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Reproduced with permission of 71 Rabels Zeitschrift für ausländisches und internationales Privatrecht (January 2007) 81-98

The Impact of the Vienna Convention on the International Sale of Goods on Polish Law, With Some References to Other Central and Eastern European Countries

By Fryderyk Zoll, Krakau

  1. The Origins of the Polish Civil Code and Current Developments
  2. Contract Formation
    1. Reform of the provisions on contract formation and their international sources of inspiration
    2. Personal scope of application (under Polish law) and difficulties with the new regulation
    3. Developments in the Czech Republic, Russia and Ukraine.
    4. Evaluation
  3. Breach of Obligation
    1. The traditional Polish system of remedies and its slightly confusing development
    2. Russia, Ukraine and the Czech Republic: three ways of modernising the systems of remedies
         a)    The influence of CISG on the Russian system of remedies
         b)    Breach of contract under the new Ukrainian Civil Code and CISG
         c)    The Czech approach
    3. Evaluation
  4. Conclusion

I. THE ORIGINS OF THE POLISH CIVIL CODE AND CURRENT DEVELOPMENTS

The Polish Civil Code (kodeks cywilny) was born during the days of the Communist regime.[1] The date of its birth -- 1964 -- may suggest that it was an [page 81] ideological product appropriate to the dark realities of the time. It would certainly be wrong to say that no traces of the communist ideology were present in the code. Of course they were. Some were placed as 'clearly visible political banners' on the new Code; others were hidden, sometimes so deeply that one can still unexpectedly stumble upon them today.[2] Despite this reason for criticism, the Polish Civil Code was then, and shall remain, a surprisingly well-designed codification. It is not simply a product of communist ideology; its roots run much deeper, back to the time of the Polish Codification Commission, which operated between the two World Wars.[3] The agenda set by the Commission was to some extent similar to the challenge facing our time. The Commission tried to unify a Polish legal system that had disintegrated following the partitions of Poland. It was attempting to establish a synthesis between several major civilian traditions, especially given that five legal systems, among them the French and German, were in force on Polish territory.[4] Although the Commission was unable to complete its work before the outbreak of the Second World War, its major achievements included the Code of Obligation (kodeks zobowiqzan), that had come into force in 1934.[5] The remaining parts of the Code had been fully, or at least partly, prepared. After the war, the new authorities did not destroy the work of the Commission. Rather, the opposite was true: the draft enactments that had been prepared earlier became law, not in the form of a code, but rather as separate decrees.[6] The Communists did not abandon the idea of having their own code. A draft was prepared which, fortunately, never came into force.[7] In 1964, the new Code was adopted. This Code was to some extent a consolidation and modernisation of the old laws; it preserved the results of the work of the Commission during the interwar period.[8] [page 82]

Since the change in Poland's political and economic system, the Civil Code has been amended several times. Legislative work was intended to cleanse it of obvious traces of Communist ideology and concepts. Gradually, the main priority became that of adjusting the Polish Code and all private law to European standards.[9] Among the members of the current Codification Commission the issue of whether a completely new codification is necessary has been a constant bone of contention.[10] Despite this fundamental question, the nation's legislature is trying to modernise the Code to keep it in line with current trends and efforts. Polish law makers want to participate in the process of harmonizing legal systems without, however, being forced to do so by international or supranational obligations. One example of this process is the reform of the provisions governing the contract formation procedure.

II. CONTRACT FORMATION

1. Reform of the provisions on contract formation and their international sources of inspiration

The part of the Civil Code that regulated contract formation had been based most closely on German law.[11] An offer was binding and could not be revoked within the period during which it was valid (Art. 61[1]) .An acceptance could only be a 'mirror reflex' [12] of the offer, otherwise it was treated as a new offer (Art. 68). This is not the place to discuss the benefits and disadvantages of these rules. One need only say that such a system limits the flexibility of contract formation, but also establishes a fairly high degree of certainty as to whether or not a contract has been concluded.[13] [page 83]

Surprisingly, this part of the Code has been one of the main focuses of interest for the reformers, despite the fact that it has not caused any major problems in the past. There were a number of reasons for considering a revision of the existing regulations. First, Polish law had to be adapted to the requirements of the e-commerce Directive, which also contains provisions relating to contract formation.[14] This offered an incentive for reconsidering the existing mechanism. Another reason was the ratification of the Vienna Convention on the International Sale of Goods (hereinafter "CISG" or "the Convention") in 1996.[15] As a result, the Convention became part of the Polish legal order. Clearly, it is unhealthy simultaneously to maintain different models of contract formation; law makers ought to avoid such a situation. Advocates of drafting an amendment also referred to the Principles of European Contract Law ("PECL") and the UNIDROIT Principles of International Commercial Contracts as sources of inspiration.[16] However, the main ideas were taken directly from the Convention.[17] The reform was broader in scope than merely those concepts adopted from the Convention; nevertheless, I would like to focus on the provisions that arise from this source. Two interventions of the legislature have introduced changes into the Polish legal system that depart from the traditional approach. They touch upon two characteristic features of the system of contract formation: first, the absence of the right to revoke an offer and second, the principle of the 'mirror reflex' of an acceptance. Both of these principles have been significantly modified. Article 66(1) of the Code now determines that in relations between entrepreneurs an offer may be revoked before a contract has been concluded, if the revocation has been declared to the offeree before he or she has dispatched an acceptance. In such a case, however, the offer cannot be revoked if it has been given as an irrevocable offer or a specific period for its acceptance has been fixed. [page 84]

Article 68 1 provides that in relations between entrepreneurs a response to an offer which modifies the offer, but not essentially so, is to be treated as an acceptance. The contract becomes binding together with the modifications that arise from its acceptance. An offeror may preclude such an effect (i) by phrasing the offer so as to exclude the possibility of a modified acceptance, (ii) by objecting without delay to a modified acceptance, or (iii) where the acceptance has been made conditional upon the offertory's assent to the modifications, by opting not to give such assent.

Although these two provisions were inspired by Arts. 16 and 19 of CISG, the differences in their formulation are clear. In the first case (the revocability of an offer), the Polish legislature does not repeat the second reservation regarding the revocability principle (Art. 16[2][b]). According to CISG, an offer cannot be revoked if it was reasonable for the offeree to rely on the offer as being irrevocable. Although the draft of the Polish amendment to the Code included such a provision.[18] it was eventually not introduced because of the critical approach of legal doctrine.[19]

In the case of Art. 68 Civil Code, the differences in relation to Art. 19 CISG are more evident. The Polish provision does not contain a list of modifications that are treated as essential (Art. 19[3]).[20] This is understandable [21] given that the Polish provision covers the entire spectrum of contracts, and is not limited only to contracts of sale.[22] The language of the Polish provision in this case resembles much more closely Art. 2:208 PECL. [page 85]

2. Personal scope of application (under Polish law) and difficulties with the new regulation

The introduction of the concepts of the revocability of an offer and modification of an acceptance into Polish law was not intended to change the entire system. Thus, the legislature decided to limit the scope of their application to business-to-business transactions. So far, therefore, the Polish system does not follow the broad concept of PECL. This has lead to a degree of internal disintegration: in general, Polish law follows the traditional German approach, while in respect of business transactions it allows for greater flexibility.[23] On the surface, this distinction appears to be reasonable. Entrepreneurs generally require more flexibility,[24] while other parties need greater security. However, the decision to treat differently contracts involving consumers deserves closer scrutiny.

It is true that a system allowing the revocation of an offer provides more protection to the offeror, who receives additional time to react if there is a change of circumstances which may influence his or her decision.[25] However, it is simplistic to reduce the balance of interests to the scheme: business as offeror, consumer as offeree. It is quite possible that the consumer may be the offeror, in which case a system allowing the revocation of the offer would benefit the consumer. He or she would be afforded a 'cooling off' period during which the intention to enter into a contract could be abandoned. Furthermore, a system allowing for a modification of the acceptance encourages parties fully to negotiate their contractual .terms. Again, it is simplistic to assume that consumers would be prejudiced by this. Affording consumers the power to modify an acceptance would not necessarily be dangerous for them. In fact, the opposite is true. It is also not obvious that additional flexibility actually benefits entrepreneurs. In fact, it may well increase the costs of transacting: the offeror must be aware of the possibility of a modification of his offer, while the offeree cannot always rely on the binding power of the offer. Offerors must also remember to include certain provisions in the offer to prevent unwanted consequences. Additional costs may also be incurred by uncertainty over whether the contract has been definitely concluded. And the use of unspecified notions such as 'unessential modification' may well create new battlefields of litigation leading to further costs.

The decision of Polish legislators to opt for a compromise solution, based on the distinction between business-to-business contracts and contracts involving consumers, is not a good way to deal with the issue of offer and [page 86] acceptance.[26] The real conflict of interests, independent of the personal status of the parties, has not been properly analysed in Poland. The business-to-business scope of application of CISG should not be blindly copied by national law makers. Instead, the problems raised here should be solved generally, independent of the personal status of the parties.

3. Developments in the Czech Republic, Russia and Ukraine

Of these three countries, only the Czech Republic has adopted an approach similar to Poland in this respect. Thus, in 43a(3) of the Civil Code (in force since 1964 [27]), the legislature adopted the concept of the revocable offer.[28] The language of this provision resembles the Polish one (and also abandons Art. 16[2][b]) CISG). Yet, the major difference between Czech and Polish law, in this respect, is the personal scope of application specified. As mentioned above, the Polish provision determining the revocability of an offer applies only in business-to-business transactions. Czech law does not impose this restriction.[29] The draft version of the new Czech Civil Code takes the same approach in its 1479.[30] Furthermore, although the 1964 Code makes no mention of modified acceptance (see 44[2]), this principle is envisaged by the draft in 1481(3), which closely resembles the language of PECL.

The new Russian Civil Code [31] was drafted with the ideas underlying CISG quite strongly in mind.[32] This influence, however, is much less evident in the [page 87] case of contract formation, as the issue of whether an offer is revocable remains obscure in the language of Art. 436.[33] This provision states that an offer which has been received by the offeree cannot be revoked for the period during which the offeree may give his or her acceptance, unless the offer has been made revocable or the offer may be revoked due to its essence or the circumstances surrounding it. The meaning of this provision is unclear. For some authors, it underlines the general principle of an offer being irrevocable;[34] for others, it represents an exception to that general principle. The latter view is based on the link existing between CISG and the Russian Civil Code.[35]

The position concerning acceptance is much clearer: acceptance of an offer with modifications is treated as a counter-offer, even if the modifications are not essential (Art. 443). Here, therefore, the example of the Convention has not been followed.[36]

The formulation of Art. 641(3) Ukrainian Civil Code [37] partially resembles the language of Art. 436 Russian Code. Potentially, this could create even greater difficulties for interpreters. In its first sentence, the provision restates the rule that an offer may be revoked only up until the moment when it is received by the offeree. The second sentence prevents the revocation of an offer during the time fixed for its acceptance, unless the offer states otherwise or something else arises from the nature of the proposal or other circumstances. The Ukrainian commentaries adopt the position of the offer being irrevocable.[38] As in the Russian Code, no modified acceptance of an offer is possible (Art. 646). [page 88]

4. Evaluation

The practicability of the new provisions governing contract formation under Polish law is difficult to evaluate. They do not mark any great revolution. There are some possible benefits, but also new risks flowing from the uncertainty surrounding the contract formation procedure. The new provisions have also resulted in an internal disintegration of the mechanism of contract formation, depending on the personal status of the parties. The justification for this is not obvious. Nevertheless, the nature of modern life, including the high speed of legal transactions, deprives these new rules of much of their significance. I do not expect their introduction to have any great impact on Polish contract law.[39]

My short comparative overview has also revealed the varying approaches to the integration of CISG, in the context of contract formation, adopted by the countries mentioned. The Polish and Czech legislatures have decided to adopt the contract formation provisions of CISG (and PECL) and to integrate them into the existing framework of their old codes. The Poles have limited the possibilities of revoking offers and modifying acceptance to business-to-business transactions, in contrast to the general solution adopted by the Czechs. The Russian solution in these cases contains some hints of CISG, but lacks overall clarity. The Ukrainian Code is inspired by the Russian model, but in this case not by those derived from CISG.

III. BREACH OF OBLIGATION

1. The traditional Polish system of remedies and its slightly confusing development

Polish law makers have not yet decided whether to modify their current system of remedies. The Civil Code of 1964 simply adopted the main features of the 1933 Code of Obligations.[40] According to Art. 471 Civil Code, a creditor may claim damages for a breach of an obligation, unless the debtor is not responsible for that breach. Article 472 specifies that the debtor is responsible for lack of diligence, unless the law provides otherwise, which means that Polish law focuses on the requirement of fault as a condition for establishing liability for breach of an obligation.[41] This traditional approach is different to [page 89] that set out by the Convention;[42] determining whether the difference is substantial, however, would require a comparison with the notions of force majeure and causation -- two other methods of limiting civil liability.[43] No such examination will be undertaken here. For present purposes, it is sufficient to mention that Polish law contains this general provision regulating breach of an obligation, which makes the system sufficiently flexible. As a remedy for breach of an obligation under Art. 471, the creditor may claim compensation (while there is a general right to specific performance, this is not treated as a remedy but as a primary right of the creditor).There is no general right to withdraw from the contract, even if the breach is fundamental. The creditor may only withdraw if there has been some delay (after notification demanding performance within an additional reasonable period of time), or in cases of subsequent impossibility (also provided that the debtor has been 'responsible' in the sense mentioned above). Polish law provides for a much broader right to withdraw in the case of certain specific contracts, the most significant example of which is the contract for work. Here, the individual's right of withdrawal is not limited to specific types of breach, such as delay or impossibility, but rather encompasses every behaviour by the debtor that is contrary to the content of his or her contractual obligations. According to Art. 636 1, the party who commissioned the work to be carried out may withdraw from .the contract if the other party performs the work defectively or in a manner contrary to his contractual obligations. Before making use of the right to withdraw, however, the former party must demand that the performance be rendered within a period of time fixed by him. It is also possible to withdraw from the contract if there has been a delay in commencing or completing the [page 90] work, or if it is unlikely that the work will be performed within the contractual period. This right of withdrawal may be exercised even before the time the obligation falls due. It thus serves as a remedy for anticipatory breach. In both cases, the right to withdraw is independent of the fault of the debtor.

Thus, the existing Polish system of remedies for breach of contract encompasses two very different approaches. The first is the general system of Art. 471, based on fault, which generally allows claims for damages for nonperformance and deficient performance, but permits withdrawal only in the specific cases of delay and impossibility. The second is the system of remedies for breach of contracts for work, for which withdrawal is a general remedy for any breach (of the 'characteristic obligation') and also for an 'anticipatory breach' as described above. Obviously the system set out in CISG could not be taken into consideration, since the Polish Civil Code is a much older instrument which, as far as its provisions on breach of obligation are concerned, has not been amended since 1964. It should also be clear that the Polish system of remedies for breach of contract remains sufficiently flexible to cope with changing times, and that there is no dramatic need for change. Nevertheless, there is a striking inconsistency between the general system of remedies and the one specifically regulating contracts for work. To some extent, the latter appears to share certain structural elements of CISG: the right of withdrawal (or "avoidance of contract", to use the terminology of the Convention) as a general remedy, and the existence of a remedy for anticipatory breach. Considering the internal values underpinning the Polish Civil Code, it is not clear why the right to withdraw is so far-reaching in the case of contracts for work.[44] It is not even qualified by a distinction between essential and non-essential breaches. The justification of this generous treatment of a person commissioning some piece of work to be carried out is far from obvious. To the contrary, in the case of contracts for work, there are particularly strong reasons for keeping the contract in force. The person carrying out the work does so for a particular customer; and if the other party withdraws from the contract, the work done so far may be of no use at all to other persons.[45] Thus, a withdrawal is likely to be extremely detrimental to the contractor.[46] This approach is in stark contrast to the general system under Art. 471, which [page 91] restricts withdrawal to certain specific types of breach. It is almost as if the Polish legislature wished to use contracts for work as a field in which to 'test' the efficacy of an alternative approach to remedying contractual breaches.[47]

The Polish legislature had an opportunity to reconsider the existing system of remedies when they were compelled to implement the Consumer Sales Directive, which has much in common with CISG.[48] Unfortunately, they were under enormous pressure at the time: they had to provide the European Commission with proof that the entire acquis had been integrated into the Polish legal system, because the country stood on the verge of accession to the Union. These political circumstances provided an obstacle to any attempt to effect more fundamental changes in the system in the course of the implementation process.[49] While the political goal has been achieved, the consistency of the existing system has suffered even further.[50] The implementation of the Consumer Sales Directive has not been done by way of amending the Code, but a special statute has been passed. The outcome has been that, not only has the legal position of the consumer in sales contracts been weakened (the system of remedies for defective goods under a contract of sale in the Code is generally more beneficial to the buyer than that found in the Directive), but the professional buyer is now also better protected than the consumer.[51] It is certainly time for the legislature to reconsider these issues, now that Poland has in fact joined the European Union.

2. Russia, Ukraine and the Czech Republic: three ways of modernising the systems of remedies

These three countries have approached the ideas within CISG in different ways. The Russian system of remedies for breach of contract has been quite strongly influenced by CISG. In the new Czech draft, one can observe the [page 92] influence of different European projects, while the direct influence of the Convention seems to be limited. The new Ukrainian Code uses this source of inspiration not directly, but rather through the Russian codification.

a) The influence of CISG on the Russian system of remedies

As has been mentioned, the new Russian Code was drafted under the strong influence of CISG. The Russian legislature combined this model with its own original approach, melting in one pot a number of European traditions. The Code contains a general concept of breach of contract, but in addition almost every type of contract specified by the law contains its own small system of remedies. The general concept is an original combination of the French system and that of CISG. In terms of Art. 450(2), a contract may be dissolved by the court if there has been a fundamental (or essential) breach of contract, or in other cases provided by law or by the contracting parties. This represents a fusion of Art. 1184 French Civil Code and Art. 64(1)(a) of the Convention. The aggrieved party has no general right unilaterally to terminate the contract -- instead, it is necessary for the court to grant such a resolution. Clearly, the Russians have taken from CISG the concept of 'fundamentality' in relation to breach. The definition of fundamental breach adopted also resembles the definition found within the Convention; in fact, it even copies the latter word for word (cf. Art. 450[2] last sentence with Art. 25 CISG, first part).

Obviously, the contract termination procedure constitutes a significant difference between the system of remedies under the Vienna Convention and Russian laws,[52] for it is based on a different balancing of the interests between debtor and creditor. But it is not the only difference. Russian law also has a unique system regulating the consequences of a court's dissolution of a contract. According to Art. 453(2) and (3) of the Code, the dissolution of a contract extinguishes contractual obligations, but the parties are not automatically obliged to return goods already received under the contract. The aggrieved party may file a claim for compensation.

The general system of civil liability under Russian law is based on the requirement of fault (Art. 401[1]).[53] This rule does not apply, however, where a breach of obligation arises from the entrepreneurial activity of a debtor. In such cases, he can escape liability only by proving that his failure to perform was due to force majeure. This rule, found in Art. 401(3), clearly follows the model of Art. 79(1) CISG.[54] If there has been a breach of obligation, the [page 93] aggrieved party may claim compensation in terms of Art. 393(1). When such claims are made, the liability of a non-professional person is based on fault, while the liability of a professional is strict. It is significant, though, that Russian law uses a standardised definition of damages that draws no distinction between strict and fault-based liability. Under CISG, by contrast, the concept of strict liability is less harsh on debtors due to the requirement of foreseeability of damages (Art. 74) .The requirement of foreseeability is only one of various mechanisms with which liability can be limited,[55] and thus plays a similar role to the requirements of fault and adequate causation in fault-based systems. There is no such limitation under Russian law,[56] which thus achieves a balance different to that under CISG: while it is quite difficult for an aggrieved creditor to terminate the contract, it is relatively easy to claim damages against an entrepreneur.

This combination of strict liability and fault-based liability within the framework of a single system causes friction concerning the right to compensation in cases where the contract has been dissolved by the court (Art. 450[1] [i] Russian Code) .As mentioned above, one of the effects of such dissolution is the possibility to claim compensation (Art. 453[5]). Article 401 should also apply in this case [57] -- if the debtor is not a professional, his or her fault must be proved for liability to be established. A professional debtor is strictly liable. The second situation does not create problems; the interesting case is the first one. Here, Russian law creates a peculiar mixture of liability based on the concepts of fault and fundamental breach. The latter concept, however, is usually intimately linked to strict liability. Thus, this example reveals a dramatic meeting of very different traditions within the framework of a single system.

As far as specific contracts are concerned, the law provides an additional set of remedies for different kinds of breach of contract. In the case of a contract of sale, one finds remedies similar to those under the Convention. Russian [page 94] law has a long list of different violations of a sale agreement, for which a set of remedies has been established which is quire different from that laid down for the general concept of breach of contract. The major rule in this context is found in Arts. 463(2) and 486(4) of the Code, which together govern the failure to comply with the contractual obligations on the part of the seller and the buyer respectively. Here. the aggrieved party may "withdraw its own performance.". According to Art. 450(3), this means that the contract is dissolved. It also means that, when dealing with a sales contract, the absence of performance confers on parties a right to withdraw from the contract without any court intervention. The provisions governing sales also provide for the right to withdraw in other circumstances (e.g., a failure to hand over documents connected with a good that has been sold in terms of Art. 464, or the delivery of "fundamentally defective goods" in terms of Art. 475[2]). In the case of defective goods the buyer may also receive a price reduction or a right to have the goods repaired, or may claim compensation for repairing it himself (Art. 475[1]); in the case of a fundamental defect. the buyer has a right to have the object replaced. These remedies all resemble, to some extent, the remedies within CISG.

The right to withdraw from a contract. which has the consequences specified under Art. 450(3), is also available for the breach of a contract for work (Art. 715[3]).

The impact of CISG on the Russian system of remedies is easily noticeable. It is evident, particularly strongly, in the central notion of fundamental breach of contract adopted by Russian law. But its influence is also evident, to a lesser degree, in many other institutions. Generally speaking, Russian law seems to be wary of the idea of a unilateral termination of a contract, although in the case of specific contracts this remedy is granted quite freely. Other remedies, such as price reduction, repair, or the right to request the delivery of substitute goods in the case of a fundamental breach of contract, are also familiar to Russian law. Yet, all in all it must be said that the system of remedies established by CISG has been diluted in Russia by many, not always consistent, traditions and ideas.

b) Breach of contract under the new Ukrainian Civil Code and CISG

The Russian codification has had a powerful impact on the new Ukrainian Civil Code. Thus, it is mainly through the Russian code that the Vienna Convention has had some impact on Ukrainian law.

The Ukrainian system of remedies differs significantly from its Russian counterpart in one respect. The Russian Civil Code not only regulates business-to-consumer and consumer-to-consumer transactions, but also applies to purely commercial relations. This is not the case with Ukrainian law. In addition to the introduction of the Civil Code in 2003, Ukraine also has a [page 95] Commercial Code, which was adopted in the same year.[58] In the case of a breach of contract the Commercial Code refers to the Civil Code, unless the Commercial Code provides its own autonomous rules (Art. 193[1]). In its language and structure the Commercial Code is rooted quite deeply in the previous economic system. The relationship between both Codes is not simple. Breach of contract, for instance, is subject to a partial regulation (Arts. 193[6]-[7], 206 and 188 of the Commercial Code). The Commercial Code does not grant a general right to withdraw from a contract in the case of failure to perform. It recognises the judicial termination of a contract but without any clearly defined conditions. The following analysis will focus on the Civil Code, which is far more deeply rooted in the European tradition. However, its narrower personal scope of application must be kept in mind and taken into account.

Article 611 of the Ukrainian Civil Code sets out a list of remedies for a breach of obligation. As in Russian law, the creditor has no general right to withdraw from the contract, even if the breach of contract is fundamental. Article 611(1) No. 1 states that a withdrawal from the contract is only allowed if there is a special provision providing for such right, or if the parties have agreed to it. According to Art. 651(2) Ukrainian Civil Code, the contract may be dissolved; this represents a judicial termination for a "fundamental breach of contract". Ukrainian law follows Russian law quite closely here. Further remedies provided under Art. 611 (1) are as follows: the right to reduce the price, payment of a penalty that has been agreed upon, or compensation for any damage (including moral damage). Liability for breach of contract under the Ukrainian Civil Code is based on the requirement of fault.[59] Even though the notion of a 'fundamental breach of contract' does not include the requirement of fault, the right to receive damages in such a case does depend on the fault of the debtor.[60] The foreseeability of damages is not a requirement for the right to claim compensation.

Remedies in the case of defective goods governed by the provisions on the sale of goods are copied almost word for word from the Russian code, as is illustrated, for example, by Art. 678 Ukrainian Civil Code, as compared to Art. 475 Russian Civil Code.

c) The Czech approach

Although the Czech legislature has decided to change the rules governing contract formation, taking into consideration PECL and CISG, the concept of breach of contract has only been subject to a number of minor modifications [page 96] since the enactment of the Code in 1964. Obviously, there are no influences of the Vienna Convention. Czech law concerning breach of contract contains a few peculiarities. The first one is the consolidation of tortious and contractual liability for damages ( 420),[61] and the second is the general regulation of liability for defective goods ( 499ff.). There is no general right to withdraw from the contract, even in the case of a fundamental breach of contract. A right of withdrawal is granted in the case of delay ( 517), and in the case of the delivery of defective goods, if they cannot be repaired, unless the defect has not affected the use of the good (507[1]). There are also other cases where a right of withdrawal has been granted, such as partial impossibility of performance ( 575[2]).

In line with the Austrian tradition, the Czech Republic has had its own Commercial Code since 1991.[62] The Code contains a general provision on breach of contract, giving the aggrieved creditor the right to claim damages. The liability of the debtor is based on his or her fault (373 and 374). The right to withdrawal is granted only in specified cases ( 344), such .15 delay of performance ( 345). Thus, the system is quite far removed from that adopted by CISG.

As has already been mentioned, a draft new Civil Code exists and it should soon replace the old, outdated codification. The remedies granted to the creditor in the case of a breach of contract do not much differ from those under the present code. The idea of having a general regulation governing liability for defective goods, common to different kinds of contracts, will be maintained ( 1599ff.). The idea of combining tort liability and contract liability for damage ( 2412) has also been retained. However, if damage has been caused by a breach of contract, the regime is one of strict liability, limited by force majeure. Here, the influence of modern worldwide developments can be observed. There is still no general right of withdrawal from a contract following a fundamental breach of contract. The right of withdrawal is granted only for specific types of breach, such as delay of performance ( 1643). Generally speaking, the draft preserves a conservative approach to the issue of breach of contract.

3. Evaluation

The authors of the Amendments to the Polish and Czech Codes did not use the example of CISG when shaping their systems of remedies. There has [page 97] been no dramatic need to do so. Traditional doctrinal features such as delay or impossibility of performance still remain attractive. Both systems have a general provision on breach as a result of which compensation may be claimed (in the case of Czech law it is integrated with the general provision of tort law). There is an indirect influence of CISG through the necessity of implementing the Consumer Sales Directive. The Russian and Ukrainian laws took much more from the vocabulary of the Convention (fundamental breach of contract, strict liability for professionals in the Russian case). However, in substance, both systems differ significantly from CISG. In particular, there is much more scepticism in granting a broadly-based right to terminate a contract.

IV. CONCLUSION

The Vienna Sales Convention has been influential in shaping the path of development taken by contract law in Central and Eastern Europe. In particular, it has been used (partly through the mediation of PECL and the UNIDROIT Principles of International Commercial Contracts) when modifying the provisions governing contract formation in Polish and Czech law, and less clearly so in Russia. Changes in the rules concerning contract formation are probably easier to accommodate in a traditional legal system. Reforming a country's system of remedies in the case of breach of contract requires much more fundamental changes in the traditional way of thinking. Hence, the Convention's influence in this area is much weaker. Even here, however, the Convention's impact is quite obvious in countries such as Russia and Ukraine, where a more drastic reform of private law was necessary. The Polish Code was (and is) sufficiently flexible to accommodate the economic transformation. Czech law is interesting in this context, for even in the new draft Code, the influence of the Convention on the system of remedies is not significant. 'The traditional rules have, by and large, been regarded as satisfactory, even for the modern world. [page 98]


FOOTNOTES

1. Kodeks cywilny [The Polish Civil Code] of April 23rd 1964. Dziennik Ustaw Rzeczy-pospolitej Polskiej (Dz. U.) [Official Journal] No. 16. pos. 93.

2. For the original version of the Code see: Z. Radwanski, Kodeks cywilny 25 (2005) [Civil Code with an Introduction by Radwanski] (2006) p. XII-XIV

3. The work of the Polish Codification Commission in the field of private law is described in detail by L. Górnicki, Prawo cywilne w pracach Komisji Kodyfikacyjnej Rzeczy-pospolitej Polskiej w latach 1919-1939 [Civil Law in the Work of the Polish Codification Commission 1919-1939] (2000); see also S. Grodziski, Prace nad kodyfikacja i unifikacja polskiego prawa prywatnego (1919-1947) [Work on the Codification and Unification of Polish Private Law (1919-1947)] (1992) 9-29.

4. Additionally, the Austrian and Russian systems were also in force and until 1922 the Hungarian system was present in two small circuits.

5. Kodeks zobowiazan [The Code of Obligation of 27.10.1933], Dz. U. No. 82, pos. 598.

6. For details, see S. Grzybotvski, System prawa cywilnego [System of Private Law] I (1985) 40ff.

7. In reality there were drafts -- the first from the years 1947-1948 was deeply rooted in the traditions of the Commission before the war. It could not be accepted by the new communist regime; see Grzybotvski (previous note) 44. The second and third drafts from 1954 and 1955 were truly products of their times: see Grzybotvski (previous note) 46-47.

8. Radwanski (supra n. 2) p. XIV

9. Radwanski (supra n. 2) p. XV-XX.

10. See Z. Radwanski, Zalozenia dalszych prac kodyfikacyjnych na obszarze prawa cywilnego [Guidelines for Further Work on the Codification in the Area of Private Law]: Panstwo i Prawo 2004, 5-13; id., Kodifikationsprobleme des Zivilrechts in Polen: Kodifikácia, europeizácia a harmonizácia súkromneho práva/Kodifikation, Europäisierung und Harmonisierung des Privatrechts (2005) 173-182.

11. On the German and Austrian origins of the Polish rules on contract formation, see R. Longchamps de Berier, Zobowiazania [Obligations] (1939) 163; J. Korzonek/I. Rosenblüth, Kodeks zobowiazan 1, Komentarz [Code of Obligations, Commentary, 1. ed.] I (1935) with references to the motives prepared by E. Till, p.142; see also the second edition of this Commentary with references to the motives of R. Longchamps de Berier and the reasons for rejecting the French system (and the rules of the French-Italian draft): J. Korzonek/I. Rosenblüth, Kodeks zobowiazan 2 (1936) 166-167; F. Ranieri, Europäisches Obligationenrecht 2 (2003) 82.

12. See: Einführung in das polnische Recht, ed. by M. Liebscher/F. Zoll (2005) 116.

13. See K. Zweigert /H. Kötz, Einführung in die Rechtsvergleichung auf dem Gebiete des Privatrechts 3 (1996) 356-358, for argument for a better distribution of risk in the German system.

14. W. Kocot, Ofertowy i negocjacyjny tryb zawarcia umowy w ujeciu zowelizowanych przepisów kodeksu cywilnego [Formation of Contracts by Offer and Negotiation according to the Civil Code after its Amendment]: Przeglad Prawa Handlowego 2003, 10; see Art. 10 of the e-commerce Directive (Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, O.J. EC L 178/1).

15. Declaration of the Polish Government of June 1st 1996, Dz. U. 1997, No. 45. pos. 287; publication of the Convention in Polish (with English translation): Dz. U. 1997, No. 45, pos. 286.

16. Motives for the draft amending the Civil Code, Kwartalnik Prawa Prywatnego 12 (2003) 700; Kocot (supra n. 14) 10; R. Stefanicki, Propozycje zmian kodeksu cywilnego w zakresie regulacji oferty [Proposals for Changes in the Rules on Offer in the Civil Code]: Kwartalnik Prawa Prywatnego 10 (2001) 127-128; X. Konarski, Komentarz do ustawy o swiadczeniu uslug droga elektroniczna [Commentary of Electronic Services Act] (2004) 25-30.

17. See M. Zachariasiewicz, Procedura zawierania umow wedlug znowelizowanych przepisów kodeksu cywilnego [The Procedure of the Formation of Contracts in the Civil Code after its Amendment]: Kwartalnik Prawa Prywatnego 13 (2004) 925.

18. See Article 66(2) of the draft, published in: Kwartalnik Prawa Prywatnego 12 (2003) 696.

19. E. Gniewek/A. Luszpak-Zajqc/P. Maclmikowski, Uwagi do projektowanych zmian kodeksu cywilnego dotyczacych zawierania umow [Remarks on the Proposed Changes of the Civil Code concerning Formation of Contracts]: Kwartalnik Prawa Prywarnego 10 (2001) 101. Compare Kocot (supra n. 14) 18.

20. For a discussion of the problems involved in determining the notion of 'non-essential modification', see Gniewek/Luszpak-Zajqc/Maclmikowski (previous note) 101. The use of these vague notions is accepted by Kocot (supra n. 14) 19.

21. The reason for the rejection of Art. 19(3) CISG by the Polish legislature was also a general criticism of this provision; see Zachariasiewicz (supra n. 17) 949; M. Pazdan (-M. Zachariasiewicz), Konwencja wiedenska o umowach miedzynarodowej sprzedazy towarów, Komentarz [Vienna Convention for International Sale of Goods, Commentary] (2001) 269-270.

22. However, Art. 19(3) CISG can be used as a tool for interpreting Art. 68(1) Civil Code: M. Jasiakiewicz/K. Oplustil/A. Klein, Zawarcie, zmiana i wykonanie umow w obrocie gospodarczym [Formation, Change and Performance of Business-to-Business Contracts], in: Prawo umow handlowych [Law of Commercial Contracts] , ed. by S. Wlodyka (2006) 174.

23. See Kocot (supra n. 14) J 9; Stefanicki (supra n. 16) 130.

24. See the argumentats presented by Stefanicki (supra n. 16) 130, who calls for more flexibility in business-to-business transactions in this context.

25. For a discussion of the balancing of interests in the context of whether or not an offer should be revocable, see Zweigert/Kötz (supra n. 13) 356-357.

26. Zachariasiewicz (supra n. 17) 940, proposes de lege ferenda inclusion of contracts involving non-professionals into the scope of application of Art. 66 Civil Code.

27. Obcanský Zákoník [The Czech Civil Code Act of 26.2.1964], Zákon c. 40/1964 Sbirka Zákonu (Sb.).

28. For a discussion of CISG as source of inspiration for 43a, see: Obcanský Zákoník 9 (-J. Švestka), Komentar [Civil Code, Commentary] (2004) 262. A brief overview of the origins of the Czech Civil Code is provided by M. Knappova/J. Švestka (-V. Knapp/M. Knappova). Obcanské právo hmotné 3 [Civil Substantive Law] 1 (2002) 60-62. For Polish literature on the background and recent development of the Czech Civil Code, see also K. Zaradkiewicz, Rekodyfikacja prawa cywilnego: Stan obecny i kierunki Zmian w Czechach i na Slowacji [Recodification of Civil Law: Present State and Mainlines of Changes in the Czech Republic and Slovakia]: Przeglad Legislacyjny 2003, 60-96.

29. It is important to remember that the Czech Republic has a separate Commercial Code (Obchodni Zákoník -- Zákon c. 513/1991 Sb.) However, the Civil Code is applicable if no rule from the Commercial Code can be applied (1[2] of the Commercial Code).

30. Draft of the Civil Code prepared at the Ministry of Justice, mainly by K. Eliáš and M. Zuklínová -- Návrh Obcanského Zákoníku [Proposal of Civil Code], available online at: <http://portal.justice.cz/ms/ms.aspx?j=33&o=23&k=381&d=40461> .

31. Grazdanskij kodeks Rossijskoj Federacii [Civil Code of the Russian Federation], First part 1994, No. 51-FZ; Second part 1996, No. 14-FZ, Third part 2001, No. 146-FZ.

32. M. Braginskij, Venskaja Konvencija 1980 g. i GK RF [Vienna Convention 1980 and Civil code of Russian Federation], in: Venskaja konvencija OON 1980 g. o dogovorach kupli-prodazi tovarov [United Nations Vienna Convention 1980 on Contracts of the International Sale of Goods] (2002) 14.

33. The discussion on this provision was brought to my attention by A. Kommissarov, who kindly gave me his paper prepared for the seminar of Professor A. Trunk in Kiel; Trunk, Der Vertragsabschluss nach clem einheidichen UN-Kaufrecht (CISG) im Vergleich zum unvereinheitlichten deutschen und russischen Recht sowie zu den UNIDROIT-und Lando-Principles (not yet published, 2003/2004) Manuscript p. 18.

34. O. Sadikov (-N. Klejn), Grazdanskoe právo Rossii, Obscaja cast' [Civil Law of Russia, General Part] (2001) 744; T. Abovoj (-N. Solovjanenko), Kommentarij k grazdanskomu kodeksu RF casti pervoj [Commentary on the First Part of the Civil Code of the Russian Federation] (2004) 1010.

35. M. Braginskij/V. Vitrjanskij, Dogovornoe právo, Obscie polozenija [Contract Law, General rules] I (2000) 200; In the pre-Revolutionary Russian law there was a principle of the revocability of the offer. The offeree could, however, claim damages caused by his reliance on the seriousness of the offer; see G. Šeršenevic, Kurs grazdanskogo prava [Lecture of Civil Law] (2001) 407 (Repr. of the original textbook of Šeršenevic, 1863-1912).

36. Braginskij/Vitrjanskij (previous note) 202; Braginskij (supra n. 32) 15.

37. Cyvilnyj kodeks Ukraïny [Civil Code of Ukraine] of 16.1. 2003, Vidomosty Verchovnoï Rady Ukraïny 2003, No. 40-44, pos. 356, with subsequent amendments, c. 58.

38. Je. Charymonova/O. Kalitenko (-A. Tkacuk), Cyvilnyj kodeks Ukraïny, Komentar [Civil Code of Ukraine, Commentary] (2004) 554; .V Kossak, Naukovo-praktycnyj komentar cywil'noho kodeksu Ukraïny [Commentary of the Civil Code of Ukraine] (2004) 540.

39. The limited importance of this problem is stressed by Zweigert/Kötz (supra n. 13) 356-358. But see the different point of view of Ranieri (supra n. 11) 86.

40. Cf. Arts. 239ff. Code of Obligations.

41. T. Pajor, Odpowiedzialnosc dluznika za niewykonanie zobowiazania [The Liability of the Debtor for Non-Performance of Obligations] (1982) 37.

42. M. Pazdan (-J. Klatka/G. Zmij), Konwencja wiedenska o miedzynarodowej sprzedazy towarów, Komentarz [Vienna Convention on the International Sale of Goods, Commentary] (2001) 609; see also J. Napierala, Odpowiedzialnosc dluznika wedlug Konwencji wiedenskiej [The Liability of the Debtor under the Vienna Convention]: Ruch Prawniczy, Ekonomiczny i Socjologiczny 1998, 110-111. For a contrasting analysis, see P. Schlechtriem, Internationales UN-Kaufrecht 3 (2005) 191-192, who argues that the question of the system adopted in Art 79(1) CISG is at least an open one, because the compromise achieved does not allow for any clear decision on the question of the liability's regime.

43. It is highly debatable in Polish doctrine as to what exactly a debtor needs to prove to escape liability for a breach of contract. Part of the doctrine requires the debtor to disclose the reason for the breach and prove that it was all accident for which he does not bear any responsibility. In other cases, it is sufficient for the debtor to prove that he was diligent. For a discussion of this issue, see: K. Pietrzykowski (-W. Popiolek), Kodeks cywilny, Komentarz [Civil Code, Commentary] (2002) 1120. We should also note the significance of the decision of the Polish Supreme Court (Sad Najwyzszy), drawing a distinction between force majeure as the limit of absolute liability, and an accident as the limit of liability based on the fault of the debtor: Decision of the Sad Najwyzszy 11.1.2001, IV CKN 150/00, Orzecznictwo Sadu Najwyzszego (OSN) 10/2001, pos. 153. Finding a practical difference between the grounds for exemption in the sense of Art. 79(1) CISG and Polish Art. 471 is probably possible, but quite difficult. Cf. Schlechtriem (previous note) 191.

44. The right to withdraw from a contract for work under Polish law is no longer ultima ratio.

45. This was one of the main arguments against having a broadly-based remedy of withdrawal from the contract presented by L. Petrazycki, Wstep do nauki politykj prawa [Introduction to the Policy of Law] (1968) 139-141 and 140 note 1.

46. J. Rajski (-A. Brzozowski). System Prawa Prywatnego 2 [System of Private Law] VII: Prawo zobowiazan -- czesc szczegolowa [Law of Obligations -- particular part] (2004) 355 note 129, argues that it also offers only illusory protection for the aggrieved party, because it removes any chance of achieving the goal of the contract. This argument is not very convincing for, after all, the aggrieved party has a choice. The right to withdraw is an extremely powerful means of exerting pressure on the other party.

47. Such a broadly-based right to withdraw from a contract for work was also granted to the aggrieved party under Art. 485(1) Code of Obligations. The origins lie in Art. 366(2) Swiss Law of Obligations: Korzonek/Rosenblüth (supra n. 11) 1144, with references to the motives given by R. Longchamps de Eerier and E. Till.

48. S. Grundmann/M. Bianca (-Grundmann), EU Kaufrechts-Richtlinie, Kommentar (2002) 19; M. Pecyna, Ustawa o sprzedazy konsumenckiej, Komentarz [Consumer Sales Act, Commentary] (2004) 13. The Directive does not, however, follow a concept of the fundamental breach of contract.

49. Pecyna (previous note) 15.

50. See F. Zoll, Das dubiose Ergebnis der Umsetzung der Richtlinie uber Verbraucherguterkauf in die polnische Rechtsordnung, in; Probleme der Angleichung des Europäischen Rechts, ed. by J. Steimach/R. Schmidr (2004) 243-249 (Krakauer-Augsburger Rechtsstudien, 1).

51. Pecyna (supra n. 48) 20. This remains true despite the fact that the seller's liability in business-to-business and consumer-to-consumer transactions can be eliminated due to the non-mandatory nature of the provisions of the Code.

52. See T. Abovoj/Kabalkina (-Mozolin), Kommentarij k grazdanskomu kodeksu Rossijskoj Federacii [Commentary on the Civil Code of Russian Federation] (2004) 1037 (cited: Abovoj/Kabalkina [-author]); Sadikov (supra n.34) 766.

53. Abovoj/Kabalkina (-M. Pavlovic) (previous note) 958.

54. Braginski (supra n. 32) 16.

55. P. Schlechtriem/I. Schwenzer (-H. Stoll/C. Gruber), Kommentar zum Einheitlichen UN-Kaufrecht.) (2004) p. 709; Schlechtriem (supra n. 42) 202.

56. Braginskij (supra n. 32) 16.

57. S. Somenkov, Rastorzenie dogovora v grazdanskom oborote: Teorija i praktika [Termination of Contract: Theory and Practice] (2002) 114-116. The question whether the liability for damages based on Art. 453(5) Russian Civil Code requires fault in a case of nonprofessionals is quite obscure. Despite of the clear statement cited above, other authors do not take a clear position; see A. Guev, Postatejnyj kommentarij k casti pervoj grazdanskogo kodeksa Rossijskoj Federacii 3 [Commentary on the First Part of the Civil Code of Russian Federation] (2001) 737; for a completely different approach to Art. 453(5), see O. Sadikov, according to whom this article covers only damages caused by the resolution of the contract and not by the fundamental breach. The damages caused by the fundamental breach should be repaired in terms of the general rule of Art. 401; O. Sadikov, Kommentarij k grazdanskomu kodeksu Rossijskoj Federacii [Commentary on the Civil Code of Russian Federation] (2002) 872-873. See the different position of Abovoj/Kabalkina (-M. Pavlovic) (supra n. 52) 1043.

58. Hospodarskyj Kodeks Ukraïny [Commercial Code of Ukraine] from 16.1.2003 (Istyna Kyiv 2003).

59. The burden of proof rests on the debtor; Kossak (supra n. 38) 529.

60. Charimonova/Kalitenko (-Tkacuk) (supra n. 38) 562.

61. This solution has an Austrian origin ( 1295 ABGB): Pajor (supra n. 41) 10; Obcanský Zákoník (-M. Pokorny/J. Salac), Komentar 9 [Civil Code, Commentary] (2004) 578.

62. Obchodni Zákoník, c. 513/1991 [Commercial Code]. On the origins of the Code, see: P. Raban, Obchodni Zákoník [Commercial Code] (2003) 16.


Pace Law School Institute of International Commercial Law - Last updated October 4, 2007
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