interim draft currently available is missing sections on additional specific contract types

(loans and donations; Book IV F. is already reserved for loans) as well as self-contained

Books on Acquisition and loss of ownership in movables (VIII), Proprietary security

rights in movable assets (IX), and Trusts (X). All considered, the project will thus result

in a draft code concerning the essential parts of patrimonial law. Its range can perhaps

best be measured by a consideration of those areas which are expressly excluded (Art.

I.-1:101 (2)): the legal capacity of natural persons, wills and successions, family law,

negotiable instruments, employment relationships, immovable property law, and

company law. It remains unclear whether the Principles of Insurance Contract Law

developed by a Hamburg/Innsbruck working group are to be incorporated into Book IV

of the DCFR.26 Also, it has not been settled whether the fairness control of consumer

contracts applies only to standard terms or also to individually negotiated terms (see the

square brackets in Art. II-9:404).27

C Origin

The present version of the DCFR has been compiled by eight international research

groups, seven of which have, however, been centrally coordinated. At the same time,

the DCFR essentially contains nine masses of texts. The oldest of these masses is the

product of a research group that was not directly involved in the preparation of the

DCFR: the Lando-Commission, mentioned earlier,28 which concluded its activities with

the publication of Part III of the PECL in 2003. Although very different from the

Lando-Commission in terms of structure, aims, and working method, the Study Group

on a European Civil Code, created by Christian von Bar in 1998, has established itself

as its successor.29 Over the years, the Study Group has evolved into an enormous

26 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [59]. On the project of theHamburg/Innsbruck group cf., most recently, H Heiss, ‘The Common Frame of Reference (CFR) of European Insurance Contract Law’ in Schulze, above n 12, 229.27 See below, 3 A (i).28 Above, text to n 6. 29 C von Bar, ‘Die Study Group on a European Civil Code’ in P Gottwald and others (eds), Festschrift für Dieter Henrich (Bielefeld, Gieseking 2000) l. In terms of personnel, there is some continuity between the Lando-Commission and the Study Group, for approximately half of the members of the (3rd) Lando-

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network of international Working Teams30 which have dedicated, and continue to

dedicate, themselves to the legal areas not covered in the PECL. These Working Teams

had or, respectively, have their seats in Osnabrück (Extra-Contractual Obligations),

Utrecht (Sales), Tilburg (Services), Amsterdam (Commercial Agency, Franchise and

Distribution Contracts) Bergen (Rental of Moveable Property), Hamburg (Personal

Securities) and, again, Amsterdam (Mandate).31 Each Working Team comprised (or

comprises) a senior member heading an internationally assembled staff of younger legal

scholars, as well as an international Advisory Council; and each of them had the

responsibility of preparing a self-contained publication based upon a structure similar to

the PECL.32 The principles set forth in these publications serve as the foundation for the

corresponding DCFR Book and, hence, represent another seven of the masses of texts

contained in it. The Working Team publications are not only approved by their

respective Advisory Councils, but also by the very large “Co-ordinating Group” of the

Study Group on a European Civil Code (it consists of 40 members, chaired by Christian

von Bar).

Apart from that, however, the Study Group adopted the PECL as the foundation for its

work, and consequently as foundation for the DCFR, though not without having revised

this body of rules to some extent.33 Thus, the Study Group in part responded to the

criticism of certain provisions of the PECL that had either appeared in academic writing

or had been articulated at the “stakeholder-meetings” with which the Commission had

sought to involve the interested public in the preparation of the CFR.34 A certain need

Commission (among them, in particular, Christian von Bar, Eric Clive and Hugh Beale) continued to serve, in some form or other, in the Study Group.30 See http://www.sgecc.net under “Organisation”, available as of 07.08.08.31 The further Working Teams whose results have not yet been incorporated into the DCFR are seated in Osnabrück (Trusts, Gratuitous Contracts), Amsterdam (Loans), Hamburg (Security Rights in Movable Property) and Graz (Transfer of Movable Property).32 Published thus far: C von Bar, Benevolent Intervention in Another's Affairs (Principles of European Law (PEL), Sellier, München 2006); M Hesselink and others, Commercial Agency, Franchise and Distribution Contracts (PEL, Sellier, München 2006); M Barendrecht and others, Service Contracts(PEL, Sellier, München 2007); U Drobnig, Personal Security (PEL, Sellier, München 2007); K Lilleholt and others Lease of Goods (PEL, Sellier, München 2008); E Hondius and others, Sales (PEL, Sellier, München 2008).33 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [50] ff; see also below, 5 B.34 For severe criticism on the way this stakeholder process was carried out, see G Wagner, ‘Die soziale Frage und der Gemeinsame Referenzrahmen’ (2007) 15 ZEuP 180 at 189 ff; for a much more positive view, see E Brödermann, ‘Betrachtungen zur Arbeit am Common Frame of Reference aus der Sicht eines Stakeholders: Der weite Weg zu einem europäischen Vertragsrecht’ (2007) 15 ZEuP 304.

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for adaptation also existed as a result of certain decisions taken by the Study Group in

areas not covered by the PECL, and of the fact that the Study Group had set itself the

goal of developing a clear and consistent terminology and structure for a European law

of obligations. The PECL, in turn, had come into being without a predetermined master

plan; consequently, certain conceptual deficiencies are quite conspicuous.35 They relate

to the decision – taken only while the work was under way – to extend the scope of the

Principles, beyond contract law, into the field of the law of obligations in general and,

equally, to the lack of coordination between Parts I and II on the one hand, and Part III

on the other, as well as to the comparatively unreflected use of central terms such as

contract, claim or obligation.

Some parts of PECL have been subject merely to terminological adjustments or other

marginal changes, e.g. prescription and set-off (set-off has, however, been given an

unsuitable definition, see Art. III.-6:101 (1)). In contrast, the rules on representation,

contracts in favour of a third party (Art. II.-9.301 ff) and assignment (Art. III.-

5.101 ff)36 have been substantially revised. Other areas lie somewhere between these

extremes. According to Art. 2:101 (1) (a) PECL, a contract is concluded if the parties

intend to be legally bound; under Art. II.-4:101 DCFR the parties must have the

intention to enter into a binding legal relationship or bring about some other legal effect.

The good faith provision of Art. 1:201 (1) PECL has been abandoned in favour of two

rules concerning pre-contractual (Art. II.-3:301 (2) DCFR) and contractual relations

(Art. III.-1:103 (1) DCFR) respectively, the latter of these rules attempting to enumerate

in which respect a party is subject to an obligation of good faith and fair dealing.

Regarding voidable contracts, the provision on mistake (Art. 4:103 PECL) has been

substantially refashioned (Art. II.-7:201 DCFR).37 The three types of plurality of

debtors (the labelling of which had been subject to intensive debates in the Lando-

Commission) are now called solidary, divided, and joint obligations (rather than

solidary, separate, and communal obligations).38 The rules on performance and non-

35 Cf., e.g., Zimmermann, above n 7 at 114 ff.36 See below, 4 A.37 See below, 5 B (ii).38 In the Unidroit Principles for International Commercial Contracts, which are in the process of being expanded, the first two categories are to be labelled joint and several, and separate obligations whereas the third is to be discarded; for a critical look at this third category, which originates in German law, see S Meier, ‘Mehrheit von Schuldnern’ in M Schmoeckel, J Rückert and R Zimmermann (eds), Historisch-kritischer Kommentar zum BGB (HKK), vol II/2, 2007, §§ 420 – 432/1 [93], [98].

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performance have been adapted to the new system of the DCFR so that they cover

obligations in general and not merely contractual ones.39 Of course, these are merely

examples that have been somewhat arbitrarily chosen. In addition, there are a number of

rules that have been newly incorporated as a result of the DCFR’s quest for

comprehensiveness, e.g. Art. II.-1:108 DCFR on mixed contracts, or Art. III.-6:201

DCFR on merger.

The ninth and final mass of text inserted into the DCFR derives from the efforts of the

European Research Group on the Existing EC Private Law (or: Acquis Group),

established in 2002 and coordinated by Hans Schulte-Nölke. In contrast to the Lando-

Commission and the Study Group, the Acquis Group had set itself the goal to develop a

set of principles based upon the already existing acquis communautaire. Conceptually,

the Acquis Principles therefore constitute an alternative project to the PECL in which

the acquis had remained unconsidered.40 As with the Study Group, the Acquis Group

also publishes its work in self-contained volumes; by the middle of 2008, however, only

the first of two announced volumes had been published.41 An analysis of this first

volume, covering pre-contractual obligations, conclusion of contract, and unfair terms,

has revealed that the Acquis Principles are not based upon a critical revision of the

consumer protection established by the acquis but rather, in a number of points, upon its

extension.42 It is these Acquis Principles which, sometimes unaltered but more often in

39 For criticism, see Lando, above n 18 at 250; Schulze, above n 16 at 14 (“The DCFR has, in this respect, become something else than a European contract law”). But see also the assessment by H Schulte-Nölke, ‘Acquis Communautaire and Structures of the CFR’ in Schulze, above n 12 at 60, 54: “The DCFR is nothing more than an extension of the PECL”.40 This has often been criticised; cf. W Wurmnest‚ ‘Common Core, Grundregeln, Kodifikationsentwürfe, Acquis-Grundsätze – Ansätze internationaler Wissenschaftlergruppen zur Privatrechtsvereinheitlichung in Europa’ (2003) 11 ZEuP 714 at 729; H-W Micklitz, ‘Verbraucherschutz in den Grundregeln des Europäischen Vertragsrechts’ (2004) 103 Zeitschrift für vergleichende Rechtswissenschaft 88; it is simply due to the fact that the European Directives in the field of private law had not yet been enacted when the Lando-Commission commenced its work.41 The Research Group on the Existing EC Private Law (Acquis Group), Principles of the Existing EC Contract Law (Acquis Principles) – Contract I: Precontractual Obligations, Conclusion of Contract, Unfair Terms (Sellier, München 2007). The second volume, Performance, Non-Performance, Remedies is scheduled for publication in December 2008; a German translation of the model rules (without commentary) can be found in (2007) 15 ZEuP 896; for further information see Schulze, above n 12 at 301.42 For a detailed assessment, see N Jansen and R Zimmermann, ‘Restating the Acquis Communautaire? A Critical Examination of the ‘Principles of the Existing EC Contract Law’’ (2008) 71 MLR 505; see also below 5 A.

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revised form, have found their way into the DCFR.43 By thus attempting to integrate the

acquis commun, that has gradually evolved over many centuries of European legal

history, and the acquis communautaire, relating primarily to consumer contract law, the

draftsmen of the DCFR have tackled one of the great tasks of our time in the field of

private law. Yet, any more than superficial integration would have required a re-

conceptualisation of consumer protection law,44 which has neither been considered nor

accomplished by the Acquis Group. Nor could the Compilation and Redaction Team,

established at the beginning of 2006 and chaired by Christian von Bar and Eric Clive,

deal with the matter because there was much too little time.

D An Academic Text?

As with the Lando-Commission and the other international working groups following in

its tracks, both the Study Group and the Acquis Group have labelled their final product

imprecisely as “Principles”. In reality we are dealing with a body of rules which could

easily be enacted by a duly empowered legislature as a Civil Code. That is disguised by

the term Common Frame of Reference that has been chosen by the European

Commission. As far as style and structure of the document are concerned, the PECL as

drawn up by the Lando-Commission provided the model, while the Lando-Commission,

in turn, had taken its cue from the US Restatements.45

The authors of the DCFR are at pains to emphasize that their text is merely an

academic, and in no way a politically legitimated or authorized, document.46 Thus, they

43 See, from the point of view of the Acquis Group, the contributions of C Twigg-Flesner, S Leible, E Terryn and T Pfeiffer in Schulze, above n 12 at 97 ff.44 See J Drexl, Die wirtschaftliche Selbstbestimmung des Verbrauchers (Mohr Siebeck, Tübingen 1998); C-W Canaris, ‘Wandlungen des Schuldvertragsrechts. Tendenzen zu seiner “Materialisierung”’ (2000) 200 AcP 273; R Zimmermann, The New German Law of Obligations: Historical and Comparative Perspectives (OUP, Oxford 2005) 159 ff (all of them emphasizing the right to self-determination of bothparties to the contract).45 Each volume of the Study Group contains, apart from the text of the individual articles, a commentary with illustrative examples as well as comparative annotations. The same style of presentation is also envisaged for the final version of the DCFR. The Acquis Group, aiming to produce a body of rules which is not based on the traditional European private law, as contained in the national codes or common laws, naturally had to modify that scheme; thus the text of the rules is normally accompanied by information on their foundation in the acquis, as well as by a commentary including illustrations. Contrary to the procedure of the Lando-Commission, English was the working language of all the Groups involved in the preparation of the DCFR and, hence, that document has, for the time being, only been published in English.46 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [4].

13

note that the Commission’s intended (political) CFR has to be distinguished from the

present academic DCFR. At the same time, the authors of the Introduction concede that

it is (of course) an aim of the DCFR to serve as a model for the CFR.47 And towards the

end of the Introduction they dedicate a section containing no less than sixteen marginal

numbers to the question of how the DCFR may be used as a preparatory work for the

CFR.48 In fact it is hardly conceivable that the Commission, having allocated

considerable funds to the Study Group and the Acquis Group,49 will not in some or other

form adopt the text or draw upon it. That alone makes the DCFR a document of

enormous potential significance for the development of European private law. Thus, it

warrants particular attention and a discussion that is as broad and critical as possible.

The present contribution, originating from a meeting of its authors at the Max Planck

Institute in Hamburg, hopes to trigger such a discussion. In the light of both the scope

and complexity of the DCFR it goes without saying that this can merely be a first

attempt to provide an assessment of that document as a whole. We thus respond to the

invitation issued by the authors of the DCFR: “Criticism and comments are most

welcome.”50

47 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [6].48 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [60] ff.49 This occurred under the auspices of the Sixth Framework Programme for Research of the European Commission and through the establishment of a “network of excellence” in which, in addition to the Study Group and the Acquis Group, an array of other organisations have been assembled. Among these other groups, the Association Henri Capitant des Amis de la Culture Juridique Française and the Société de Legislation Comparée have recently presented a text entitled Terminologie Contractuelle Commune(2008) as well as a further volume entitled Principes Contractuels Communs (2008). In the first of these volumes the following foundational terms are examined in detail: contrat, obligation/devoir, acte juridique/fait juridique, ordre public et règles imperatives, bonne foi, faute et manquement, préjudice,dommages et intérêts/indemnité and anéantissement. The second volume is intended to do two things: Firstly, it addressed three “principes directeurs” of European contract law: liberté contractuelle, securité contractuelle, and loyauté contractuelle and proposes a number of principles on these issues underpinning the PECL. Secondly, and in the light of these “principes directeurs”, the PECL are revised. Collectively, the volume on terminology and the first part of the second volume appear to constitute drafts for the Chapters I and II envisaged by the European Commission in its Communication of 11.10.2004 (above n 13) reprinted in part in (2005) 13 ZEuP 462), the body of law compiled by the Study Group and Acquis Group forming the intended Chapter III. However, it is unclear whether, or to what extent, the two initiatives have been coordinated with one another (especially in view of the fact that the French initiative also contains model rules based upon the PECL).50 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [77].

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2 Underlying and Competing Values in the DCFR

A Commitment to Fundamental Principles

A legal code will invariably be more than simply a collection of technically integrated

rules; it will reflect particular values and interests. Consequently, it is important that the

normative goals and their relations to one another are plainly apparent. Only then is it

possible to assess the body of law in terms of doctrinal clarity and consistency as well

as the realisation of policy interests. It is an entirely different question whether such

abstract goals should be explicitly set out, or perhaps even defined in detail, in an

introductory section separate from the main body of rules.

Whether the DCFR should indeed eventually be supplemented by such a section, is

explicitly left open in the Introduction.51 The authors do, none the less, identify and

briefly describe some of the core aims that they associate with private law:52 justice,

freedom, protection of human rights, “economic welfare”,53 as well as solidarity and

social responsibility. To the extent that the endeavour relates specifically to the shaping

of European private law by the European Union, they also add the promotion of the

internal market as well as the preservation of cultural and linguistic plurality to the list.

As more “formal” aims which are to be pursued when formulating model rules, the

authors identify rationality, legal certainty, predictability and efficiency. This list is not

intended to be exhaustive. For example, protection of a person’s reasonable reliance on

another’s conduct or responsibility for self-created risks are also named as important

underlying principles, even if not core ones.

51 See von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [11], [19].52 Cf. von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [22] ff.53 “Economic Welfare” is a pleonasm: “welfare” is an economic concept per se. Non-economic welfare does not exist.

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B Content and Interrelationship of the Fundamental Principles

In view of the diversity of these aims and values,54 the initial question is whether they

offer any practical assistance in the interpretation and application of individual DCFR

rules. For that is, after all, the primary function of the stipulated fundamental principles:

“Any statement of them must…give some practical guidance on how to read and to

interpret the definitions and model rules contained in the CFR…”.55 As to this issue,

two matters seem particularly problematic. First, the content of the fundamental

principles is mostly unclear, hence curtailing any overarching interpretative guidance

they might otherwise offer. Second, the interplay between these principles is left open in

those instances where – unavoidably in individual cases – they conflict with one

another.

Just how little clarification the mere statement of individual principles provides is

readily illustrated by the notions of “justice” and “freedom”. “Freedom” can be subject

to many different interpretations. The introductory text in the DCFR contains some

remarks, but they only generally address the idea of freedom of contract.56 Other

conceivable notions of freedom, all quite distinct from one another, include: (i) formal

freedom in the sense of non-intervention by the state, possibly limited to certain spheres

(e.g., the right to life and bodily integrity); (ii) freedom in the sense of certain spheres of

activity being safeguarded – by the state – against interference by third parties (e.g.,

through the protective devices of tort law); (iii) freedom in the sense of having genuine

and “valuable” options (only those with sufficient resources are “free” and can “afford”

to use certain options) that may, again, be created by the state; (iv) freedom in the sense

of freedom of choice/will – this concept often relating to situations involving fraud,

threats, etc. Although each of these notions is relevant in private law theory, the

Introduction to the DCFR fails to adopt a position as to any of them.

54 The Introduction to the DCFR is interspersed with frequent and alternating references to “principles”, “aims” and “values”. One cannot discern a consistent use of terminology based, for example, on the distinction between rules and principles, introduced by Dworkin and developed further by Alexy (cf.R Dworkin, Taking Rights Seriously (Harvard University Press, Cambridge, Mass. 1977) 22 ff, 71 ff and throughout; R Alexy, Theorie der Grundrechte (Nomos, Baden-Baden 1985) 71 ff). Also, the distinction between “core aims” and “more ‘formal’ aims” (von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [22]) remains unclear.55 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [18].56 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [25] ff.

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As can be expected, there are also widely different understandings as to the meaning

and scope of justice. Sometimes the term is used in the sense of equality (an ambiguous

term in its own right), sometimes only as a substitute for an ethical conception (e.g.

liberalism or utilitarianism). It can also refer to procedural notions of justice (“justice

through procedure”). The Introduction deals with the issue insofar as it seizes upon

Aristotle’s differentiation between distributive justice (iustitia distributiva) and

corrective justice (iustitia commutativa).57 The DCFR, one reads, is particularly

concerned with promoting corrective justice but may also at times reflect distributive

concerns. Such a vague and casual allusion to a distinction which is as old as it is

controversial hardly constitutes a consistent conception of justice. As a means of

determining the concrete meaning of legal norms, however, only such a consistent

conception could be useful.

Ascertaining a clear and functional meaning from the DCFR’s other specified aims is,

for the most part, equally impossible. This is the case, for example, with regard to the

aim of promoting solidarity and social responsibility. Political positions which may be

open to attack or controversy have, apparently, been consciously avoided. The result,

however, is that the elaborately prepared core aims are of almost no practical assistance

when actually working with the DCFR.

This shortcoming is aggravated by the Introduction failing to indicate the priority the

stated aims and values have vis-à-vis each other. The authors of the DCFR correctly

note that these aims and values will on occasion conflict and that, as a result, none of

them can be rigidly pursued without resort to compromise.58 Rather, the application of

individual rules must reflect and describe a balancing exercise. Yet it is exactly here,

where underlying values are in actual or potential (fundamental) conflict with one

another, or simply emphasize different points, that their mere listing accomplishes little.

At least a number of abstract “conflict rules” would be required which determine when

57 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [24]. On the interpretation of this difference see, for example, EJ Weinrib, The Idea of Private Law (Harvard University Press, Cambridge, Mass. 1995); C-W Canaris, Die Bedeutung der iustitia distributiva im deutschen Vertragsrecht (Bayerische Akademie der Wissenschaften, München 1997) 9 ff and throughout; C Wendehorst, Anspruch und Ausgleich (Ius Privatum, Mohr Siebeck, Tübingen 1999) 3 ff, 13 ff and throughout; N Jansen, Die Struktur des Haftungsrechts (Mohr Siebeck, Tübingen 2003) 76 ff and throughout; H Eidenmüller, ‘Verhandlungsanalyse, Vertragsparität und Vertragsrecht’ in C Ott and H-B Schäfer (eds), Ökonomische Analyse des Sozialschutzprinzips im Zivilrecht (Mohr Siebeck, Tübingen 2004) 45 at 46; J Gordley, Foundations of Private Law (OUP, Oxford 2006) 12 ff and throughout.58 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [23].

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a given value prevails or may prevail and, even more importantly, the reasons relevant

for this assessment should be provided.

Among the values particularly prone to conflict are: freedom and solidarity, efficiency

and justice, justice and legal certainty/predictability (to what extent there is a difference

between certainty and predictability is as unclear as between efficiency and “economic

welfare”). At a minimum, one might have expected some comment on the relation

between efficiency – the maximisation of the pie – and solidarity/iustitia distributiva –

the division of the pie, i.e. whether contract law is at all suitable to achieve distributive

goals.59 It can be demonstrated that distributive effects can be achieved more efficiently,

i.e. with a smaller loss of welfare, by means of taxes and transfer payments than by

means of private law norms.60 In a similar vein, solidarity, social responsibility or non-

discrimination61 can probably be realized more appropriately in the domain of public as

opposed to private law. It would have considerably reduced tensions within the tableau

of underlying values, had private law and public law been more clearly differentiated

and had the relevant aims been limited to those genuinely associated with private law.

With every additional aim to be saddled upon private law, legal predictability and

clarity are more likely to fall to the wayside.62

In the final assessment, one must conclude that the Introduction to the DCFR contains a

hotchpotch of diverse aims and underlying values which are neither precisely defined

individually nor as regards their relation to one another. Such a conglomeration of

disparate factors is hardly helpful for the interpretation of the DCFR’s individual rules,

particular since, as noted, the list is not intended to be exhaustive (“at least”).

59 Cf. Wagner, above n 34 at 184 ff.60 See S Shavell, ‘A Note on Efficiency vs. Distributional Equity in Legal Rulemaking: Should Distributional Equity Matter Given Optimal Income Taxation?’ (1981) 71 American Economic Review, Papers and Proceedings 414; L Kaplow and S Shavell, ‘Why the legal system is less efficient than the income tax in redistributing income’ (1994) 23 The Journal of Legal Studies 667; H Eidenmüller, Effizienz als Rechtsprinzip (3rd edn, Mohr Siebeck, Tübingen 2005) 289 ff.61 That the existing European private law contains Directives along these lines is not an excuse for the lack of critical reflection by the Acquis Group on their meaning, purpose and, above all, scope.62 On private law as the “Magna Charta” of a free society, cf. E Böhm, ‘Privatrechtsgesellschaft und Marktwirtschaft’ (1966) 17 Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft (ORDO) 75 at77 f.

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C The Realisation of Fundamental Principles in the DCFR

Independent of how one evaluates the individual aims and values expressed in the

DCFR, the quality of a legal code can be measured by the extent to which it in fact

manages to realise its aims. In this sense, the DCFR is “to be taken by its word”. To

begin with, this relates to the balancing of conflicting aims and values that, according to

the authors of the DCFR, is to be accomplished on the level of the individual rules.63

This would, to some certain extent, simultaneously satisfy the formal aims of legal

certainty and predictability (which thereby would thus be accorded the status of meta-

principles). Whether stated intention and reality in fact coincide in this respect will be

considered below. Furthermore, measuring the success of the DCFR also involves an

assessment as to whether the individual material aims or values announced in the

Introduction themselves have actually found systematic and consistent articulation on

the level of the rules. There is much reason for doubt in this respect. That can be

illustrated by the aim, or underlying principle, of “efficiency”.

In plain and unambiguous language, the Introduction declares efficiency and economic

welfare to be core aims of the DCFR: “The rules in the DCFR are in general intended to

be such as will promote economic welfare; and this is a criterion against which any

legislative intervention should be checked.”64 Directly thereafter it is stated that

economic welfare and efficiency may be promoted, for example, by consumer

protection rules or obligations to disclose information.65 In the light of recent findings in

cognitive psychology that statement is, however, highly questionable: the flood of

information demanded by the DCFR66 is beyond the processing abilities of the

individual person on whom it is to descend (the marginal utility of additional

information declines and may even become negative).67 Also, rights of withdrawal are

63 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [23].64 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [29].65 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [30].66 See below, 5 A (i).67 Cf. B Grunewald, ‘Aufklärungspflichten ohne Grenzen?’ (1990) 190 AcP 609 at 612 ff; M Martinek,‘Das neue Teilzeit-Wohnrechtegesetz – mißratener Verbraucherschutz bei Time-Sharing-Verträgen’ [1997] Neue Juristische Wochenschrift (NJW) 1393 at 1396; S Kind, Die Grenzen des Verbraucherschutzes durch Information – aufgezeigt am Teilzeitwohnrechtegesetz (Duncker & Humblot, Berlin 1998) 513 ff; H Eidenmüller, ‘Der homo oeconomicus und das Schuldrecht: Herausforderungen durch Behavioral Law and Economics’ [2005] JZ 216 at 218; M Rehberg, ‘Der staatliche Umgang mit Information – Das europäische Informationsmodell im Lichte von Behavioral Economics‘, in T Eger and

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in practice only rarely made use of and, consequently, serve their intended function only

in exceptional cases (assuming that in situations where parties can avail themselves of a

right of withdrawal we are confronted with a multitude of inefficient contracts).68

In the actual rules, the notion of an efficient solution explicitly only appears on two

occasions: In determining whether a non-disclosure is fraudulent, the cost to the party

who wants to avoid the contract of acquiring the relevant information is one of the

factors to be considered (Art. II.-7:205 (3) (b)). Yet, concerning pre-contractual

disclosure of information (Art. II.-3:101 ff) and mistake caused by the other party to a

contract (Art. II.-7:201 (1) (b)) the same aspect is not taken into account, even though it

would appear to be equally relevant. This is inconsistent. Cost is once again mentioned

as a factor in determining the care and skill a client is entitled to expect under a service

contract. According to Art. IV.C.-2:105 (4) (b) the costs of any precautions which

would have prevented damage or similar damage from occurring are to be included in

making such an assessment.

Concerning other legal rules or institutions, no explicit reference is made to the notion

of efficiency. Of course, private law rules can prove themselves efficient (or non-

efficient) without express reference to economic considerations. And indeterminate

legal terms such as “negligence” traditionally provide an inroad for conceptions of

welfare economics. However, contrary to the claims made in the Introduction, it cannot

be maintained that the rules of the DCFR are predicated upon the notions of efficiency

and/or economic welfare, or upon a consistent conception of these issues.

D Divergent Values on the Level of the Rules

In addition to the problems addressed above, the DCFR’s individual rules also do not,

as promised, clarify the relationship between competing fundamental values. This is,

above all, due to the abundant number of blanket provisions as well as to the frequent

H-B Schäfer (eds), Ökonomische Analyse der europäischen Zivilrechtsentwicklung (Mohr Siebeck, Tübingen 2007) 284 at 319 ff.68 See Bundestag Drucksache 10/2876 v. 15.2.1985, 7 f; M Lehmann, ‘Ist der unbestellte Vertreterbesuch gemäß § 1 UWG sittenwidrig?’ (1974) Gewerblicher Rechtsschutz und Urheberrecht 133 at 140; G Magoulas and A Schwartze, ‘Das Gesetz über den Widerruf von Haustürgeschäften und ähnlichen Geschäften: Eine Rechtliche und Ökonomische Analyse (1986) 18 Juristische Arbeitsblätter 225 at 230; Kind, above n 67 at 520 f; M Rehberg, Der Versicherungsabschluss als Informationsproblem (Nomos, Baden-Baden 2003) 243 f; Eidenmüller, above n 67 at 216, 221 f; though for a less sceptical view, see Drexl, above n 44 at 485 ff. See also below, 5 A (ii).

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use of open-ended legal concepts. As a result, the determination of the relevant values,

and of how conflicts between them are to be resolved on the level of the individual

rules, is left to those who have to apply the law, i.e. ultimately the courts.

Among the rules at least approximating blanket provisions is Art. I.-1:102: good faith

and fair dealing are to guide the interpretation of the individual DCFR rules. According

to Art. II.-1:102 (1), party autonomy is from the outset placed under a general proviso

of good faith and fair dealing.69 Similarly, a party has the duty to negotiate in

accordance with these standards (Art. II.-3:301 (2)). Regard should also be had to them

in interpreting a contract (Art. II.-8:102 (1) (g)). Further, Art. III.-1:103 (1) states that a

party has a duty to act in accordance with good faith and fair dealing in performing an

obligation, in exercising a right to performance, in pursuing or defending a remedy for

non-performance, and in exercising a right of termination. The DCFR reiterates these

types of provisions on all levels. All in all, good faith and/or fair dealing surfaces more

than 20 times in the text of the DCFR. If this ubiquity was planned, the intention was

presumably to emphasise the relevance of good faith and fair dealing for and within the

English legal tradition.

The legal uncertainty caused by the widespread use of blanket provisions is further

aggravated by the frequent appearance of open-ended legal concepts in the requirements

established by the DCFR’s rules for triggering specific legal consequences and in the

definitions of those consequences themselves. Standing out in particular is the excessive

use of the term “reasonable”. “Reasonable” – or “fair and reasonable” in tort law –

appears to be the solution to every conceivable problem.70 Not including the

Introduction, the term appears in the text of the DCFR over 400 times in its various

forms ([un]reasonable/y). The catalogue of definitions provided in Annex I offers the

following explanation: “What is ‘reasonable’ is to be objectively ascertained, having

regard to the nature and purpose of what is being done, to the circumstances of the case

and to any relevant usages and practices.” Thereby, however, one indefinite legal term

is being replaced by others of equally indeterminate meaning. None the less, the

69 For more detail, see below, 3 A (i).70 However: If some rules incorporate the notion of reasonableness and others do not, it would seem to follow that unreasonable interpretations are allowed where the term does not appear – an odd outcome indeed. Yet if one is not justified in reaching this conclusion, what is then accomplished by including the term reasonable?

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frequent use of the term “reasonable” is apparently perceived as one of the particular

strengths of the DCFR.71

The meaning of “fair dealing”, “reasonable” or “good faith” in any individual case

depends on the underlying values supporting the rule at issue as well as on these values’

interplay with one another. Consider, for example, a judge having to decide on the

validity, or the reduction, of contractually stipulated damages (Art. III.-3:710) imposed

upon a constructor who is close to bankruptcy by a consumer who is the owner of the

relevant building. The result will depend on whether the judge focuses on the protection

of consumers under EC law or on distributive justice. If he gives priority to consumer

protection, the owner stands to prevail; if he strives to protect the weaker party, the

constructor will succeed. A result favouring the constructor would also correspond to a

substantive understanding of freedom of contract in the sense of contracting parties

having a “genuine” freedom of choice between various options. By contrast, if freedom

of contract is understood in the sense of “formal” freedom, equality, and personal

responsibility, the stipulated damages provision stands a good chance of surviving

judicial scrutiny. In sum, either result can be justified depending on the choice and

prioritisation among the underlying principles.

The DCFR’s reservoir of indeterminate terminology is, however, not exhausted with

good faith, fair dealing and reasonableness. Others such as “circumstances” (used more

than 90 times), “(un)fair” (more than 70 times),72 “similar” (more than 10 times) or

“normal” (more than 10 times), run all the way through the draft. Even periods of time

are regularly left unspecified; reference is often made to “undue delay” (28 times).

Thus, provisions of key importance for legal certainty in business life remain totally

vague.

A final example in this regard is presented by the rule covering conflicts of interest in

representation (Art. II.-6:109). Under this provision the principal can avoid an act done

71 Cf. S Troiano, ‘Das Konzept der “reasonableness” als Mittel zur Harmonisierung des Europäischen Vertragsrechts: Probleme und Perspektiven aus der Sicht des italienischen Rechtssystems’ in R Schulze (ed), New Features in Contract Law (Sellier, München 2007) 375.72 The term unfair (naturally) appears prominently in the rules regulating the policing of standard contract terms. In respect of b2c and c2c contracts the more specific standard is significantly disadvantages(Art. II.-9:404 and Art. II.-9:405). Particularly striking is the vagueness of the form for the determining standard for b2b contracts: “...grossly deviates from good commercial practice, contrary to good faith and fair dealing” (Art. II.-9:406). An indeterminate term is thus exchanged for further indeterminate terminology as well as a blanket provision.

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by a representative which involves the latter in a conflict of interest provided the other

party to the contract knew or could reasonably have been expected to know of this

conflict of interest. Subparagraph (2) presumes that there is a conflict of interest where

the representative also represented the other party or where the transaction was with the

representative in a personal capacity. Yet, subparagraph (2) is not exhaustive; a conflict

of interest may also be found in other situations. Avoidance of a contract on account of

a representative’s conflict of interest is, however, excluded by subparagraph (3) (c) if

the principal could reasonably be expected to have known of the conflict of interest and

did not object within a reasonable time. The prerequisites for avoiding the contract are

thus established on several levels by means of indefinite legal terms: “conflict of

interest”, “could reasonably be expected to have known” and “within a reasonable

time”. This is certainly not conducive to legal certainty, particularly not with regard to a

sensitive question such as this.73

E Divergent Values: Legal Uncertainty and Judicial Discretion

Legal certainty is not simply an arbitrary objective. It is an expression of principles

central to the rule of law. First, it advances democratic principles and protects

fundamental rights by reserving questions of particular importance (for the citizen) for

determination by a democratically legitimised parliament. Additionally, legal certainty

guarantees the universally recognised democratic principle of equal treatment before the

law by insuring that like cases are treated in a like manner. In a democratically

constituted society, the decision making authority allocated to the judiciary should

consequently be carefully circumscribed. Yet, open-ended concepts and blanket

provisions ultimately amount to a far-reaching delegation of such authority.74 Just what

is to be understood by terms such as “reasonable” or “due” will inevitably vary with the

view the individual judge takes of the matter.

Furthermore, the ability of parties to adjust their actions to the applicable legal

parameters is greatly facilitated by clear and unambiguous rules. To the extent that such

73 A variety of additional examples can readily be offered. An equally sensitive area, under the auspices of legal certainty, is the law on avoidance. According to Art. II.-7:201 (2), avoidance on account of mistake is ruled out if: “...(a) the mistake was inexcusable in the circumstances; or (b) the risk of the mistake was assumed, or in the circumstances should be borne, by [the] party [that wishes to avoid the contract].” On avoidance on account of mistake in the DCFR, see below, 5 B (ii).74 See P Heck, Grundriss des Schuldrechts (Mohr, Tübingen 1929) 11 f (§ 4 [1]).

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rules can be provided, the legal system may be relieved from having to resolve disputes;

also, the normative aims pursued by the respective rules will in fact be achieved. The

(excessive) use of blanket provisions and open-ended concepts presupposes a shared

understanding based upon a tradition of dispute resolution that may guide the

application of the law.

In respect of an (optional) European Civil Code, with the CFR as a potential

precursor,75 such open-endedness is especially problematic as it is exactly this shared

legal understanding that does not yet exist. Shifting awkward but centrally important

political questions to the level of the application of private law rules threatens

significantly to politicise the judiciary. In view of the different legal traditions found

within the Member States of the EU, there is also the danger that national courts will

interpret indefinite concepts so as to yield the solution that their own law traditionally

envisages for such a case. Although it dates from a different era, the drafting of the

German Civil Code provides an instructive example. Its draftsmen made a concerted

effort to resort to technical and clearly defined rules and concepts in order to overcome

the prevailing legal fragmentation at the turn of the twentieth century.76 We face a

similar, and possibly even more difficult problem today. Particularly in a supranational

code of law, it is fundamentally important to lay down rules which are as precise and

systematically convincing as possible. Otherwise the DCFR will only serve to provide a

systematic peg for the future – disparate – case law; it will not be able to shape the

direction the case law will take.

That other instruments of supranational law – the CISG for example – also contain a

variety of indefinite legal concepts is not a compelling counter-argument. No

codification can function without such concepts. However, there is a considerable

difference between having a core of determinate and relatively specific rules that may

be subject to the corrective effect of general provisions in exceptional instances and – as

is the case with the DCFR – first integrating open-ended concepts into the individual

rules and then supplementing them with blanket provisions. It is true that

indeterminateness – as prevailing in the CISG – is harmless as long as the parties can

evade the negative effects of such rules by means of choice of law. However, it would

75 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [76]; see above, 1 A and D.76 See, e.g., G Planck, ‘Zur Kritik des Entwurfs eines bürgerlichen Gesetzbuches für das deutsche Reich’ (1889) 74 AcP 327 at 331.

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seem unwise even for a “merely” optional European instrument to deal with areas of the

law where there is no consensus as to legal rules which are clearly defined in terms of

their requirements and consequences.

3 Liberal vs Social Private Law

A Limitations on Party Autonomy

In line with their commitment to a pluralistic foundation of values, the authors of the

DCFR have established party autonomy as merely one normative principle among

many.77 This egalitarian understanding of values is evident in many far-reaching

restraints on private freedom and, above all, in objective standards and blanket

provisions (e.g. “good faith” and “fairness”) that are widely used in order to curtail the

scope of contractual agreements. Such provisions are objectionable most notably

because they fail to stress that such intrusions into party autonomy must be exceptional

in character. Furthermore, they fail to specify sufficiently precise criteria for the

application of such exceptions.78

The resolution to control contractual agreements by general standards is based upon the

conviction of the authors of the DCFR that a general test of fairness is a less intrusive

infringement on the freedom of the parties than specific mandatory rules.79 Yet, the

restrictions on party autonomy in the DCFR go markedly further than what has

generally been referred to as the “materialisation” of the freedom of contract.80 This

idea essentially amounts to a merely functional refinement of the conditions for

recognizing decisions of contracting parties as autonomous in the legal sense. The

DCFR-provisions furthermore dwarf the amount of regulation and bureaucracy thus far

accomplished by Community Directives in respect of private law. For, essentially, these

Directives are limited to business-to-consumer (b2c) transactions, and they apply only

77 See above, 2 B.78 A commendable example of how the exceptional nature of an intrusion into party autonomy can be indicated is presented by the provision on change of circumstances (Art. III.-1:110). Here, it is expressly stated that contractual obligations must be performed even where “performance has become more onerous”. A high threshold for judicial intervention is also fixed with respect to a modification of the contract (“exceptional change”, “manifestly unjust”).79 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [28].80 See Canaris, above n 44 at 273 ff.

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in specific situations which are sufficiently predictable for the parties. The DCFR, in

contrast, puts in place global and incalculable limitations on the scope of the freedom

enjoyed by parties under private law.81

(i) Good faith and usages as overriding concepts of contract law?

Particularly ominous is Art. II.-1.102 (1), according to which “[p]arties are free to make

a contract…and to determine its contents, subject to the rules on good faith and fair

dealing and any other applicable mandatory rules.”82 The freedom of contract is thus,

from the outset, subjected to a caveat of good faith. As a result, the judge is presented

with a relatively low threshold for interfering with the terms that parties have agreed

upon. This threshold is considerably lower than those set by the standards of

immorality, unconscionability, and illegality (e.g. §§ 134, 138 BGB). It is obvious that

Art. II.-1:102 (1) goes far beyond the scope of judicial scrutiny of contracts recognized

in the law of the majority of European states and in the law of the EU. The judicial

scrutiny on the basis of good faith undermines the primacy of freedom as the general

rule which, in the law as it stands, is made abundantly clear by the very restrictive scope

for judicial intervention on the basis of standards such as immorality, by means of

specific legal prohibitions, and as a result of detailed prerequisites for the policing of

standard contract terms. The DCFR’s proviso of good faith, by contrast, extends to all

types of contracts and to all provisions contained in them and would, therefore, even

countenance extensive judicial scrutiny of the price fixed by the parties in their contract.

It is possible that the authors of the DCFR were not entirely aware of these

consequences. For judicial scrutiny of contractual terms is, according to Arts. II.-

9:402 ff, subject to a standard of “fairness” and to other more specific prerequisites. In

particular, b2c contracts are subject to scrutiny only if a term has been supplied by a

business and significantly disadvantages a consumer, contrary to good faith and fair

dealing (Art. II-9:404); the definition of the main subject matter of the contract and the

adequacy of the price are even specifically excluded from judicial intervention (Art. II-

9:407 (2)). However, a tendency towards excessive regulation is apparent also in this

81 In addition to the examples that follow, this tendency is also very clearly demonstrated by the comprehensive network of pre-contractual duties of information established by the DCFR. Little is left of the principle of personal responsibility. For details, see below, 5 A (i).82 Cf. Art. 1:102 (1) PECL.

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context. For the limitation of judicial intervention to terms “which ha[ve] not been

individually negotiated” has been placed in brackets and, thus, remains subject to

further debate: while the Study Group does indeed favour the comprehensive scrutiny of

all terms in b2c contracts, the Acquis Group – commendably – proposes to exclude

“individually negotiated” terms from judicial control and thus seeks to maintain a core

of (largely) unregulated party autonomy also for b2c contracts.83 Concerning contracts

between consumers and between businesses, the fairness-criterion applies only to

“standard terms” (Arts. II.9:405 ff). However, the definitions provided by Art. II.-9:403

(1), (3) suggest that, under certain circumstances, standard terms can be individually

negotiated and none the less remain subject to judicial scrutiny. As a result, even terms

individually negotiated by businesses may be subject to a fairness-inquiry – a strange

result which, in the light of the definition of “standard terms” provided in Annex I, was

possibly not intended.84

The proviso of good faith in Art. II.-1:102 (1) is supplemented and intensified by

Art. II.-1:104 (2), according to which, “[t]he parties are bound by a usage which would

be considered generally applicable by persons in the same situation as the parties except

where the application of such usage would be unreasonable”. The DCFR, therefore,

does not appear to restrict common usage to a supplementary role, so as to assist in the

process of interpreting a contract or of determining points which the parties have failed

to regulate.85 By introducing “usage” as a binding, objective standard rather than as a

supplementary device, the DCFR creates the impression that it has priority over the

agreement of the parties: another far-reaching restriction on the freedom of contract that

would be without parallel in any European legal system.

83 The introduction of a general provision comprehensively policing the content of contractual agreements in b2c-situations has already previously been contemplated – Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts [1993] OJ L 095/29 – but subsequently been abandoned: Commission (EC) Proposal for a Council Directive on Unfair Terms in Consumer Contracts COM(90) 322 final [1990] OJ C 243/2 of 28 September 1990; for criticism concerning a policy of comprehensively policing the contents of a contract, see C-W Canaris, ‘Verfassungs- und europarechtliche Aspekte der Vertragsfreiheit in der Privatrechtsgesellschaft’ in P Badura, Festschrift für Peter Lerche (Beck, München 1993) 873 at 887 ff; HE Brandner and P Ulmer, ‘EG-Richtlinie über mißbräuchliche Klauseln in Verbraucherverträgen’ [1991] Betriebsberater 701; P Hommelhoff, ‘Zivilrecht unter dem Einfluß europäischer Rechtsangleichung’ (1992) 192 AcP 71 at 90 ff.84 See below, 6 A.85 Cf., in this sense, e.g. §§ 242 BGB, 346 HGB (Handelsgesetzbuch, Commercial Code).

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(ii) Imposition of a general duty to cooperate

A further limitation on party autonomy is the general obligation of the parties to “co-

operate” with each other, as contained in Art. III.-1:104.86 Once again, the imposition of

such obligations which go well beyond what the contractual parties have agreed upon

has to be tied to strict and precise prerequisites because, in principle, it has to be

assumed that parties wish to reserve to themselves the definitive and exclusive

specification of their contractual rights and obligations. Yet, the primacy of the parties’

dispositions and the exceptional character of any intervention is obscured by the express

and unqualified incorporation of a general duty to cooperate in the DCFR. This duty is

even extended by five (!) additional duties of cooperation that arise with respect to

certain types of contracts.87 Moreover, the DCFR provides for further mechanisms – in

the form of general standards – interfering with the obligations specified in the contract

and overlapping with the duties of cooperation. Examples for such mechanisms are the

duty to act in good faith when performing a contract (Art. III.-1:103) and the narrowly

defined obligations arising in cases of a “change of circumstances” (Art. III.-1:110).

The incorporation of an additional and general duty to cooperate threatens further to

wear away the binding force of contracts, as it may encourage debtors to challenge

onerous obligations by relying on the vagueness of these standards and on the

complexity of their coordination; and it may provide judges with an opportunity to

achieve “just results” by arbitrarily complementing the contractual provisions of the

parties.

B Damages and Tort Law: Opening the Floodgates

Within the areas of the DCFR covering the law of contractual and non-contractual

liability, “Solidarity and Social Responsibility”88 again appear as the dominant

guidelines, pushing the principle of personal responsibility into the background. This

can already be seen in contract law. Here, the central provision covering damages for

86 Cf. Art. 1:202 PECL. The duty to co-operate (also) reflects the conviction of the authors of the DCFR that private law should encourage altruism; cf. von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [32].87 Cf. Art. IV. C.-2:103 (Rules applying to service contracts in general); Art. IV. C.-3:102 (Construction); Art. IV. C.-4:102 (Processing); Art. IV. D.-2:101 (Mandate); Art. IV. E.-2:201 (Commercial agency, Franchise and distributorship).88 von Bar, Clive, Schulte-Nölke, above n 15, Introduction at [22]; on the core aims and values underlying the DCFR, see above, 2 B.

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breach of contract is Art. III.-3:701 (3). What is said there amounts to the flat rule that

any loss is recoverable regardless of whether it is economic or non-economic in nature.

Economic loss is said to include loss of income or profit as well as “burdens incurred”

and a reduction in the value of property. According to Art. III-3:701 (3) (cl. 2), non-

economic loss includes pain and suffering as well as general impairment of the quality

of life.

As demonstrated by the use of the word “includes”, neither of these definitions is

exhaustive. Consequently, if the specified heads of damage are being used merely as

examples, it follows that contractual liability comprises any and all losses caused,

regardless of their nature or magnitude. This principle results in a major expansion of

the scope of compensable damage for many member states. The German law of

damages, for example, has been rightly criticised for its failure to treat non-pecuniary

loss sufficiently seriously, especially in those cases where the purpose of the contract is

the protection of interests of a non-economic nature.89 The DCFR, however, falls into

the opposite extreme of an unbounded right to damages. Compared to the liability

regimes of the Member States, it may come closest to the French legal system. In the

courts of France, damages are estimated by judges exercising their discretion instead of

being calculated in the style and with the precision of an accountant.90 The French

approach is generous and generalistic but for it to be operational, it needs a series of

limiting criteria setting boundaries for the definition of damages and, therefore, their

compensation. This set of limiting guidelines is enshrined in Art. 1151 Code Civil

which requires that damages must be “une suite immediate et directe” of the breach in

order to be recoverable.91 On the basis of this formula, French jurisprudence has

developed a framework which allows courts to reject claims for compensation of trivial

loss and to limit claims for compensation of non-pecuniary loss. The DCFR, in contrast,

not only lacks legal guideposts comparable to those set out in Art. 1151 Code Civil but,

in addition, cannot rely on a legal tradition familiar with the task of keeping within

bounds an otherwise excessively broad definition of recoverable loss.

89 For details, see G Wagner, ‘Neue Perspektiven im Schadensersatzrecht: Kommerzialisierung, Strafschadensersatz, Kollektivschaden’ in Deutscher Juristentag (ed), Verhandlungen des 66. Deutschen Juristentags vol I (C.H. Beck, München 2006) A 49 ff.90 G Viney, Les obligations, La responsabilité: effets (Libraire General de Droit et de Jurisprudence, Paris 1988) [62]; C van Dam, European Tort Law (OUP, Oxford 2006) [1202-1].91 A Bénabent, Droit civil – Les obligations (10th edn, Montchrestien, Paris 2005) [416].

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This propensity towards expanding liability by the elimination of distinctions and

limitations recognised by the legal systems of many Member States is not only

characteristic of the DCFR provisions on contract law, but likewise – or even more – for

those on tort law which are contained in its Book VI.

(i) Economic and non-economic loss

Book VI of the DCFR carries the somewhat unwieldy title, “Non-contractual liability

arising out of damage caused to another”, and, on first review, its doctrinal structure

proves equally complex and clumsy. On the one hand, this can be attributed to the

DCFR immediately turning to “damage” rather than first stipulating that a legally

protected interest must have been infringed. Subsequently, however, it lists a full

spectrum of protected interests in Art. VI.-2:101 and Arts. VI.-2:201 - 2:211. Liability

under Book VI requires the infringement of a protected interest as listed in those

provisions, in addition to the general requirements of responsibility in tort law, i.e.

causation and fault of the wrongdoer, or the presence of a ground for strict liability (Art.

VI.-3:201 ff). Looking at the long list of categories of “recoverable damage” or – which

amounts to the same – protected interests, one must draw the conclusion that the DCFR

does not subscribe to a general clause such as Arts. 1382, 1383 of the French Code Civil

but operates with a set of categories of torts which together delineate the scope of non-

contractual liability. However, some provisions of Chapter 2 (Arts. VI.-2:201 – 2:211)

also define the scope of compensation, i.e., they belong to the law of damages.

Correspondingly, the treatment of remedies in Arts. VI.-6:101 - 6:106 is rather short.

Even though Book VI thus departs from the generalistic style of French law, in

substance it still carries further the approach, already familiar from the area of

contractual liability, significantly to expand the scope of liability. As a review of

Chapter 2 reveals, the list of heads of recoverable damage is long and comprehensive

indeed. With respect to personal injuries, Art. VI.-2:201 (2) (a) makes it clear that not

only the costs of health care are recoverable but also expenses incurred for the care of

the injured person by those close to the victim. These clarifications are hardly surprising

but the point is that they are merely illustrative rather than exhaustive, a fact hinted at

by the introductory phrase in Art. VI.-2:201 (2) (a): “such loss includes”. Hence one

must infer that non-pecuniary loss arising from injury to body or health is also

compensable. This conclusion is supported by the definition of non-economic loss

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outlined in Art. VI.-2:101 (4) (b)92 which – consistent with Art. III.-3:701 (3) – lists

pain and suffering as well as impairment of the quality of life as heads of compensable

loss. But, once again, the seemingly inescapable “includes” indicates that this

enumeration is not exhaustive. As a consequence, every head of damage and each

category of consequential loss resulting from bodily injury seems to be compensable

regardless of whether the loss is economic or non-economic. Quite obviously, the legal

system coming closest to the tort law model of the DCFR is again the French one which

is loath to discriminate between different categories of loss. This does not mean,

however, that, in France, the scope of liability is without limits. Rather the French law

of “responsabilité civil” requires that the damage be “direct, actuel et certain”, and

French judges know how to handle this formula.93 It is missing in the DCFR.

(ii) Compensation for injury as such

Another indication for the tendency of the DCFR towards unbounded liability is the

provision of Art. VI.-6:204 which declares that “Injury as such is to be compensated

independent of compensation for economic or non-economic loss”. The point here is not

that injury entails loss and in this sense is an element of claims for damages. Rather, as

Art. VI.-2:201 (1) as well as Art. VI.-6:204, and the definition of “damage” in Annex I

of the DCFR make clear, “injury as such” is introduced as a third category of loss, in

addition and alongside to economic and non-economic loss. If, however, “loss”

according to Art. VI.-2:101 (4) includes all economic loss (lit. a) as well as all non-

economic loss (lit. b), what then remains for “injury as such”?

“Injury as such” represents a reception of the concept of “danno biologico” or “danno

alla salute” (biological damage; damage to health) developed in Italian law. The Italian

legal system needed a special category of personal injury damage in order to circumvent

92 Unfortunately, Art. VI.-2:201 does not make any reference to Art. VI.-2:101 (4) (b) and thus leaves the reader wondering why the basic categories of economic and non-economic loss do not appear in the categories of wrong enumerated in Art. VI.-2:201 ff. The failure to coordinate these provisions is regrettable since, in its current form, Art. VI.-2:201 does not respect its own definition of “legally relevant damage” as concerns injury to body or health. Obviously, the proviso of “includes” in Art. VI.-2:201 (2) (a) needs to be taken seriously and must be read to refer back to Art. VI.-2:101 (4). As Art. VI.-2:101 (4) (b) makes clear, compensation in cases of personal injury does in fact include damages for pain and suffering and for impairment of the quality of life.93 J Flour, J-L Aubert and E Savaux, Droit civil, Les obligations, vol 2, Le fait juridique (10th edn,Collection U. Série Droit privé, A Colin, Paris 2003) [136]; E Terré, P Simler and L Lequette, Droit civil, Les obligations (9th edn, Dalloz, Paris 2002) [700] ff; see also above n 91.

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the otherwise overly restrictive scope of recovery for pain and suffering.94

Consequently, in addition to awards of health care costs, lost wages, and pain and

suffering damages in the narrow sense of the term, Italian law compensates victims of

personal injury for the loss of bodily functions as such. In a given case, the amount of

compensation is calculated in a manner which bears a close resemblance to the

assessment of disablement benefits available under workers’ compensation schemes or

other social security systems.95 In essence, an abstractly measured money payment is

awarded as compensation for the loss of bodily functions and the associated diminution

of the quality of life. In contrast to Italian law, however, the DCFR does not limit

compensation for non-economic loss to the category of pain and suffering: Art. VI.-

2:101 (4) expressly declares loss of amenities – impairment of the quality of life – to be

worthy of redress independent of, and in addition to, pain and suffering in the narrow

sense of the term.96 Therefore, other than Italian law, the DCFR simply does not need

the concept of “injury as such” on top of a broad concept of non-pecuniary loss that

goes well beyond the pain actually felt by the victim. In allowing compensation both for

impairment of the quality of life (loss of amenities) and for injury as such, the DCFR is

in serious danger of reproducing identical loss under two separate heads of damage.97

The risk of double compensation is imminent.

94 Cf. FD Busnelli and G Comandé, ‘Country Report Italy’ in WVH Rogers (ed), Damages for Non-Pecuniary Loss in a Comparative Perspective (Tort and Insurance Law vol 2, Springer, Wien 2001) 137ff; B Markesinis and others, Compensation for Personal Injury in English, German and Italian Law(CUP, Cambridge 2005) 84 ff; C von Bar, The Common European Law of Torts vol I (OUP, Oxford 1998) [573] f; Wagner, above n 89 at A 46 ff; idem in E Lorenz (ed), Karlsruher Forum 2006: Schadensersatz – Zwecke, Inhalte, Grenzen (VersR-Schriftenreihe vol 35, VVW Karlsruhe, Karlsruhe) 5at 100 ff.95 FD Busnelli and G Comandé, ‘Compensation for Personal Injury in Italy’ in BA Koch and H Koziol (eds), Compensation for Personal Injury in a Comparative Perspective (Tort and Insurance Law vol 4, Springer, Wien 2003) [l] ff; G Comandé, ‘Towards a Global Model for Adjudicating Personal InjuryDamages: Bridging Europe and the United States’ (2005) 19 Temple International & Comparative Law Journal 241 at 288 ff; Markesinis and others, above n 94 at 88.96 The different heads of non-economic loss caused by personal injury are summarized and reviewed by WVH Rogers, ‘Comparative Report’ in Rogers, above n 94, 246 ff; Markesinis and others, above n 94 at45 ff; G Wagner, ‘Ersatz immaterieller Schäden: Bestandsaufnahme und europäische Perspektiven’ [2004] JZ 319 at 322 ff.97 Cf. Markesinis and others, above n 94 at 85: “The compensation thus given to the victim under this new heading of damage (danno biologico) covers all the different kinds of damage which English law would compensate under such headings as ‘loss of amenities of life’, Damage to the aesthetic appearance of the victim…”.

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(iii) Bereavement damages, environmental harm and other interests

This is not the place for a comprehensive and thorough discussion of the many

categories of “legally relevant damage” contained in Chapter 2 of Book VI. Two

examples must suffice for the purpose of illustrating the tendency of the DCFR to

expand liability. One such example is Art. VI.-2:202 which provides for the recovery of

non-pecuniary loss suffered by relatives and others close to the primary victim. Other

than current English law which awards bereavement damages under the Fatal Accidents

Act in cases of death only, the DCFR also allows for compensation where the primary

victim is “merely” injured. In this case, the relatives and other loved ones may recover

damages for non-pecuniary loss in addition to the reimbursement of expenses incurred

in the course of caring for the victim, as provided for in Art. VI.-2:201 (2) (a).

Furthermore, claims are not limited to spouses and relatives but are available to any

natural person who suffers non-economic loss as a result of another’s personal injury or

death.98 As a result, ordinary cases of personal injury such as traffic accidents would

routinely trigger a whole series of damage claims by the primary victim, by spouses and

relatives, and by other loved ones. It seems highly doubtful whether such multiplication

of claims and disputes even in rank-and-file tort cases has much to recommend itself.99

Another example for the expansion of liability by the DCFR is Art. VI.-2:209 which

allows the state to recover expenses incurred in the course of restoring environmental

resources, i.e. natural elements like air, water, soil, flora and fauna. In employing such

sweeping, comprehensive language, the DCFR goes far beyond the approach adopted

by the EU Directive on environmental liability.100

98 The discussion on bereavement damages in German law is summarized by Wagner, above n 89 at A 62ff; for a comparative overview cf. Rogers, above n 96 at 262 ff.99 Rogers, above n 96 at 264: “However such damages were to be assessed it would add a new dimension of complexity and uncertainty to even the simplest claims.”100 Parliament and Council Directive 35/2004/EC of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage [2004] OJ L 143/56. As to the state of the transformation process in the UK cf. http://www.defra.gov.uk, available as of 07.08.08; as to the transformation in Germany see G Wagner, ‘Das neue Umweltschadensgesetz’ [2008] Versicherungsrecht565; for other Member States cf.http://www.soton.ac.uk/law/research/europelaw/EnvironmentalLiabilitydirective.html, available as of 07.08.08; for more detail on the Directive as such, see G Wagner, ‘Die gemeinschaftsrechtliche Umwelthaftung aus der Sicht des Zivilrechts’ in R Hendler and P Marburger (eds), Umwelthaftung nach neuem EG-Recht (Schmidt, Berlin 2005) 73; G Wagner, ‘Die gemeinschaftsrechtliche Umwelthaftung aus der Sicht des Zivilrechts’ [2005] Versicherungsrecht 177 ff.

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When going through the various categories of Chapter 2, it should be borne in mind that

the catalogue of “instances of legally relevant damage” (Art. VI.-2:201 ff) is not

exhaustive. As stated in Art. VI.-2:101 (1) (b), other injury or loss is also compensable,

provided only that it results from the violation of a right conferred by the law. Finally,

Art. VI.-2:101 (1) (c) adds something close to a general clause by accepting any interest

worthy of legal protection as a trigger of liability. In sum, it seems that the protective

scope of tort law is ultimately left to the determination of the courts. It is difficult to see

how such an open-ended regime could work satisfactorily in a community of 25

member states with divergent systems of tort law.

(iv) Reduction clause

Having first proposed a wide expansion of non-contractual liability, the authors of the

DCFR appear to have thereafter been overcome by a sense of remorse. The broad scope

of protection and the generosity in compensating each and every type of loss is

counterbalanced by Art. VI.-6:202 which authorizes the court to reduce, or even strike

out entirely, a claim for damages, well-founded otherwise, in instances where this is

deemed “fair and reasonable”.101 As the provision makes clear, such reduction is never

reasonable where the harm has been caused intentionally. In the remaining cases of

negligence and strict liability, a reduction may be granted where liability in full is

disproportionate to either (1) the accountability of the person causing the damage,

(2) the extent of the damage102 or (3) the means of preventing it. In some sense, the

reduction clause of VI.-6:202 is the reverse of the concept of liability in equity, known

in the tort law systems of some, albeit not all, Member States of the EU. Whereas

liability in equity allows the court to grant compensation even though no valid claim

exists, the reduction clause authorizes the court to take liability away even though a

valid claim does exist. Against this background, it is highly surprising that the factor

looming large in the area of liability in equity, i.e. the financial circumstances of the

parties, is absent from the brief list of factors provided by Art. VI.-6:202. One will

101 Similarly Art. 10:401 Principles of European Tort Law, above n 24, of the (competing) Group on European Tort Law; cf. also O Moreteau, ‘Reduction Clause” in Principles of European Tort Law, above n 24 at 179 and § 1317 of the Austrian Draft Reform Act; cf. I Griss, G Kathrein and H Koziol (eds), Entwurf eines neuen österreichischen Schadenersatzrechts (Tort and Insurance law number 15, Springer, Wien 2006) 9, 89 ff; for a critical discussion of the latter draft, see G Wagner, ‘Reform des Schadenersatzrechts’ [2008] Juristische Blätter (JBl) 2 at 18 ff.102 This criterion remains unclear since the scope of liability and the scope of damage are generally two sides of the same coin.

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probably have to try to sneak it in under the guise of the second factor – extent of the

damage – which would otherwise have no rational meaning.103

(v) A scheme of unbounded liability

Even though warnings of a liability regime out of bounds – the so-called “floodgates

argument” – are often-heard, and sometimes irrational or guided by self-interest, the

DCFR presents a welcome and deserving target. The reduction clause provided by Art.

VI.-6:202 does not mitigate the concern but rather serves to reinforce it. The

acknowledgment of the draftsmen that an otherwise valid damage claim may be reduced

or struck out at the court’s discretion, effectively casts doubt on the entire scheme of

Book VI. If the actionable wrongs, as defined in the DCFR, stand on solid normative

ground to justify the imposition of liability on the wrongdoer, why is there a need for a

reduction clause? Furthermore, if courts are explicitly called upon to limit the liability

of parties according to a criterion of proportionality, one can hardly restrain them from

also basing liability upon a simple weighing of competing interests. The DCFR, in its

Art. VI.-2:101 (1) (c), and in other provisions, invites courts to do so and, on the other

hand, lacks the safeguards which can reliably prevent them from behaving like

redistributive agencies.

Book VI comprises no less than 57 articles. This is far more than the five provisions

which the French Code Civil dedicates to general tort law104 and also well beyond the

30 or so sections which suffice for the German Civil Code. There is thus no dearth of

legal provisions in the DCFR; none the less, the liability regime set up by those

provisions remains exceedingly vague.105 The explanation for this paradox lies in the

reluctance of the authors to settle upon definitive determinations, and in their

inflationary use of the word “includes”. It is ultimately for the courts to decide which

interests are worthy of legal protection. If there is injury to such an interest, economic as

well as non-economic loss is awarded as a matter of course, without any limitation.

However, should the result achieved by the operation of these principles contradict the

court’s sense of justice, the award of damages can be reduced – or even eliminated – at

103 G Wagner in K Rebman (ed), Münchener Kommentar zum Bürgerlichen Gesetzbuch (4th edn, Beck, München 2004) § 829 [14] ff.104 Not included in this figure are the numerous provisions of Arts. 1386-1 ff Code Civil which serve to implement the product liability directive.105 Concurring Jansen, above n 24 at 756.

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the judge’s discretion. In doing so, Book VI furnishes striking evidence of the DCFR’s

penchant for leaving crucial legal issues to the courts which will have to grapple with

general clauses replete with indeterminate terminology. The role model of the DCFR’s

tort regime is not the autonomous and rational party who may rightly be held

responsible for his or her actions but the paternalistic judge who strives for social

improvement and seeks to bring it about by means of his judgments.

4 Ill-adjusted Sets of Rules and Systematic Inconsistencies

In the light of the disparate policy decisions underlying the DCFR, the multitude of

participating legal scholars and the tight time-frame under which they laboured, it is no

surprise that the text widely suffers from terminological, systematic and normative

contradictions. This is not only true for the unresolved tension and conflict among

foundational legal principles,106 but also for many rules on comparatively “non-

political” topics such as assignment, representation and mandate. These areas, where the

DCFR significantly diverges from the PECL, warrant closer consideration.

A Assignment

A detailed analysis of the law on assignment cannot be undertaken within the scope of

this paper although much here clearly merits further discussion.107 For the purposes of

106 See above, 2 B.107 This includes, in the first instance, the ineffectiveness vis-à-vis third parties of contractual clauses purporting to prohibit assignment even concerning non-monetary obligations: Art. III.-5:108 (1). That entails a far-reaching limitation of the freedom of contract which appears without justification (H Eidenmüller, ‘Die Dogmatik der Zession vor dem Hintergrund der internationalen Entwicklung’ (2004) 204 AcP 457 at 464 ff, 471; Kötz and Flessner, above n 3 at 417). Equally unfortunate is the concession made in Art. III.-5:108 (2) to the debtor who is discharged by performing in favour of the assignor even though the latter has been in breach of his contractual obligation vis-à-vis the debtor (Art. III-5:108 (2)); cf. Eidenmüller, this n at 472. According to Arts. 11:301, 303 PECL, assignments in violation of a contractual prohibition are given effect only under much more limited requirements, but the debtor is discharged by performing in favour of the assignor once he knows of the assignment. Now, this proposal of the Study Group leads to doctrinal inconsistency: under Art. III.-5:116 (2) (b) the debtor may not invoke “defences” against the assignee that are based on a breach of the contractual prohibition of the assignment even though Art. III.-5:108 (2) specifically establishes such a defence. For the discharging effect of the performance applies in spite of the debtor’s knowledge of the assignment. Apparently, the authors only intended to cover defences such as a termination of the contract because of an assignment contrary to a contractual prohibition, but this is hardly clear from the text of the rule. Finally, it is very problematic that the debtor is discharged by performing in good faith to an apparent assignee on the basis of a note of assignment in which that person is identified as the new creditor: Art. III.-5:118 (2). This can lead to an expropriation of a creditor who can in no way be held responsible for having created the appearance that the right had been assigned to that other person; see further Eidenmüller, this n at 490.

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this article, it suffices briefly to outline shortcomings which make it difficult – if not

impossible – to apply the rules in a rational way. First, there is the problem of post-

contractual modifications between the assignor and the debtor which impact upon the

assigned right. For unexecuted service contracts and continuing obligations, in

particular, a practical need for such modifications exists, examples being the granting of

a delay for payment, a waiver of a debt, a settlement concerning a defect, which is

controversial between the parties, or simply a mutually agreed upon change in the

performance owed. Examples of the last situation would be a contractor desiring a

different (and more modestly priced) tiling material than that called for in the contract,

or leased technical equipment being replaced by a modernised version before the

expiration of the contract. Modern international conventions on the law of assignment

contain solutions for this question as a matter of course.108 According to Art. 11:308

PECL, such agreements are only effective when they are made in good faith and are not

contrary to the interests of the assignee. This approach transforms the result of

hypothetical negotiations between the parties into a rule of law. The transaction costs

saved by this solution present a clear advantage over a requirement that the assignee

approve the agreement in advance. The DCFR, in contrast, refrains from any statement

as to the effectiveness of such agreements. Instead, the assignor “undertakes” that the

contract will only be modified along the lines set out in the respective PECL provision

(Art. III.-5:112 (4)).

Now, such agreements can normally not be enforceable since they operate to the

detriment of a third party (i.e. the assignee) (Art. II.-1:103 (1)); the same applies if they

are seen as a disposition by an unauthorised party over another person’s right. In view

of this, Art. III.-5:112 (4) appears rather puzzling: the assignor is obligated to refrain

from doing something which is, in any event, impossible for him as a matter of law.109

Obviously this cannot be the intended meaning. But if one, therefore, concludes that

108 See, the UNIDROIT Convention on International Factoring, the UNIDROIT Convention on International Interests in Mobile Equipment and, above all, the United Nations Convention on Assignment. For further information, see Eidenmüller, above n 107 at 486 f; Hattenhauer in HKK, above n 38, vol II/2, §§ 398 – 413 [70] ff.109 The rules in the PECL appear more plausible also in view of the fact that there the assignment only becomes effective against the debtor upon notice being provided: G Lubbe, ‘Assignment’ in H MacQueen and R Zimmermann (eds), European Contract Law: Scots and South African Perspectives (Edinburgh Studies in Law, Edinburgh University Press, Edinburgh 2006) 307 at 312 f, 329. According to the DCFR, the transfer of the claim is accomplished by the act of assignment and notice of the assignment is irrelevant: Arts. III.-5:104 (2), 5:113, 5:118 ff.

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such agreements are taken to be effective and that this was reason for making the

assignor liable inter partes against the assignee, the provision appears even more

problematic: for this reading would entail that the assignee is always reduced to

damages claims against the assignor, if he is disadvantaged by a later modification of

the obligation between the assignor and the debtor. Such a result would be unfair and

does not find any support in existing national or international laws.

The good faith acquisition of rights is also treated in an inconsistent fashion. Under

Art. III.-5:104 (Basic Requirements) the prerequisites for an assignment include the

existence of an assignable right and the assignor being entitled to transfer the right.

Art. III.-5:111 states more precisely that only the creditor is authorised to assign a right

and that the basic requirements, though they may not be satisfied at the time of the act

of an assignment, must be satisfied at the time the assignment itself is to take effect. The

consequences appear to be unambiguous: in accordance with many national legal

systems a good faith purchase of a right is ruled out (nemo plus iuris ad alium

transferre potest quam ipse haberet). Hence, a second assignment of the same right

would not be possible. As far as successive assignments are concerned, priority would

therefore have to be allocated to the first assignee who has become the new and sole

creditor as a result of the first assignment (Art. III.-5:113). However, Art. III.-5:120

(Competition between successive assignees) arranges the matter conversely, giving

priority to the assignee whose assignment was first notified to the debtor if the assignee

of the later assignment did not know or could not reasonably have known of the earlier

assignment. That rule is not implausible,110 and it is in accordance with Art. 11:401

PECL. Yet, it contradicts the basic requirements set out in Art. III.-5:104. If one

assumes that the specific provision of Art. III.-5:120 must be given priority, then

Art. III.-5:104 (which is, incidentally, without an equivalent in the PECL) turns out to

be a confusing and superfluous legislative statement of legal doctrine.

Furthermore, the DCFR does not adopt any clear position as to the fundamental

question whether the assignment is formed causally according to the French model or,

as in the German view, abstractly. In other words, the DCFR is unclear on whether an

assignment is linked, conceptually and with regard to its effectiveness, to an underlying

110 Cf. Lando and others, above n 6 at 121 ff (Comments on Art. 11:401); Hattenhauer in HKK, above n 38 vol II/2, §§ 398-413 [72] with further references concerning the international discussion.

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transaction such as the purchase of a right, a donation or a security agreement.111 The

definition of an act of assignment as “a contract or other juridical act which is intended

to effect the transfer of a right” (Art. III.-5:102 (2)112), may be understood as pointing

towards an abstract model. Additionally, as the law of sales also comprises the purchase

of rights (Art. IV.A.-1:101 (2) (c)), one must conclude that the purchase of a right and

its assignment are conceived of as being legally distinct. Consequently, the transfer of

an obligation appears to require no more than an effective assignment. The validity and

effectiveness of an underlying transaction would be immaterial; accordingly, the

assignment would seem to be conceived as an abstract transaction.

None the less, in accordance with the model of Art. 1269 Codice Civil and Art. 11:204

PECL, Art. III.-5:112 (2), (3) DCFR affixes far-reaching assignor guarantees

(“undertakings”) to an assignment, entailing a sort of warranty liability. According to

Art. III.-5:112 (2), (3) DCFR the assignor must undertake, inter alia, that the assigned

right exists, that he is entitled to assign the right and that no defences or rights of set-off

exist as to the right. Moreover, gratuitous acts of assignment and acts of assignment for

purposes of security are subject to the corresponding requirements as to formation and

validity relating to contracts of donation and to security agreements (Art. III.-5:110).

The assignment thus includes elements of the underlying transaction. Its effectiveness

would therefore, at least partially, appear to be dependent on a causal transaction. All in

all, the resulting picture is anything but cohesive.

Especially awkward, however, is the co-existence of divergent rules on liability as

found in Art. III.-5:112 and in the provisions on sales law. Thus, on the one hand, sales

law excludes warranty liability where the buyer knew of the lack of conformity

(Art. IV.A.-2:307), whereas such an exception does not exist within the provisions on

assignment. On the other hand, the seller must assume responsibility not only as to

“rights” asserted by third parties but also as to their “claims”; hence, the seller also

accepts responsibility when a third party brings a claim that ultimately turns out to be

unfounded (Art. IV.A.-2-305).113 The seller of a right would, accordingly, also have to

111 For a comprehensive discussion, see, Hattenhauer in HKK, above n 38 vol II/2, §§ 398-413 [6], [18] f, [28] ff, [66] ff and references therein.112 “An ‘act of assignment’ is a contract or other juridical act which is intended to effect a transfer of the right.”113 Annex I defines: “A claim is a demand for something based on the assertion of a right.”

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assume responsibility as to claims raised by a third party on the basis of a purported

assignment or, respectively, as to alleged defences of the debtor, even though Art. III.-

5:112 (2) imposes no such liability on the assignor. Yet the relationship between

warranties of sale and of assignment remains unclear; in particular, none of these

provisions can be understood as being more specific than the other.114 Clearly, a

warranty rule in respect of an assignment, such as Art. III.-5:112, only makes sense, if

the assignment represents its own type of transaction and, therefore, a duplication in the

law of sales is avoided – as is the case in the PECL. Compared with the PECL, the

provisions of the DCFR appear doctrinally and systematically incongruent. If the

assignment is to be seen as an abstract transfer of a right, it would actually fit best into

property law.115 Otherwise, it would have to be conceptualised either – as in Italian

law116 – as its own type of transaction, or – as in French law117 – as part and parcel of

sales law.

B Representation and Mandate

The provisions addressing representation on the one hand and mandate and service

contracts on the other also appear to be systematically ill-conceived. The problem

derives from the fact that, whereas the authority – in accordance with the development

of European law over the last 200 years – is conceptualised abstractly, mandate is

specially treated as its counterpart within the law of obligations, and thus as an

“authority contract”, i.e. a contract that confers authority upon a representative.118 At the

same time, mandate specifically does not constitute a special type of service contract in

the DCFR, regardless of the fact that the definition of “services” is extremely broad and

114 Whereas from a sales law perspective the sale of a right represents a special type of transaction, the situation is the other way around from an assignment perspective: here, the assignment of a right on account of a contract of sale would be seen as a special case of assignment.115 That would correspond to the Dutch model; on the problem in general, see Kötz and Flessner, above n 3 at 404 ff.116 Arts. 1260 ff Codice Civile.117 Arts. 1689 ff Code Civil; see F Ranieri, Europäisches Obligationenrecht (2nd edn, Springer, Wien 2003) 442 f.118 Art. IV.D.-1:101 (1) defines mandate as a contract, “under which: (a) a person...is authorised and instructed...to conclude a contract between the principal and a third party or otherwise affect the legal position of the principal in relation to a third party;...” (see further n 119).

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would easily appear to encompass mandate.119 As a result, there is an unresolved120

conflict for service contracts, in which the service provider is also authorised to act on

behalf of the client. Such contracts, including especially business management

contracts, would appear to be of a mixed nature. That is particularly problematic in view

of the fact that mandate is not classified as a service contract and the DCFR therefore

provides divergent solutions for identical legal issues.121

As concerns mandate and representation, there is also a doubling of provisions resulting

not only in redundancies, such as identical definitions,122 but also in contradictions123

and structural gaps. For example, under the provisions of mandate the representative is

allowed to conclude the contract, on behalf of the principal, with himself, provided that

the content of the contract is determined so precisely in the contract of mandate that

there is no risk of impairing the interests of the principal (Art. IV.D.-5:101 (2) (d)). Yet,

this exception does not exist in the respective rules on representation (Art. II.-6:109

(3)).124 And while even German law, in spite of being so enamoured with the abstract

conception of authority, generally determines its expiration on the basis of the

underlying legal relationship (§ 168, 1 BGB), the DCFR treats these two issues

independent of one another (Arts. II.-6:112 and, respectively, IV.D.-6:101 ff). The

authority continues to exist until a third party, who knew of the original authority,

knows or can reasonably be expected to know of its ending (Art. II.-6:112 (1)). This

means that it is incumbent upon the principal to inform third parties of the ending of the

119 Art. IV.C.-1:101 (l) (a) defines a service contract as a contract “under which one party...undertakes to supply a service to the other party...” On the other hand Art. IV.D.-1:101 (1) defines a mandate as a contract “under which:...(b) the representative undertakes...to act on behalf of...the principal”. To act on behalf of someone means to provide a service to that person.120 An express resolution of this conflict (in favour of the rules on mandate) exists only for contracts in which the representative has been instructed to initiate a contract but has not initially been authorised to conclude the contract: Art. IV.D.-1:101 (4).121 Divergent formulation can be found, for example, concerning the price provisions (Art. IV. C.-2:101 and IV.D.-2:102), the obligations of cooperation (Art. IV.C.-2:103 and IV.D.-2:101), and the obligations of skill and care (Art. IV.C.-2:105 and Art. IV.D.-3:103). Reasons for these differences are not apparent.122 See, e.g., Art. II.-6:102 (2) and Art. IV.D.-1:102 (b) (“authority of a representative”).123 Thus, Annex I defines “revocation...in relation to a juridical act” as “its recall by a person or persons having the power to recall it, so that it no longer has effect”, while Art. IV.D.-1:102 (h) describes “revocation of the mandate of the representative” as “the decision of the principal to no longer authorise and instruct the representative to act on behalf of the principal”.124 Similar problems can be seen with regard to the disclosure of a conflict of interest by the representative under the provisions on representation and mandate; here, Art. II.-6:109 (3) and IV.D.-5:101 (2), IV.D.-5:102 (2) contain differences in detail, although these provisions appear to be intended to lay down materially identical rules. That leads to unnecessary problems of interpretation.

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authority even in cases where the mandate was granted internally, i.e. vis-à-vis the

representative, who had in turn informed other persons about it, and even if the

authority was from the very outset only granted for a limited time, or for a limited

purpose.125 Thus, rather than the third party having to show the existence of facts which

justify his or her reliance on the existence of the mandate, the principal must establish

the absence of such facts. That is often impossible; it goes well beyond a reasonable

protection of expectations; and it cannot seriously have been intended. Conversely, the

authority appears to be revocable even if the underlying mandate is irrevocable: for the

detailed provisions on irrevocable mandates (Art. IV.D.-1:105) apply only as to the

(internal) relationship between principal and representative. With respect to third

parties, the DCFR provides for an irrevocable authority only in those cases where the

principal is under an obligation to the third party to not end the representation: Art. II.-

6:112 (2). This, too, is hardly convincing. Where the parties are allowed to provide for

an irrevocable mandate, the law should protect their concern of assuring the legal

authority of the representative, rather than merely establishing a claim for damages.

Finally, the DCFR also paradoxically deals with the situation where a representative

exceeds his contractual authority (mandate), on the one hand, and his power of

representation vis-à-vis third parties (representation), on the other. As concerns

mandate, he has authority to act, in situations where the principal is not available and

his wishes cannot be ascertained: Art. IV.D.-3:201 (1).126 However, these provisions do

not establish any competence with regard to third parties; in that respect, reference is

made to the Chapter on representation.127 There, however, one does not find any

pronouncement covering this situation (cf. Art. II.-6:104: Scope of authority).128 Thus,

although the representative may in certain circumstances exceed his authority, he does

not appear to be empowered, in these cases, to act on behalf of the principal. This is not

only unfortunate but also stands in direct contradiction to the rules on Benevolent

125 A comparatively far-reaching rule was already contained in Art. 3:209 (1) PECL, but Art. II.-6:112 (1) DCFR ventures well beyond it.126 “The representative may act in a way not covered by the mandate if: (a) the representative has reasonable ground for so acting on behalf of the principal; and (b) the representative does not have a reasonable opportunity to discover the principal’s wishes in the particular circumstances; and (c) the representative does not know and could not reasonably be expected to know that the act in the particular circumstances is against the principal’s wishes.”127 The reference to “Book III…” (rather than Book II) appears to be an editorial error.128 Art. II.-6:112 (4), establishing a kind of emergency authority after the ending of authorisation, does not cover such cases.

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intervention in another’s affairs. There, the intervener is expressly empowered to act on

behalf of the principal vis-à-vis third parties in so far as this may reasonably be

expected to benefit the principal (Art. V.-3:106).129 According to the rules on

Benevolent intervention in another’s affairs, as published in 2006, this emergency

authority was to be conferred also to representatives under a contract of mandate.130 In

the DCFR, however, exactly the opposite is now set out in Art. IV.D.-3:201 (3). If this

is not merely an editorial lapse, this regulation is incomprehensible. Ultimately, it is a

consequence of the exaggerated separation of mandate and authority. That one should

keep both legal acts distinct from each other does not mean that the respective

regulations should have nothing to do with each other.

5 Dodging the Task of Critically Revising the Consumer Acquis and the PECL

Another important aspect in the appreciation of the DCFR is the way in which its

authors have dealt with the sources from which they have drawn. In this regard, three

different levels of regulation need to be distinguished: first, the rules that build upon

existing PECL provisions; second, rules that are based on the private law acquis

communautaire; and, third, those chapters and provisions that have their foundation

neither in the PECL nor the acquis but (supposedly) in the national legal systems and in

comparative legal scholarship. This last-mentioned category of “new” areas of

regulation is too voluminous for a substantial assessment at this very early stage,

particularly in view of the fact that the commentary which is eventually to accompany

the DCFR is still outstanding. However, considerable doubt exists as to whether

important parts of the DCFR – for instance those concerning service contracts

(Arts. IV.C.-1:101 ff), benevolent intervention in another’s affairs (Arts. V.-1:101 ff),

tort law (Arts. VI.-1:101 ff) and unjustified enrichment (Arts. VII.-1:101 ff) – can claim

to have a convincing basis either in the national legal systems of the EU or in general

private law discourse.131 The present analysis will focus on the incorporation of the

129 Although the text is capable of being misunderstood (“may conclude legal transactions”), the authority vis-à-vis third parties is supposed to be covered, as is apparent from the title of the Chapter (“Authority of the intervener”), the provision in sub-paragraph (2) as well as the rationale provided by its principal draftsman (von Bar, above n 32 Introduction at [93] and the comments to Art. 3:106).130 von Bar, above n 32 Introduction at [93]: a person authorized to conduct contractual negotiations is allowed to conclude the contract in so far as this is reasonable to benefit the principal.131 See, with regard to some basic aspects of tort law, above 3 B (i) – (v); with regard to the rules on benevolent intervention in another’s affairs, see Jansen, above n 23.

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acquis and the PECL, and it will demonstrate that these sources have not been subjected

to an adequate degree of critical reflection.

A Acquis-Revision vs Acquis-Positivism and Acquis-Expansion

In conceptualising the CFR, the EU Commission has envisaged the existing acquis

communautaire in the field of contract law to be fundamentally revised and improved.

The Commission’s concerns were to ensure coherence among the various Directives

that had been enacted over the years as well as the necessary coordination of these

Directives with the rules of corresponding national law. Furthermore, the EU

Commission called for a critical review of the existing body of European private law,

especially in respect of its effects on consumers and businesses.132 These goals have

been expressly embraced in the Introduction to the DCFR.133

In fact, the Commission’s request for a critical examination of the acquis

communautaire pays due recognition to a pressing need and provides an excellent

opportunity comprehensively to review and reform the existing body of rules.134 The

enactment of the first Directive in the field of contract law, the so-called Doorstep

Selling Directive, now lies more than 20 years in the past.135 The time has come

fundamentally to re-evaluate the effectiveness of central elements of consumer law,

such as the right of withdrawal and the information duties. As regards the right of

withdrawal, for instance, the evidence that it provides any meaningful protection is, so

far, less than conclusive. Equally, it is still unsettled in which specific circumstances

132 Cf. ‘Way forward’ COM(2004), above n 13; on the critical function of the DCFR with regard to the acquis, see 3 ff); Commission (EC) ‘A More Coherent European Contract Law. An Action Plan’ (‘Action plan’) COM(2003) 68 final, of 2 February 2003; in particular, see 19 ff). On the various models for implementing an acquis revision that are currently being discussed, particularly the possibility of a separate revision of individual Directives or the drafting of a comprehensive Consumer Protection Directive, see the ‘Green paper’ COM(2006), above n 14; H-W Micklitz and N Reich, ‘Europäisches Verbraucherschutzrecht – quo vadis?’ http://www.vur-online.de/beitrag/2007_04_2.html, available as of 07.08.08.133 von Bar, Clive, Schulte-Nölke, above n 15 Introduction at [60] ff.134 For a critical assessment of the acquis, see also B Dauner-Lieb, ‘Auf dem Weg zu einem europäischen Schuldrecht?’ [2004] NJW 1431 at 1433.135 Cf. Council Directive 85/577/EEC of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises [1985] OJ L372/31, commonly known as the Doorstep Selling Directive.

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and under which specific conditions the granting of a right of withdrawal is justified.136

Even more urgently, the effects of the various duties of information contained in the

consumer-acquis have to be examined. It is generally recognised that the marginal

utility of information decreases with an increase in the amount of information, and can

in fact become negative.137 Hence, the usefulness of individual duties of information

and the consequences of an information overload have to be examined thoroughly and

on the basis of an empirical analysis.

Neither a critical review of the consumer protection acquis nor a profound examination

of its ramifications appear to have been carried out in the process of drafting the

DCFR.138 The incorporation of the acquis in the DCFR generally presents the picture of

a quasi-notarial effort, the central concern being a faithful and complete reproduction of

the existing EC private law. To the extent that the DCFR moves beyond such faithful

reproduction, one can identify a tendency towards abandoning the limitations

concerning the scope of application fixed by the Directives and of generalising the rules

of the acquis.139 The sometimes uncritical, at other times expansive, approach towards

the acquis is characteristic of the DCFR wherever it is based on the incorporation of

EC-Directives. This unfortunate tendency can be best illustrated with regard to the rules

concerning information duties (Arts. II.-3:101 ff) and the right of withdrawal (Arts. II.-

5:201 ff).

136 Cf. the reference above, n 68. For a thorough systematic analysis of the rights of withdrawal and their teleological background, see P Mankowski, Beseitigungsrechte (Mohr Siebeck, Tübingen 2003) especially 33 ff, 222 ff, 734 ff, 1082 ff, 1131 ff; S Lorenz, Der Schutz vor dem unerwünschten Vertrag(Beck, München 1997) 122 ff.137 Cf. the references above n 67. Further, see W Boente and T Riehm, ‘Besondere Vertriebsformen im BGB’ [2002] Jura 222 at 225, 230 (“Informations-Kollaps”); HC Grigoleit, ‘Besondere Vertriebsformen im BGB’ [2002] NJW 1151 at 1155, 1158; A Tiffe, Die Struktur der Informationspflichten bei Finanzdienstleistungen (Nomos, Baden-Baden 2006) especially at 110 f, 203, 264, 312. Some reservations on the extent of the information duties in the acquis are also apparent from H Schulte-Nölke, C Twigg-Flesner and M Ebers (eds), EC Consumer Law Compendium – Comparative Analysis(Universität Bielefield, 2007) 743, available at http://ec.europa.eu/consumers/rights/docs/consumer_law_compendium_comparative_analysis_en_final.pdf, available as of 07.08.08.138 For an extensive and valuable analysis of the consumer-acquis, see Schulte-Nölke, Twigg-Flesner, Ebers, above n 137. The study offers a detailed account of the implementation of the consumer protection Directives in the national laws of the Member States. It is, however, not intended to re-examine the acquis fundamentally but rather aims at its systematisation and an improvement of its coherence.139 For a critical assessment of the Acquis Principles, see Jansen and Zimmermann, above n 42 at 505 ff.

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(i) Information duties

The various obligations to provide information as established in the consumer

protection Directives140 are largely converted into provisions of general application by

the rules set forth in Arts. II.-3:101 ff. The restrictive character of the acquis, especially

its limitation to certain marketing forms and contract types, has been abandoned.

Furthermore, the information duties focusing on consumer contracts in the Directives

are extended to business-to-business (b2b) relationships in the DCFR. Before

concluding a contract, businesses are supposed to disclose to their contractual partners

all information “concerning the goods or services to be supplied” as far as the other

party can reasonably expect such disclosure (Art. II.-3:101 (1)). Vis-à-vis consumers,

the business even has to provide such material information as an average consumer

needs in the given context to make an informed decision (Art. II.-3:102 (1)). Finally,

businesses are subject to additional duties to provide information “in the case of

transactions that place the consumer at a significant informational disadvantage” (Art.-

II-3:103).

This exposition of information duties in several general provisions lacks coherence and

systematic coordination. However, its most dangerous aspect is the suggestive effect

that in contractual relations comprehensive disclosure appears to constitute the general

rule and only exceptionally each party is individually responsible for supplying itself

with the required information141 – and this not only in b2c but also in b2b relationships.

140 See, in particular, Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (Consumer Credit Directive) [1987] OJ L042/48; Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours (Package Travel Directive) [1990] OJ L158/59; Parliament and Council Directive 94/47/EC of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis [1994] OJ L280/83 (Timeshare Directive); Parliament and Council Directive 97/5/EC of 27 January 1997 on cross-border credit transfers [1997] OJ L43/25; Parliament and Council Directive 97/7/EC of 20 May 1997 on the protection of consumers in respect of distance contracts – Statement by the Council and the Parliament re Article 6 (1) – Statement by the Commission re Article 3 (1), first indent (Distance Selling Directive) [1997] OJ L144/19; Parliament and Council Directive 2000/31/EC of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (E-Commerce Directive) [2000] OJ L 178/1; Parliament and Council Directive 2002/65/EC of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC (Directive on distance marketing) [2002] OJ L271/16; and more recently Title III Parliament and Council Directive 2007/64/EC on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC [2007] OJ L319/1. All Directives can be found in R Schulze and R Zimmermann, Europäisches Privatrecht, Basistexte (3rd edn, Nomos, Baden-Baden 2005).141 The commentary accompanying the rules on information duties in the Acquis Principles, which to a large degree correspond to those contained in the DCFR, does in fact mention the principle of self-

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That rule-exception scheme stands in marked contrast to the law prevailing in the

European legal systems as well as to the fundamental precepts of a private law regime

for a free society. Even from the European Directives, it cannot be derived that one

party may comprehensively rely on the other in order to make up its mind whether to

conclude a contract.142 The Directives do, admittedly, contain a vast number of

individual information duties. But, essentially, they are limited to consumer protection

and mainly relate to technical details concerning the formation of the contract, its

content and the rendering of performance.143 It is thus centrally important for the task of

revising European private law to domesticate the jungle of information duties and to

identify their persuasive core. The motley collection of general provisions presented by

the DCFR (Art. II.-3:101 (1); Art. II.-3:102 (1) and Art. 3:103 (1)) amounts to the exact

opposite. The criteria that have emerged from recent legal and economic discourse as

adequate tools for specifying information duties – such as the relevance of the

information at issue, the relative costs and accessibility of information as between the

parties, and an assessment of the information gathering incentives144 – have not been

taken into account in the rules provided by the DCFR.

The expansive approach adopted by the DCFR towards incorporating the acquis is also

apparent in the provision on remedies available for breach of information duties

(Art. II.-3:107). An array of possible sanctions is listed, ranging from a postponement of

the moment triggering the withdrawal period, via the imposition of liability for any loss

caused by a party’s failure to disclose the required information, and damages for non-

performance, to an avoidance of the contract due to mistake. What is lacking, however,

are any criteria linking specific types of breach to the appropriate remedies. The

impression is thus created that any of the listed remedies is available regardless of the

responsibility; cf. Acquis Group, above n 41, Art. 2:201 [4]. However, against the background of the rules themselves, this appears to be merely lip service. In contrast, the DCFR provision on “change ofcircumstances” clearly illustrates how the exceptional character of limitations on party autonomy may be, and has to be, emphasised on the level of the rules; cf. n 78.142 The justification for deriving such broad duties of disclosure from the acquis is, accordingly, quite vague; cf. Acquis Group, above n 41, Art. 2:201 [4] ff (especially referring to the notion of non-conformity with the contract (!) used in the Consumer Sales Directive and in the CISG and also relying on the Product Liability Directive); for criticism, see Jansen and Zimmermann, above n 42 at 532 ff and Art. 2:202 [4] (with reference to the Unfair Commercial Practices Directive).143 See above n 140.144 For these criteria see, e.g., H Kötz, ‘Vertragliche Aufklärungspflichten’ in J Basedow, KJ Hopt and R Zimmermann (eds), Undogmatisches (Mohr Siebeck, Tübingen 2005) 246 ff; H Fleischer, Informationsasymmetrie im Vertragsrecht (Beck, München 2001) 576 ff.

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nature of the information duty and its violation. Yet, the information duties laid down

by the EU Directives serve different functions and, as a result, their violation should

trigger different sanctions.145 The information duties concerning contracts concluded by

electronic means (Art. II.-3:105),146 for example, are inextricably linked to the general

rules on formation of contracts. Numerous other information duties aim to ensure that

the content of a contract is transparent (Art. II.-3:103 (1))147 and are, therefore, closely

related to the rules governing the interpretation of contracts. The obligation to provide

clear information about the subject matter of the contract (Arts. II.-3:101 (1), 3:103

(1)),148 in turn, is intimately connected to contractual liability, and particularly to

liability for defects, as provided in sales law. In sum, the main conceptional challenge

posed by a revision of the information duties laid down in the European Directives is an

evaluation of the individual duties against the background of related sets of rules and,

on that basis, the development of a differentiated system of legal consequences. This

challenge has not been met by the over-expansive approach adopted in the DCFR.

(ii) Rights of withdrawal

A further example of the same approach adopted with regard to another aspect of the

acquis is provided by the rules on the right of withdrawal (Arts. II.-5:201 ff). Rights of

withdrawal are recognised, with regard to certain marketing techniques, in the Doorstep

Selling,149 Distance Selling150 and Distance Marketing of Financial Services

Directives151. In the DCFR, they are reduced to one uniform criterion, i.e. that of the

consumer’s offer or acceptance being expressed “away from the business premises”

(Art. II.-5:201 (1)).

145 See further HC Grigoleit, above n 137 at 1155 f and also HC Grigoleit, ‘Rechtsfolgenspezifische Analyse “besonderer” Informationspflichten am Beispiel der Reformpläne für den E-Commerce’ [2001] Zeitschrift für Wirtschafts- und Bankrecht (WM) 597 ff.146 E-Commerce Directive, above n 140.147 Distance Selling Directive, above n 140; Directive on the distance marketing of consumer financial services, above n 140; Package Travel Directive, above n 140.148 Distance Selling Directive, above n 140; Directive on the distance marketing of consumer financial services, above n 140; Package Travel Directive, above n 140; Doorstep Selling Directive, above n 140.149 Doorstep Selling Directive, above n 135.150 Distance Selling Directive, above n 140.151 Directive on the distance marketing of consumer financial services, above n 140.

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It is true that this phrase appears in the title of the Doorstep Selling Directive. But the

contracting situations covered by the Directive are specified so as to cover cases where

consumers are caught off-guard. In particular, according to Art. 1 of the Doorstep

Selling Directive, a right of withdrawal is excluded, in principle, where the business

contact was initiated by the consumer. The DCFR, on the other hand, by defining the

scope of application only locally (contracts concluded “away from the business

premises”) abandons the focus on being caught off-guard.152

At the same time, the DCFR abolishes the specific threshold criterion put in place for a

right of withdrawal in respect of distance marketing in the other two Directives. This

essentially consists in the negotiations and the conclusion of the contract having to have

occurred entirely by means of distance communication.153 The specific need for

consumer protection is taken, in such cases, to arise from the fact that the consumer’s

ability to decide upon whether or not to conclude a contract is impaired as a result of the

lack of a personal contact: his possibility to make enquiries and to examine the quality

of the object of the contract are typically limited.154 This consideration is not captured

by the purely local “away from the business premises” criterion. If, for example, a

business in its branch office makes available computers to its customers for the

conclusion of contracts, the contracting situation is “impersonal” in the same way as is

typical for distance selling, even though the consumer has not expressed his acceptance

“away from the business premises”. The generalisation of the rights of withdrawl that

are specific for marketing-situations thus dissolves their teleological core and is

symptomatic for the expansive approach adopted towards the acquis. If the right of

withdrawal is neither limited to situations where the consumer is caught off-guard nor

tied to the impersonal process of contracting, then one must ask how a right of

withdrawal may be justified in the first place and, moreover, why it should not apply,

across the board, to all consumer transactions. This impression of a lack of rational

contours is reinforced by the DCFR’s wholesale incorporation of the – often ill-founded

152 For the reasons, see Acquis Group, above n 41, Art. 5:201 [1] ff (the DCFR, in this respect, adopts the approach pursued in the Acquis Principles). The exception for business contacts initiated by the consumer was rejected with reference to a British study indicating that here, too, the consumer is under a specific pressure situation; see Acquis Group, above n 41, Art. 5:201 [23].153 Cf. Art. 2 Directive on the distance marketing of consumer financial services, above n 140; Art. 2 Distance Selling Directive, above n 140.154 See e.g., C Wendehorst in FJ Säcker (ed), Münchener Kommentar zum Bürgerlichen Gesetzbuch (5th

edn, Beck, München 2007) text preceding § 312b [4].

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– exceptions to the right of withdrawal contained in the Directives (Art. II.-5:201 (2) to

(4)).155

All in all, therefore, the impression is created that the DCFR lacks a clear conception

with regard to the function, legitimacy, and scope of application of rights of withdrawal.

This impression is confirmed if account is taken of the single instance where the DCFR

– in an exact reproduction of the acquis – provides for a type-of-transaction specific

right of withdrawal, i.e. the one for timeshare contracts (Art. II.-5:202). If one recalls

the Commission’s request to revise the acquis, the question arises why the authors of

the DCFR saw fit to select this – in no way paradigmatic – type of contract to be the

only one warranting a specific right of withdrawal. The doubts are increased if one takes

into account that the disadvantages associated with timeshare contracts typically only

appear after a considerable period of time: with the result that the effectiveness of a

right of withdrawal is particularly problematic.156 Thus, the draftsmen of the DCFR

might well have either refrained from including a specific provision for timeshare

contracts altogether, or envisaged a right of withdrawal for especially “dangerous”

contracts: dangerous e.g. in view of the complexity of their content, their financial

dimension, or their duration.

B Uncritical Treatment of the PECL

(i) The need for a thorough examination of the PECL

A similar criticism can be levelled against the uncritical incorporation of the PECL

which constitute the core of general contract law within the DCFR.157 Although Parts I,

II and III of the PECL have been published thirteen, eight and five years ago,

respectively,158 the scholarly and critical assessment of the model rules established by

the PECL has thus far been only rudimentary.159 Here, too, the process of arriving at a

155 Timeshare Directive, above n 140.156 Cf. Martinek, above n 67 at 1397; Zimmermann, above n 44 at 216; cf. also Acquis Group, above n 41, Art. 5:202 [5].157 See above, 1 C.158 See above n 6.159 See the following volumes containing articles relating to the PECL: J Basedow (ed), Europäische Vertragsrechtsvereinheitlichung und deutsches Recht (Mohr Siebeck, Tübingen 2000); A Hartkamp and others (eds), Towards a European Civil Code (3rd edn, Ars Aequi Libri, Nijmegen 2004); H MacQueen

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critical assessment has been impeded by the fragmentation which continues to blight the

academic discourse on private law in Europe.

Given this state of affairs, the CFR provides a good opportunity to take account of, and

to intensify the debate on the PECL and, on that basis, to conduct a thorough revision of

the model rules provided in that document. The draftsmen of the DCFR have not seen

or accepted that challenge. Admittedly, certain changes have been implemented and, to

some extent, they have led to welcome clarifications and improvements.160 Yet, in some

areas the modifications undertaken have produced ambiguities as well as inconsistencies

– as has been demonstrated in the analysis of the provisions on assignment and

representation.161 A number of other rules which appear particularly vulnerable to

criticism, such as those limiting party autonomy, have been adopted without revision.

On whole, the modifications to PECL appear haphazard; and the impression is created

that a systematic and academically consistent revision of the PECL has not taken place.

In addition to the pressure of time under which the DCFR had to be conceived, the

(partial) continuity between the Commission on European Contract Law and the Study

Group may have played a role.162

and Zimmermann, above n 109; Association Henri Capitant, above n 49. See also R Zimmermann, ‘Vertrag und Versprechen, Deutsches Recht und Principles of European Contract Law im Vergleich’ in Stephan Lorenz and others (eds), Festschrift für Andreas Heldrich (Beck, München 2005) 467; R Zimmermann, ‘Restitutio in integrum: Die Rückabwicklung fehlgeschlagener Verträge nach den Principles of European Contract Law, den Unidroit Principles und dem Avant-projet eines Code Européen des Contrats’ in Privatrecht und Methode: Festschrift für Ernst A. Kramer (Helbing & Lichtenhahn, Basel 2004) 735; P Aumüllner, ‘Das Recht der Stellvertretung in den Principles of European Contract Law (PECL) und in der österreichischen Rechtsordnung – ein Systemvergleich’ [2007] Zeitschrift für Rechtsvergleichung Internationales Privatrecht und Europarecht 208; C Armbrüster, ‘Zustandekommen und Wirksamkeit von Verträgen aus gemeineuropäischer Sicht. Ein Vergleich der Lando-Principles (PECL) und der Konzeption des Gemeinsamen Referenzrahmens (CFR) mit dem deutschen Recht’ [2007] Jura 321.160 See, e.g., Arts. II.-9:301 ff DCFR in comparison with Art. 6:110 PECL (stipulatio alteri) and the change in system in Arts. III.-3:511 ff DCFR as compared with Arts. 9:305 ff, PECL (restitution following termination of contract).161 See above, 4.162 See above, 1 C, and especially n 29.

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(ii) The rules on defects of consent: a characteristic example

The need for a critical revision of the PECL may be illustrated by considering obvious

objections that can be raised against PECL rules which have largely, or even entirely,

been taken over by the DCFR. The rules on “defects of consent” are a case in point.163

The PECL rule on fundamental mistakes as to facts or law (Art. 4:103 PECL) is

premised on the convincing consideration that avoidance of a contract should only be

based on mistakes for which the other party carried either full or partial responsibility.

However, the instances in which the other party bears (co-)responsibility for the mistake

are defined neither with precision nor in a normatively persuasive manner. Thus,

Art. 4:103 (1) PECL makes the relevance of the mistake basically contingent upon two

cumulative conditions: the other party must have (in some way) caused the mistake or

has to have been under the same misapprehension, and the other party knew or ought to

have known that the mistake was material. Yet, the pivotal consideration of whether an

information duty has been infringed – an issue which is shaping the current academic

discussion on pre-contractual duties of disclosure – is entirely lacking in the PECL rules

on mistake.

Art. II.-7:201 DCFR essentially perpetuates the PECL’s inconsistent concept of

responsibility for defining relevant mistakes. It is true that the DCFR adds the breach of

a pre-contractual information duty or the duty to facilitate the correction of input errors

as alternative grounds of responsibility, thus presumably referring to the information

duties derived from the acquis that have just been discussed (Arts. II.-3:101 ff DCFR).

However, this incorporation even increases the confusion, for it remains unclear what

role these duties of information are intended to play next to the complex elements of

responsibility taken over from the PECL. As a result, the uncritical approach towards

the PECL and the inclination to over-expand the acquis rules strikingly coincide in

Art. II.-7:201 DCFR.

163 For criticism, from a different point of view, cf. also W Ernst, ‘Irrtum: Ein Streifzug durch die Dogmengeschichte’ in R Zimmermann (ed), Störungen der Willensbildung bei Vertragsschluss (Mohr Siebeck, Tübingen 2007) l at 27 ff; JD Harke, ‘Entwicklungen – Irrtum und culpa in contrahendo in den Grundregeln des Europäischen Vertragsrechts: Eine Kritik’ (2006) 14 ZEuP 326; cf. also HC Grigoleit, ‘Irrtum, Täuschung und Informationspflichten in den European Principles und in den Unidroit-Principles’in R Schulze, M Ebers and HC Grigoleit, Informationspflichten und Vertragsschluss im Acquis communautaire (Mohr Siebeck, Tübingen 2003) 201 at 207 ff.

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A further deficiency in the definition of relevant mistakes is that the fundamental

distinction between providing false information and failing to disclose material

information remains unclear.164 This distinction is clearly drawn only in the rule on

avoidance for fraud (Art. II.-7:205 DCFR/Art. 4:107 PECL). In this provision, also the

criteria generating a duty to disclose information to the other party are set out. Yet, it is

inconsistent if, on the one hand, the relevance of a mistake is made dependent on the

other party being (co-)responsible for it but, on the other hand, the impression is created

that the issue of non-disclosure only arises in cases of fraud.165 Unfortunate is,

furthermore, the express equation of mistakes in motive with inaccuracies in

communication (Art. II.-7:202 DCFR/Art. 4:104 PECL). As inaccuracies in

communications are also subject to the principle that a mistake is only relevant if the

other party knew or ought to have known of it (Art. II.-7:201 DCFR/Art. 4:103 PECL),

the issue of avoidance does not arise since the inaccuracy is resolved by way of

interpretation: if the other party is responsible for the inaccuracy in communication, the

contract is to be interpreted in the way intended by the mistaken party because the other

party “was aware, or could reasonably be expected to have been aware” of the mistaken

party’s intent (Art. II.-8:101 (2) DCFR).166

The provision on adaptation of the contract as an alternative to avoidance (Art. II.-7:203

DCFR/Art. 4:105 PECL) likewise displays obvious weaknesses. This provision focuses,

as far as the contemplated adaptation is concerned, upon the “obligations under the

contract as it was understood by the party entitled to avoid it”. This criterion can,

however, only be relevant in cases involving inaccuracies of communication in which

the mistake concerns the content of the contract; such cases are of little practical

significance. By contrast, the rule appears to be unsuitable for the much more important

situations of a relevant mistake in motive for which the other party is responsible.

Moreover, there is a conspicuous lack of coherence between the provisions on

adaptation of the contract in case of mistake and on adaptation due to a change of

circumstances (Art. III.-1:110 DCFR/Art. 6:111 PECL). The close relationship of these

164 G Wagner, ‘Lügen im Vertragsrecht’ in Zimmermann, above n 163 at 84 ff.165 Cf. also the conclusion by Ernst, above n 163 at 30 f, according to whom the provision on mistake “absorbs” the rule on fraud, leaving “no room” for a separate rule on avoidance for fraud.166 The point is also made by Harke, above n 163 at 327 f.

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issues has already been overlooked in the PECL, and the DCFR has also failed to take

account of it.

6 Formalism and Terminology

A Inconsistent Definitions

It is apparent from a first review of the DCFR that the authors have aspired to textbook-

type definitions of legal concepts. Such an approach may be prudent for rules to be

applied in different legal systems and against the background of diverse legal traditions.

At the same time, it unavoidably leads to a loss of flexibility. Definitions should

therefore be restricted to where they are required by the precepts of legal certainty;

conceptualisation should never take place for its own sake. The DCFR does not always

observe these restrictions. For instance, the requirements of a “Benevolent intervention

in another’s affairs” are set forth in the provisions of Book V; the definition in the

Annex with its reference to negotiorum gestio is a doctrinal explanation which is out of

place in a system of rules. The same is true for the definition, in the Annex, of

“Unjustified Enrichment”. Likewise, definitions for terms such as “liable” or “must”

seem superfluous. It is particularly irritating to see the DCFR striving for such precision

in doctrinal definitions while, simultaneously, its excessive use of terms such as

“reasonable” leaves the normative substance of the law to the judges’ individual senses

of justice.167

In any case, if one decides to lay down definitions then those definitions have to be

internally consistent, and they should further legal certainty. In this respect, too, the

DCFR exhibits grave technical flaws which are by no means mere cosmetic failures.

Rather, they are deficiencies which often present a greater threat to legal certainty than

would have resulted if no definitions had been formulated in the first place.

Thus, Art. I.-1:103 emphasises the significance of the definitions and refers to the

inventory contained in Annex I. Yet, as already in Art. 1:301 PECL, the relevance of

these definitions is immediately called into question by the reservation “unless the

context otherwise requires”. Of what help is a definition that is applicable only if the

167 See above, 2 D.

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context so requires? With respect to a similar caveat contained in § 1-201 of the U.S.

Uniform Commercial Code, David Mellinkoff aptly if bitingly noted: “The draftsman is

… warning us that while we are to remember his definitions, he may forget them”.168

The draftsmen of the DCFR do indeed, at times, appear to have forgotten their own

definitions. Thus, Art. II.-9:403 (3) allows a party supplying a “standard term” to prove

that it was individually negotiated, while the Annex specifically defines a “standard

term” as not having been individually negotiated. Or: how are we to understand Art. II.-

9:411, under which certain consumer contract terms are “presumed” to be unfair and, as

a result, not binding? Have the drafters forgotten, or remembered, that “presumptions”

have been defined as being rebuttable? From a comparison with Art. II.-9:410 it may be

inferred that the expression was consciously chosen and that the contract terms specified

in Art. II.-9:411 may indeed be given effect in some instances. Nevertheless the answer

remains uncertain; one can but hope that the forthcoming comments will provide a

resolution.

It is difficult to discern which criteria have been employed for selecting the concepts to

be defined in the Annex. Sometimes we find a mere repetition of definitions already

appearing in the model rules (e.g. “assignment” in Art. III.-5:102 (1), or “authorisation”

in Art.II.-6:102 (3)). At other times the definitions have a significance of their own (e.g.

“assets” and “avoidance”). In still other instances definitions which appear in the model

rules are not repeated in the Annex (e.g. “act of assignment” in Art. III.-5:102 (2), and

“reciprocal” in Art. III.-1:101 (4)). Yet, the location of a definition may give rise to

problems of interpretation. For instance, Art. II.-4:104 (1) concerns an “individually

negotiated clause”. The Annex does not provide a definition of “individually

negotiated”, but Art. II.-9:403 defines “not individually negotiated”. Can this definition

be drawn upon for the interpretation of Art. II.-4:104 (1) even though Art. I.-1:103

declares only the Annex definitions to be generally applicable? In any case, it would be

helpful if the text were to refer to the Annex in every case where a term appears which

has an Annex definition.

Some definitions are of little assistance because they use concepts that remain,

themselves, un-defined. For example, in defining “damage” as “any type of detrimental

168 D Mellinkoff, ‘The Language of the Uniform Commercial Code’ (1967) 77 Yale Law Journal 185, 190.

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effect” the Annex further states: “It includes loss and injury”. Omnipresent in the

DCFR,169 the word “includes” immediately raises the question, whether the definition is

meant to be exhaustive or whether, apart from “loss” and “injury”, there may be other

types of damage. As discussed above, the DCFR stipulates that “[l]oss includes

economic and non-economic loss”. What then is left for “injury”?170 While the DCFR

does not provide a definition of that term, it does define an “injured person” as “a

person who has suffered damage”. Consequently, if one heeds the admonition in Art. I.-

1:103 (2) that other grammatical forms of a defined word are to be given a

corresponding meaning, then “injury” means the same as “damage”, even though

“damage”, in addition, comprises “loss”. Here, at the latest, the reader feels mired in

square one.

In cases of doubt, the drafters of the DCFR apparently prefer to list several similar

concepts rather than run the risk of omitting something that should, perhaps, have been

included. This strategy diminishes the conceptual strength of definitions; at the same

time, it may lead to the inclusion of matters that should not have been included. Thus,

“juridical act” is defined in the Annex and in Art. II.-1:101 (2) as “any statement or

agreement or declaration of intention, whether express or implied from conduct, which

has or is intended to have legal effect as such”. “Statement”, “agreement” and

“declaration of intention”, however, are nowhere defined. Now, especially the term

“statement” is so broad that it may be taken to cover any utterance. The relative clause

which appears to be meant to narrow down this concept, also fails to provide any

meaningful limitation, since it is not required that the assertion in question actually aims

at a legal effect: it is sufficient if it does in fact trigger legal consequences. For example,

unlawful advertisements or slander appear to be “juridical acts” since they entail legal

consequences according to the relevant provisions of competition law or criminal law.

Contrary to the definition of a “juridical act” in the Annex, the intention to achieve a

legal effect is required for “contracts” (Art. II.-4:101) and for “unilateral juridical acts”

(Art. II.-4:301). The reason for the general definition also encompassing a “statement …

which has legal effect as such” must therefore remain unclear.

169 See, e.g., Arts. I.-1:106 (1), II.-1:106 (1), II.-3:104 (2).170 See also above, 3 B (ii).

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Art. II.-1:103 (2) states, “A valid unilateral promise or undertaking is binding on the

person giving it if it is intended to be legally binding without acceptance.” Here, the

difference between “promise” and “undertaking” is difficult to comprehend in view of

the fact that neither term is defined.171 Given that Art. II.-1:106 (1) stipulates that

“notice” includes the communication of a “promise” (but not of an “undertaking”), it

may be inferred that “promises” are effectuated expressly and “undertakings” impliedly.

That would, however, raise the question why several provisions, e.g. Art. II.-4:104

(1),172 Art. IV.A.-6:101173 and Art. IV.G.-2:101 (1)174 speak only of “undertakings” and

make no mention of “promises”.

The Annex definitions of “business” and “consumer” pose serious problems.

“‘Business’ means any natural or legal person … who is acting for purposes relating to

the person’s self-employed trade, work or profession”, while “[a] ‘consumer’ means any

natural person who is acting primarily for purposes which are not related to his or her

trade, business or profession.”175 These two definitions do not mirror one another in the

way in which the EC consumer protection Directives176 or §§ 13, 14 BGB do. A first

difference consists in the fact that only the consumer definition requires the individual

171 The same problem is posed in Art. IV.G.-1:104 (2).172 “If a contract document contains an individually negotiated clause stating that the document embodies all the terms of the contract (a merger clause), any prior statements, undertakings or agreements which are not embodied in the document do not form part of the contract.”173 “A consumer goods guarantee means any undertaking of a type mentioned in the following paragraph given to a consumer in connection with a consumer contract for the sale of goods…” Art. IV.A.-6:102 (1) also only refers to “unilateral undertaking”.174 “Any undertaking to pay, to render any other performance or to pay damages to the creditor by way of security is presumed to give rise to a dependent personal security, unless the creditor shows that it was agreed otherwise.”175 The consumer definition presupposes that the person in question is engaged in a trade, business or profession even if, in the present instance, he is acting for purposes not related to that trade, business or profession (the same is true of the definitions contained in the relevant EC consumer protection Directives and § 13 BGB). That cannot be intended for, of course, students and pensioners are also consumers. Correctly, therefore, the definition would have to be phrased: “… who is acting primarily for purposes which are not related to a trade, business or profession”. The point has already been made byW Flume, ‘Vom Beruf unserer Zeit für Gesetzgebung’ [2000] ZIP 1427-8.176 For example, Art. l (2) (a) and (c) Parliament and Council Directive 1999/44/EC of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L 171/12: “For the purposes of this Directive: (a) consumer: shall mean any natural person who, in the contracts covered by this Directive, is acting for purposes which are not related to his trade, business or profession; … (c) seller: shall mean any natural or legal person who, under a contract, sells consumer goods in the course of his trade, business or profession”. Similarly, Art. 2 Directive on contracts negotiated away from business premises, above n 135; Art. l (2) (a) and (b) Directive on consumer credit, above n 140 (slight differences, however, are to be found in the English version, where “business” is referred to only with regard to the creditor); Art. 2 (b) and (c) Directive on unfair terms in consumer contracts, above n 83; Art. 2 (2) and (3) Directive on distance contracts, above n 140.

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to act primarily for a private purpose while, for being classified as a business, any

purpose which is related to the person’s trade or professional activities suffices. Thus,

an attorney purchasing a computer primarily in order to play video games but also,

occasionally, to facilitate the drafting of legal pleadings appears to be acting both as a

consumer and as a business: for while his primary purpose is private, he also pursues

professional purposes. Conversely, a school teacher who purchases a computer in order

to prepare for his classes appears to be neither a consumer nor a business. He is not a

consumer since the intended use is related to his profession. Nor is he a business since

he is not engaged in a self-employed trade, work or profession. The DCFR’s definition

of a business, in this respect, conforms to the rule contained in the German Civil Code,

where self-employment is the decisive factor. In defining a consumer, however, the

DCFR is in line with the EC consumer protection Directives in which self-employment

is not mentioned. It has been widely argued that the self-employment criterion should

also be read into the EC Directives.177 Yet, in the DCFR the antithetical formulations of

“consumer” and “business” exclude such interpretation. Nevertheless, it is highly

doubtful whether its drafters intended to reject a scheme according to which a person

must always be classified as either consumer or business and never classified as being

both at the same time. In all likelihood, the difference between the two definitions is due

to a drafting mistake.

B Redundancies

The DCFR contains a great deal of superfluous material and features numerous

repetitions. Reading this text is thus a somewhat tedious endeavour. Art. IV.C.-1:201,

for instance, takes in the trouble of outlining the structure of the ensuing articles as if it

were the beginning of a chapter in a legal textbook. Yet this structure is readily apparent

from the subsequent chapter headings. With respect to the payment of the price agreed

upon in a contract of sale, Art. IV.A.-3:201 unnecessarily refers to the general

provisions on the place and time of performance. Similarly superfluous is Art. II.-3:106

(2), according to which it is possible that rules for specific contracts may require

information to be provided in a particular form. Arts. IV.A.-1:301, IV.C.-1:202, IV.E.-

177 See, e.g., T Pfeiffer in B Dauner-Lieb and and W Langen (eds), Anwaltkommentar BGB (Deutscher Anwaltverlag, Bonn 2005) Art. 1 Kauf-RiL [24]; L Serrano in S Grundmann and F Bianca (eds), EU-Kaufrechts-Richtlinie (O Schmidt, Köln 2002) Art. l [58]; H-W Micklitz in F J Säcker and R Rixecker (eds), Münchener Kommentar zum Bürgerlichen Gesetzbuch (5th edn, Beck, München 2006) § 14 [32].

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1:202 and IV.G.-1:103 expressly stipulate – although under various headings (“Rules

not mandatory unless otherwise stated”, “Derogation”, “Freedom of Contract”) – that

the rules contained in the respective Parts of Book IV are not mandatory except where

otherwise provided. Yet exactly the same was already stated in the general provisions

on contracts (Art. II.-1:102 (2)). In this case, the redundancy is more than simply a

cosmetic imperfection since it may encourage an argumentum e contrario: if the non-

mandatory nature of the rules concerning sales, services, commercial agency, franchise

and distributorship, and personal security needs to be specifically stated notwithstanding

the general rule already contained in Book II, does it follow that the rules on the lease of

goods (IV.B.) and mandate (IV.D.) are, in principle, mandatory? Such a conclusion

seems plausible, yet it would render superfluous the numerous individual provisions

according to which certain rules contained in these Parts are mandatory (e.g.

Arts. IV.B.-2:103 (5), IV.B.-4:102, IV.B.-6:102, IV.D.-1:104 (3) and IV.D.-6:102 (3)).

Are the provisions in Parts A, C, E and G redundant, whereas those in Parts B and D are

constitutive? Or is it the other way round? The former interpretation appears to be more

likely, but the question would never have arisen if the DCFR had been drafted more

precisely.

C Missing Qualifications

As has already been mentioned,178 the DCFR in spite of its verbosity often suffers from

grave imprecision because it qualifies its provisions by means of open-ended concepts

such as “reasonable”. Conversely, though, qualifications are lacking in several places

where they should have been expected. For example, according to Arts. III.-4:104, III.-

4:204 and III.-4:206 (1) debtors bound by a divided obligation are liable in equal shares

and creditors with divided and solidary rights are entitled to equal shares. It is unlikely

that these provisions are intended to rule out a different apportionment. Indeed,

according to the general rule of Art. II.-1:102 (2), the affected debtors and creditors are

free to agree on a different apportionment. Yet, not in all cases of a plurality of debtors

or creditors does a contractual relationship between the parties exist. In view of the fact

that other rules in the same Chapter are introduced with “The default rule is…”

(Arts. III.-4:103 (2) and III.-4:203 (2)) and in view of Art. III.-4:106 (2), which

178 See above 2 D and 3 B (v).

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contemplates a different apportionment between solidary debtors, a similar clarification

would have been desirable in Arts. III.-4:104, III.-4:204 and III.-4:206 (1) in order to

avoid misunderstandings.

7 The Way Forward

It is certainly an immense achievement for the participating academic groups to have

produced such a comprehensive body of rules in such a short time. None the less, the

verdict on the published Draft must be negative.179 The text suffers from a great number

of serious shortcomings. These include unresolved or unconvincing policy decisions as

much as ill-adjusted and inconsistent sets of rules. Especially alarming is the fact that

the Draft paves the way for a massive erosion of private autonomy which goes far

beyond existing tendencies to “materialize” private law. Good faith and fair dealing are

no longer merely taken to guide the interpretation of contracts and the process of

determining issues which the contracting parties have failed to regulate. Rather, the

content of what the parties to a contract may agree upon appears to be placed under the

general proviso of good faith, fair dealing and general usage. Moreover, to a

considerable extent, contract law is no longer conceived as providing rules which the

parties may or may not choose to accept as suitable for their transaction, but as

regulatory ius cogens. Thus, the responsibility for the content of a contract is shifted

from the parties towards the law and the judiciary. This is all the more alarming as the

Draft lacks clear core aims and values on the level of both principles and rules. Given

the arbitrary catalogue of core aims set out in the Introduction, the abundance of general

provisions and open-ended legal concepts signifies a massive expansion of uncontrolled

judicial power. This is true not only for contract law (the details of which are made to

depend, above all, on what the judge regards as “reasonable”), but equally for extra-

contractual liability. Here the Draft combines a very general basic rule with a very wide

definition of legally relevant damage and attempts to “balance” this extremely

expansive approach by a provision enabling the judge to reduce liability when it appears

to him fair and reasonable. The Draft does not, therefore, constitute an appropriate basis

for an (optional) code of European private law. Such instrument can hardly be

envisaged without a thorough discussion of its normative foundations (which appear to

179 For a similar view, see Ernst, above n 12.

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have remained controversial even among leading members of the group involved in the

preparation of the DCFR).180 Moreover, a plausible integration of acquis commun and

acquis communautaire would be required as well as a very different approach to rule-

making which emphasizes clarity and precision rather than leaving everything to the

discretion of those who have to apply the law.

Of substantial importance, in view of what has been said, is the question what academic

significance lawyers of Europe should ascribe to the DCFR. The document, so far,

exhibits serious structural deficiencies. Fundamental issues have not been addressed; in

particular, no critical revision of the consumer-acquis has taken place. Chunks of text

from that body of law have been added to the (revised) PECL; but a true and

intellectually satisfactory integration has not taken place. The Acquis Principles would,

therefore, still appear to constitute the relevant reference text. Where the DCFR deviates

from the PECL, this is not always an improvement. The PECL, too, will thus retain their

significance as an independent restatement of European contract law. The same applies

to the other parts of the DCFR: in view of CISG and the Consumer Sales Directive, the

rules on the law of sales are comparatively conservative, while other areas, such as the

service contracts and the non-contractual obligations, have been drafted in a markedly

innovative spirit and still have to be subjected to close scrutiny.181 The further debate

will, therefore, be marked by the existence of different and competing texts: next to the

“academic” draft of a CFR there will continue to be the PECL as well as the individual

texts that have been published in self-contained volumes by the Acquis Group and the

Study Group. Even within the DCFR they have remained clearly identifiable bodies of

text.182 The debates in the years to come, and the competition for the best arguments and

solutions, will reveal to what extent any of these texts can gain authority imperio

rationis; and it is only on the basis of these debates that a responsible decision can be

180 A certain “lack of social oil” is deplored by Lando, above n 18 at 251 ff; H Beale, ‘The Future of the Common Frame of Reference’ (2007) 3 ERCL 257 at 265 ff; while outside observers have remarked upon the infusion of too much social oil: cf. Wagner, above n 34. (For the original metaphor, see Zimmermann, above n 44 at 163 ff).181 On service contracts see C Wendehorst, ‘Das Vertragsrecht der Dienstleistungen im deutschen und künftigen europäischen Recht’ (2006) 206 AcP 205 at 290 ff; E Cashin Ritaine, ‘The Common Frame of Reference (CFR) and the Principles of European Law on Commercial Agency, Franchise and Distribution Contracts’ (2008) 8 ERA-Forum 563; on “benevolent intervention in another's affairs” see H Sprau, ‘Benevolent Intervention in Another’s Affairs: Some Remarks on the Draft Report Presented by the Study Group on a European Civil Code’ (2006) 7 ERA-Forum 220; Jansen, above n 23; L Rademacher, ‘Die Geschäftsführung ohne Auftrag im europäischen Privatrecht’ [2008] Jura 87. 182 See above, 1 C.

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taken, which individual rules should be incorporated into a political frame of reference

and should thus be invested with authority ratione imperii. These debates require

considerable time. The DCFR clearly demonstrates that the time has not yet come for a

politically legitimated text.

The academic discussion about the structure, core aims and values, and the rules of

European private law will not find its conclusion with the DCFR. It will have to

continue. That raises the question of an appropriate procedural and institutional setting

to channel such discussion. For without such framework it will not be possible to

formulate a coherent reference text which, in the medium or long term, might constitute

the basis for an (optional) Civil Code. In view of the inevitable link between scholarship

and politics within this process – so much has already become evident from the

discussions concerning the present Draft – an institution will have to be established with

an incontestable legitimacy both on an academic and political level: an institution which

can be charged with the responsibility of channelling and guiding the discussions

surrounding the CFR. The creation of a European Law Institute on the model of the

American Law Institute183 may be the next step that has to be taken. At any rate, the

DCFR both deserves and requires a broadly based discussion among the jurists of all

Member States.

183 Cf. WF Ebke, ‘Unternehmensrechtsangleichung in der Europäischen Union: Brauchen wir ein European Law Institute?’ in WF Ebke and U Hübner (eds), Festschrift für Bernhard Großfeld (Recht und Wirtschaft, Heidelberg 1999); Ernst, above n 12 at 278 ff with further references.