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Reproduced with the permission of 43 Harvard International Law Journal (Summer, 2002) 569-581. Copyright © 2002 by President and Fellows of Harvard College and the Harvard International Law Journal <http://www.law.harvard.edu/studorgs/ilj>.

Contract Talk: Reviewing the Historical and Practical Significance of the Principles of European Contract Law

Larry A. DiMatteo [*]

I.    Introduction
II.   Substantive Coverage: Comparing European Principles, CISG and UNIDROIT Principles
A. European Principles
B.  Comparison
III.  Practical Importance
IV.  The Descriptive-Prescriptive Divide
V.   Precursor to a European Contract Code?
VI.  Conclusion

I. Introduction

The Commission on European Contract Law is scheduled to publish in April 2002 Part III of the Principles of European Contract Law [hereinafter European Principles].[1] The Commission on European Contract Law is an independent body of experts from each of the Member States of the European Union. The Commission, popularly known as the Lando Commission, was formed under the auspices of Professor Ole Lando following two resolutions of the European Parliament calling for the development of a European codification of private law.[2]

European Principles promises to play a significant role in the development of a harmonized contract law for the European Union. Part I of European Principles was published in 1995. It deals with issues of performance, non-performance, and remedies. A revised Part I, along with Part II, were published in 1998. Together, Parts I and II cover core issues of contract law including formation, validity, interpretation, performance, remedies, and authority of agents. Part III covers issues including the effects of illegality, assignment, assumption, statutes of limitations, conditions, procedural issues involving plurality of parties, and capitalization of interest.

The desire to harmonize legal regimes in order to make trade easier is not new. The medieval lex mercatoria [3] is an example of an extra-legal attempt by merchants to bridge the legal and cultural divides across different nations. At the end of the twentieth century, globalization and the volume of international [page 569] transactions has led to the idea of a new lex mercatoria.[4] Of "prime importance" to the continued development of international trade is the internationalization of commercial law.[5]

Nowhere is the pressure for internationalization of legal regimes more prevalent than in contract law. As in any mating ritual, the call of "let's talk contract" warns the would be party of the seriousness of the suitor's intentions. Despite this universal language of business, divergences in national private legal systems pose obstacles to the consummation of a transnational contract. Even if contract formation is not prevented entirely, a true consensus ad idem [6] is hindered by linguistic, cultural, and legal differences.

To ease the friction between different contract regimes, several documents have been adopted and published with the intent to provide rules and principles of an international law of contract.[7] The most noteworthy are the Convention for the International Sale of Goods (CISG) [8] and the UNIDROIT Principles of International Commercial Contracts (UNIDROIT Principles).[9] These attempts at supranational unification of contract law respond to a perceived need to remove legal obstacles to international trade and investment. If successful, harmonization of contract principles should provide many benefits, including the reduction in transaction costs associated with the negotiation of transnational contracts, as well as the reduced likelihood of disputes precipitated by misunderstandings of the meaning of contractual terms.

The latest attempt at transcending national contract law differences was made at the regional level through European Principles, whose authors seek [page 570] to overcome legal diversity by making value-laden determinations of a transcending best solution.[10] Unlike either CISG or UNIDROIT Principles, European Principles has the potential to provide a workable international contract regime because of its level of comprehensiveness. It covers more subjects in contract law than either UNIDROIT Principles or CISG. In turn, this depth and breadth makes it a more attractive tool for lawyers, arbitrators, legislators, and businesspersons.

Part II of this Recent Development will sketch the substantive coverage of the European Principles and compare it to UNIDROIT Principles and CISG. Part III will explore the practical importance of European Principles in everyday business life. Part IV will analyze the prescriptive and descriptive elements of European Principles, and Part V will assess the possibility that European Principles can provide the basis for a workable European Contract Code.

II. Substantive Coverage: Comparing European Principles, CISG, and UNIDROIT Principles

International unification efforts in the area of private law have produced several model sets of contract rules. Of these many efforts, European Principles, CISG, and UNIDROIT Principles have been the most influential.[11] CISG has become an international commercial code for sale of goods transactions. As of January 2002, some sixty-one countries [12] have enacted CISG as part of their domestic laws. Thus, CISG is the default law for most international sale of goods transactions unless the parties expressly agree otherwise. In contrast, UNIDROIT Principles and European Principles are generally referred to as soft law: they have no express grounds of jurisdiction and are analogous to U.S. model laws.[13] Such sets of advisory or aspirational rules apply only by agreement of the parties. However, courts and arbitral panels [page 571] voluntarily have used soft law rules as evidence of international customary law to trump national contract laws.[14]

A. European Principles

European Principles, with the expected publication of Part III, represents a broad, comprehensive set of contract rules. In fact, European Principles covers some areas that are left out of the U.S. Uniform Commercial Code (U.C.C.). For example, the U.C.C. leaves issues of validity, authorities of agents, transfer of contract rights and duties (assignment and assumption), illegality, set off, and procedural matters of plurality of parties to other areas of state common and statutory law. After the publication of Part III, European Principles will cover all of these subjects. Part III adds eight additional chapters to the nine chapters existing under Parts I and II. Figure 1 lists European Principles' 17 chapters and some representative subjects covered in each chapter. Even a quick perusal highlights the comprehensiveness of the document.[page 572]

Ch. Title Representative Coverage
1 General Trade usage and practice; freedom of contract; duties of good faith, fair dealing, and cooperation; notice
2 Formation Offer and acceptance rules; modification; written confirmation; merger clauses; duty of good faith negotiation; breach of confidentiality
3 Authority Direct and indirect representation; express, implied, and apparent authority; conflicts of interest; ratification; unidentified principal; sub-agency
4 Validity Mistake; fraud; threats (duress); unfair advantage (undue influence); unfair terms (standard forms)
5 Interpretation General rules of interpretation; contra proferentem rule
6 Contents and Effects Implied terms; quality (warranty); change of circumstances
7 Performance Place; time; order; payment; currency
8 Remedies Remedies; fundamental breach; cure; assurance of performance; excuse
9 Particular Remedies Specific performance; termination of contract; price reduction remedy; damages
10 Plurality of Parties Communal obligations; apportionment of debt; release; settlement
11 Assignment of Claims Assignment; effects as between assignor and assignee; effects as between assignee and debtor
12 Transfer of Contract Substitution of new debtor; transfer of contract
13 Set-Off Counterclaims
14 Prescription Limitation period; suspension; postponement; renewal
15 Illegality Contrary to fundamental principles (public policy); restitution
16 Conditions Types; interference with conditions; effect
17 Capitalization of Interest [page 573]


Sale of Goods Yes Yes Yes
Service Contracts No Yes Yes
Authority of Agents No No Yes
Other Contracts No Yes Yes
Commercial Contracts Sale of Goods
Yes Yes
Consumer Contracts No No Yes
Adoption as National Law Yes No No
Lex Mercatoria Application Yes Yes Yes
Pre-Contractual Good Faith No Yes Yes
Formation Yes Yes Yes
Validity Issues No Yes
Performance/Non-Performance Yes Yes Yes
Remedies Yes Yes Yes
Right to Specific Performance Deferred to
National Law
Yes Yes
Assignment, Assumption, Discharge No No Yes
Illegality No No Yes
[page 574]
No No Yes

B. Comparison

The major substantive differences between European Principles, CISG, and UNIDROIT Principles are displayed in Figure 2. CISG applies only to the commercial sale of goods. UNIDROIT Principles applies to all forms of contract, including sale of goods and services contracts, but it is also limited to commercial transactions. In contrast, European Principles not only applies to all forms of contracts, but also applies to both commercial and consumer contracts.[15] Also, unlike either of the other two, European Principles provides express rules pertaining to agency contracts, including rules pertaining to indirect representation.[16]

All three documents are optional in application, but the parties are free to make any of the documents the law of their contract through an expressed choice of law clause. If one of the documents does apply, the parties are generally free to alter through contract any of the document's provisions. For example, Article 1:102 (2) of European Principles states that "[t]he parties may exclude the application of the Principles or derogate from or vary their effects."[17] However, some provisions will be deemed immutable [18] and embody non-negotiable protective principles such as European Principles' duty of good faith and fair dealing,[19] duty to cooperate,[20] and the judicial right to reduce grossly excessive liquidated damage amounts.[21]

Contract issues involving formation, performance, non-performance (breach), and remedies are covered in all three documents.[22] However, European [page 575] Principles and UNIDROIT Principles differ with CISG on the right of the non-breaching party to the remedy of specific performance. The latter defers to national law. In contrast, European Principles expressly states that the "aggrieved party is entitled to specific performance"[23] subject to a number of limitations.[24] In the area of pre-contractual liability, European Principles expands the duty of good faith to the area of pre-contractual negotiations. It states that "a party who has negotiated or broken off negotiations contrary to good faith and fair dealing is liable for the losses caused to the other party."[25]

Regarding validity, CISG defers to national law,[26] while European Principles and UNIDROIT Principles [27] have provisions governing certain issues of validity. Unlike UNIDROIT Principles, Part III of European Principles also provides provisions dealing with illegality. Finally, Part III of European Principles adds much that is not present either in CISG or in UNIDROIT Principles, including rules pertaining to the assignment of claims, assumption of debt, plurality of parties, set-off, and prescription. Thus, the European Principles are more comprehensive in scope than either CISG or UNIDROIT Principles.

III. Practical Importance

The broad, comprehensive coverage of European Principles and its flexible, non-binding nature make it useful for a variety of actors in the commercial world. The Commission on European Contract Law has listed a number of uses for the European Principles:[28] facilitation of cross-border trade; strengthening of the single European market; creation of an infrastructure for Community laws governing contracts; guidelines for national courts and legislatures; and construction of a bridge between the civil law and the common law. It also lists five purposes for which the European Principles are designed: a foundation for European legislation; express adoption by the parties; a modern formulation of a lex mercatoria; a model for judicial and legislative development of contract law; and a basis for harmonization.

These uses are tied to the perspectives of the businessperson, lawyer, arbitrator, and legislator. From the perspective of the businessperson, and her [page 576] lawyer, the European Principles represent a neutral, non-national set of rules -- a deal-saving compromise choice of law when neither party is willing to accept the law of the other party's country. Such a choice of law also enables the lawyer to avoid unforeseen nuances and uncertainties in the application of a foreign law. In addition, the lawyer could benefit from the use of European Principles in drafting a transnational contract. In negotiating the written contract, a lawyer could use European Principles as a checklist of issues that need to be addressed in the contract and could appeal to the parties to apply European Principles as a fair, reasonable, and neutral set of contract rules.

From the perspective of an arbitrator, European Principles could be used as a source of internationally accepted principles of law to supply a customary default rule to fill in a gap in a contract.[29] This use was employed in the case of Arbitration of Andersen v. Andersen.[30] The arbitration panel cited Article 5:101(3) of the Principles of European Contract Law [31] to interpret an ambiguous contract term to imply a duty of cooperation between parties in a contract of association.

The value of European Principles to the legislator would be multifaceted. Its most ambitious use would be as a template for a European Contracts Code [32] or as a mechanism for drafting and harmonizing more specific E.U. Directives.[33] In the short-term, it could act as a meta-document for harmonizing the discrete, independent pieces of E.U. legislation. In the long term, it could act as a precursor to a unified, comprehensive regional code. This perspective, however, raises questions of whether European Principles is a mere descriptive statement of the law or whether it acts as a statement of the law as it "ought" to be, and how that affects the ability of European Principles to develop into a European Contract Code.

IV. The Descriptive-Prescriptive Divide

The closest analogy to the descriptive-prescriptive nature of the European Principles is the U.S. Restatement (Second) of Contracts.[34] Both instruments possess descriptive and prescriptive features. For example, some provisions of [page 577] the European Principles primarily describe contract law as it generally exists throughout the European Union, while other provisions are primarily prescriptive in that they attempt to create a normative structure for contract law as it should be. In fact, European Principles is even more prescriptive given its starting point -- shaping the law of numerous countries with both civil and common law traditions.[35]

European Principles attempts to provide "best solutions" to the different issues of contract law.[36] By definition, this approach transcends any one single national formulation of a given rule or principle. At a higher level of abstraction, European Principles also attempts to compile the best solutions into a coherent whole. Thus, the adopted or formulated rule needs to satisfy a two-step approval process. First, the best rule has to be chosen, whether it is transplanted from a particular national law, melded from various national approaches, or is a purely anational creation.[37] Second, the rule needs to fit into the overarching framework of the code; best solution or not, it has to support the unified whole.[38]

The approach and style of European Principles can be contrasted with what has been called the common core approach. The common core approach is historically linked to the "Cornell Project" instigated by Professor Rudolf Schlesinger in the 1960s.[39] This enterprise was purely descriptive in nature; its goal was to uncover the principles of private law that underscored the different European legal systems. The most recent attempt to uncover such principles is the ongoing Common Core Project sponsored by the University of Trento, Italy. Two of the principals in that project, Ugo Mattei and Mauro Bussani, liken their task to that of cartography -- charting the legal landscape of Europe.[40] Their expressed objective is therefore merely descriptive.[41] [page 578]

V. Precursor to a European Contract Code?

Given the differences across European legal systems, a descriptive approach, unlike that of European Principles, cannot succeed in unifying the many systems into one code. One of the stated prescriptive goals of the European Principles is to act as a precursor to either a European contract code or a European civil code.[42] The European Parliament provided the initial impetus for the drafting of the European Principles with such a European-wide code in mind. In two resolutions, the Parliament voiced a desire in favor of a harmonization of European private law.[43]

The soft law nature of European Principles means that it does not have any express grounds of jurisdiction, much like U.S. model laws drafted by private or quasi-private organizations.[44] The very notion of "model law" reflects that its ultimate purpose is that of adoption or a precursor that is an improvement on and rationalization of existing law. European Principles is directed at resolving the legal uncertainty of multi-jurisdictional transactions. In addition, it seeks to address the problem of creating a legal regime through the piecemeal accumulation of legislation.

The current piecemeal approach of European Community legislation -- to harmonize isolated issues of contract law -- presents problems of fragmentation and systemic disunity. The ad hoc, directive-based approach that currently characterizes E.U. initiatives in the private law sphere has created more divergence than convergence in E.U. private law.[45] European Principles, with its use of a best solutions approach and the comprehensiveness of its sweep, offers the needed blueprint for a European contract code. It provides both the option of its adoption as a whole as well as a methodology for drafting an entirely new code.[46] In Lando's terminology, the current system [page 579] of "optional Europeanisation" must be supplanted by "mandatory Europe-anisation."[47]

A major constitutional barrier needs to be overcome, however, before European Principles can ultimately act as a foundation for a European legislated code. Under the foundational constitutional provision of the E.C. Treaty, the E.U. institutions may not be empowered to enact a Europe-wide code. The subsidiarity principle of Article 3 of the E.C. Treaty states that "[i]n areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if and so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States."[48]

The constitutional argument against the enactment of a European contract code is not insurmountable. Rather, it is more a question of political will. If the E.U. authorities assert that such harmonization is required for the efficient operation of the internal market, then the subsidiarity principle would not prevent the adoption of such a code. In order for the principle of subsidiarity to be overcome, it would have to be shown that national contract laws are no longer competent to order the private transactions throughout the European Union.[49] Professor Jürgen Basedow has argued that an E.U. codification of the law of contracts is needed to harmonize the divergences in national contract laws. According to Basedow, codification of European private law would serve to create a single legal framework for and foster the internal market, facilitate information about European law, provide a common point of reference for legal education, and create a professional [page 580] identification for European lawyers.[50] If the need for harmonization is deemed to be great enough, then the requirements of the principle of subsidiarity can be satisfied. Basedow advocates the enactment of a "Community Contracts Regulation" that would be gradually phased in over a twenty-to thirty-year period.[51] European Principles could be used as the first phase of the codification process.[52] From this perspective, European Principles is the first step in the evolution of a mandatory European Contract Code.[53] European Principles' combination of comprehensiveness and best solutions should ensure its role in the Europeanization of private law.

VI. Conclusion

The very fact that a transaction transcends a national boundary confronts parties to a contract with an environment of legal pluralism characterized by multiple private ordering systems. European Principles offers a ready-made blueprint for the development of a European contract code. It may ultimately be, in the words of Professor von Mehren, a "[c]omparatists['] map [of] the forests into which practitioners venture and provide concepts and tools of analysis that enable them to find their way."[54] If it serves this function, then the effort expended in its creation will not have been in vain. Even if it fails to act as a precursor to a European contract code, its use to contracting parties, judges, and arbitrators as a source of best solutions will have warranted the efforts of its creators.[page 581]


* Associate Professor of Management and Legal Studies, Warrington College of Business Administration, University of Florida, and LL.M. candidate, Harvard Law School.

1. A full copy of the texts, commentary, and illustrations of Parts I and II of the European Principles are found in PRINCIPLES OF EUROPEAN CONTRACT LAW. PARTS I AND II. (Ole Lando, Hugh Beale & the Commission on European Contract Law eds., 2000) [hereinafter, EUROPEAN PRINCIPLES].

2. The most recent Parliamentary Resolution was issued May 6, 1994 and states in part that:

"Whereas the [European] Commission has not yet taken preparatory work [for the drawing up of a Common Code of Private Law],

  1. Calls on the Commission for work to be commenced on the possibility of drawing a Common European Code of Private Law;
  2. Calls for the setting up of a committee of experts to propose priorities for partial harmonization in the short term and a more general harmonization in the long term;
  3. Considers that the Union could promote harmonization and standardization at world or European levels within organizations such as UNIDROIT, UNCITRAL, and the Council of Europe;
  4. Considers that support should continue to be given to the Commission on European Contract Law, better known as the Lando Commission, in its work on harmonization of contract law."

Resolution on the Harmonization of Certain Sectors of the Private Law of the Member States, EUR. PARL. DOC. (COM 205) 518 (1994).

3. The modern day lex mercatoria is considered to be a descendant of the Roman ius gentium and the medieval law merchant. For an historical accounting of the medieval law merchant, see generally WYNDHAM A. BEWES, THE ROMANCE OF THE LAW MERCHANT (1923); Harold J. Berman, The Law of International Commercial Transactions (Lex Mercatoria), 2 EMORY J. INT'L DISP. RESOL. 235 (1988); Lord McNair, The Generalized Principles of Law Recognized by Civilized Nations, 33 BRIT. Y.B. INT'L L. 1 (1957).


5. Dennis Tallon, Civil Law & Commercial Law, 8 INT'L ENCYCLOPEDIA COMP. L. 2-18 (Konrad Zweigert ed., 1993).

6. The Latin term for "meeting of the minds" represents the core common law concept of agreement. Some form of mutual assent, whether subjective or objective, is required in order to form a contract. See generally P. S. ATIYAH, AN INTRODUCTION TO THE LAW OF CONTRACT 10-13 (4th ed. 1989).

7. International conventions exist that provide substantive rules and principles of contract law along the lines of the U.S. Uniform Commercial Code or Restatement (Second) of Contracts, including the Convention on the International Sale of Goods (CISG), the UNIDROIT Principles of International Commercial Law. See infra Part II and accompanying text. There have also been notable developments in the area of private international conflict of law rules. See, e.g., Convention on the Law Applicable to Contractual Obligations, opened for signature June 19, 1980, 1980 O.J. (L 266) (entered into force April 1, 1999); Inter-American Convention on the Law Applicable to International Contracts, Mar. 17, 1944, 33 I.L.M. 732 (1994).

8. Final Act of the United Nations Conference on Contracts for the International Sale of Goods, Apr. 10, 1980, U.N. Doc. A/Conf. 97/18, with Annex, United Nations Convention on Contracts for the International Sale of Goods, reprinted in 19 I.L.M. 668 (1980). See generally HENRY GABRIEL, PRACTITIONER'S GUIDE TO THE CISG AND THE U.C.C. (1994).

9. See generally Joseph M. Perillo, UNIDROIT Principles of International Commercial Contracts: The Black Letter Text and Review, 63 FORDHAM L. REV. 281 (1994). For information on UNIDROIT, see Charter Establishing the International Institute for the Unification of Private Law, opened for signature Mar. 15, 1940, 15 U.S.T. 2494, T.I.A.S. No. 5743 (entered into force for the United States on Mar. 13, 1964).

10. This has been criticized as being a too draconian approach. Such an approach "discard[s] ... the possibility that core diversity might be justified on many grounds." Mauro Bussani & Ugo Mattei, The Common Core Approach to European Private Law, 3 COLUM. J. EUR. L. 339, 348 (1998).

11. For a brief substantive comparison between the UNIDROIT Principles and the European Principles, along with select references to the CISG, see Arthur Hartkamp, The UNIDROIT Principles for International Commercial Contracts and the Principles of European Contract Law, 2 EUR. REV. PRIVATE L. 341 (1994) (discussing only Part I of the European Principles). See also Michael J. Bonell, The UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law: Similar Rules for the Same Purposes?, 26 UNIFORM L. REV. 229 (1996).

12. Many of the world's major trading countries have acceded to the CISG, including the United States, China, Russian Federation, Canada, Mexico, Germany, France, and Italy. The most notable exceptions include the United Kingdom, Japan, and Brazil. An up to date listing of signatory countries is available at the UNCITRAL Web site, <http://www.uncitral.org/english/status/status-e.htm> United Nations Convention on Contracts for the International Sale of Goods (Vienna, 1980).

13. Thus, their "most important function ... would be to serve as a model: they are soft law, representing an ideal that is to be reached." Jan Smits, How to Take the Road Untraveled? European Private Law in the Making: A Review Essay, 6 MAASTRICHT J. EUR. & COMP. L. 25, 39 (1999).

14. For an example of the use of CISG as "soft law," see Larry A. DiMatteo, Resolving International Contract Disputes, 53 DISP. RESOL. J. 75, 79 (Nov. 1998). ("The CISG, along with the UNIDROIT Principles [and European Principles], provide arbitrators a suitable framework for deciding international contract disputes by the application of the general principles that underlie [these] documents.").

15. Commercial contracts are those involving merchant to merchant transactions, while consumer contracts relate to merchant to consumer or consumer to consumer transactions. Most E.U. Directives pertaining to contracts are consumer protection laws applicable only to sales to consumers. In contrast, European Principles applies to commercial as well as consumer contracts.

16. The European Principles agency rules are found in Chapter 3: Authority of Agents. Section 1 provides general provisions, Section 2 covers direct representation, and Section 3 covers indirect representation. See EUROPEAN PRINCIPLES, supra note 1, arts. 3:101-3:304. "Indirect representation" deals with the situation where an agent does not negotiate in the name of the principal and the third party is not aware that he is acting on behalf of a principal. Article 3:301 recognizes that the agent and the third party will be primarily liable to each other.

17. EUROPEAN PRINCIPLES, supra note 1, art. 1:102 (2).

18. Protective principles or immutable rules such as good faith, fair dealing, duty to cooperate, duty to renegotiate, duty to mitigate, and the duty of confidentiality often act as counterweights to the paradigmatic basis of freedom of contract. It has long been argued that such protective principles derive from business practice itself, as contracting parties are generally more concerned with preserving a business deal or relationship and not the strict enforcement of contractual rights and remedies. See, e.g., Stewart Macaulay, Non-Contractual Relations in Business: a Preliminary Study, 28 AM. SOC. REV. 45 (1963); Hugh Beale & Tony Dugdale, Contracts Between Businessmen: Planning and the Use of Contractual Remedies, 2 BRIT. J.L. & SOC'Y 45, 46 (1975). See generally IAN MACNEIL, THE NEW SOCIAL CONTRACT: AN INQUIRY INTO MODERN CONTRACTUAL RELATIONS (1980).

19. EUROPEAN PRINCIPLES, supra note 1, art. 1:201 (expressly stating that "[t]he parties may not exclude or limit this duty.").

20. EUROPEAN PRINCIPLES, supra note 1, art. 1:202.

21. EUROPEAN PRINCIPLES, supra note 1, art. 9:509 (2).

22. For an analysis of the remedy provisions in the European Principles, see Lena Olsen, The Choice of the Aggrieved Party -- An Analysis of the Remedies in the Principles of the European Contract Law, 1 EUR. REV. PRIVATE L. 21 (1999).

23. EUROPEAN PRINCIPLES, supra note 1, art. 9:102 (1); UNIDROIT Principles, supra note 9, art. 7.2.2.

24. EUROPEAN PRINCIPLES, supra note 1, art. 9:102 (2) & (3); UNIDROIT Principles, supra note 9, art. 7.2.2 (a)-(e).

25. EUROPEAN PRINCIPLES, supra note 1, art. 2:301 (2) (emphasis added). The European Principles and UNIDROIT Principles impose a duty of good faith while the CISG has no express good faith provision. See EUROPEAN PRINCIPLES, supra note 1, art. 2:301 (Negotiations Contrary to Good Faith); UNIDROIT Principles, supra note 9, art. 2.15 (Negotiations in Bad Faith).

26. CISG, supra note 8, art. 4 ("[T]his Convention ... is not concerned with the validity of the contract.").

27. See EUROPEAN PRINCIPLES, supra note 1, Ch. 4 (Validity); UNIDROIT Principles, supra note 9, ch. 3 (Validity).

28. Commission on European Contract Law, "Introduction to the Principles of European Contract Law," <http://www.cbs.dk/departments/law/staff/olcommission_on_ecl/survey_pecl.htm>. See also EUROPEAN PRINCIPLES, supra note 1, at xxi-xxv.

29. Alternatively, where the parties failed to make a choice of law selection, European Principles could be used to supplant the applicable national law that the arbitrator deems to render an unfair result. For an analogous use of the CISG, see Seller v. Buyer, Int'l Comm. Arb. No. 5713 (1989), reprinted in 15 Y.B. COM. ARB. 70 (1990) (substituting the two year notice of non-conformity provision in the CISG as evidence of international customary law for the one year period prescribed by the applicable Danish Sales Act).

30. Andersen v. Andersen, 10 AM. REV INT'L ARB. 451 (1999).

31. Id. at n.237. It should be noted that the panel also cited the corresponding Article 4.1(2) of the UNIDROIT Principles.

32. See infra Part V and accompanying text.

33. One suggested use for European Principles is outside of its intended scope of application: as a model law for countries restoring or updating their private law systems. See, e.g., Peter Schlechtriem, E.C. Directives, Common Principles, and Law Reforms, 75 TUL. L. REV. 1177, 1183 (2001).


35. Lando and Beale state that of the variety of legal systems existing in the European Union "general principles applicable across the Union as a whole must be established by a more creative process ...." EUROPEAN PRINCIPLES, supra note 1, at xxvi (emphasis added).

36. This approach "involves the pursuit of rationality, harmony, and reform ideals, and such a task implies the selection of the legal rules and materials that are best suited for the task." Bussani & Mattei, supra note 10, at 347.

37. See Kazuaki Sono, The Rise of Anational Contract Law in the Age of Globalization, 75 TUL. L. REV. 1185 (2001).

38. For an analysis of the different methods used to achieve uniformity, see generally Arthur Rosett, Unification, Harmonization, Restatement, Codification, and Reform in International Commercial Law, 40 AM. J. COMP. L. 683 (1992).

39. See generally FORMATION OF CONTRACTS: STUDY OF THE COMMON CORE OF LEGAL SYSTEMS (Rudolf B. Schlesinger ed., 1968); Rudolf B. Schlesinger, The Past and Future of Comparative Law, 43 AM. J. COMP. L. 477 (1995).

40. "We do not wish to force the actual diverse reality of the law within a single map to attain uniformity." Bussani & Mattei, supra note 10, at 341. Professor Mattei is a Professor of International and Comparative Law at Hastings College of Law and Professor of Civil Law at the University of Turin. Professor Bussani is an Acting Professor of Private Law at the University of Trento.

41. However, their descriptive enterprise is not limited to a discovery and recitation of contract rules and doctrine. They understand that contract law is more than rules; it is also process. For example, they expressly note the importance of the overarching legal system and judicial styles of reasoning to the application of contract law. The Common Core format of comparative law analysis is divided into three levels: Level I, Operative Rules; Level II, Descriptive Formats; and Level III, Metalegal Formats. Id. at 354-55 (App. 1).

42. The difference between such codes is evidenced by their titles. A European contract code would be limited to the law of contracts, while a civil code would be a more expansive endeavor embodying other areas of law such as restitution, property, tort, and possible family law. Both would need to come from the European Union, therefore effectively displacing all conflicting national laws. See generally Ole Lando, Principles of European Contract Law: An Alternative to or Precursor of European Legislation?, 40 AM. J. COMP. L. 573 (1992).

43. Resolution on Action to Bring into Line the Private Law of the Member States, EUR. PARL. DOC. (COM 158)400 (1989); Resolution on the Harmonization of Certain Sectors of the Private Law of Member States, supra note 2.

44. See supra notes 13-14 and accompanying text. Examples of such U.S. organizations include the American Law Institute and the National Conference of Commissioners on Uniform State Laws. These organizations are the authors of the Restatement of Laws and the Uniform Commercial Code.

45. Jürgen Basedow, A Common Contract Law for the Common Market, 33 COMMON MKT. L. REV. 1169 (1996). Professor Basedow refers to "the more disturbing friction between these pointilistic directives and the national systems of private law." Id. at 1171 (emphasis in original).

46. The need for a European law of contracts has become a controversial issue. For example, some commentators have argued that efficiency is best achieved through the continued operation of national private law systems. See, e.g., Roger Van den Bergh, Subsidiarity as an Economic Demarcation Principle and the Emergence of European Private Law, 5 MAASTRICHT J. EUR. & COMP. L. 129 (1999). Van den Bergh asserts that "the current diversity of the solutions adopted in private law is prima facie evidence in favour of a decentralized private law." Id. at 130. See generally Martin Boodman, The Myth of Harmonization of Laws, 39 AM. J. COMP. L. 715 (1991). The process of convergence in private law involves more than the law of contracts. See, e.g., David Bradley, Convergence in Family Law: Mirrors, Transplants and Political Economy, 6 MAASTRICHT J. EUR. & COMP. L. 127 (1999) (noting that there is "[a]n impetus for greater uniformity in [the] sphere [of family law] as part of the general project of European unification.") (emphasis added).

47. See Ole Lando, Optional or Mandatory Europeanisation, 1 EUR. REV. PRIVATE L. 59 (2000). Lando defines the term "Europeanise" as the unification or harmonization of European law. Id. at 59. "Optional Europeanisation" leaves the decision and implementation of legal harmonization to the courts and arbitration panels. "Mandatory Europeanisation" is the imposition of a harmonizing body of law through legislative enactment. Id. at 60. Others have argued that optional Europeanisation offers the best means to effect harmonization of contract law. See, e.g., Kristina Riedl, The Work of the Lando-Commission from an Alternative Viewpoint, 1 EUR. REV. PRIVATE L. 71, 80 (2000). European Principles would be the basis of a "dynamic harmonisation" of European contract law. Id. at 80. The judiciary would shape and interpret the European Principles into a European-wide body of general rules. Id. at 83. See also Reiner Schultze, A Century of the Bürgerliches Gesetzbuch: German Legal Uniformity and European Private Law, 5 COLUM. J. EUR. L. 461, 467 (1999) ("[E]ven if it were in fact possible to put into force a European Code within a short period of time, its chances of success would be limited.").


49. See generally Reimer von Borries & Malte Hauschild, Implementing the Subsidiarity Principle, 5 COLUM. J. EUR. L. 369 (1999); Nicolas Bernard, The Future of European Economic Law in the Light of the Principle of Subsidiarity, 33 COMMON MKT. L. REV. 634 (1996).

50. See Jürgen Basedow, Codification of Private Law in the European Union: The Making of a Hybrid, 9 EUR. REV. PRIVATE L. 35, 43 (2001).

51. Id. at 35. Professor Basedow is the Director of the Max-Planck Institute. See also Armin von Bogdandy, The Legal Case for Unity: The European Union as a Single Organization with a Single Legal System, 36 COMMON MKT. L. REV. 887 (1999).

52. This gradual process of codification beginning with soft law, that being non-mandatory or advisory principles like the European Principles, has been referred to as creeping codification. See, e.g., Klaus P. Berger, The Principles of European Contract Law and the Concept of the 'Creeping Codification' of Law, 1 EUR. REV. PRIVATE L. 21, 21 (2001).

53. But see Pierre Legrand, Against a European Civil Code, 60 MOD. L. REV. 44 (1997).

54. Arthur T. von Mehren, The Rise of Transnational Legal Practice and the Task of Comparative Law, 75 TUL. L. REV. 1215, 1216 (2001). This quotation is being used out of context: Professor von Mehren's statement was referencing the job of comparatist scholars and not to the lex mercatoria or general principles. However, the European Principles can be seen as a product of comparatist scholars.

Pace Law School Institute of International Commercial Law - Last updated March 1, 2004
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