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The two papers in Ch. 5 examine how lawyers and law professors, operating in private arenas, successfully revived a pre-modern legal system, the Lex Mercatoria – the international body of trade law derived from merchant practice. Shapiro’s paper, which was originally published in The State and Freedom of Contract (ed. Harry Scheiber, Stanford University Press) in 1998) first introduces the Lex Mercatoria (the law of merchants) in relation to freedom of contract and contract law, and then discusses globalizing tendencies in contract law, doctrine, and jurisprudence, before moving on to globalizing tendencies in contract practice, using the legal doctrine of conflict of laws as a baseline for measurement of globalization tendencies. Here, Lex Mercatoria (or general principles of law) often play a substantial part in the resolution of contract disputes, particularly where arbitration is involved. Shapiro goes on to deal with the unification of private law in the United States in the 1920s (the trans-state harmonization of contract law), which he uses as a benchmark to assess the massive post-Second World War movement to a global law of contract. Aspects addressed include the globalization of contracting practice and law, the American-style contract (in relation to franchising law and mineral (non-oil) development contracts), and developments in business organization and law institutions.

This chapter discusses Japanese law of obligations and contracts. Topics covered include general rules of law and obligations, the law of contract, and the management of another person's unjust affairs and unjust enrichment.

This chapter argues that the law of personal employment work contracts has developed in such a way and to such a point that it is extremely difficult to provide a clear and logical overall account of the law relating to the evolution, termination, and transformation of those contracts. The case law and legislation, upon which such an account would have to be based, have become intractably complex, to the point where it can be considered impossible to resolve all the intricacies, ambiguities, and inconsistencies to which they give rise. The first part of the chapter proposes a general theory of termination and transformation, which seeks to explain the causes of those difficulties, and presents a conceptual scheme which may help minimize them. The remainder of the chapter develops and applies the general theory in relation to the specific aspects of termination and transformation.

More than by any other component of the reform process, the face of the German Civil Code (BGB) has been changed by the incorporation of a number of special statutes aiming at the protection of consumers. The draftsmen of the new law have thus made an effort to streamline, or harmonise, general contract law and consumer contract law. While it had been on the initial reform agenda of 1978, it had no longer been part of the brief of the Commission charged with the reform of Germany's law of obligations. The incorporation into the BGB of the special legislation concerning consumer protection was not required by any fiat on the European level. The issue is very much on the agenda mapped out by the action plan for a more coherent European contract law and it also still has to be considered by the draftsmen of the Principles of European Contract Law who, while providing a blueprint for general contract law, have so far failed to take account of the acquis communautaire in the field of consumer contracts.

This chapter tries to determine whether English law is right to adopt an individualist attitude, or whether it should shift towards the German position, which is generally representative of most continental legal systems. It provides some background information on the ‘European’ principles of contract law, and then identifies the actual differences between ‘European’ and English laws. It also describes the provisions on mistake and non-disclosure of fact that are found in the Principles of European Contract Law (PECL). This chapter also discusses English and German cases related to the law on mistake and non-disclosure of fact.

This chapter examines a selection of other laws of contract, particularly models found in national systems that supposedly form the basis of the PECL provisions. It first studies the Commonwealth laws, where it identifies two cases that have deviated from the doctrine of unconscionability. The next section deals with European models, specifically Dutch, French, Scandinavian, and German laws. The laws of individual states in the U.S. are discussed in the final part of the chapter.

This chapter discusses suretyship contracts in Lithuanian banking practice. Topics covered include commercial suretyships and consumer suretyships, suretyships and indebtedness of individuals and families, unfair suretyships of non-professional guarantors, laws for surety protection, impact on the guarantor's position of changes in the debtor-creditor relationship, the most effective means of protection for non-professional sureties, and proposals to improve the protection of non-professional sureties.

So long as contracts are observed according to their terms there is little call for the law to intervene. Problems arise when a party fails to perform. This situation is known in both Scottish and South African law as ‘breach of contract’ although the term ‘non-performance’ is preferred by the Principles of European Contract Law. This chapter considers how the main problems thrown up by breach of contract have been solved in the two jurisdictions. In neither jurisdiction has the legislature provided much assistance. In both there has been a certain mixing of civil law and English law influences, combined, most importantly, with continuing attempts to make and keep the law functional and just. The solutions devised by the judges are compared with the quasi-legislative solutions of the Principles of European Contract Law.

Experts in contract law from different Member States have drafted two volumes of Principles of European Contract Law, which are based on ‘rules’ contained in the contract laws of the EU Member States. But contrary to the (unformulated) principles referred to in Article 288(2) EC, they are worded in very precise terms, and structured and numbered in the same way as articles are in a ‘civil code’. This chapter argues that the aforementioned Principles of European Law are rules, not principles. Moreover, taken together they form a fully fledged European Code of Contract Law — or, more appropriate, it would seem, a European Contract Law Act.

This chapter shows how the 17th and 18th centuries marked a period of consolidation of the law of contract, the fleshing out of the skeletal structure that had been locked in place at the end of the 16th century. The most important developments occurred in the Chancery, which had begun to operate along clearly defined, rule-based lines by the time of the Chancellorship of Nottingham (1673-81). The 18th century saw the first attempts to articulate a theory of contractual liability, largely based on the writings of non-lawyers, at least non-Common lawyers. Although these attempts were neither sophisticated nor successful, they did begin the work of accustoming English lawyers to the fact that there were not several sets of rules applicable to different forms of action in Common law and Chancery, but a single body of definable rules that could be called the ‘law of contract’.

Before the revision of Germany's law of obligations it had been, for a long time, a standard complaint that the rules concerning breach of contract were far too complex. Moreover, they were taken to be deficient in several important respects. They were based on a classification of various types of breach, that is, impossibility of performance, delay of performance, and defective performance, rather than structured according to the various remedies available. Central to the understanding of the system, so it was said, was a highly artificial concept of impossibility of pandectist vintage. Moreover, the German Civil Code was thought to be characterised by an axiomatic adherence to the outdated fault principle. This chapter discusses the development of German law and remedies for non-performance from the vantage point of the broader European debate that has led to the formulation of the Principles of European Contract Law.

This chapter aims to discover whether the present law of contract strikes the right balance between formal and substantive reasons. It attempts to answer the question of whether, in a wholly executory contract, should such a contract be binding, the only kind of damages that would be awarded would be damages for loss of expectations since, by hypothesis, there would be no reliance and no benefit which could form the basis of damages. The chapter also examines the extent of expectation damages that should be awarded in cases of executory contracts. Furthermore, this chapter also seeks to study various economic issues on contract law to determine its economic efficiency, as well as discover if economics provides a solid argument for the moral and legal rules underlying executory contracts.

The Principles of European Contract Law constitute the most advanced, and internationally most widely noted, project on the way towards a harmonisation of contract law in Europe. These Principles are designed to facilitate cross-border trade within Europe by making available a set of neutral rules, detached from the peculiarities of any national legal system, to which parties can subject their transactions. In a longer-term perspective, the Principles can be seen to provide a conceptual and systematic infrastructure for community legislation concerning contract law; at the same time, they can even be taken to constitute a first step on the way towards a European Civil Code. By intellectually relating the national laws and the Principles to each other, legal scholarship can create an awareness of the Principles as a model for legislative reform and as a guideline for judicial interpretation of the law. The present chapter on prescription law in Germany has been written in this spirit. Special prescription rules of very considerable practical significance are contained in sections 438, 634 a of the German Civil Code. They relate to claims arising from liability for non-conformity under contracts of sale or contracts for work.

This chapter examines the law of contract in France and discusses the milestone reform of French contract law. While this new legislation introduces a fresh equilibrium between the contracting parties and enhances accessibility and legal certainty in contract, it does not radically change the state of the law in this area. In addition, it does not strongly impact the traditional philosophical foundations of the law of contract. The reform, in short, looks more like a tidying up operation rather than a far-reaching transformation of the law. Therefore, the chapter argues that it is questionable whether the new law, which was also intended to increase France's attractiveness against the background of a world market dominated by the Common Law, will keep its promise.

This chapter provides an intellectual background to the freedom of contract issue in England in 1770. It suggests that the modern law of contract and its underlying principles appear to have had no relationship to the ideas which underlay the concept of social contract. It discusses several issues relevant to social contract. These include the notion of a contract as the creation of a voluntary agreement, the impact of the Revolution settlement of 1688 on political theories, and the cohesiveness of the governing class.

This chapter discusses the difficulty of choosing developments in the law of contract in the 20th century which are important enough to rank as ‘Landmarks’. It explains that the scope of the discussion is almost entirely restricted to developments in English law and to the analysis of primary sources (judicial decisions and legislation) as opposed to secondary literature. It also gives a brief account and evaluation of the project to codify the law of contract, which was initiated by the Law Commission in 1965, and of the reasons why, after considerable work on the project had been done, it was abandoned in 1973.

This chapter challenges the argument that one of Equity’s most distinctive doctrines, fiduciary law, must be fused with a common law doctrine—the law of contract. In particular, it highlights the disadvantages of transforming the equitable duty of loyalty into an ordinary contractual obligation. The chapter first considers the ‘contractarian’ interpretation of fiduciary law according to which fiduciary duties are no more than a species of contractual obligations before explaining why, in contrast with the contractarian argument, Equity was right in claiming that the fiduciary relationship was essentially different from contract. After making the case of why fiduciary law should be treated as a sui generis equitable doctrine, the chapter examines two features of equitable fiduciary law that will change dramatically if the fusion suggestion is adopted (the language in which it is set and the way into the relationship) and shows the adverse consequences of moving in that direction. It concludes with the contention that the concept of ‘conscience’ still has an active role to play in the legal reasoning about fiduciaries.

This chapter begins with a discussion of liability for wrongdoing, showing how it became focused on the causation of loss. This became the general central feature of the action of trespass, and it has remained the central feature of the English law of tort. The chapter then discusses Glavill and the law of debt and covenant and a law of contract.