European Contract Law

1 – The unification of different aspects of the law of contract has a long his-tory. In the 1970s a new phase started. In 1971 the Governing Council of UNIDROIT decided to undertake an international restatement of general principles of contract law and in 1980 a special working group was set up to draft a set of principles for international commercial contracts. These prin-ciples were published in 1994.¹

* Judge of the Constitutional Court of Hungary, Professor at the Faculty of Law of the Eötvös Loránd University, Budapest.

1 Introduction to the 1994 edition, in : UNIDROIT Principles of International Commercial Contracts, Rome 2004, XIV.

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Similar endeavours were afoot in the European Communities. In 1974 the idea of some kind of common European contract law was discussed and the first meetings in preparation of the work were held in 1980 and in 1981. It was entrusted to commissions under the chairmanship of Professor Lando and the general principles were published in 2000.²

A different line of research was embarked on in Pavia in 1990. Based on an introductory paper by Professor Gandolfi, a working group started draft-ing a Contract Code. In 1992 the Academy of European Private Lawyers was established with the aim of contributing through academic research to the unification of private law and of promoting a common European legal cul-ture. In 1995 the collected proposals were assessed and the first part of the preliminary draft was published in 2004.³

A different approach was adopted by the Trento group. The year 1993 saw the launch of their project on “The Common Core of European Private Law.”

Working groups began comparative research following a method pioneered by a team of scholars led by Rudolf Schlesinger who had been considering the formation of contracts. The method involves using case studies to exam-ine how European Union legal systems resolve specific legal questions.⁴ Comparative research has gained momentum from the existence and functioning of the European Communities. It is not always confined to the unification of law in the European Union : the work covers a wider spectrum of legal problems.⁵

2 – The above-mentioned research projects were either not connected with European integration, or had no official character. However, the European Communities were equally concerned with the convergence, harmonisation and unification of the laws of Member States.

The harmonisation of rules concerning consumer protection has been in progress since the 1970s. In the 1990s several measures were taken to promote

2 Ole Lando, Preface, in : Ole Lando, Hugh Beale (eds.), Principles of European Contract Law, Parts I and II, The Hague, London, Boston 2000, XI, XII.

3 Peter Stein, Preface, in : Code européen des contrats, coordinateur Giuseppe Gandolfi, Milan 2004. XLI-XLV.

4 Mauro Bussani, Ugo Mattei, General editors’ Preface, and Simon Whittaker, Reinhard Zimmermann, Good faith in European contract law : surveying the legal landscape, in : Reinhard Zimmermann, Simon Whittaker (eds.), Good Faith in the European Contract Law, Cambridge 2000, XI, 58.

5 See e.g. Peter-Christian Müller-Graff, Gemeinsames Privatrecht in der Europäischen Gemein-schaft, in : Peter-Christian Müller-Graff (Hrsg.), Gemeinsames Privatrecht in der Europäischen Gemeinschaft, Baden-Baden 1993, 8-11 ; Reiner Schulze, Gemeinsame Prinzipien des Europä-ischen Privatrechts, in : Reiner Schulze, Gianmaria Ajani (Hrsg.), Gemeinsame Prinzipien des Europäischen Privatrechts, Baden-Baden 2003, 12-15.

On the Regulation of Contracts convergence in the field of consumer contracts across Member States, with the aim of establishing and regulating the internal market.

It was decided that the smooth functioning of the internal market re-quired further measures in the field of contract law. Therefore the Commission of the European Communities adopted the Communication to the Council and the European Parliament on European Contract Law of 1 July 2001⁶. The Commission stated that the EC legislator had been following a case-by-case approach, adopting directives on specific contracts or specific marketing techniques. The Commission wanted to know whether far-reaching EC ac-tion was needed in the area of contract law. The Communicaac-tion listed four options and the Commission sought information on which of them was pre-ferred by stakeholders, including businesses, legal practitioners, academics and consumer groups.

It is interesting to read in the Communication that the Commission was seeking information on a series of questions :

– whether problems result from divergences in contract law and if so, what kind of problems,

– whether the proper functioning of the Internal Market may be being hin-dered by problems relating to cross-border contracts,

– whether differences among national contract laws discourage, or in-crease the costs of, cross-border transactions,

– whether the existing approach through sector-by-sector harmonisation of contract law could lead to possible inconsistencies at EC level, or to problems of non-uniform implementation of EC law and application of national transposition measures.

Dirk Staudenmayer, chairman of the working group which prepared the Communication, explained in an article that the document had to be seen in the light of three converging developments :

– resolutions of the European Parliament calling on the Commission to ex-amine the potential for greater harmonisation of civil law,

– ongoing and completed academic work,

– conclusions ofthe European Council of October 1999 requesting an overall study of the need for convergence in Member States’ legislation in civil law matters and asking for the submission of a report by 2001.⁷

Staudenmayer stressed the political importance of the Council’s conclu-sions but pointed out that according to a decision of the European Court of Justice, the divergence of national laws would not in itself create a sufficient

6 COM(2001) 398 final of 11.07.2001. OJ C 255.

7 Dirk Staudenmayer, The Commission Communication on European Contract Law : What Future for European Contract Law ? European Review of Private Law 2002, 250-252.

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need for Internal Market harmonisation ; there must be actual or at least probable obstacles to the functioning of the Internal Market and the elimina-tion of the obstacles, or an end to the distorelimina-tion of competielimina-tion, must be the purpose of the measure.⁸

3 – In February 2003 the Commission adopted the Action Plan on a More Coherent European Contract Law,⁹presenting the Commission’s assessment of the consultation process launched by the 2001 Communication. It con-firmed that there was no need to abandon the sector-specific approach but suggested a mix of non-regulatory and regulatory measures. In addition to sector-specific interventions the Commission would seek to increase coher-ence among instruments which are among the established elements (acquis) of Community contract law ; promote the development of EU-wide general contract terms ; and examine whether problems of European contract law required non-sector-specific solutions such as an optional instrument. To in-crease the coherence of instruments a common frame of reference would be developed with the assistance of all interested parties, and the current Euro-pean contract lawacquiswould be reviewed.

The chairman of the working group preparing the Action Plan published his comments in an article. He pointed out that both the European Parliament and the Council had responded to the Communication of 2001. The Council report emphasised the need for greater coherence and the improvement of existingacquis. The Council advised the Commission to launch a study of the areas of extra-contractual liability and property law. The Commission did indeed launch such a study but its scope was limited to the borderline areas between contract law, on the one hand, and property and tort law on the other. The European Parliament passed a resolution calling for an action plan to formulate legislative proposals, setting a deadline for its completion.¹⁰ In the framework of consultations after the 2001 Communication, some contributors argued that the smooth functioning of the Internal Market was being hampered by the national rules of Member States. Weaker parties can-not choose their national law, and the additional costs of obtaining legal ad-vice on foreign law can constitute a competitive disadvantage for small and medium size enterprises and create an obstacle to cross-border transactions.¹¹ The Communication is a supplement to the Commission’s Action Plan taking account of the feedback. It focuses on the role and development of the Common

8 Staudenmayer, op. cit. (footnote 7) 252, 254.

9 COM(2003) 68 final. 15.3.2003. OJ C 63.

10 Dirk Staudenmayer, The Commission Action Plan on European Contract Law, European Review of Private Law 2003, 114-117.

11 Staudenmayer, op. cit. (footnote 10) 120.

On the Regulation of Contracts Frame of Reference. Based on the feedback, the Commission concluded that there would be benefits from raising awareness of existing possibilities for the cross-border applicability of EU Standard Terms and Conditions ; fur-ther consultation with stakeholders would be organised. With regard to non-sector-specific measures such as an optional instrument in European contract law, the Commission would promote the exchange of information.

4 – In October 2004 the Commission submitted to the European Parliament and the Council a further Communication on “European Contract Law and the revision of theacquis: the way forward.”¹²

The Communication discussed reactions to the Action Plan. There had been some support for a Common Frame of Reference, but other suggestions in the Plan had met with scepticism, or at least caution. The Common Frame of Reference was now hailed as an important device for improving the qual-ity of legislation and the coherence of European contract law, and as a basis for possible optional instruments. Its importance was underlined by linking it to the Lisbon Agenda which promotes competitiveness.¹³

In September 2005 the Commission submitted the First Annual Report on European Contract Law and the Acquis Review.¹⁴Work, it said, had pro-ceeded in two directions. The first was the preparation of the Common Frame of Reference : an extensive research network had been set up to study the Euro-pean legal tradition. The research was being organised in work packages that would feed into the draft Common Frame of Reference. The second main line was the review of consumeracquis: the Commission analysed the transposi-tion and applicatransposi-tion of consumer directives by the Member States, seeking to identify regulatory problems, internal market barriers and gaps in consumer protection. The Commission’s assessment was complemented by a compara-tive law analysis of how direccompara-tives were being applied in the Member States.

The research network understands its task to be much wider that was for-mulated in the Communication of 2004. It is well aware that nobody can fore-see what preferences will exist in 2010, when the final result is to be submitted.

Therefore a multifunctional Common Frame of Reference will be designed, which could be used either solely to improve the quality of legislation or for other purposes as well. The aim is to create a framework for assuring the co-herence of all market-relevant rules in contract, property and tort law.¹⁵

12 COM(2004) 651 final 11.10.2004.

13 Dirk Staudenmayer, The Way Forward in European Contract Law, European Review of Private Law 2005, 96.

14 COM(2005) 456 final, 23.9.2005.

15 Christian von Bar, Hans Schulte-Nölke, Gemeinsamer Referenzrahmen für europäisches Schuld- und Sachenrecht, Zeitschrift für Rechtspolitik 2005, 166.

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