Mora Creditoris

From Max-EuP 2012

by Martin Schmidt-Kessel

1. Subject and function of mora creditoris; terminology

Many continental European legal systems regard mora creditoris (default on the part of the creditor) as involving an obstruction to performance caused by the creditor. It is thus conceived as a type of breach of contract providing rules on how the creditor should behave and the remedies to be awarded to the debtor in the event of the creditor infringing those rules.

The functions underpinning the concept of mora creditoris can be divided into two groups. On the one hand the debtor is to be protected against the imposition of liability for non-performance which has occurred as a result of the creditor’s lack of cooperation, as well as against additional costs of performance (performance and its modalities). On the other hand, these rules allow for the enforcement of the right to claim the counter-performance, irrespective of the performance of the debtor, by overcoming the defences based on the synallagma. Hence, mora creditoris is considerably more important in synallagmatic contracts than in transactions under which only one party is obliged to render performance. A special interest of the debtor in rendering his performance is usually not protected (neither by means of mora creditoris nor by any other means), but the parties may agree otherwise.

It is notable, and from a comparative law perspective far from self-evident, that the creditor’s misconduct is dealt with by a separate set of legal rules. The most important reason for the existence of mora creditoris as a separate concept within the context of the rules on non-performance lies in the fact that the usual remedies for non-performance (especially specific performance, termination of contract and damages) cannot normally be applied to the misconduct of the creditor since they serve to protect the reasonable expectations of the creditor under the contract only to a limited extent. Apart from this, there is also, probably, the historically perceived need to mirror the legal concept of mora debitoris (default on the part of the debtor).

More often than not mora creditoris coincides with a breach of the obligation to render counter-performance, which, as a rule, is the obligation to pay the price. The interplay between these sets of rules—non-performance and mora creditoris—is regularly left open as the ensuing remedies are not incompatible.

There is no uniform definition of the legal construct of mora creditoris. Owing to the standard case provided for by law, ie the non-acceptance of the performance owed under a contract of sale, it is mostly called Annahmeverzug (delay in receiving performance) in German-speaking areas. However, the terms mora creditoris or mora credendi, schuldeiserverzuim or Gläubigerverzug, focussing on the creditor, reflect more accurately the broader scope of application of those rules. A more modern conceptualization, inspired by the prevailing remedy-oriented approach which is based, in turn, on a uniform notion of non-performance, would use a more general notion such as ‘creditor’s misconduct’ rather than emphasize the delay/mora/Verzug-aspect. However, such re-conceptualization has not yet taken root.

2. Tendencies in legal development

Mora creditoris in its modern manifestation in continental European legal systems is based on developments in the 19th century; in many of those systems it had, until then, been a familiar feature. The Roman sources (Roman law) do not contain a systematic concept of mora creditoris but solely refer to consequences ensuing from a lack of cooperation by the creditor. Subsequent developments are probably mainly based on the perceived need to mirror mora debitoris with a corresponding legal construct.

Mora creditoris in its modern form with its refusal to recognize a duty, on the part of the creditor, to cooperate and hence the absence of a breach of such duty resulting from a lack of cooperation, can be traced back to Josef Kohler. The main arguments against imposing a duty to cooperate are the presumed absence of any willingness on the part of the creditor to subject himself to such a duty as well as the fact that contracts can be terminated under Art 1794 French Code civil, in the historical point of departure for the customer’s rights freely to terminate a contract for work and a contract for services.

Kohler’s suggestions were first integrated into the German Civil Code (§§ 293–296 Bürgerliches Gesetzbuch (BGB); but see § 433(2) where the basis is subjected to a duty to receive the object of the sale) and were thereafter received by the other German language legal systems as well as the Netherlands (Arts 6:58-73 Burgerlijk Wetboek (BW); Arts 91–96 Swiss OR; in Austria the respective rules were developed without basis in the text of the ABGB). The adoption of these principles continued apace in the first half of the 20th century with Spain and Portugal, Italy and Greece as well as many countries in eastern Europe (cf Arts 1206–1217 Codice civile; Arts 813–816 Portuguese Código civil; Arts 349–360 Greek Civil Code; §§ 119–126 Estonian Law of Obligations Act) following suit. Even in Belgium this legal concept is widely accepted today in spite of not being set out in the civil code. France, the common law jurisdictions and Scotland (Scottish private law) have not, however, embraced it.

The result of this fairly extensive adoption of mora creditoris is that there are only a few functional differences in the applicable rules: A debtor may everywhere defend himself by pointing to the creditor’s misconduct. Furthermore, every European jurisdiction recognizes rights to deposit, or to store, or to sell the goods in question. However, the borderline between the right to resell as a means of self-help and covering transaction is not always clearly drawn and the scope of application of the rights to deposit, or to store, differ considerably in respect of what objects may be deposited or stored.

A great functional divergence exists with respect to the enforcement of the counter-performance: mora creditoris overrides the synallagma and allows the debtor to enforce his right to receive counter-performance. In most of the jurisdictions lacking the doctrine of mora creditoris—eg in England—the debtor’s interest in receiving counter-performance is only enforceable by means of damages which, however, is disadvantageous for the debtor because of the burden of proof concerning the extent of damages.

Mora creditoris does not fit into the modern structure of the remedy-based approach to non-performance. However, the substantive questions involved can easily be integrated into this modern structure: a general defence such as Art 80 CISG or Art III.-3:101(3) DCFR is sufficient to protect the debtor and the general liability for damages for non-performance is able to obviate any prejudice ensuing from lack of cooperation by the creditor. Deposit and the right to sell need to be regulated separately because of the interferences in rights in rem often connected with them.

Finally, one should think about extending the right freely to terminate a contract (eg Art 1794 French Code civil; § 649 BGB; IV.C.-2:111 DCFR) to all creditors; the creditor could thereby shirk his duty concerning cooperation in the fulfilment of the contract. At the same time, the debtor’s right to counter-performance would be protected as far as is legitimate by deducting from it savings in costs due to the debtor’s release from performance, as well as remunerations earned instead.

3. Rules in detail

a) Expectations concerning the creditor

The normal expectation with regard to the creditor is that he is to accept the duly offered performance of the debtor. The precondition for this expectation, which is mainly geared to sales contracts, is the offer in its various manifestations. It is usually the contract that determines in which way the offer has to be made: is it sufficient to make an oral offer, do the goods that have been sold have to be brought to the creditor, etc? All codifications contain rules perpetuating these classical archetypes of offers.

However, mora creditoris in its modern form has to cover all expectations concerning cooperation of the creditor beyond merely accepting the goods. The focus on outdated standardized types of offer does not, however, fit the comprehensive approach. The essential precondition for mora creditoris is rather that the debtor has to advance the fulfilment of the contract to the point where cooperation of the creditor becomes necessary. Such cooperation can be expected of the creditor at least in cases where the further fulfilment of the contract would otherwise be impossible. On the other hand, the creditor has to refrain from obstructing performance. Further expectations concerning the creditor’s cooperation can arise from the general mechanisms of supplementary interpretation (or: implying terms).

For the doctrinal classification of the cooperation expectations the notion of Obliegenheit has been widely recognized which differs from the notion of duty in the sense of the general rules on non-performance. Obliegenheiten only have a protection purpose in that their infringement does not entail the normal consequences resulting from a breach of duty but only certain consequences, disadvantageous for the party in breach, which serve to protect the reasonable expectations of the other party (eg that he may raise a defence against a claim to perform, that he receives reimbursement for his costs, etc).

Whether the creditor can exonerate himself in case of a breach of cooperation expectancies is questionable. One rather conceptual argument advanced is that without a duty in the technical sense there can be no fault and therefore there can be no defence of lack of fault; however, no substantial ground for imposing strict liability on the creditor can be derived from this reasoning. One will rather have to consider expanding certain already existing cases of exoneration (especially the unexpected offer) to a general concept. But the doctrinal ground work in that respect is still lacking.

b) Defences on the part of the debtor

A simple lack of cooperation by the creditor generally does not absolve the debtor from his duties. However, a different result may ensue if an enduring frustration is the consequence of the failure to cooperate. Especially in contracts for the performance of continuing obligations, this may be due to lapse of time alone. Additionally, in a number of jurisdictions, the creditor who fails to cooperate is burdened with the risk that the object of the performance is subsequently destroyed.

Practically more important are a number of possibilities available to the debtor and absolving himself from his duty to render performance. They are often classified as substitutes for performance. The defence of abandonment, known to the historical sources of Roman law, is of hardly any relevance today. Rights to sell, to deposit, or to store are far more important. Rights to sell are construed as imparting an authorization to sell for the creditor’s account. They are of considerable significance where the debtor—eg under a contract of transportation—is prevented from obtaining a right to conclude a cover transaction. The rights to deposit, or to store diverge considerably in terms of both their conditions and effects; everywhere, however, they grant the debtor a defence. A right to terminate the contract solely on the grounds of the creditor’s lack of cooperation, is not, however, accorded to the debtor in many legal systems. However, in most cases the duty to render counter-performance will be infringed which will, in turn, create a right to terminate so that there is effectively not much of a difference.

Additionally, some rights of the creditor are suspended on the grounds of lack of cooperation: Usually enforcement of the claim for performance by way of judicial execution and partly even the court judgment ordering specific performance are precluded for the duration of the creditor’s failure to cooperate. Mora debitoris and rights under a contractual penalty clause are also excluded. The creditor will normally also not be able to terminate the contract if the debtor’s failure to perform has been caused by the creditor; this latter rule, however, is rarely subject to express statutory regulation and is partly based on the general legal principle of tu quoque.

c) Rights of the debtor

Enforcement of cooperation in kind is excluded under the concept of mora creditoris. That is one of its key features. However, this does not necessarily hinder enforcement in kind when a true duty in the technical sense exists. Thus, the debtor will generally not have a legitimate interest in such enforcement.

Additionally, mora creditoris allows for enforcement of the right to counter-performance. More particularly various defences available to safeguard the synallagma can be overcome by means of mora creditoris. In most legal systems mora creditoris already excludes the right to withhold counter-performance (exceptio non adimpleti contractus); only German law moves this exclusion to the rules on judicial execution, which in most cases leads to the same result. Duties to render advance performance, however, are generally not overcome by mora creditoris itself; in these cases the legal systems partly provide for other legal instruments. Transfer of the risk concerning counter-performance (risk, transfer of), on the other hand, is one of the typical legal consequences of mora creditoris, even though it is not of great practical significance.

Because the conduct that is expected from the creditor is not regarded as giving rise to a duty, the debtor usually cannot claim damages for non-performance. Existing claims do, however, allow for a compensation of possible additional costs. Winding up the entire contract by way of damages is only possible for the debtor if the creditor breaches the duty to counter-perform. But this claim would technically not be based on mora creditoris.

4. Regulatory approaches under Union law

Union law rarely covers mora creditoris or its functional equivalents. The Late Payment Directive (Dir 2000/35) contains an exclusion of the consequences of delay in cases where the delay in payment was caused by the creditor. The Directive on Package Travel (Dir 90/314) contains similar exemptions. Practical cases can probably be solved with reference to the prohibition of abuse of rights in Union law, eg deferral of the passing of the risk under the Consumer Sales Directive (Dir 1999/44), which is now explicitly envisaged in Art 23(2) Proposal for a Directive on Consumer Rights (consumers and consumer protection law).

Whereas these regulatory approaches essentially concern the defences accorded to the debtor, no provision—apart from risk rule just mentioned can be found protecting the debtor’s interest in counter-performance. Given the diverging views on the enforceability of the claim for counter-performance, this is not particularly surprising.

5. Structures of regulation in uniform law

Uniform law does not recognize mora creditoris as a legal concept; however, it does contain several rules which serve as functional equivalents. In particular, Art 80 CISG (sale of goods, international (uniform law)) contains a blanket clause protecting the debtor. The possible effects of this clause are still uncertain. Moreover, Arts 85–88 CISG regulate the standard of diligence concerning the preservation of the goods which are not accepted as well as the right to deposit or to sell them. Article 69 CISG governs the passing of risk (risk, transfer of) when the goods are not taken over in time.

Lack of clarity persists concerning enforceability of the counter-performance. Sometimes it is argued that Art 28 CISG is also applicable. However, this would mean that the divergences in the national legal systems would find this reflection in the Convention. A contrasting view therefore argues that Art 28 CISG is not applicable to the right to payment and suggests a solution based on the Convention itself and guided by the rules on mora creditoris.

6. Projects on unification

The concept of the Gandolfi-group (Code Européen des Contrats (Avant-Projet)) is the only one of the European projects on the unification of contract law which expressly contains rules concerning mora creditoris. The Principles of European Contract Law (PECL) and the Draft Common Frame of Reference (DCFR) on the other hand—like the CISG—contain various elements which are typically connected to the concept of mora creditoris, eg the blanket clause concerning the debtor’s defence, Arts 8:101(3) PECL and III.-3:101(3) DCFR, and the rules on deposit and self-help sale, Arts 7:109, 7:110 PECL and III.-2:111, III.-2:112 DCFR. The DCFR also contains a provision concerning the consequences for the transfer of risk in Arts IV.A-5:103(2), IV.A.-5:201 DCFR as well as the debtor’s right freely to terminate a service contract in Art IV.C.-2:111 DCFR.

Literature

Josef Kohler, ‘Annahme und Annahmeverzug’ (1879) 17 Jherings Jahrbücher für die Dogmatik des heutigen römischen und deutschen Privatrechts 261; Josef Kohler, ‘Der Gläubigerverzug’ (1897) 13 Archiv des Bürgerlichen Rechts 149; Matthias E Storme, De invloed van de goede trouw op de kontraktuele schuldvorderingen: een onderzoek betreffende rechtsgrondslag, tekortkoming en rechtsverwerking bij overeenkomsten, Story-Scientia (1990); Martin Schmidt-Kessel, ‘Rechtsmißbrauch im Gemeinschaftsprivatrecht’ [2000] Jahrbuch Junger Zivilrechtswissenschaftler 61; Antoni Vaquer Aloy, Tender of Performance, Mora Creditoris and the (Common?) Principles of European Contract Law (2002), 83 ff; Reinhard Zimmermann, The Law of Obligations (1996) 817 ff.

Retrieved from Mora Creditoris – Max-EuP 2012 on 22 May 2022.

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