Code Européen des Contrats (Avant-Projet)
by Kurt Siehr
The Draft European Contract Code or—as it is officially called—the Code européen des contrats (avant-projet) is the work of the Academy of European Private Lawyers. That Academy is located in Pavia, Italy, and consists of jurists from the Member States of the European Union and some other countries. The coordinator Giuseppe Gandolfi, professor of private law and comparative law at the University of Pavia, regularly convenes these jurists at Pavia with the aim ‘to contribute, through scientific research, to the unification and the future interpretation and enforcement of private law in Europe, in the spirit of the community conventions’ (Art 4 of the Statutes of the Academy).
After the European Parliament had recommended on 26 May 1989 the preparation of a European Civil Code ( OJ C 158/400), Giuseppe Gandolfi extended an invitation to Pavia to discuss such a codification on 20–21 October 1990. It was recommended to start with a discussion of contract law on the basis of Book 4 of the Codice civile (on this initial conference, see Piero G Gaggero, Giurisprudenza italiana 1992, IV, col 44; José Luis de los Mozos, Revista de derecho privado 1991, 694 ff; Peter Stein, Il futuro Codice; Fritz Sturm (1991) JZ 555). The proposal met with considerable enthusiasm, and thus the Accademia dei Giusprivatisti Europei was founded on 9 November 1992. Subsequently, the members of the Academy of all the – then – Member States of the EC plus Switzerland (see the list of the original members in Peter Stein, Convegni di studio, 301 ff) were invited to a working session on 30–31 October 1993 in Pavia. Since then, the Academy convenes at least once a year and discusses the efforts of its members and casts votes on the proposals of what is to be included in the Contract Code. In 2001 Book 1 of the Code européen des contrats was published; it has most recently been brought out in a third, improved edition (2004), Book II part 1 on the contract of sale was published in 2007.
The starting point, and guideline, of the work is the Italian Codice civile of 1942. The Italian Civil Code is of comparatively recent origin and has been regarded as a good compromise between Romanist (French and Italian) and Germanic (German, Austrian and Swiss) legal traditions. In addition to the discussion of the Italian contract law, the proposals are tested by a comparative method to determine whether they sufficiently meet the requirements for a modern codification. Serving as a basis for these tests are the Austrian Allgemeines Bürgerliches Gesetzbuch (ABGB), the German Bürgerliches Gesetzbuch (BGB), the CISG (sale of goods, international (uniform law)), the French Code civil, the Swiss Code of Obligations (OR), the Spanish Código civil and English law, both as it stands today and as Harvey McGregor (at the request of the English Law Commission) tried to codify it in his ‘Contract Code’ which has been published in Italy at the suggestion of Giuseppe Gandolfi. The outcome of these efforts of the Academy of European Private Lawyers is a codification having very precise and detailed provisions (rather than merely ‘principles’).
a) Book I
Book I of the Draft Contract Code is devoted to the general contract law (Des contrats en général). In 11 Titles and 173 Articles, it contains introductory provisions, and deals with the creation of contractual obligations, the contractual content, formalities, interpretation of contracts, the effects of contracts, performance, non-performance, transfer of contractual obligations, the extinction of contracts and contractual obligations, and other contractual anomalies and remedies.
(1) Introductory provisions. The Draft Code is designed to cover all contracts, no matter whether they are consumer contracts or commercial ones, whether they constitute a type that is codified or not, and whether they create unilateral obligations or bilateral ones. Unilateral acts are treated mutatis mutandis.
(2) Formation of contract. Even before a contract has been concluded and in the course of the negotiations leading up to it, certain obligations have to be observed. Article 7, for instance, lays down a comprehensive duty of information. Thus, every party is obliged to reveal to the other party all factual and legal circumstances known to him, which may be necessary for that other party to assess the contents of the contract to be concluded.
A contract is concluded by offer and acceptance. The offer is binding as soon as it is received by the offeree (Art 14 (1)) and when it is expressly made irrevocable (Art 17).
(3) Content of contract. The contents of a contract must be useful, possible, permitted, and either definite or determinable (Arts 25–31). This provision is designed to replace the requirement of ‘cause’ and to be more precise than the latter. General terms of business are dealt with only in Art 33.
(4) Formalities of contract. Normally contracts do not require any form, unless they concern real estate or the promise of a gift (Art 35). Contracts for a value of more than €5,000 need to be in writing in order to be enforceable in court, unless Union law permits another form of evidence (Art 36).
(5) Interpretation of contract. A contract has to be reasonably interpreted (Art 39).
(6) Effects of contracts. A contract works between the parties as if it were a statute. This rule is taken over by Art 42 of the Draft Code from Art 1134 French Code civil. Article 46 deals with the in rem effects of a contract and determines that transfer of possession is necessary and that from this moment onwards the other party bears the risk (risk, transfer of). If the transferor is not the owner of the object, transfer is only valid if made to a bona fide transferee (acquisition of ownership from a non-owner). This Title also provides some articles on representation (Arts 60–69), on contracts with a party to be nominated (Arts 70–71) and the contract in favour of third parties (Arts 72–74).
(7) Performance of contract. Following some general provisions on performance (Arts 75–85) this Title deals with the performance of monetary obligations (Art 86) and the performance of cumulative, alternative, or joint and several (solidary obligations) and undivided obligations (Arts 87, 88).
(8) Breach of contract. Three chapters deal with general provisions on non-performance (Arts 89–102), mora creditoris (Arts 103–105) and the effects of non-performance (Arts 106–117). The first chapter provides in great detail when non-performance occurs: non-performance of an obligation to deliver a specific thing, or objects by description, non-performance of an obligation to do something, to refrain from doing something, and of ‘protection duties’. Other provisions deal with the debtor’s default (Art 96) and with other details. In the last Title of this part the effects of non-performance are laid down. It is specified when terms excluding any responsibility are null and void, what constitutes a fundamental breach of contract (Art 107 based on Art 25 CISG) and which sanctions exist for a non-performance (defence of non-performance, supplementary performance, price reduction, termination of a contract, unwinding of contracts, damages).
(9) Transfer of contract and of relationships arising therefrom (Arts 118–127). This Title also deals with assignment (Arts 121–124). An assignment is abstract and valid without the debtor’s consent.
(10) Extinction of contract. Grounds for extinction may be novation, renunciation, set-off and merger. According to Italian tradition, prescription (Art 2934(1) Codice civile) is also a ground for the extinction of a contractual right and not only a bar to its legal enforcement as it is, for example, in German law (§ 214 BGB).
(11) Other contractual anomalies and remedies. The last Title is devoted to nullity of contracts and its effects, avoidance and its effects, as well as temporary or definite invalidity (inefficacia). A contract can—apart from instances of psychological or physical duress—be avoided because of mistake in four different situations: a mistake concerning a basic element or aspect of the contract (Art 151(1)(a)), a mistake induced by misrepresentation by the other party (Art 151(1)(b) and (4)), a mistake made without gross negligence, provided the mistaken party compensates the other party (Art 151(3)), and a common mistake (Art 151(7)). The last chapter of the last Title deals with remedies. Here one finds provisions on termination of a contract, re-negotiation of contracts, restitution, payment of damages, penalty clauses, arbitration clauses (arbitration law (national), arbitration, international) and conservation measures and summary remedies.
b) Book II
The second book of the Draft Code européen des contrats is devoted to specific obligations, ie also non-contractual ones. Its authors try to delimit contractual from non-contractual obligations in the code itself and thus avoid reference to national law concerning the law of torts/delict. The Draft Code européen des contrats thus becomes a Draft Code européen des obligations. The second book starts with specific contracts.
(1) The provisions on a contract of sale are contained in Arts 174–220 of the Draft Code (cf the text in Italian in Code européen des contrats II/1, 131; Europa e diritto privato 2006, 1235 ff; Foro padano 2006, II, cols 114 ff; text in German: (2009)17 ZEuP 624). Research on this subject began in 2001. At the beginning it had to be decided whether the Codice civile should be used again as a model, or whether the CISG was preferable. Finally, it was decided once again to take the Codice civile as a model because also local contracts excluded by Art 1 CISG as well as consumer contracts (excluded by Art 2(a) CISG) were to be treated in the Code. Nonetheless, the CISG provided many valuable inspirations. In a total of three chapters the contract of sale is regulated.
(i) The introductory provisions deal with the definition of a contract of sale and with the transfer of title (for movables a transfer of possession is necessary unless there is an explicit agreement to the contrary). Contracts for real estate which should continue to be governed by national law are excluded.
(ii) The second chapter deals exclusively with the sale of goods. The general provisions (Arts 177–186) provide rules on the object of sale (including the sale of future objects, or of objects belonging to other persons) and on the informal character of a contract of sale. Subsequently comprehensive information duties on the part of the seller are addressed, as well as his duty to transfer title and the warranty of proper functioning (Art 199). The third part is devoted to the buyer’s obligations. Finally, the remedies are dealt with in Part 4 (Arts 203–209). Here there are special rules for consumer contracts of sale, for the infringement of information duties and for non-performance, late performance and inadequate performance. The old distinction between the aedilitian remedies and the general remedies for non-performance has been abandoned.
(iii) The third chapter contains rules for special types of contracts of sale such as sale on approval, sale by instalments, resale, leasing, exclusive sale, franchising, and sale by auction.
(2) After the law of sale the following contracts have been dealt with: exchange, contracts to join forces, lease agreements, mandate including contracts of commission, contracts for work, service contracts, contracts of carriage, agency, deposit, lending contracts (gratuitous use) and loans. These provisions will soon be published.
(3) At present the Academy is discussing banking contracts. With the exception of provisions on loans, deposits and orders, they are seldom dealt with in comprehensive codifications of private law; but see Arts 1823–1833 and Arts 1834–1880 Codice civile which serve as a model.
The Code européen des contrats is unlikely to replace the national contract laws of the Member States because the European Union has no competence to regulate purely domestic contracts. Nevertheless the Code with its precise—sometimes too precise—rules has an advantage in comparison with other projects. It may serve as a model and be a source of inspiration for new codifications of private law, and it offers an example of a codification, which may be chosen in international cases instead of national law. As is stated in recital 13 of the Rome I Regulation 593/2008, the parties to a contract may choose as the law governing their contract the provisions of a non-state organization. For this the Draft Code européen des contrats with its comprehensive and precise rules may be a good choice.
Giuseppe Gandolfi, ‘Per un codice europeo dei contratti’ (1991) 45 Riv Trim Dir & Proc Civ 781; Giuseppe Gandolfi, ‘Pour un code européen des contrats’  RTDCiv 707; Maria Letizia Ruffini-Gandolfi, ‘Una codificazione europea sui contratti—prospettive e problemi’ (1991) 89 I Riv Dir Comm 659; Peter Stein (ed), Incontro di studio su: Il futuro codice europeo dei contratti, Pavia, 20–21 ottobre 1990 (1993); Giuseppe Gandolfi, ‘Per la redazione di un “codice europeo dei contratti”’ (1995) 49 Riv Trim Dir & Proc Civ 1073; Peter Stein (ed), Convegni di studio per la redazione del progetto di un Codice europeo dei contratti, Pavia 1992–1994 (1996); Piero G Gaggero, ‘Il progetto di un Codice europeo dei contratti—l’attività del gruppo di lavoro pavese’ (1997) 43 II Riv Dir Civ 113; Akademie Europäischer Privatrechtswissenschaftler, ‘Europäisches Vertragsgesetzbuch. Vorentwurf’ (2002) 10 ZEuP 139–172, 365–394; Giuseppe Gandolfi (coordinator), Code européen des contrats, Codice europeo dei contratti, European Contract Code, Europäisches Vertragsgesetzbuch, Código europeo de contratos, Avant-projet, Livre premier (3rd edn, 2004); Gabriel García Cantero (ed), Anotaciones españolas al proyecto de Pavía (2005); Reiner Schulze and Reinhard Zimmermann (eds), Europäisches Privatrecht. Basistexte (3rd edn, 2005) no II 18, 469–532; Giuseppe Gandolfi (coordinator), Code européen des contrats, Codice europeo dei contratti, European Contract Code, Europäisches Vertragsgesetzbuch, Código europeo de contratos, Avant-projet, Livre deuxième/1 (2007); Giuseppe Gandolfi (coordinator), ‘I contratti bancari nel “Codice europeo dei contratti”’  Euro Dir Priv 291; Claus-Wilhelm Canaris, ‘L’inadempimento nel “Codice europeo dei contratti”’ (2008) 54 Riv Dir Civ 629. Code: <www. accademiagiusprivatisti europei.it>.