Obligations and contract law
Lecture 1 Organisational members (chapter 1 & 2)
What is a contract?
A contract is a legally binding agreement
An contact is an agreement by which one or several persons bind themselves towards one or several
others to transfer, to do or not to do something. It is enforceable.
If the agreement is broken, you can go to court and claim damages.
Classification
One can classify contracts on the basis of:
- The parties involved
Type of the parties
o B2B - between two business people, commercial contract
o B2C - business to consumer, he is not acting for business purposes
o C2C - two individual who contracts for other purposes than commercial
- Main characteristics
Is the contract a sales contract of for example an employee’s contract
Types of performance
o Sales contract
o Servicesc
o Employment
o Lease
o Insurance
o Etc.
- Reason why parties want to be bound
o Bilateral contracts, both parties makes promises
o Unilateral contracts, only one party promises something
Contracts as a part of contract law
Private law
Deal with the relationship between private actors
- Patrimonial law
o Law of obligations
§ Contract
§ Tort (delict)
§ Unjust enrichment
o Property law
- Law relating to persons
o Family law
o Corporate law
Difference between contract law and tort law
In both cases are damages, in tort law however, there are no former relations between the parties
Unjust enrichment
Benefit at the expense of another person
By mistake you transfer money to a wrong account.
,Values connected to contract law – freedom of contract
- The freedom of contract at all
- Freedom to choose the other party
- Freedom to choose the content
Some restriction of freedom are necessary to preserve freedom
Regulated contracts
Protection of the weaker party
Employment contract must be regulated to protect the employee, the weaker party. He only has the
option to enter the agreement or not enter the agreement, he usually has no bargaining power
Standard form contracts / general conditions
These are a part of your contract
General conditions are included
Main principles of contract law
- The freedom of contract;
- Binding force of the contract: (pacta sunt servanda)
- Principle of informality: Pacta punt servanda, consent to be bound
Agreements lawfully entered into have the force of law for those who have made them
- Contractual fairness;
o Negotiationsà procedural fairness
§ The law often requires the professional party to give all kinds of information
to the consumer so that the latter can take an informed decision before
entering into the contract (chapter 6) requires the unequal position among
the parties is remedied
o Content of contract à substantive fairness
§ The contract must in any event be concerned with this procedural fairness
whereas substantive fairness is accepted everywhere.
- Equality
There is no greater inequality than the equal treatment of unequal’s
Mandatory rules, rules that are mandatory for the business parties but not the consumers
Default rules, binding rules as long as the parties do not decide otherwise
Default rules, rules that are automatically applicable if the parties have not made other
arrangements
Stages in the life of contract
- Formation of the contract
- Defects and consent (mistake,misrep.,threat/duress, fraud)
- Good faith and pre-contractually liability
- Interpretation
- Remedies
In three phases:
- Pre-contractual phase
o Offer
o Acceptance
o Formalities and legal capabilities.
o Pre-contractual liability à Is the contract valid? (statutory illegality or defect of consent)
- Conclusion of contract
, o Breach of contract;
o Performance and special performance
o Amendments of the contract
o Damage claims
o Interpretation of contracts and gap filling
o Good faith principle
- Performance, breach, remedies or end
o Contract is performed / contract is terminated
Diversity of private law in Europe
- 28 widely divergent private law regimes (29 if Scotland is counted as a separate regime)
- Contract law to a large extent national law!
- Some supranational or international contract laws:
o EU contract law directives
o Conventions, eg CISG
o Soft law, eg PECL, Unidroit Principles, DCFR
o PICC: principles of international commercial contracts
o PECL: principles of European contract law
o DCFT: Draft Common Frame of Reference of European Private Law
A categorization of legal system in Europe
Legal traditions in Europe
Common law:
In common law, we do not speak of one great body of private law covering all the different laws of
obligations. Rather, the common law lawyers regard contract law, the law of torts, property law etc.
to be separate and distinct from each other. Generally speaking, in common law, a contract can be
for example breached if it is economically justified. Common law does not recognize the principle of
good faith per se and common law judges interpret contracts in a rather literal manner.
- No single set off principles of law
- Case law is a principle source of law
- Judges have a significant and individual states
- Academic writing is no so significant
Civil law:
In Civil law, contract law is viewed as merely one part of the larger system of private law. Private law,
in general, consists of the rules and principles governing the relationships between private actors
(companies and individuals). Apart from contract law, tort law, restitution, property law, trust law,
inheritance law, family law and company law are considered to be part of private law. What is
common to civil law legal systems is the believe that contracts have legally binding effect and there
are certain moral obligations arising from contracts. Moreover, the principle of good faith is a very
important denominator in civil law. Therefore, contracts should not be breached easily. This ethos
even applies to cases where it might be more economically efficient to breach the contract. Finally,
certain rules are applied by default and therefore not everything needs to be included in the
contract). This means that civil law judges interpret contracts less strict than is done in common law.
Sources of civil law
Primary sources: codification of private laws, such as:
- Code Napoléon 1804
- Bürgerliches Gesetzbuch 1900 (2002)
- Other sources: case law, EU legislation, ECHR, CISG, soft law
Sources of law
- Legislation
- Case law
, - Scholarship - Obligations and contract law
Reading lecture 1
Contracts can even come about in cases where no words is spoken at all
Contract law are the rules and principles that govern transactions among parties
The implicit assumption behind it is that the law must treat all contracts and parties equally, no
matter what they contract about
Objectives
Define the different stages of contracting
- Formation of the contract
- Defects and consent
- Good faith and pre-contractually liability
- Interpretation
- Remedies
Understand why people make contracts and be able to reflect upon the role of contract law in
society
Understand the role of the principles of freedom of contract and party autonomy
Understand the regulation of contracts through mandatory law and default rules
Identify different kinds of contracts, in particular the difference between general contract law and
the regulation of specific contracts
Draw a map of the main topics of contract law in different legal systems
Understand the background and characteristics of the Draft Common Frame of Reference
Understand the place of contract law in relation to the law of obligations (besides tort, unjustified
enrichment, benevolent intervention, and restitution)
lecture 2 (chapters 3,5, 6)
Outline
- What is an offer and how to distinguish it from a more invitation to enter into negotiations?
- Can an offer be revoked before the offeree accepts it?
- How long does the offer last?
- What are the requirements that the acceptance must meet?
- What is the time of the conclusion of the contract?
objectives:
Identify the requirements for formation of contract
Discuss the theoretical notion of ‘juridical act’
Explain the difference between preliminary dealings and an actual offer
Explain under which conditions an offer can be made, revoked or lapses
Explain the form of acceptance and whether it needs to be communicated to take effect
Understand whether offer and acceptance reflect a ‘meeting of the minds’ in an objective or
subjective meaning
Identify when a ‘battle of the forms’ occurs and explain how different legal systems (England, the
Netherlands, Germany, DCFR) solve this problem
Understand the notions of legal personality and legal capacity
Formation of contract
Requirements
- Agreement
- Offer
- Acceptance
- Intention to create legal relations
