Promise, Unilateral

by Martin Illmer

1. Term and subject-matter

A fundamental question within the law of obligations is whether a unilateral promise binds the debtor or whether only an accepted promise, ie a contract, is capable of doing so. The issue is of practical relevance, particularly with respect to legal relationships that by their nature do not consist of mutual rights and obligations since they are not concerned with an exchange between the parties. Examples of such relationships include promises of a reward and gratuitous transactions such as donations, but the matter is also relevant for contracts in favour of a third party (from the perspective of the third party) and releases. The question is whether such relationships should be brought home under the legal concept of contract, or whether it is preferable to accept the unilaterally binding promises as a second way of establishing an obligation.

2. Historical development

a) Roman law

The early model of Roman contract law was the unilaterally binding contract of stipulatio. It consisted of a formal question by the creditor to the debtor, to do, to give or to perform something, and the formal affirmative answer taking the form of a promise. Although a promise was the core element of the stipulatio, this promise, on its own, did not give rise to an obligation of the debtor. Since the question of the creditor was posed prior to the affirmative promise, the promise had already been accepted by the creditor. The stipulatio, in other words, was a contract.

Beyond the stipulatio, whose oral form was increasingly replaced by writing, informal contracts became more and more important. Initially only contracts of sale, contracts for work, service contracts, lease, mandate and societas were recognized as formless consensual contracts. In the course of the subsequent development, the principle of ex nudo pacto non oritur actio was increasingly overcome. The dividing line between contractus (enforceable) and pactum nudum (initially not enforceable) became blurred and was ultimately no longer of relevance. Dispensing with formal requirements for the validity and enforceability of a contract, consensus became the basic foundation of a contractual relationship and the concurrent rights and obligations.

As opposed to the stipulatio and consensual contracts, the formless unilateral promise did not give rise to an obligation. There was one, somewhat marginal, exception: the pollicitatio as a unilateral promise addressed to a municipality for a performance for the public benefit. Ulpian (D. 50,12,3) differentiates between consensual contracts (pactum est duorum consensus atque conventio) and the one type of a unilateral promise binding the debtor regardless of an acceptance (pollicitatio vero offerentis solius promissum).

Hence, the concept of the contract as the predominant basis for undertaking a voluntary obligation had already been inherent in Roman law.

b) Late scholastic jurisprudence and natural law

The Spanish late scholastic jurisprudence of the 16th century aimed at developing a general system of the law of obligations based on the philosophical and theological theories of Aristotle and Thomas Aquinas and the rules on contract law to be found in the Roman Digest. Their starting point was the virtue of fidelity (fidelitas) concerning a promise that had been given. Breach of promise was regarded as a sin.

Hugo Grotius took the scholastic jurisprudence as his starting point but developed his own model of contractual obligations. He distinguished between the binding effect of a promise for the debtor on the one hand, and the obligation created by the promise towards the creditor on the other. Every promise produces a ‘self-binding’ effect which Grotius called pollicitatio (internal consensus). Only the act of making the promise vis-à-vis another person is intended to create an obligation toward that person. The promise is, in a way, transferred to the other person, in a similar way as the transfer of a thing. To create an obligation, however, this promise made to another person requires a causa forming the basis of the intention to transfer the promise. Grotius regarded as a valid causa only the expectation of a counter-performance (exchange contract) and certain instances of generosity. For an exchange contract to create mutual obligations there was not only a causa required but also, drawn from Roman law, an external consensus between the parties. This external consensus was constituted by an acceptatio (usually combined with the promise of a counter-performance). For a promise constituting an act of generosity, eg a donation, to give rise to an obligation, the debtor had to adhere to specific form requirements.

Hence, apart from some gratuitous acts, Grotius did not regard the unilateral promise as giving rise to an obligation. A contract consisting of reciprocal promises conditional upon each other was required. Jean Domat, Robert Joseph Pothier, Christian Thomasius, Samuel von Pufendorf and Christian Wolff took over that model of a ‘translative contract’ based on reciprocal promises requiring a dual (internal and external) consensus (Bruno Schmidlin: translativer Versprechensvertrag). It was only in the later period of natural law (Thomasius and Wolff constituting the beginnings) that the (external) consensus became the central basis of contractual rights and obligations.

3. Development in the national legal systems

a) Development on the Continent

During the Age of Enlightenment and with the emerging will theories, the (external) consensus was established as the sole basis of contractual rights and obligations. The reciprocal promises as the constituent elements of consensus, still visible in the construction of offer and acceptance, no longer played a central role. According to Friedrich Carl von Savigny, the basis of contractual obligations was not the transfer of promises but the consensus, the concurrence of wills brought about by the promises (Willensvereinigung, similarly Immanuel Kant: ‘Vertrag ist der Akt der vereinigten Willkür’). The promises are reduced to vehicles for reaching the consensus which is the sole source of contractual rights and obligations. The pandectists (Pandektensystem) took over that model of contract and refined it further (Bernhard Windscheid: ‘Der Vertrag ist nicht nur Willensübereinstimmung, sondern Willensvereinigung’).

The codifications of the late 19th century, particularly the German Bürgerliches Gesetzbuch (BGB), the Swiss Code of Obligations (OR), and later also the Dutch Burgerlijk Wetboek (BW), adopted the pandectist concept of contract (see Art 1 OR, implicitly also § 311(1) BGB and the provisions on the formation of contract in §§ 145 ff BGB (contract (formation)); likewise implicitly Art 6:213 BW).

The earlier codifications, in particular Arts 1101 ff French Code civil (convention as external consensus and consentement de la partie qui s’oblige as internal consensus) and § 861 Austrian ABGB (promise to transfer a right and the acceptance by a counter-promise), still resemble the conception of natural law in their wording and systematic structure. Case law and doctrine, however, soon abandoned the old concept and equally regarded the external consensus as the constituent element of contractual rights and obligations. The Italian Codice civile was even amended accordingly so as to represent the new concept (Art 1321, 1325 no 1: accordo delle partie). Since the new concept, based solely on the external consensus of the parties, had abandoned the model of ‘transferring’ promises, it no longer required a causa. The concurrence of wills of the parties was a sufficient basis for mutual rights and obligations to come into existence. Consequently, the requirement of a causa was abandoned by many private law systems. In French law, however, adhering to Pothier in that regard, the doctrine of cause is still part of the law of contractual obligations (see Art 1131 Code civil; see also Arts 1343, 1418 Codice civile and Art 1261 Spanish Código civil), in addition to the concept of contract by consensus (Arts 1101, 1108 ff Code civil) but virtually any motive is recognized as a valid cause, so that the requirement now rather serves as a conglomerate of reasons for the invalidity of a contract.

Under both models of contract, there was no room for unilaterally binding promises. Consequently, even the early codifications, eg the Codex Maximilianeus Bavaricus Civilis (1756) and the Allgemeines Landrecht für die Preußischen Staaten (ALR) (1794), stated explicitly that a unilateral promise is not binding, ie does not give rise to an obligation. This is still, essentially, the situation today. Apart from Scottish private law and some Scandinavian legal systems (see c) below), the European legal systems do not recognize unilateral promises as the basis for an obligation. Even in the course of the reform of the Dutch Burgerlijk Wetboek (BW) in the 1990s, the concept of a unilaterally binding promise was rejected. Gratuitous acts, particularly donations, taking the form of a unilateral promise were squeezed into the concept of contract. To give rise to an obligation on the part of the donor, an acceptance by the donee is required (cf § 516(2) BGB; Art 932 Code civil; Art 7:175 BW, operating with a fictitious acceptance in the case of contracts in favour of a third party). However, the form requirement was retained in most legal systems in order to protect the donor (see § 518 BGB; Art 931 Code civil; but not in the BW).

Nonetheless, the exclusive emphasis on contract did not remain uncontested. In Germany, Heinrich Siegel argued strongly in favour of unilaterally binding promises as a second basis for creating obligations. Hence, during the preparatory stages of the BGB, Franz Philipp von Kübel, the draftsman for the law of obligations, envisaged unilaterally binding promises requiring no acceptance. He only withdrew this proposition following the discussions in the First Commission and established the concept of contract as the sole basis for contractual obligations in his second draft, subject to very limited exceptions: promises of a reward, contracts in favour of a third party and bearer instruments. But even after the BGB had entered into force, Philipp Heck strongly criticized the restrictive attitude vis-à-vis unilateral promises in the 1920s.

b) Development in the English common law

Until the 19th century, the English law of contract was built around the concept of promise. Among writs of the common law, the writ of assumpsit was the predominant action for the law of contract. It required a promise, consideration and a breach of the promise. The writ of covenant was only admissible in relation to promises under seal, ie promises made under special formal requirements, initially under oath. Promises under seal, in turn, did not require consideration; rather, they could be unilaterally binding (gratuitous transactions).

The treatise writers of the 19th century, particularly John Joseph Powell, Joseph Chitty, Frederick Pollock and William Anson, received much of the Roman law of obligations, as it had been systematized by Grotius, Pufendorf, Domat and Pothier. Even the common law courts referred to these continental writers from time to time (Cox v Troy (1822) 5 B & Ald 474). As a result, the will theories ultimately also prevailed in England, and the unilaterally binding promise was replaced by the bilateral concept of contract based on consensus. The reciprocal promises taking the form of offer and acceptance were regarded as the constituent, but—on their own—non-binding, elements for the formation of contract (see Adams v Lindsell (1818) 1 B & Ald 681 (KB) and Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 (CA)). The offer was a unilateral promise, but it required acceptance to give rise to a contractual obligation.

The element of consideration (indicia of seriousness), similar to that of cause in French law, does not fit into the concept of a contract law based on consensus. Although consideration will regularly coincide with acceptance, both elements are systematically different. Systematically, consideration relates to the concept of promise, while acceptance is the necessary corollary to the offer in order to establish consensus. It does not come as a surprise that the requirement of consideration is nowadays hardly more than an empty shell. Under an exchange contract, the reciprocal promises are regarded as consideration for each other. Unilateral acts, eg a donation, do not give rise to a contractual obligation unless they are made in a deed, but in practice the requirement of consideration is watered down considerably by allowing nominal consideration.

c) The development in Scotland and the Scandinavian countries

Under Scottish private law, the unilateral promise is recognized as an alternative to a contract to create a voluntary obligation. This dualism dates back to the Institutions of the Law of Scotland by James Dalrymple, Viscount Stair. Stair drew a threefold distinction between an offer as a promise conditional upon acceptance by the creditor, a pollicitatio as a promise conditional upon the performance of a specific act (this covers, in particular, public offers for a reward) and a promise as the unconditional, unilaterally binding promise.

In the Scandinavian private law systems, promise is still the basis of a contractual obligation under the løfte theory. A unilateral promise creates an unconditional obligation (enforceable regardless of acceptance) towards the creditor, eg in case of donation and public offers for a reward. In exchange relationships the promise is conditional upon a promise of a counter-performance by the other party. The reciprocal promises creating a contract are called offer and acceptance. Reciprocal promises are therefore the basis of the parties’ obligation even in exchange relationships.

4. Promise of a reward

Due to the rise of the concept of voluntary obligations having to be based on consensus, it became difficult, in most legal systems, to explain the obligatory effect of unilateral promises. While donation was regarded as a contract in most European private law systems, promises of a reward are treated differently throughout Europe.

Under German and Austrian law the concept of a unilaterally binding promise prevailed under the Pollizitationstheorie as an exception to the rule requiring consensus (§ 657 BGB and § 860, 1 ABGB, but also in effect Art 6:120 Burgerlijk Wetboek (BW), Art 1989 Codice civile and Spanish as well as Danish law). The right to the reward is conditional upon the performance of the act for which the reward has been promised. An acceptance of the promise of the reward is not required. Hence, the promise is binding even if the act was performed without knowledge of the promise of reward. Contrary to the offer that is intended to lead to a contract (formation of contract), the unilateral promise of a reward may be revoked until the act for which the reward is offered has been performed (§ 658 BGB; § 860a ABGB). Like the promise of a reward, the promise of a prize under § 661a BGB and § 860, 2 ABGB is also a unilaterally binding promise.

In French law, promises for a reward are not regarded as unilaterally binding promises but squeezed into the concept of a contract. The promise of the reward is an offer ad incertas personas requiring an acceptance by performing the respective act in order to create a right to the reward. The person suing for the reward thus had to be aware of the promise when performing the act. With regard to promises of a prize French case law and doctrine are not yet settled and sometimes refer to a unilateral promise, sometimes to the law of contract, quasi-contract or even quasi-delict.

In English law, the problem how to classify promises of a reward arose in the late 19th century in the famous case of Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 (CA). The claimant had performed the act for which the reward had been promised and brought a claim for the reward. Under the writ of assumpsit the claimant would have succeeded (consideration at the time of the promise was furnished by the future performance of the act for which the reward had been promised). In order to adhere to the concept of contract, the Court of Appeal invented the concept of a unilateral contract (instead of a unilateral promise). The offer (ad incertas personas) was seen in the promise of the reward while the performance of the act for which the reward had been promised was regarded as sufficient to constitute an acceptance although it had not been communicated to the offeror. This construction has little to do with a contract as a manifestation of concurrent wills establishing consensus; in fact, the parties to the alleged contract had never communicated or been otherwise in contact. Rather, this construction forces a unilateral act under a bilateral concept.

In Scottish law, following Stair, the courts regarded a promise of reward as a unilaterally binding promise, conditional only upon performance of the act for which the reward had been promised. Following the English Court of Appeal’s judgment in Carlill, however, the concept of a unilateral contract also gained some ground in Scottish law.

5. Dualism in European private law

In contrast to the national systems of contract law, European private law seems to follow a dual track with contract and unilateral promise as two parallel concepts for constituting a voluntary obligation. While contract, of course, is still the predominant basis for such obligations (see Art 2:101 PECL, Art 4:101 ACQP, Art II.-4:101 DCFR), the unilaterally binding promise is accepted as an alternative basis in Art 2:107 PECL, taken over by Art 4:107(1) ACQP. The Draft Common Frame of Reference (DCFR) accepts the concept of a unilaterally binding promise in its Arts II.-4:301 to 4:303 under the broad category of unilateral (or: other) juridical acts. In contrast, the UNIDROIT Principles of International Commercial Contracts (PICC) require a contract to establish voluntary obligations (Art 3.2). According to PECL, ACQP and DCFR a unilateral promise, in order to be binding, requires the intention of the debtor to create legal relations. Such intention is drawn from the wording of the promise and the circumstances under which the promise was made. Article 4:107(2) ACQP provides for the protective mechanisms of contract law to apply equally in cases of unilateral promises (this probably refers particularly to rights of withdrawal and other protective mechanisms in favour of consumers). The PECL solve this issue, which appears to be rather rare in practice, by incorporating the unilateral promise into a very wide understanding of the concept of contract.

Neither the PECL, nor the ACQP, nor the DCFR deal with promises of a reward. While an obligation of the debtor may be established by reference to the provisions on unilateral promises, rules on the aspects dealt with by §§ 659 ff German BGB and respective provisions in other codifications are lacking.

With regard to the special case of a guarantee under Art 6 of the Consumer Sales Directive (Dir 1999/44) and its national implementations, it is contested whether the guarantee is a unilaterally binding promise or a contract requiring acceptance. The ECJ has not yet had to determine the issue. The national legal systems usually construe the guarantee as a contract since this understanding fits better into their systematic design.

Literature

Heinrich Siegel, Das Versprechen als Verpflichtungsgrund im heutigen Recht (1873); Klaus Wennberg, Die skandinavische Löftetheorie (1966); Arthur T von Mehren, ‘The Formation of Contracts’ in IECL VII/1 (1991) ch 9; James Gordley, Philosophical Origins of Modern Contract Doctrine (1991) 71 ff; Reinhard Zimmermann, The Law of Obligations (1996) ch 18 (in particular 572 ff); Reinhard Zimmermann and Phillip Hellwege, ‘Belohnungsversprechen: “pollicitatio”, “promise” oder “offer”?‘ [1998] Zeitschrift für Rechtsvergleichung, Internationales Privatrecht und Europarecht 133; Bruno Schmidlin, ‘Die beiden Vertragsmodelle des europäischen Zivilrechts: Das naturrrechtliche Modell der Versprechensübertragung und das pandektistische Modell der vereinigten Willenserklärungen’ in Reinhard Zimmermann, Rolf Knütel and Jens Peter Meincke (eds), Rechtsgeschichte und Privatrechtsdogmatik (1999) 187; James Gordley (ed), The Enforceability of Promises in European Contract Law (2001); Reinhard Zimmermann, ‘Vertrag und Versprechen’ in Festschrift Andreas Heldrich (2005) 467; Caroline Cauffman, De verbindende eenzijdige belofte (2005); Jens Kleinschmidt, ‘Unilaterial contract und einseitiges Versprechen’ [2007] Juristische Ausbildung 249.