Formation of Contract




© Springer International Publishing Switzerland 2015
Javier Plaza Penadés and Luz M. Martínez Velencoso (eds.)European Perspectives on the Common European Sales LawStudies in European Economic Law and Regulation410.1007/978-3-319-10497-3_3


3. Formation of Contract



Jakub J. Szczerbowski 


(1)
University of Social Sciences and Humanities, Warszawa, Poland

 



 

Jakub J. Szczerbowski



Abstract

Formation of contract in the Common European Sales Law is based on a mix of concepts derived from various legal systems. The rules governing conclusion of contract are an important piece of the puzzle of contractual freedom. Achieving balance between the description of social customs and the needs for abstraction expected from a normative system requires not only a clear legal text but also a legal culture built around it. The textual part of the CESL combines some of the elements of common law and some of the elements of the European system. Future application of the rules will, therefore, provide interesting insights into the mechanism of the reception of law into different legal cultures. This text compares the rules of the CESL to some of the existing legal systems and underlines the most important differences between them.


Keywords
“Causa”ConsiderationContract formationOfferAcceptanceNegotiationsAuction



3.1 Introduction


The Common European Sales Law (CESL) devotes its Chapter 3 to contract formation . The drafters decided to adapt the model of offer and acceptance , which is known on both sides of the Atlantic. The model does not exclude other means leading to the conclusion of a contract, such as negotiations , auctions or tenders, as the main emphasis is put on reaching a consensus that is intended to create a legal bond where its content is sufficient for this purpose. (Article 30 of the CESL states: “A contract is concluded if: (a) the parties reach an agreement; (b) they intend the agreement to have legal effect; and (c) the agreement, supplemented if necessary by rules of the Common European Sales Law, has sufficient content and certainty to be given legal effect.”1)

This is a very minimalist set of rules. The model of offer and acceptance is considered to be sufficient as a description of all social facts leading to the conclusion of a contract. This is similar to the understanding of offer and acceptance in the Common Law. Auctions and negotiations are viewed as various configurations of offer and acceptance. The reducibility of auctions and negotiations to offer and acceptance makes the reduction desirable. Along with consideration , i.e. the giving of something of value, offer and acceptance are the only requirements for the formation of a contract (Silva 2004, p. 106). In the Common Law, contrary to the view of the legal systems of continental Europe, offer and acceptance are not dependent on higher layers of abstraction such as legal acts and declarations of will.

This model lies on the basic principle of freedom of contract (art. 1.1 CESL: “Parties are free to conclude a contract and to determine its contents, subject to any applicable mandatory rules.”). The principle of freedom of contract covers both the conclusion of the contract and its contents; and is further developed by the principle of the freedom of form (art. 6 CESL: “Unless otherwise stated in the Common European Sales Law, a contract, statement or any other act which is governed by it need not be made in or evidenced by a particular form.”). Freedom of form is sometimes limited in various jurisdictions dependent on the value of the contract or on the nature of the thing conveyed (Philippe 2004, p. 364).

Another underlying principle is the principle of good faith expressed in art. 2.1 CESL: “Each party has a duty to act in accordance with good faith and fair dealing”. This principle has to be interpreted as relating not only to the performance phase of the contractual relationship but also as governing the pre-contractual obligations of potential parties. Good faith in pre-contractual relations was already present implicitly in Roman law, but its full development is owed to the nineteenth century German legal science, (for a detailed analysis of the development of the pre-contractual duties doctrine based on the analysis of German Gemeines Recht, see Bauknecht 2014, p. 75 et sqq.).


3.2 “Causa”, Consideration and the Intention to be Legally Bound


It is important in every system of contract law to distinguish between agreements that create only social or moral obligations and legally binding contracts. The answer to this important question has been given in a couple of different ways. A legal system may only recognise a closed number of contracts, and all agreements not having the features of one of the contracts would not be considered legally relevant. Roman law developed a similar solution, but even then there existed other legal devices, such as ‘form’ (on the role of form in the early Roman law of unilaterally binding contracts, see Sacconi 1989, p. 4) and ‘causa’, which allowed a legally binding promise to be distinguished from a purely moral obligation. Moreover, the Romans preferred contracts to be concluded by the passing of possession; most of the Roman contracts were “real” contracts. Only contracts, in which the nature of the obligation made it impossible to require the passing of a thing, such as the societas or mandate, were binding by mere agreement. In the Common Law, its functional equivalent is the concept of consideration , understood on the European continent as onerosity. This understanding is not exact as consideration does not equal the conveyance of rights to the other party (Gamage and Kedem 2006, p. 1299).

The conceptual framework of the CESL rejects both causa and consideration following the path indicated by the DCFR . The DCFR consciously omits the requirements of causa or consideration and states they serve no sufficiently important purpose to fit a modern contract law. According to the DCFR, both concepts have only “residual” functions that are fulfilled by other rules. One example given by the DCFR is the one-sided character of a contract (von Bar et al. 2009, p. 290). Also, the DCFR considers causa and consideration to be legal devices that work against efficiency (von Bar et al. 2009, p. 75). The efficiency argument is partly convincing (for an extensive review of literature on efficiency in contract law, see Golecki 2003, p. 2 et seq.) as both concepts prove to be complex and difficult to understand for lawyers, but according to Jansen and Zimmermann the model of DCFR is even more obscure (2011, p. 6).