Common Frame of Reference (CFR)
European contract law is generally regarded as being in an unsatisfactory state. It essentially consists of a ragtag bunch of poorly coordinated directives, with a clear focus on consumer contract law (consumers and consumer protection law). Simply revising the consumer acquis would offer, at best, a partial solution, for that would leave the central question of the relationship between consumer contract law and general contract law unresolved. The consumer acquis of the European Union could not, on its own, support a system of European contract law, as the recent work on a ‘restatement’ of the consumer acquis by the Research Group on the Existing EC Private Law (Acquis Group) demonstrates (Acquis Principles). For this reason, a codification of European contract law as a whole is sometimes thought to be desirable (European Civil Code). Since its first resolution on the subject in 1989, the European Parliament has been one of the major proponents of this view. However, such an enterprise is not at present practically feasible and it also raises problems of competence on the part of the European Union.
In view of this, the idea of an ‘optional instrument’ has been broached, ie of another contract law regime, in addition to the approximately 30 or so regimes already existing in Europe, which parties may choose to govern their contract. Since 2003, when it first appeared in a Communication from the European Commission to the European Parliament and the Council (Council and the European Council) (A More Coherent European Contract Law: An Action Plan, COM(2003) 68 final), the enigmatic concept of a Common Frame of Reference (CFR) has increasingly assumed centre stage and now dominates the discussion. It may in fact serve as the basis for such an ‘optional instrument’. For the preparation of this CFR, a number of already existing international groups of academics were brought together to form a Joint Network on European Private Law (CoPECL network) in 2005. This project was financed under the auspices of the European Union’s Sixth Framework Programme for Research and Technological Development. Within that network, the Study Group on a European Civil Code and the Acquis Group have played the leading roles. As they put it themselves, they form (together, for the relevant part, with the Insurance Contract Group) ‘the so-called “drafting teams” of the CoPECL network’. The Draft Common Frame of Reference (DCFR), published in an Interim Outline Edition in February 2008, in an Outline Edition in February 2009, and in its Full Edition in October 2009, is the result of this preparatory work.
Formally, the DCFR consists of three parts. In the centre, under the title ‘Model Rules’, is a draft for a European Civil Code, which goes far beyond contract law and encompasses central parts of patrimonial law. It is supplemented by a catalogue of more than 150 definitions and a discursive section devoted to the DCFR’s underlying principles: freedom, security, justice, and efficiency. Henceforth, in this essay, DCFR designates the centrally important draft code. It consists of 10 books.
The somewhat heterogeneous Book I (general provisions) contains only 10 rules. They cover the field of application, and the interpretation, of the DCFR as well as computation of time and notices. Apart from that, a number of terms are specified (including good faith and fair dealing, reasonableness, consumer, business) and there is a reference to the list of definitions (which apply ‘unless the context otherwise requires’) in the annex.
Books II and III contain what would be designated in Germany as the doctrine of legal acts (juridical act), and the general law of obligations. Thus, one finds in Book II rules on formation of contract (contract (formation)), representation, validity (especially: defects of consent, illegality of contracts), interpretation of contracts, and on the content and effect of contracts. Book III, in contrast, deals with performance (performance and its substitutes), remedies for non-performance, plurality of creditors and plurality of debtors (solidary obligations), transfer of rights and obligations (assignment, assumption of debt and transfer of contract), set-off and prescription. Analytically, this subdivision of material is premised upon two conceptual categories: ‘contracts and other juridical acts’ and ‘obligations and corresponding rights’. An obligation is defined as ‘a duty to perform which one party to a legal relationship … owes to another party’; the definition, therefore, encompasses both contractual and non-contractual obligations. Both Books II and III begin with a general part containing definitions and fundamental principles (party autonomy (freedom of contract), form (formal requirements), |good faith and fair dealing), but also a potpourri of rules addressing specific legal issues that could not, apparently, be adequately placed elsewhere.
Book IV is dedicated to specific contracts and comprises eight parts: sale, lease of goods, service contracts other than employment, mandate, commercial agency, franchise and distribution contracts (franchising; sales (forms of distribution)), loans, personal security (suretyship; guarantee) and gratuitous contracts (donation). In the preparation of the part on sales, the United Nations Sales Convention (sale of goods, international (uniform law)) and the Consumer Sales Directive (Dir 1999/44) (sale of consumer goods) have naturally played a significant role; in this respect the authors of the DCFR could draw upon established models as well as on an extensive comparative discussion dating back to Ernst Rabel’s famous monograph on the international sale of goods. The same is not true, or is only true to a very limited extent, for the other contract types that have been mentioned. The extent to which the DCFR is venturing into uncharted territory in the field of comparative law and legal harmonization becomes immediately apparent upon reviewing the structure of the rules on the provision of services. After a chapter on rules applying to service contracts in general (which is, in fact, preceded by another chapter with provisions of an even more general nature), the text contains particular chapters covering an array of ‘basic activities’: construction, processing, storage, design, information and advice, and (medical) treatment. For many of these particular types of (in the terminology of German law) contracts for services and contracts for work, we find no self-contained regulations within the existing European codifications.
Into this system of traditional private law rules, the ius novum of the acquis communitaire is inserted (sometimes in a generalized form): non-discrimination (discrimination), information obligations, unsolicited goods or services, rights of withdrawal (all in Book II), the rules on consumer goods guarantees (sale of consumer goods) and a variety of further consumer protection measures in sales law (Book IV A.) as well as a chapter containing special rules for personal security of consumers (Book IV G.). Special consumer protection rules, though not assembled in an independent chapter, are also found in Book IV B. on lease of goods.
Books V, VI and VII of the DCFR are concerned with non-contractual obligations: ‘benevolent intervention in another’s affairs’ (management of another’s affairs without a mandate (negotiorum gestio)), non-contractual liability arising out of damage caused to another (law of torts/delict; strict liability) and unjustified enrichment. Book VIII contains rules on acquisition and loss of ownership in movables (transfer of title (movable property)), Book IX on proprietary security in movable assets (security rights in movable assets) and Book X on trusts. All in all, the ambit of the DCFR can perhaps best be measured by looking at those areas which are expressly excluded (Art I.-1:101 (2)): the legal capacity of natural persons, wills and succession, family law, negotiable instruments, employment relationships, immovable property law and company law as well as procedure and enforcement.
a) DCFR and PECL
The DCFR contains eight different ‘masses’ of text. Books II and III are based on the Principles of European Contract Law (PECL) of the Lando-Commission which have, since their publication, begun to play an important role as a point of reference in comparative discussions on contract law. To some extent, however, the PECL have been revised by the Study Group in the course of the preparatory work towards the DCFR. Some chapters have merely been subjected to terminological adjustments or marginal changes, whereas other areas have been substantially revised. In some places, rules and ideas have been taken from the UNIDROIT Principles of International Commercial Contracts (PICC). In view of the fact that general contract law (together with the law of sales) has dominated both general comparative law discourse over the past decades and international discussions concerning legal harmonization, it is not surprising that Books II and III of the DCFR contain texts of considerable maturity. They build upon intensive scholarly work that had previously led not only to the PECL and the UNIDROIT PICC but also to the United Nations Sales Convention (sale of goods, international) (which itself has had a major impact on the PECL and the UNIDROIT PICC; Ole Lando therefore refers to a troika of instruments in international contract law). Yet, even here there are areas that have received very little attention in comparative discourse (eg plurality of debtors and creditors). In addition to this, the authors of the DCFR display a strong inclination towards dogmatization, evident, for instance, in the use of the systematic concept of a ‘juridical act’ (which in general comparative legal literature is regarded as a concept that is far too abstract). Moreover, Book III does not focus on contract law, but rather seeks to conceptualize a general law of obligations, thus also in this respect venturing beyond what is generally accepted in comparative legal discourse.
b) DCFR and the Study Group
The task of revising the PECL was undertaken by the Study Group, which considers itself to be the successor to the Lando-Commission despite a number of important differences in structure, aims and working method. The major task that the Study Group had set for itself, however, was the development of model rules similar to the PECL for other areas of patrimonial law. A number of individual volumes on a range of areas (sale, lease of goods, service contracts, commercial agency, franchising and distribution contracts, personal securities, and negotiorum gestio) have thus been published within the ‘Principles of European Law’ series, the structure of which largely corresponds with that of the PECL. These textual ‘masses’ have, in a revised form, been adopted in Books IV–X of the DCFR. For the remaining areas covered by Books IV–X, publications in the Principles of European Law series will presumably still follow. Despite the formal similarities with the PECL, the texts developed by the various Working Teams of the Study Group are rather different in character from the PECL (and also from one another). Whereas the PECL could claim, with some plausibility, merely to ‘restate’ the existing European law of contract, the Study Group has tackled areas where fundamental values, structures and concepts that are common to the European legal systems and teleologically satisfactory are either lacking entirely or as yet rather amorphous. The obstacles to acceptance of the Study Group’s work are therefore much greater than they were in the case of the Lando-Commission; it can only be considered as a first step on the way towards the formation of genuinely European model rules. Their pioneering character is also demonstrated by the fact that trusts and tort law are the only other areas for which comparable model rules had previously been developed by other international working teams. These are the Principles of European Tort Law and the Principles of European Trust Law (trusts).
c) DCFR and the Acquis Group
The Acquis Group’s main contribution to the DCFR is the development of a body of rules on the basis of the existing acquis communautaire (Acquis Principles). Conceptually, the Acquis Principles therefore constitute a complement to the PECL in which the acquis had remained largely unconsidered. The Acquis Principles have been incorporated in the DCFR, predominantly in a revised form. For this purpose, a Compilation and Redaction Team was formed at the beginning of 2006, with members drawn from the Study Group and the Acquis Group. It has tackled one of the great tasks of our time in the field of contract law: an attempt to integrate the acquis commun that has gradually evolved over many centuries of European legal history, and the acquis communautaire, relating primarily to consumer contract law. Yet, any more than superficial integration would have required a re-conceptualization of consumer protection law, which has neither been considered nor accomplished by either the Acquis Group or the Compilation and Redaction Team.
d) DCFR and France
The aforementioned CoPECL network, established for the drafting of the DCFR, also included the Association Henri Capitant des Amis de la Culture Juridique Française and the Société de Législation Comparée. A common working group of those two organizations published a volume identifying and discussing three ‘guiding principles’ (principes directeurs) of European contract law (liberté contractuelle, sincerité contractuelle, and loyauté contractuelle). This document provided the basis for the discursive section devoted to the DCFR’s underlying principles, published in front of the model rules in both the Outline Edition and the Full Edition (it had not been contained in the Interim Outline Edition). The French working group also produced a revised version of the PECL and published a comparative study on the terminology of European contract law. No account was taken, apparently, of either of these documents in the drafting of the DCFR.
The Common Frame of Reference project and the DCFR produced by the CoPECL network have been the object of intensive scholarly discussion since 2006. Severe criticism has been raised against the DCFR. The DCFR’s tendency to pave the way towards a massive erosion of private autonomy going far beyond the modern tendencies to ‘materialize’ contract law; the abundance of blanket provisions and open-ended legal concepts leading to a massive expansion of judicial discretion; the fact that the various textual ‘masses’ have not been sufficiently coordinated and that, particularly, the consumer acquis has not been successfully integrated into the rest of the text; the failure to undertake a fundamental revision of the consumer acquis; and the blurring of the boundary between textbook and legislation: these are among the matters that have caused concern. Even if this criticism was raised against the Interim Outline Edition, and even if the authors of the DCFR have made certain amendments, much of it remains valid for the appraisal of the DCFR’s Outline and Full Editions. Critical evaluation of those parts, which appeared for the first time in the Outline Edition (Books IV F. and H. as well as VIII–X), has not even started.
5. The future of the DCFR
It appears to be widely accepted today that the DCFR is overambitious in two respects. For on the one hand, it ventures far beyond contract law into largely uncharted territory. On the other hand, and related to this, it reconceptualizes general contract law under the auspices of a general law of obligations. In both respects, the DCFR does not correspond to what the European Commission was aiming at: a general contract law (including consumer contracts) and special rules concerning the law of sale. It is hardly surprising, therefore, that the Commission is keen to ‘recontractualize’ the DCFR. An ‘Expert Group’ was thus established in April 2010 and charged with selecting those parts of the DCFR ‘which [are] of direct relevance to contract law and to simplify, restructure, update and supplement the selected content’. The Expert Group was asked to work on an ‘as if’ basis, drafting a study that could be used in different scenarios.
The main scenarios available are a document that can be used as a ‘toolbox’ for future European legislation in the field of contract law, and a regulation setting up an optional instrument of European contract law and containing a set of rules that parties may choose to govern their transaction. Both scenarios feature among the seven policy options laid out in a green paper published by the Commission in July 2010. The green paper consultation closed on 31 January and yielded more than 300 responses. Most of them were in favour of the toolbox option. Nonetheless, the Commission seems to be determined to introduce an optional instrument. At the time of writing it seems likely that in autumn 2011 a Commission proposal for a regulation concerning an optional instrument will be published. This proposal will draw on the result of the work of the ‘Expert Group’ that was, in turn, published in May 2011 as a ‘feasibility study’ for a future instrument in European contract law. It is based, essentially, on the PECL and the DCFR without, however, covering ‘all issues which, at a practical level, are relevant in a contractual relationship in the internal market of the European Union’. Thus, for instance (unlike in the PECL and the DCFR) there are no rules on set-off, plurality of debtors and creditors, representation, and assignment. The draft prepared by the Expert Group covers business to consumer as well as business to business contracts.
At this stage, many questions are still open. Thus, the legal basis for the enactment of the optional instrument is unclear. So is its relationship to private international law. No solution is in sight for the problems arising from the great diversity of languages within the European Union for the application of a uniform contract law, and from the fact that the European courts are hardly adequately prepared for the challenge of ensuring a uniform application throughout Europe. Another problem arises from the fact that the European Commission had produced, in October 2008, a proposal for a Directive on Consumer Rights which is supposed to consolidate four of the existing directives in the field of consumer contract law into a single instrument. Remarkably, that document appears to have been drafted independently from, and uncoordinated with, the DCFR. It was so severely defective that it was rejected by just about every commentator who examined it. The full harmonization approach, pursued by it, was particularly severely criticized. In June 2011, after protracted negotiations, the European Parliament has adopted a text with a much reduced scope and ambition (first reading). The consumer contract law provisions contained in the draft of the Expert Group will still have to be adjusted to this proposal (assuming that it contains the final text). This will, hopefully, avoid contradictions and inconsistencies. What it will not achieve is what is long overdue but has not been done by the draftsmen of the Acquis Principles, of the DCFR, of the ‘feasibility study’, or of the proposal for a Directive on Consumer Rights: a revision of the consumer acquis that moves beyond tinkering with details and attemping to achieve a harmonization by means of generalization but that critically examines its intellectual consistency and rational justification as well as the viability of the concepts chosen, ideas pursued, and legal institutions established.
The contributions by Thomas Pfeiffer and Wolfgang Ernst to the congress of private law professors in Potsdam (2007) 207 AcP 227; Proceedings of the 4th European Jurists’ Forum, Section 1, ‘European Contract Law’ (2008), 1 (General Report 185 ff); Horst Eidenmüller, Florian Faust, Hans Christoph Grigoleit, Nils Jansen, Gerhard Wagner and Reinhard Zimmermann, ‘The Common Frame of Reference for European Private Law—Policy Choices and Codification Problems’ (2008) 28 Oxford J Legal Stud 659; Reiner Schulze, Christian von Bar and Hans Schulte-Nölke (eds), Der akademische Entwurf für einen Gemeinsamen Referenzrahmen: Kontroversen und Perspektiven (2008); Martin Schmidt-Kessel (ed), Der gemeinsame Referenzrahmen: Entstehung, Inhalte, Anwendung (2009); Guido Alpa, Giovanni Iudica, Ubaldo Perfetti and Paolo Zatti (eds), Il Draft Common Frame of Reference del diritto privato europeo (2009); Reinhard Zimmermann, ‘The Present State of European Private Law’ (2009) 57 Am J Comp L 479; Stefan Vogenauer, ‘Common Frame of Reference and UNIDROIT Principles of International Commercial Contracts: Coexistence, Competition or Overkill of Soft Law?’ (2010) 6 ERCL 143; Nils Jansen and Reinhard Zimmermann, ‘A European Civil Code in All But Name: Discussing the Nature and Purpose of the Draft Common Frame of Reference’ (2010) 69 Cambridge LJ 98; Max Planck Institute for Comparative and International Private Law, ‘Policy Options for Progress Towards a European Contract Law’ (2011) 75 RabelsZ 371; Nils Jansen and Reinhard Zimmermann, ‘Contract Formation and Mistake in European Contract Law: A Genetic Comparison of Transnational Model Rules’ (2011) 31 Oxford J Legal Stud, issue 4; Horst Eidenmüller, Florian Faust, Hans Christoph Grigoleit, Nils Jansen, Gerhard Wagner and Reinhard Zimmermann, Revision des Verbraucheracquis (2011).