Go to Database Directory || Go to Bibliography

Published in Santiago Espiau Espiau & Antoni Vaquer Aloy eds., Bases de un Derechop Contractual Europeo, Tirant lo blanch: Valencia (2003) 339-458. Reproduced with permission of the author.

Pacta sunt servanda meets the market: enforcing
promises in Spanish and United States law

Shael Herman [*]

I.   Preface
II. Values underlying Spanish preferences for performance over damages
      1. Effect of the victim's option to seek performance or damages from the breaching party
      2. Spanish doctrine favors specific performance (ejecución forzosa) over damages (resarcimiento)
      3. The embargo
III. A spirit of pragmatism informs the United States approach to remedies for contract breach
      1. Extrajudicial constrains condition reflexes of American merchants
      2. American judicial attitudes discourage demands for specific performance
      3. "Tough love" therapy for a stubborn plaintiff
      4. Other deterrents to demands for specific performance
IV. United States and Spanish regulation of specific performance compared
      (of judgments, embargos, convergencies, and enforcement weapons)
      1. The effects of a United States judgment and a Spanish judgment compared
      2. Are there possible convergences between American and Spanish approaches on specific performance?
      3. In a legal duel over a contract breach, which legal actor chooses the enforcement weapon?
V.  Conclusion

I. PREFACE

This paper addresses a heavily freighted legal term--specific performance-in the context of Spanish and United States regulation of sales of goods. In American law, "specific performance, " like its Spanish equivalent, "ejecucion forzosa" or "cumplimiento forzoso," entails compelling a defaulting obligor to perform his promise. But despite convergence of these terms on this essential issue of compulsion, fundamental values embedded in the two legal cultures send these terms in different directions. Animated by demands of economic efficiency, American practice supposes that a demand for specific performance will be granted only upon certain conditions that are unimportant for a like demand under Spanish law: first, as is often the case in sales of merchandise, a buyer under United States law cannot force his seller to specifically perform his promise if money damages would suffice to repair the harm resulting from the breach. As a result of this presumption about the adequacy of damages, a buyer's prospect for mitigating damages routinely hovers over his demand for specific performance. Second, if a United States court grants an order of performance against a seller, it may back up the order with a contempt citation against the obligor. The court may order even incarceration of a recalcitrant seller. Third, specific performance is a one-way street: a seller may be specifically compelled to deliver, but his buyer may not ordinarily be compelled to pay the price.

In Spanish law, by contrast, an aggrieved buyer's right to ejecucion forzosa does not depend upon a showing of inadequacy of damages. Nor does an aggrieved party--whether buyer or seller--need to justify his demand for performance by showing the impossibility of mitigating his damages, e.g. by finding a substitute contract in the market place. Though Spanish law affords a claimant no contempt citation against a recalcitrant obligor, it has other procedural tools for extracting performance from him: the embargo authorizes a victorious claimant to have the tribunal assist him in wresting from the breacher control of the assets specified in his judgment. Unlike specific performance, which, under American law, will ordinarily avail a buyer but not a seller in an executory contract, the embargo is a two-way street: If a Spanish seller obtains an order against his buyer for the price, then he may be entitled to an embargo dinerario, that is, a right to collect the price from the buyer's accounts by judicial process. Largely ignoring concerns of economic [page 439] efficiency in the market place, Spanish doctrine explains ejecución forzosa and embargo in terms of the venerable maxim, pacta sunt servanda. Subject to traditional defenses like impossibility, promises are to be kept. Period.

II. VALUES UNDERLYING SPANISH PREFERENCE FOR PERFORMANCE OVER DAMAGES [1]

An heir to the Romano-Germanic tradition, a Spanish lawyer might argue that the responses of Spanish judges to contractual non-performance mirror bedrock principles of the Spanish legal order. These judicial responses would resonate with familiar maxims: Recalling his Latin training, a typical Spanish lawyer, as above suggested, might invoke the slogan Pacta sunt servanda. A fondness for German law might lead him to invoke Kant's categorical imperative, according to which a promise would be idle chatter and not a promise at all if it were not in principle to be kept. The distinguished comparative scholar, Ernst Rabel, seems to have embraced a Kantian view of the sanctity of promises when he wrote that the duty to perform [was] "the backbone of the obligation."[2] In stating the axiom in this form, Rabel presumably would have been less enthusiastic for the proposition that the backbone of the obligation consisted in a duty to pay damages upon breach.

Following Rabel's suggestion, if the meaning of pacta sunt servanda [3] is not to be hollowed out, then a solemn undertaking should offer the contract violator no alternative obligation. In other words, a legal regime should not grant a breaching promisor an option either to perform or to pay damages. As Professor Schlechtriem has remarked, the party in breach should not be allowed to buy himself free of a contract that he has violated.[4] On [page 440] the contrary, so argue proponents of pacta sunt servanda, the victim of the breach, not the contract violator, should be afforded an opportunity to decide whether he prefers the breaching party's performance or a judgment against the latter for damages consequent upon his non -performance.

1. Effect of the Victim's Option to Seek Performance or Damages from the Breaching Party

By reserving for a breach victim a remedial option of specific performance, a legal regime excuses him from having to mitigate his losses. Although the victim may ultimately mitigate his losses, his failure to do so should entail no penalty such as a reduction of his claim in an amount reasonable mitigation would have saved him. In a classical civilian perspective committed to the ideal of pacta sunt servanda, a buyer in breach should not compel his seller to seek a substitute sale, nor should a breaching seller force his buyer to enter into a substitute purchase.[5] At the moment of a breach, so goes the conventional wisdom, the aggrieved party has the moral high ground. If an innocent party's conduct vis-a-vis his co-contracting party has been above reproach, then he should stand on his contract, confident that a court will protect his interest in the contract. As if to underscore the correctness of this position and the sanctity of the contract, the victim's legal regime could ordinarily require a judicial decree to dissolve the original contract and excuse the [page 441] parties from its fulfillment. Never mind that a judicial termination of the contract represents for the aggrieved party considerable cost in time and money. At a stressful moment when the disappointed party is fretting about meeting his obligations to his own customers, he is loath to spend time and money on his lawyer and the courts. Yet, absent a special clause that would automatically dissolve the contract, the moral force of pacta sunt servanda may bar even the victim of a breach from confecting a replacement contract before he obtains a judicial dissolution of the initial agreement.[6]

2. Spanish Doctrine Favors Specific Performance (ejecución forzosa) over Damages (Resarcimiento) [7]

How does a general preference for specific performance over damages figure in the Spanish regulation of remedies for contract breach? In determining the appropriate recourse for the disappointed party, Spanish jurists start with a classical Romanist distinction among duties to give, to do, and not to do.[8] Spanish law classifies a seller's duty to deliver an object as a duty to give. If a seller has failed to deliver movable items, the doctrine, viewing the promise as sacrosanct, requires delivery as a primary remedy.[9] As a [page 442] subordinate remedy, compensating an aggrieved buyer becomes appropriate upon failure of all efforts--both judicial and extra-judicial--to extract delivery from the seller. If the item is certain and determined, (e.g., an art work, a rare book) then the tribunal, on application of the aggrieved buyer, will order him to be put into possession of it. If a recalcitrant seller tries to frustrate the order by concealing the thing, the court may open the suspected hiding place, remove the item, and turn it over to the purchaser.

Compensating an aggrieved buyer may also be appropriate if the item cannot be located, no longer exists, or is found in possession of a third party from whom it cannot be revindicated. Such third parties could include an acquirer in good faith and a pledgee of the goods. In determining the feasibility of forcing the seller to deliver the object, Spanish doctrine asks if the object can be put within the buyer's grasp. According to Spanish law's formulation, the thing must be "habida" (verb: haber) and this condition would not be legally feasible if the item had been destroyed or was acquired definitively by a third party through a valid juridical act not subject to revocation. If the object of the obligation is indeterminate or generic, (i.e. a fungible, a commodity, or merchandise commercially available in a market,) the buyer nonetheless has two routes to ejecución forzosa: an order either putting him in possession of the thing at the seller's expense or granting him monetary compensation to buy substitute items together with an embargo on enough of the debtor's bank accounts to complete the purchase.[10] If the buyer no longer needs the contractual object, then he may seek compensation instead of performance.

For an aggrieved promisee, mitigation of damages is not a pre-condition to an order of compensation. Notably, even when an aggrieved party seeks compensation, he may avail himself of the court's protective shield by having the court block enough of the seller's assets to assure the availability of funds necessary to buy the substitute goods.[11] In obtaining a judicial imprimatur for his legal position, an aggrieved Spanish buyer, unlike his American counterpart, would not open himself to self-doubt about the appropriateness of his decision against mitigation after he had learned of his seller's repudiation. Nor could a defaulting seller legitimately reproach his buyer for inflicting unjustified losses upon him by failing to make adequate mitigation efforts.

3. The Embargo [12]

Evocative of the artisanry of Moorish filigree, the refined craftsmanship devoted to the embargo by the Spanish legislator reinforces the conviction that Spanish lawyers mean [page 443] business when they demand performance from a recalcitrant obligor [13]. Tens of articles on execution and embargo equip an aggrieved party with the tools needed to compel this performance. To assure a defaulter's compliance with court orders to give or to do, Spanish embargo provisions provide a procedural apparatus whose precision and seemingly draconian reach may surprise a United States lawyer accustomed to damages as the normal remedy for a contract breach. In the calculus of the Spanish lawmaker, extracting delivery or payment from an obligor seems more important than assuring that a breach victim has efficiently reallocated his resources through mitigation.

According to article 634 of the Spanish Ley de Enjuiciamiento Civil (LEC), the tribunal must deliver directly to a creditor the goods covered in the judgment ("executory title"). Remarkable for American lawyers unaccustomed to specific performance of a duty to pay money, article 571 of the LEC authorizes an embargo dinerario (dinero=money) that contemplates a forced execution of such a duty. To assure the debtor's full payment, the embargo blocks the debtor's assets including rents, cash, stock shares, and partnership interests. If a creditor alleges that the assets in question are under the control of a third party, then the court is empowered to investigate their true ownership among entities believed to have specific knowledge of them (LEC art 593).[14] When interrogated by a tribunal regarding these assets, an uncooperative entity may be fined.[15] Under LEC article 701, if the debtor does not put the creditor in possession of the items specified in the judgment, then the court may rely upon official pressure to have them delivered. Helped by public officers, the court may open locked spaces where goods are suspected of being concealed. When the asset cannot be put into the creditor's possession (no pudiere ser habida la cosa) the court may order compensation by money award for the non-delivery. Unlike a typical United States judgment, a Spanish judgment can embargo a debtor's funds to assure payment. Although this rule applies to specifically identified items, LEC article 702 also makes the embargo applicable in principle to generic goods. [page 444]

III. A SPIRIT OF PRAGMATISM INFORMS THE UNITED STATES APPROACH TO REMEDIES FOR CONTRACT BREACH

As a result of a conditioning process dating back to his pragmatic law training, an American lawyer would probably react with amusement (or alarm) to our narrative of Spanish enforcement rules. He would likely say that performance orders and embargos make sense if one finds it helpful to moralize about a defaulter's conduct. But the complexity and velocity of business transactions usually make moralizing impractical. People default on their obligations every day, sometimes intentionally and in bad faith, but more often unintentionally and in good faith. We cannot condemn all of these defaulters to Dante's Inferno for their contractual transgressions.

Stuff happens. If a vendor defaults, the innocent purchaser should get over it. Failed transactions may be the stuff of tragedy. Although litigation may heighten the sense of tragedy, mitigation may turn the affair into comedy or farce. Ideally, mitigation should also permit the aggrieved party to reallocate his assets efficiently with minimal judicial intervention.[16] In a United States lawyer's view, efficient reallocation is a by-product of bedrock principles, for American law qualifies the principle of pacta sunt servanda by inverting the preference for performance over compensatory damages. More than a century ago, Judge Oliver Wendell Holmes captured the American preference for damages in case of breach in a famous (and provocative) law review comment: "The duty to keep a contract means a prediction that you must pay damages if you do not keep it---and nothing else. Such a mode of looking at the matter stinks in the nostrils of those who think [page 445] it advantageous to get as much ethics into the law as they can."[17] Perhaps Holmes's pronouncements on contract breach were tinged with too much moral agnosticism; he would not have deemed a contract breaker a sinner whose conduct warranted casting him into the inferno. Unlike proponents of pacta sunt servanda who grant the breach victim the benefit of an alternative obligation, Holmes seems to have granted such an alternative to the breaching promisor. His vision has endured. Today, a United States court would be extremely reluctant to compel a breacher to perform in the usual situation when the goods in question are not unique and the loss is reparable in damages.

1. Extrajudicial Constraints Condition Reflexes of American Merchants

A century of American case law has vindicated Holmes's dictum on the appropriate consequences of a contract breach. Commercial realities have conspired with United States jurisprudence to instill in merchants certain conditioned reflexes upon breach by their counterparts. Typically, an aggrieved buyer or seller, after canceling the contract, seeks damages rather than specific performance. Even before the victim of the breach seeks damages, he will routinely try to minimize the loss by seeking a suitable replacement contract, or by buying replacement goods on a spot market.[18]

The Uniform Commercial Code calls this mitigation effort "cover" when it refers to a buyer's locating a substitute transaction for the one that was repudiated. In a line of commerce populated by numerous sellers and buyers, an obligation of good faith requires a buyer to make reasonable efforts to cover from another source of comparable goods. If the market discloses an adequate supply of substitute goods not exceeding by too much the [page 446] original contract price, then an aggrieved party will likely absorb modest losses. Of course, he will be disappointed by the breach, but he will try to "get over it." Perhaps he will mutter something crude about the breacher before he goes on to the next transaction.

A breach victim knows today that no rule of natural law prevents him from defaulting tomorrow, and thus incurring the wrath of the very co-contracting party who disappointed him yesterday. If the aggrieved party is particularly upset, he may vow never to deal with the breacher again; he may complain to his colleagues about the defaulter's ethics; he may even complain about the defaulter to the better business bureau or the local chamber of commerce. But it is a fact of life that merchants cannot stop dealing with one another because one of their number defaults, and the breach victim would seem to be overreacting if the default does not appear intentional or malicious. (in Spanish terms "de dolo y malo"). A merchant is unlikely to sue someone with whom he needs to continue dealing. Mercifully, at least for the courts and society generally, the law does not grant a disappointed trader damages for emotional upset resulting from a contract breach, unless the breach has been malicious. In a commercial dispute, such malice is exceedingly difficult to prove., and thus many lawyers would think a long while before alleging it.[19] As a result of these disincentives, lawsuits are reserved for grave situations, and most of such suits would seek damages rather than performance.

2. American Judicial Attitudes Discourage Demands for Specific Performance

To cure a routine default in a contract for readily available merchandise, a suit for specific performance is unappealing and ill-advised for several reasons. The merchant realizes that his demand for specific performance may profit his lawyers more than himself. In many cases, the litigation cost may exceed the concrete losses likely to be suffered if he mitigates promptly and reasonably (the phrase of UCC § 2-706 is "commercially reasonable manner"). Beyond the immediate litigation costs, a specific performance claim may entail logistical difficulties. During protracted litigation, an aggrieved seller would have to risk the vagaries of the market by holding the goods at the buyer's disposition. Storing the goods can result in a logjam of back (obsolescent) inventory, which can sink a retailer financially. Considerable storage costs can impel many merchants to minimize the inventory on hand. Pioneered years ago by Japanese enterprises, "just in time" techniques of inventory maintenance would probably lead many sellers to prefer mitigation by resale over specific performance.[20] So strong is the UCC's preference for mitigation as a means to preserving the utility of the contractual object, that a seller may sell the goods to a third party even after he has obtained a judgment for the purchase price against a [page 447] defaulting buyer.[21] But an aggrieved merchant would likely reflect a long time before pursuing a claim under UCC 2-709 that could ultimately result in a judgment rendered moot by a later resale of the goods.

Although a lawyer may sometimes file a demand for specific performance on behalf of his aggrieved client, he knows that the claim is unlikely to impress the judge or threaten the breacher. The United States legal system does not shame breachers into silence. Au contraire. Upon receiving a demand for performance, the breacher will likely bombard the plaintiff with a fusillade of defenses including the following: the injury is reparable in money, and thus a demand for performance is inappropriate; the merchandise is not unique and thus cover in the marketplace is feasible; the contract does not explicitly authorize specific performance as a remedy;[22] judicial supervision of the seller's performance would be time-consuming and cumbersome for a court overburdened by a heavy docket. These arguments amount to telling the plaintiff to stop whining. Even though the breacher may have sinned against you, do not compound the misfortune. Because mitigation was commercially feasible, the court will likely make it clear that the plaintiff's damage claim could be reduced by the amount that he could have saved had he mitigated promptly. Furthermore, the judge will probably credit the defendant's argument that specific performance represents undue interference with his personal liberty. An order of specific performance might be seen as overkill,--akin to swatting a fly with a two-by-four.

Behind the judge's resistance to the plaintiff's demand for performance lies his conviction that an appeal court is unlikely to overturn his denial of specific performance. This confidence is borne of knowledge that specific performance is equitable, discretionary, and justified only in rare cases when the object is unique and damages will not repair the injury. Although the UCC does not explicitly condition specific performance on this irreparability criterion, the standard is deeply imbedded in judicial practice. The judge probably realizes that by the time his denial of performance reached the appellate court, [page 448] passage of time should have begun to heal the injuries from the breach and defused combustible circumstances between the parties.[23] A judge's reluctance to grant a performance decree may also result from his belief that his contempt power, though in principle an available tool, should be saved for rare situations, not routinely tested in a dispute between merchants.

In principle, if the defendant does not perform, he could be ordered to do so. If he resisted the order, he could be remanded to the marshal to spend time in jail until he fulfilled his duty. (According to a maxim of English equity, the contemnor has the key to the jailhouse door in his own pocket[24] in the sense that he can regain his freedom on complying with the court order.) Inherent in a contempt order, this heavy-handed interference with the businessman's liberty would ordinarily be seen as a draconian remedy to be avoided in a case that seemed trivial alongside more reprehensible and contumacious forms of conduct.

3. "Tough Love"[25] Therapy for a Stubborn Plaintiff

In pursuit of a breacher, a disappointed client can occasionally be extremely stubborn. In addition to asking for specific performance in a final judgment, the client's petition may seek provisional relief, such as a restraining order pending the proceeding, to prevent the seller from negotiating with a third party. Facing a request for such provisional remedies, the judge may require the claimant to post security or an indemnity bond to cover eventual losses of the breacher rather than the losses of the breach victim. The prospect of such business losses for the breacher may be veiled behind a judicial reservation, usually prompted by the breacher's assertions, that an "improvidently granted" injunction or restraining order may unduly interfere with the breacher's business.[26] Although the [page 449] plaintiff has come to court pure and virtuous, he now realizes that he seems to be making a pest of himself. Instead of obtaining satisfaction from the defendant, there is now a suggestion that the plaintiff himself will be open to a damage claim from the very person who should be compelled to compensate him. Although initially a victim of the defendant's wrongdoing, the plaintiff is now portrayed as the defendant's persecutor. To the plaintiff's chagrin, he may be transformed from the victim of the piece into its villain.

4. Other Deterrents to Demands for Specific Performance

Besides being tactically unappealing, specific performance is financially unattractive. Seeking replacement goods on a spot market, a buyer will often discover that his demand for specific performance can derail his planning. Waging battle on two fronts---the court and the marketplace---requires both dexterity and persistence from an aggrieved party. Inevitably, there is also tension between specific performance and mitigation, for a nagging concern about whether and how to mitigate will weigh upon the breach victim's decision to seek performance. In a great number of situations, mitigation, however burdensome, is feasible. But, mitigation efforts can retard the victim's decision to seek legal counsel. Once fulfilled, a duty to mitigate will usually blunt a demand for specific performance or render it pointless. This is so because a buyer cannot readily seek an order compelling a seller to deliver him a contractual object in exchange for his payment, and at the same time mitigate by spending the price to acquire substitute goods. If an aggrieved buyer succeeds in mitigating his loss by cover, then the utility of an order forcing a seller to hold the goods at the buyer's disposition tends to evaporate. By suing for specific performance, a buyer signifies that he has not acquiesced in his opponent's repudiation or default, usually because the contractual object is unique or otherwise unavailable in the market. A buyer's mitigation effort concedes tacitly the opposite point: namely, he will acquiesce in the repudiation and, after successful mitigation, he will take his chances by limiting his recourse to damages.

Specific performance is no more financially appealing for the aggrieved seller than the aggrieved buyer: if the seller demands the price from the buyer,[27] then he will likely have to hold the goods pending the litigation in anticipation of a favorable result. If the seller meanwhile sells the goods to a third party to cut the loss associated with stockpiling them, [page 450] then he may have mooted or collapsed his claim for the price.[28] Rarely will the facts allow a United States claimant to have it both ways.

IV. UNITED STATES AND SPANISH REGULATION OF SPECIFIC PERFORMANCE COMPARED (OF JUDGMENTS, EMBARGOS, CONVERGENCES, AND ENFORCEMENT WEAPONS)

1. The Effects of a United States Judgment and a Spanish Judgment Compared

In terms of juridical effects, a judgment under United States practice may differ significantly from a Spanish judgment. To an extent, these differences result from a Spanish preference for specific performance, on one hand, and an American preference for damages, on the other. Execution of a specific performance order would seem to require a more elaborate judicial mechanism than would a damage award. As every state in the United States, to a great extent, may independently develop its own private law subject to constitutional standards, it is difficult to generalize securely about the form and effect of judgments across the country. According to a prevailing pattern of judgment in the United States, the successful breach victim, normally after mitigation efforts, secures a money judgment against the breacher and then registers the judgment as a lien or judicial mortgage in the public records of the jurisdiction where the defendant, now the victim's judgment debtor, owns immovable property. Although the judgment commands the defendant to pay a certain sum, the judgment is "merely declaratory of a fact of liability and the amount of liability," but it does not order the defendant to pay any money "or indeed do anything."[29] The judgment creditor has the responsibility of starting collection proceedings, and the judgment itself does not identify any assets which may be his appropriate targets.

Because a United States judgment, unlike its Spanish counterpart, cannot block a judgment debtor's accounts by an embargo, it would not guarantee the plaintiff the funds necessary to purchase substitute merchandise. In accordance with rules of ranking and priority, the United States plaintiff would compete with the debtor's other creditors for a [page 451] fraction of his debtor's patrimony. If the time of filing the judgment, or another specific rule not dependent upon chronology of filing, made the judgment inferior to other liens and judgments against the debtor's estate, the judgment creditor could end up realizing nothing from his debtor's estate. Based on the author's experience, a recalcitrant judgment debtor might frustrate enforcement of the judgment by several techniques including concealment of assets, simulations, and the like, and a judgment can easily prescribe without any collection by the judgment creditor.[30]

While a United States creditor will ordinarily begin efforts to collect his judgment by filing it in a public office of a district where the debtor owns real property, merely recording the judgment does not itself result in its satisfaction. A judgment may literally command the defendant to pay over a certain sum, but it invokes no procedural mechanism for forcing the debtor to do so. A United States judgment has teeth, but they are not much in evidence as a result of registry alone. Ordinarily constituting a money award, the judgment typically does not affect any specific property. Rather, it operates against all of the debtor's immovable property situated within the county or district where the judgment has been filed. Generally, the recorded judgment constitutes an impediment to a sale or mortgage of all of the judgment debtor's real property. Hence the judgment's effects are largely dormant until either the debtor decides to alienate or encumber his property or another judgment creditor executes upon the debtor's property, thus provoking a contest among creditors.

A United States judgment may be made to bare its teeth in a post-judgment phase when the judgment is made executory. This executory phase entails locating and seizing the judgment debtor's available assets through ancillary processes such as garnishment, judgment debtor motions, writs and discovery procedures.[31] Unlike the Spanish embargo, which forms part of an executory judgment and is constructed to coerce the debtor to turn over the precise goods he has promised, the United States judgment's main purpose is to compensate the victim of the breach in cash for damages resulting from his unfulfilled promises. If a United States buyer eventually ends up acquiring the goods that his breaching seller has promised him, the acquisition is largely a coincidence resulting from seizure and sale at public auction. There is no necessary connection between the amounts owed by the debtor and the merchandise or real estate the creditor eventually obtains. In contrast with Spanish practice, the United States judgment contains no judicial order extracting the merchandise directly from the debtor's estate and transferring it immediately into the creditor's hands. Rather, to acquire the property, the creditor must be the high bidder at an auction scheduled and carried out on his motion. If the creditor is not the high bidder at the auction, then he will never acquire the debtor's property at all. His claim will [page 452] be satisfied by a cash payment made by the high bidder to the official who has conducted the auction.

2. Are there Possible Convergences Between American and Spanish Approaches on Specific Performance?

There seems no simple answer to this question. In a study entitled El Cumplimiento Forzoso de las Obligaciones, Professor Rafael Verdera has exhibited ambivalence toward Spanish law's avowed preference for specific performance. Even the term "ambivalence" might not capture the author's perspective on the relative merits of specific performance and damages in sales. Verdera's monograph alerts us to the fact that Spanish doctrine frames the remedial issues differently from United States doctrine. Treating ejecución forzosa generically across a wide range of nominate contracts, the author, in classical civilian fashion, analyzes a sale as a subspecies of obligations to give rather than as a category distinct from other contracts. Furthermore, the study contains no systematic treatment of mitigation as either a right or a duty of the breach victim.[32] For a United States lawyer, the missing ingredient of mitigation is important for as we have already suggested, mitigation, anchored in an overriding duty of good faith, can be decisive in determining the plaintiff's strategy, the merits of his eventual claim, and even the formulation of his allegations.

Despite the commitment of Spanish law to forced performance as a primary remedy, Verdera expresses doubts about both the wisdom and inevitability of this remedy for breaches of sale agreements. According to Verdera, nothing in the commercial arena seems to foreordain specific performance as the preferred remedy in case of breach. "Anglo-Saxon experience and certain features of Roman law demonstrate that forced execution does not constitute a necessary institutional principle of the law of obligations."[33] Verdera recalls a remark by the American scholars, Fuller and Perdue, that although a contract can make law for the parties, the contract does not necessarily specify the consequences for the parties upon breach by one of them.[34] Reacting rather like an American lawyer, Verdera also seems to doubt the wisdom of specific performance when a cash payment would suffice to repair the harm resulting from some breaches. ("One can question the practical utility of a forced execution of a generic or fungible obligation because it would suffice to grant the creditor the necessary funds so that he could obtain the goods in the market").[35] Unfortunately, notes Verdera, Spanish law fails to deal [page 453] comprehensively with this last hypothesis.[36] According to him, a recent line of cases justified a decree of specific performance when the breacher's repudiation was willful, or arose de dolo y malo. In these cases, the obligation to be enforced was one to do rather than to give. Yet, one could reasonably conclude that if Spanish courts favor specific performance when a party must perform a personal act (i.e. an obligation to do), then a fortiori a performance decree would be warranted in a sale because it imports obligations to give.

According to Verdera, Spain's preference for specific performance may be instructively compared with that of German law, which in theory also considers performance a primary remedy and backs up the preference with a number of procedural vehicles favoring contract fulfillment by performance. Yet, notes Verdera, German breach victims, like their American counterparts, often content themselves with seeking damages even when, in principle, they could have sought performance. Based on Server's discussion,[37] an American reader could conclude that the German rule of performance is being gobbled up by exceptions preferring damages.[38] French regulation of the issue of forced performance is no more decisive than its German counterpart. According to some commentators, the French legal order is ambivalent toward performance as a primary remedy [39] though other treatises seem to regard this preference for specific performance as a foregone conclusion.[40]

3. In a Legal Duel Over a Contract Breach, Which Legal Actor Chooses the Enforcement Weapon?

A noteworthy difference between Spanish regulation of specific performance and its American counterpart results from the relative power of the parties and the court to select the remedy, i.e. the enforcement weapon. Although the choice of remedy belongs initially to the plaintiff in a United States context, it ultimately rests with the judge. By contrast, the criteria for decision confided to the Spanish tribunal seem considerably to limit the judge's latitude in dictating the remedy once the plaintiff has announced his choice.

As we have noted, a United States court could grant or reject a demand for performance after considering several questions: Are the goods unique? Did the claimant mitigate? Would damages suffice to repair the harm? Did the contract stipulate specific performance as the primary relief? Would an order of specific performance unduly interfere with the defendant's liberty or require unusual court supervision? By contrast, once a plaintiff demands specific performance in a Spanish tribunal, the tribunal seems pretty much bound to acquiesce in his choice. The Spanish judge, instead of addressing the victim's mitigation efforts and the other concerns of interest in a United States court, would make rather narrow and objectively verifiable inquiries: Does the defendant have the item? Has the performance become impossible? Is the defendant still capable of performing the contract? These are important questions, and a United States judge, like his Spanish counterpart, would expect answers to them. But while these answers might conclude the Spanish judge's inquiry, they would likely mark the beginning of the United States court's more extensive analysis of the conduct and motivation of the parties.

Familiar with the dictum that parties make contracts while judges interpret them, a United States lawyer is accustomed to thinking contract litigants benefit from a liberal hands-off policy on the part of the court. An American lawyer might be surprised to discover that the questions posed by a Spanish judge facing a demand for performance give a Spanish claimant a freer hand in selecting and maintaining his enforcement weapon than his United States counterpart would have in his home tribunal. Perhaps the Spanish plaintiff's advantage grows naturally out of an ideal of pacta sunt servanda; perhaps it is a reward for occupying the moral high ground. In the United States context, the victim's moral high ground, such as it is, is no guarantee that the court will honor the remedy of his choice. The spirit of Holmes' maxim invites the contract breacher to deflect the victim's demand for performance with evidence that damages will repair the harm. If only the victim would mitigate, so goes the breacher's claim, the matter would be set right. The court would be spared inquiries into the uniqueness of the goods and the feasibility of supervising the requested specific relief. Then the breacher would settle with the claimant in cash.

Preferring compensation in the usual case, a United States judge is the final arbiter of the relative merits of the parties' contentions regarding suitability of performance or damages. In United States regulation of specific performance, mitigation duties and reparability in damages tend to give the breacher a large hand in the judge's evaluation, [page 455] leaving the judge as referee of the ultimate option (as the UCC says, the judge can act in appropriate circumstances). This judicial trump card seems to make a United States judge a spokesman for society, at least for the breach at hand. To the court is confided the task of deciding whether society's advantage lies in forcing the breacher to perform or to pay. It is true that the breach victim in an American setting can state his preference for performance, but this preference is less decisive than it would be for a breach victim in a Spanish setting. As the master of his utilitarian calculus, the Spanish victim can demand performance with little risk of the tribunal's refusing his request in response to the breacher's arguments. Spanish doctrine seems to regard the victim, not the judge, as best situated to know his own interest. As Verdera says, "the scheme of our law discloses a liberal ideology that views the judge as an organ" of an "estado-gendarme" presiding over the execution process through formal direction, leaving the "ejecutante" to his own devices.[41] On this view, if the Spanish victim demands performance, and performance is a possibility, then the breacher should not be able to defeat the victim's choice by buying himself free of his contract.[42]

V. CONCLUSION

From the foregoing talk of cash and goods among market actors that John Maynard Keynes dubbed "animal spirits" there emerges a dialogue of quasi religious dimensions between adherents of pacta sunt servanda and those favoring Holmes's pragmatic vision of contract remedies. Although the rival views have been linked concretely to Spanish and United States regulation of specific performance, their adherents seem to advance them as articles of faith divorced from their specific legal systems. As such, the rival views are not easily changed by rational argument or empirical evidence. Decades ago, Ernst Rabel forecast an irreconcilable and intense competition between proponents of the rival views.[43] More recently, the intensity of the rivalry has prompted John Honnold, a U.S. delegate to the drafting sessions for the Vienna Sales Convention, to remark:

"One bred in the common law remains puzzled at the civil law's insistence on a remedy (specific performance) that is rarely useful while a scion of the civil law must be dismayed by an attitude that seems to subvert the sanctity of obligations."[44]

English legal historians remind us that the English chancellor, keeper of the conscience of the realm, ordered specific performance against a defaulter to help him redeem his soul. [page 456] For this senior royal figure, who was also an archbishop and adviser to the monarch, oath breaking was a serious offense akin to perjury.[45] Locking away a defaulting oath taker was seen as a fitting inducement to having him assure his salvation. If we look back over centuries of judicial decisions ordering specific performance, claims of economic inefficiency of this remedy seem to constitute a modern gloss, perhaps even an ahistorical reformulation of a venerable remedy anchored in ideas of piety and spiritual healing.

Not surprisingly, Spanish heirs of the Romano Germanic tradition, influenced to some extent by canonical ideas, display a quasi-religious faith in pacta sunt servanda as a principle of social cohesion.[46] (This faith may explain a general resistance in the international community to recent United States decisions to renounce unilaterally long standing treaty obligations) [47] The principle of pacta sunt servanda is a cornerstone of Spanish contract regulation, though a Spanish jurist may rightly wonder if the principle is occasionally ignored in practice.[48] According to Spanish doctrine, impossibility may excuse a promisor from performance, but he should not escape his duties on flimsier grounds than this. Nor should the breacher be heard to claim that his breach, by permitting him to reallocate his assets efficiently, has enhanced social welfare.

Holmes questioned the ethical warrant for the view that a promisor had to perform his promise just because he had promised to do so. If the promisor breached his contract, he would pay damages; in Schlechtriem's phrase, he could buy himself free of his contract. Holmes evidently did not mean that a breacher, immediately upon his repudiation, should write the promisee a certified check to cover the damages. Indeed, the breacher would not write any check at all unless he were pushed to do so. When the victim complained, the breacher would likely shift the burden to the victim, demanding first that he mitigate damages he had not caused. If he was not lucky enough substantially to reduce his damages via mitigation, then he could engage a lawyer to recover his loss. In many cases a patient and persistent promisee might get a judgment, plus a large invoice from his lawyer. But winning a judgment after a long period of anxiety and struggle was not tantamount to receiving a certified check on the date of repudiation, let alone delivery of the merchandise.

Following Holmes's view, considerations of efficiency paradoxically allow a breacher to put the victim at risk with respect to his forward customers. In seeking to make himself whole, a victim faces a number of challenges. Would his customers forgive delays not of his own making? Would he promptly find substitute goods in the necessary quantities? Would the witnesses remember events properly? Would a court be sympathetic to the [page 457] victim's mitigation efforts, even if they are largely unsuccessful? Could a judgment against the breacher be collected? Would the currency in which the judgment was to be paid remain stable enough fully to compensate the victim? The answers to these questions were not assured, even if the breacher belonged to the beati possidentis. [49] In view of the frustrations for the breach victim, we may wonder why the jurisprudence did not evolve to impose on the breacher a trust protecting the promised goods for the victim's benefit. Alternatively, if the breaching seller had resold the merchandise at a higher price than his original contract provided, perhaps the cases could have forced the seller as trustee to disgorge his profit without allowing him a defense based on a victim's mitigation prospects and foreseeability of the damages.

These challenges for an innocent victim make it easy to sympathize with proponents of pacta sunt servanda; for a breach victim, performance seems an ideal way of assuring him the benefit of his bargain. Spanish procedure would grant the victim the choice of remedy. If a victim mitigated, though without a duty to do so, then he would seek damages. But a victim's decision against mitigation would not hurt his demand for performance.

Holmes's vision seems to have been anchored in a fundamental faith, though his faith was of a different kind than that underlying pacta sunt servanda. Associated with efficient markets and the invisible hand, this faith was described by Professor Farnsworth:

"In a market economy it is supposed that with rare exceptions for such 'unique' items and heirlooms and objects of art, substantially similar goods were available elsewhere."[50]

Mitigation by a breach victim may often seem difficult and unjustified, but his prompt mitigation efforts can earn him grace at least among customers and tribunals. Manipulated by an invisible hand, an omniscient market promises the victim that prompt and virtuous efforts to mitigate will make everything come out for the best. If we do not impede the function of efficient markets, so the argument goes, everybody seems pretty much able to act in his own self interest. Unlike the Spanish contractual conception, which locates the promise of social cohesion and utility in pacta sunt servanda, the American conception locates such cohesion in the activity of the invisible hand in the market place. Lawyers from the two systems may ignore the contrast at their peril. [page 458]


FOOTNOTES

* John Minor Wisdom Professor of Civil Law, Tulane University, New Orleans, Louisiana; Visiting Professor, Law Faculty, University of Lausanne; University of Paris II (Pantheon-Assas). Grateful acknowledgment is made to Professor Antoni Vaquer for having supplied many of the Spanish references and for offering criticism of earlier drafts.

1. R. Zimmermann, The Law of Obligations 770-782 (1st ed. 1990; reprinted 1992) "…even though the [common law] courts…have in recent years been inclined to expand the scope of the remedy [specific performance], the attitude adopted towards enforcement of the actual performance of a contract remains one of the fundamental differences between continental legal systems and the common law." Id. at 781.

2. P. Schlechtriem, COMMENTARY ON THE U.N. CONVENTION ON THE INTERNATIONAL SALE OF GOODS (CISG) (2d ed.; 1998; trans. G. Thomas), 199, note 2 (Rückgrat der Obligation). Some Spanish writers echo Rabel's neo-Kantian views on the ethical basis of promises. According to Doral Garcia, "las obligaciones nacen para ser cumplidas, ya sea por cumplimiento espontaneo o por realización coactiva." ("Obligations are born to be carried out, whether by spontaneous performance or by compelled realization"). Quoted in R. Verdera, EL CUMPLIMIENTO FORZOSO DE LAS OBLIGACIONES _ 103 (1995).

3. ". . .en el respeto a la palabra dada reposa la confianza de las partes en el vínculo contractual. No en vano pacta sunt servanda constituye un principio fundamental del derecho contractual." (In the respect for one's word rests the parties confidence in the contractual bond. It is not for nothing that pacta sunt servanda constitutes a fundamental principle of contract law.) Verdera supra note 2, 103. For speculation on the evolution of pacta sunt servanda among medieval and early modern writers, see R. Hyland, Pacta Sunt Servanda: A Meditation , 34 VA. J. INT'L LAW 405 (1995).

4. Schlechtriem, supra note 2, 199, (citing Dölle/von Caemmerer). Some Spanish scholars share Schlechtriem's view. According to Albaladejo, a monetary indemnity is usually warranted only when there is no possibility of performance in natura. The defaulter has no option to pay or perform as he chooses. M. Albaladejo, 2 Derecho Civil 195 (10th ed 1997). According to Prof. Antoni Vaquer, University of Lleida, Spain, the only exception to this last statement may arise if a debtor has signed a "cláusula penal de desistimiento," akin to a penal bond. According to article 1153, Spanish Civil Code, "el deudor no podrá eximirse de cumplir la obligación pagando la pena sino en el caso de que expresamente le hubiese sido reservado este derecho." ("The debtor may not be excused from performing the obligation by paying a penalty except in the case when he has expressly reserved this right"). Prof. Verdera resists as immoral the idea of turning a contractual duty into cash: for him this venality bespeaks a merely quantitative vision of contractual rights and negates their qualitative character. Conceding priority to an indemnity in damages would likely devalue a creditor's interest in the parties' obligatory relationship by converting every case into a pecuniary prestation. Furthermore, Verdera suggests that transforming a contractual duty into cash does violence to the character of the civil law, may mark a return to certain postulates of Roman law, and represents a blow to the meaning of the contract. Allowing a breacher to pay an indemnity is unjust because it allows debtors with considerable economic resources (beati possidentes) to perform or pay at their option. Thus, like Holmes' contract breaker, see text infra at note 17, a contract violator can buy himself free of the contract he has breached. It should also be said, however, that one's suitability as a contracting party initially depends largely on his being among the beati possidentes; for if he were not a person of means, few would wish to deal with him. As we shall see, Verdera is ambivalent about rewarding the beati possidentes, for elsewhere in his study he notes that there may be good reason to allow a breacher to pay damages for breaching a sale. See infra notes 32-37.

5. This perspective seems to have dominated debates among drafters of the U N Convention on the International Sale of Goods. On several occasions, U.S. delegates proposed to limit a victim's right to require performance from a contract breacher. A chorus of delegates from Japan, Sweden, and France expressed opposition to the limitation on the ground that a breach victim should not be put to the trouble of investigating a market for replacement goods. See Summary Records of the First Committee (18th mtg.) U.N. Doc A/Conf. 97/C.1/SR.18 (1980), reprinted in Official Records at 321, 328-332.

6. For example, classical French doctrine requires a judicial declaration of the contract resolution unless one of several exceptions is satisfied. According to one exception, the parties may dispense with judicial intervention if their contract stipulates a résolution de plein droit in certain events. The clause is called technically a "clause résolutoire" or "pacte commissoire expres." But a party may still argue that the clause was abusive or was invoked in bad faith. F. Terré, P Simler, Y. LeQuette, Droit Civil : Les Obligations 518.(6th ed.)

7. For regulation of ejecuciòn forzosa, see Spanish Civil Code articles 1094-1099 and LEC 99 seq. The Spanish rules on performance are forceful and concise: According to Civil Code article 1096, "when what should be delivered is a determinate thing, the creditor…can compel the debtor to perform the delivery…"Article 1098: "…if the obligor does not do something, be will be ordered to execute it at his cost…" References herein to the Spanish Civil Code are to Código Civil in Aranzadi Colección Códigos Básicos (11th edition 2001), which Prof. Vaquer has generously furnished. The narrative of Spanish law is based upon L. Díez-Picazo, Fundamentos del Derecho Civil Patrimonial 678-681 (1993).

8. Ferran Badosa Coll, Dret D'Obligacions 391 (1990); M. Albaladejo, II Derecho de Obligaciones 197 (1997). Although the tripartite classification was known in classical Roman law, it flourished in the debates of medieval doctors, see Zimmerman, supra note 1, 773-774, and was carried into modern civil codes such as those of Spain, France, and Louisiana. See Spanish Civil Code articles 1088 and LEC art. 925. Spanish Civil Code article 1088 provides: "Every obligation consists in giving, doing, or not doing something." Louisiana Civil Code article ____contains the same rule.

9. Rather rarely, a Spanish judge may deny a request for performance if the performance is "exceedingly onerous" for the debtor (excesiva onerosidad del cumplimiento) and thus disproportionate to the creditor's ultimate benefit. See, e.g. the cases cited in Verdera, supra note 2, 171, n. 94. But the standard of onerosidad excesiva is stringent: the performance must "desequilibrar profundamente las reglas contractuales originales." ("profoundly unbalance the original contractual rules.") The cases cited by Verdera concern economic waste where the cost of performance for a debtor would greatly exceed the damages recoverable by the creditor. Verdera, supra note 2, 169-172. Analogous cases familiar to English and American lawyers would include Groves v. G. Wunder Co., 286 NW 235 (1939); Peevyhouse v. Garland Coal & Mining Co., 382 P.2d 109 (1963); Jacobs & Youngs v. Kent, 129 N.E. 889 (1921).

10. J. Montero Aroca, J.L. Gomez Colomer, A. Montón Redondo, S. Barona Vilar, 2 Derecho Jurisdiccional 515 (9th ed. 2000).

11. In a forced execution of a generic obligation, a tribunal may substitute for delivery of the promised item a judicial extraction from the debtor's patrimony of a sum of cash sufficient to acquire the same kind of goods. Ejecución forzosa may also require replacing a defective item with a merchantable one. Verdera, supra note 2, 258.

12. The right of embargo is said to flow from Spanish Civil Code article 1911: "For the performance of his obligation the debtor responds with all of his assets present and future." Despite this all inclusive language, a number of assets are exempt from embargo. See Montero Aroca, supra note 10, 585-588. Embargo is defined as "a procedural activity carried out in the execution process, aimed at choosing the assets of the debtor to be subjected to execution and to be concretely affected by it, engendering in the executing creditor a merely procedural ability to receive the products yielded by realizing on the affected assets without limiting legally or taking away the debtor's power of disposition over the assets." Id at 583-84. This discussion of the embargo is based upon Badosa Coll, supra note 8, 391 (1990); Luis Diez-Picazo, Fundamentos del Derecho Civil Patrimonial. 678-81 (1993); and Montero Aroca, supra note 10, 583-590.

13. This conviction is perhaps also reinforced by modern doctrinal identification of the origins of ejecucion forzosa in the Siete Partidas, which was based on Roman and canon law, and the Lex Toletana, issued by the Catholic Kings in 1480 at the height of the inquisition. Montero Aroca, supra note 10, 554-555. Rather surprisingly for a U.S. lawyer, a popular treatise on forced execution analyzes enforcement of judgments by ecclesiastical tribunals alongside enforcement of purely civil judgments. Id at 535 et seq.

14. Montero Aroca, supra note 10, 583-590.

15. Id. at 589-590.

16. Some United States scholars have argued that specific performance cripples market actors' efforts to reallocate resources efficiently. See Farnsworth, Damages and Specific Relief, 27 AM J COMP L 247 (1979).; Kronman, Specific Performance, 45 U CHI L REV 351 (1978). On the efficiency or inefficiency of specific performance, the evidence appears inconclusive, and empirical studies testing these propositions are virtually non-existent. Factors worth considering in such a study might include the difficulty and expense of enforcement mechanisms as well as the volatility or unreliability of the currency in which payment would be made if a creditor sought damages. In their evaluation of specific performance, scholars should guard against assuming the universal appeal of the approach of their own national system. An ideal of efficiency should also be weighed against considerations of fairness. Proponents of specific performance as a primary remedy argue that damage remedies are likely to undercompensate aggrieved parties because a court cannot account for costs of uncertainty, unrecoverable litigation costs, volatility of currencies in which a damage judgment may be granted etc. For arguments against specific performance on grounds of inefficiency, see Kronman, supra.. For a discussion of the debate concerning the efficiency of specific performance, see J. White & R. Summers, The Uniform Commercial Code 231-234 (5th edition). Notably, Professors White and Summers side with the proponents of specific performance as a primary remedy. "We doubt that granting specific performance would cause any significant inefficiencies, and like the law-and-economics advocates of specific performance, we suspect that specific performance might even promote efficiency" Id at 234. One may wonder if specific performance could become a preferred remedy in U.S. law without a reconceptualization of the declarative character of a U.S. judgment and its enforcement mechanisms. For differences between the form of the U.S. judgment and that prevailing in Spanish practice, see infra Section III A.

17. Holmes, Path of the Law, 10 Harvard L. Review 457, 469 (1897). Also indicative of Holmes's viewpoint is the following comment: "The only universal consequence of a legally binding promise is that the law makes the promisor pay damages if the promised events does not come to pass. In every case it leaves him free from interference until the time for fulfillment has gone by and therefore free to break the contract if he chooses." Holmes, The Common Law 236.

18. UCC § 2-711 provides:

"(1) Where the seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved, and with respect to the whole if the breach goes to the whole contract (Section 2-612), the buyer may cancel and whether or not he has done so may in addition to recovering so much of the price as has been paid

(a) "cover" and have damages under the next section as to all the goods affected whether or not they have been identified to the contract; or

(b) recover damages for non-delivery as provided in this Article (Section 2-713).

(2) Where the seller fails to deliver or repudiates the buyer may also

(a) if the goods have been identified recover them as provided in this Article (Section 2-502); or

(b) in a proper case obtain specific performance or replevy the goods as provided in this Article (Section 2-716).

(3) On rightful rejection or justifiable revocation of acceptance a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody and may hold such goods and resell them in like manner as an aggrieved seller (Section 2-706)."

19. For a discussion of the burden of proof for mental distress resulting from malicious breach, see Valentine v. General American Credit, Inc., 362 N.W.2d 628 (1984) ("The courts have not, despite 'make whole' generalizations regarding the damages recoverable, attempted to provide compensation for all losses." Id). The Valentine decision denied recovery for mental distress damages resulting from breach of an employment contract, but recovery for mental distress resulting from a breach of sale should be no easier.

20. But tragic events since September 11, 2001 and the use of the mails as a weapon of terrorism may persuade some merchants to reconsider the virtues of stockpiling inventory.

21. UCC Section 2-709 provides:

"(1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price

(a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer; and
(b) of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.

(2) Where the seller sues for the price he must hold for the buyer any goods which have been identified to the contract and are still in his control except that if resale becomes possible he may resell them at any time prior to the collection of the judgment. The net proceeds of any such resale must be credited to the buyer and payment of the judgment entitles him to any goods not resold. (Emphasis added).

(3) After the buyer has wrongfully rejected or revoked acceptance of the goods or has failed to make a payment due or has repudiated (Section 2-610), a seller who is held not entitled to the price under this section shall nevertheless be awarded damages for non-acceptance under the preceding section."

22. Historically, a stipulation of specific performance has not assured that a court would grant it. A goal of the proposed UCC revision is to strengthen a claimant's right to performance. According to the current proposed revision of UCC Art. 2-716, "in a contract other than a consumer contract, specific performance may be decreed if the parties have agreed to that remedy." Draft Revision, Sept. 2001, 138. According to a comment under the proposed revision, "the parties' agreement to specific performance can be enforced even if legal remedies are entirely adequate." Id at 140. I thank Prof. Henry Gabriel, reporter for the revision of Article 2, for providing me a current draft of the proposed revision of Article 2 of the UCC.

23. The judge may also encounter procedural stumbling blocks to obtaining a defendant's immediate compliance even if he were ordered to perform. Once ordered to perform, the defendant in a federal proceeding may promptly appeal the order, and thus suspend the effect of the trial court's order along with a contempt citation for refusing to comply. J Friedenthal, M. Kane, & A. Miller. Civil Procedure (3d ed 1999) 731-735. Commercial cases fall disproportionately to the state courts rather than the federal courts, and state court procedures on contempt are so diverse as to be insusceptible of generalization beyond a basic level.

24. On the contempt process and judicial contempt powers, see Id at 733. References here are to civil contempt rather than criminal contempt. For civil contempt, the aggrieved plaintiff must demand that the defendant be cited for contempt. Even in that unusual case, the presiding judge, instead of ordering incarceration of the debtor, may impose fines, along the lines of the French astreintes. The fines would be payable to the aggrieved plaintiff, not the state. On the coercive aspect of specific performance as a reason for its limited use, see E.A. Farnsworth, Legal Remedies for Breach of Contract, 70 Colum L. Rev. 1145, 1152-56 (1970).

25. The term is borrowed from a technique of psychological therapy in which the therapist withholds sympathy from a patient. The term "tough love" captures a duality of judicial policy that sympathizes with a breach victim for having honored his contract, while discouraging him from grieving for his losses from the breach so much that his business is disrupted.

26. The prejudice resulting to a debtor from a provisional order has also pre-occupied the Spanish lawmaker. The new procedural law (LEC arts. 524-534) authorizes a procedure for opposing provisional orders of execution such as an embargo. The basic criterion for an opposition to a provisional order is the likely irreversibility of the provisional order's effects and impossibility of compensating the debtor once the order is revoked. LEC Exposición de Motivos, BOE Num. 7, 589 (January 8, 2000). According to LEC art. 534, on revocation of a provisional order of execution, the creditor must restore the affected asset to the debtor together with fruits and rents, or the value of the use of the asset. Montero Aroca, supra note 10, .

27. By tradition, United States law does not view an action for the price as a suit for specific performance, even though its similarity with specific performance has been stressed. In terms of international sales practices, the proper classification of an action for the price is at odds with the U.S. classification: for example, CISG Art 28 speaks in terms of a judgment for specific performance, and there is reliable evidence for the view that article 28 should also apply to an action for the price. Schlechtriem, supra note 2, 484.

28. See text accompanying notes 20-21.

29. Friedenthal, supra note 23, 730. The declaratory character of a United States judgment may be instructively compared with the more instrumental view of a Spanish judgment: "Whether or not preceded by a jurisdictional declaration of law, the process of execution is one in which, beginning with the executing party's claim, there is realized by a jurisdictional organ a physical behavior productive of a real change in the external world to accommodate it to that established in the judgment which serves as a basis for the party's claim and to the jurisdictional action. The power of a court to sell the debtor's assets to liquidate a judgment proceeds from the fact that "in our legal order the judgment debtor's exercise of power over his patrimony is considered juridically fungible…. The [debtor's] personal, private acts may be replaced by exercise of the public power vested in the tribunal." J. Montero Aroca, supra note 10, 502-503 .(Italics added)

30. According to Prof. Vaquer, judgment debtors in the U.S. have no monopoly on these evasive techniques. Spanish debtors also employ them routinely and, as in Louisiana, a Spanish creditor's remedies for retrieving the debtor's assets include the revocatory or Paulian action. Montero Aroca, supra note 10, 591-2.

31. For background on these ancillary processes of execution, see Friedenthal, supra note 23, 724-31.

32. At first glance, the doctrine of onerosidad excesiva, treated by Verdera, supra note 9, seems to perform a function akin to mitigation, but it is hard to envision a role for onerosidad excesiva in the usual sale of movables which should feature a rough equivalence between the purchase price and the merchandise.

33. Verdera, supra note 2, 103.

34. Id, note 40.

35. Id at 259.

36. But it should be noted that Verdera's monograph predates LEC 2000, and the new law may permit a more comprehensive treatment of this hypothesis.

37. Verdera,supra note 2, 122.

38. To a German lawyer this conclusion might seem sketchy and simplistic, and a comprehensive reading of Verdera's analysis would not warrant it.. According to Ms. Astrid Wallow, a German lawyer (Tulane LL.M., 2002), German law regards specific performance (Erfüllung) as the primary relief for contract breach and damages (Schadenersatz) as secondary relief. In support of this conclusion, Ms. Wallow offers the following evidence. No legal provision bars a creditor from immediately demanding performance upon the debtor's default. Articles 883-898 of the ZivilProzessOrdnung (ZPO) regulate procedures for obtaining specific performance. If an aggrieved party seeks performance from a breacher, the principle of Parteiengrundsatz keeps the judge from unilaterally converting a demand for performance into one for damages. In a sequence familiar to merchants, when a debtor does not perform on time, the creditor can send him a notice to perform and set a period of time in which to do so. Under BGB article 284, this notice puts the debtor into delay (Verzug). BGB article 286 authorizes the creditor to demand delay damages, but not compensatory damages, for added expense resulting from the debtor's delay. Under BGB article 326, the creditor may give the debtor still another notice to perform. (Nachfristsetzung mit Ablehnungsandrohung). After expiration of the period stipulated in the Nachfrist notice, BGB article 326, (I) excludes specific performance and instead authorizes a demand for compensatory damages. The foregoing narrative makes clear that under German law, a creditor could end up recovering damages for a contract breach, but the steps leading to a judgment for damages would be notably different from those taken by a U.S. creditor. According to Ms. Wallow, a creditor's notice to perform is a precondition to a damage award. The notice would be senseless if German law did not view specific performance as primary relief. I thank Ms. Wallow for her patient explanation of these remedies.

39. Professor Audit, for example, suggests that French commercial practice recognizes in the aggrieved buyer a "faculté de remplacement." After a fruitless notice of default served on the seller, the buyer has a right to locate the merchandise elsewhere in the market. B. Audit, La Vente Internationale de Marchandises 122, Note 1 (1990).

40. On the difficulties of obtaining a specific performance decree under French law, see F. TERRE, P. SIMLER, Y LEQUETTE, supra note 6, 509 .

41. Verdera, supra note 2, 172.

42. According to Prof. Vaquer, the breacher can not buy himself free of the contract unless he has specifically stipulated for this escape via a penal clause authorized by Spanish Civil Code article 1153. For the text of the article, see supra ,note 4..

43. SCHLECHTRIEM, supra note 2, 200.

44. JOHN O. HONNOLD, UNIFORM LAW FOR INTERNATIONAL SALES UNDER THE 1980 UNITED NATIONS CONVENTION section 286 at 303.

45. This view is consistent with civilian and canonical learning. Pufendorf, who gave the maxim pacta sunt servanda its current form, invoked Augustine's view that breaking a promise is "equivalent to deceit." Hyland, supra note 3, 426.

46. This view is consistent with Pufendorf's argument that broken promises can give rise to war. Id

47. The maxim pacta sunt servanda was codified in the heading of article 26 of the Vienna Convention on the Law of Treaties. Regrettably, there have been rumblings of late in the United States press suggesting that the United States may renounce even the Vienna convention itself.

48. Spanish Civil Code article 1091.

49. See supra note 4.

50. FARNSWORTH ON CONTRACTS 176, note 25. The key words in the quotations are "supposed" and "substantially similar" for modern merchandising techniques aim at variety and product differentiation, both antithetical to substitution of precise equivalents. Goods purchased from alternative suppliers may come with reduced warranties, less brand name recognition, or diminished quality. Diminished value caused by these differences is difficult to prove and difficult for a court to evaluate.


Pace Law School Institute of International Commercial Law - Last updated September 17, 2003
Go to Database Directory || Go to Bibliography
Comments/Contributions