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Reproduced from the website of the Commission on European Contract Law
Introduction to the Principles of European Contract Law
The Commission on European Contract Law
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A businessman is negotiating a contract with a company in another State of the European Union, but neither party wishes to apply the law of the other country. A lawyer is advising parties to a contract involving parties in different States. An arbitrator has to decide a dispute under a contract "to be governed by internationally accepted principles of law". A professor of law wants his students to gain an understanding of the way in which contracts are treated by the laws of the different States of the European Union, and to learn the common principles. A legislator is drafting a code or a statute on the law of contracts. An European Union official is drafting a new Directive affecting contracts.
All these need to know the principles of contract law shared by the legal systems of the Member States and to have a concise, comprehensive and workable statement of them. The Principles of European Contract Law Parts I and II(1), [...] and the coming part III will provide this.
The Principles have been drawn up by an independent body of experts from each Member State of the European Union under a project supported by the European Commission and many other organisations. The principles are stated in the form of articles with a detailed commentary explaining the purpose and operation of each article. In the comments there are illustrations, ultra short cases which show how the rules are to operate in practice. Each article also has comparative notes surveying the national laws and other international provisions on the topic.
The Principles of European Contract Law Parts I and II (hereinafter referred to as PECL I and II.) cover the core rules of contract, formation, authority of agents, validity, interpretation,, contents, performance, non-performance (breach) and remedies. The Principles previously published in Part I (1995) are included in a revised and re-ordered form.
Throughout Europe there is great interest in developing a common European civil and commercial law. The European Parliament has twice called for the creation of a European Civil Code. The Principles of European Contract Law are essential steps in these projects.
The Background of the Principles
The European Union have promoted a European régime of academic lawyers whose platform is Europe and whose writings and debates are concerned with the future European law. This new European régime resembles that of the American. In the United States the writings on contract law -- as on other subjects -- deal with the problems and issues common to the common law states. There are considerable differences between the contract laws of the several states. These differences, however, do not prevent a debate which can be based on common concepts and a common legal method. Such a common language and a common legal method is also slowly emerging in Europe. The American and the new European régimes are inspiring each other. Together with lawyers from other countries they are in the process of becoming a world community of academic lawyers.
To day, however, the domestic law is the main subject of the European law schools. And Europe has as many legal sciences as there are legal systems. This, in fact, is a great waste of efforts and talent. It will be an enormous improvement of resources and ideas and enrich the legal science considerably when in the third millennium the talents will unite to establish and later maintain a European -- or a world -- private law.(3) And the efforts and money which it will cost to unify the private law will be amply repaid when it is there. Much of the work to cultivate the many domestic laws will then be saved.
The Commission on European Contract Law
These considerations have guided the Commission on European Contract Law. Since l982 it has been working to establish Principles of European Contract Law (hereinafter called PECL). Part 1 of the Principles dealing with performance, non-performance and remedies was published in 1995.(4) PECL Parts I and II was published in 1999. In 1997 the Third Commission began to prepare rules on compound interest, conditions and the effect of illegality, and rules on subjects which are common to contracts, torts and unjust enrichment, such as plurality of creditors and debtors, assignment of debts and claims, set-off, and prescription. the Thirds Commission held its last meeting in February 2001 and a new volume containing these rules with comments and notes are being prepared.
With a few exceptions the members of the Commission of European Contract Law have been academics, but many of the academics are also practising lawyers. The Members have not been representatives of specific political or governmental interests, and they have all pursued the same objective, to draft the most appropriate contract rules for Europe.
In some respects the Principles may be compared with the American Restatement of the Law of Contract, which was published in its second edition in 1981.Like the Restatements the articles drafted are supplied with comments and notes. The Restatements consist of non-binding rules, "soft law". They purport to restate the Common Law of the United States. The Principles are also "soft law", but their main purpose is to serve as a first draft of a part of a European Civil Code. Furthermore a common law does not to exist in the European Union. The Principles has therefore been established by a more radical process. No single legal system has been their basis. The Commission has paid attention to all the systems of the Member States, but not every of them has had influence on every issue dealt with. The rules of the legal systems outside of the Communities have also been considered. So have the American Restatement on the Law of Contracts and the existing conventions, such as The United Nations Convention on Contracts for the International Sales of Goods (CISG). Some of the Principles reflect ideas which have not yet materialised in the law of any state. In short, the Commission has tried to establish those principles which it believed to be best under the existing economic and social conditions in Europe.
An attempt has been made to draft short rules which are easily understood by the prospective users of the Principles such as practising lawyers and business people. The Commission has made an analysis of the extent to which Part 1 of the Principles are applicable to the more important commercial contracts for the provision of goods and services of various kinds and the transfer of rights (licence agreements, etc.). Although the Principles cannot provide the appropriate solution to all the issues which every of these specific contracts raises the commission has found them applicable to the great majority of these issues.
The Commission has made an effort to deal with those issues in contract which face business life of today and which may advance the trade, especially the international trade. However, the Principles do not intend to apply exclusively to international transactions.
Which Further Parts of the Law are Planned to be Unified? The Study Group of a European Civil Code
On the European Continent there is a traditional concept of what is private law. It covers family law, law of inheritance, law of property and the law of obligations with its three main branches, the law of contract, the law of restitution and the law of torts. For the time being a unification of family law and the law of inheritance appear to be less urgent. Areas of private law where unification is needed are the law of contracts, restitution, torts and movable property. The law of contract is probably the field of the law which most urgently needs unification. It is also here that we find a fragmentary European legislation enacted as directives.
It has been doubted whether the Amsterdam Treaty empowers the institutions of the EU to prepare a Civil Code for the Union.(5) However, this issue was impliedly touched upon at a special meeting of the European Council devoted to the Creation of an area of freedom, security and justice in the European Union which was held in Tampere in Finland on 15 and 16 October 1999. A part of the Presidency Conclusions from that meeting deals with" A genuine European area of justice" and with "a greater convergence in civil law". Here the Council and the Commission of the EU are invited to prepare a new procedural legislation in cross border cases, in particular on those elements which are instrumental to a smooth judicial co-operation and to enhanced access to justice. As far as substantive private law is concerned an overall study is requested on the need to approximate Member States’ legislation in civil matters in order to eliminate obstacles to the good functioning of civil proceedings. The Council is requested to report back by 2001, and the European Commission has taken measures to prepare the report. It seems as if the doubts as to whether the Amsterdam Treaty allows the EU to prepare a Civil Code could be overcome.
Some of the Governments have given the idea of a codification more than a moral support. In February 1997 the Dutch Government organised a symposium on a future European Civil Code in the Hague, and since then a Study Group of a European Civil Code has been established under the leadership of Professor Christian von Bar, University of Osnabrück Germany and comparative studies and ensuing drafts of a code are now carried out in centres. A centre in Hamburg in Germany is The Max Planck Institut für ausländisches und internationales Privatrect. It is dealing primarily with personal security and with secured transactions relating to moveable property (mortgage in moveables, retention of title, etc). The Hamburg centre and the Zentrum für europäisches Recht at the University of Innsbruck in Austria is dealing with insurance contracts. A centre in Osnabrück in Germany is treating rules on torts, unjust enrichment and negotiorum gestio. Centres in Amsterdam, Utrecht and Tilburg in the Netherlands are working on sales, long term contracts and contracts for the renditions of services, such as construction contracts and services rendered by professionals (lawyers, doctors, accountants). A centre in Salzburg Austria is treating transfer of property in moveable goods. A centre in Edinburgh is planned to deal with trusts and a centre in Paris with money loans.
The German the Dutch and the Flemish Research Councils and a Greek foundation have granted funds for these enterprises, Contributions have also been received from the Austrian Ministry of Education and Science and the Italian Council of Lawyers. The work started in July 1999. It is envisaged that the general principles of the law of contracts provided in the PECL will be integrated in what may eventually become a European Civil Code.
1. Hardbound ISBN 90-411-1305-3 published in November 1999 by Kluwer Law International P.O Box 85889 2508 CN Hague, The Netherlands.
3. In 1838 Thibaut made this observation regarding Germany which was then divided in a great number of legal systems, see Über die sogennante historische und nicht-historische -Rechts-schule, Archiv für die zivilistische Praxis (1838) 39l-4l9, reprinted in Hattenhauer, Thibaut und Savigny, Ihre programmatischen Schriften, München 1973 p 275, 279f.
4. Lando & Beale (eds) Principles of European Contract Law, Part 1. Performance, Non-performance and Remedies, Dordrecht 1995.
5. See Winfried Tilmann & Walter van Gerven, Die Kompetenzen det EU zur Schaffung eines einheitlichen Europäischen Schuld- und Sachenrechts und die möglichen Rechtsgrundlagen in Vergleichende Untersuchung der Privatrechts ordnungen der Migliedstaaten der EU im Hinblick auf Diskriminerungen aus Gründen der Statsangehörigkeit sowie zur Möglichkeit und Notwendigkeit der Schaffung eines europäischen Zivilgesetzbuches, Europäishes Parlament, Generaldirektion Wissenschaft, Projekt Nr IV/98/44, 1999.
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