Visiting Professor, University of Edinburgh
European Initiatives (CFR) and Reform of Civil Law in New Member States: Differences between the Draft Common Frame of Reference and the Principles of European Contract Law
The Draft Common Frame of Reference (DCFR) incorporates a revised and updated version of the Principles of European Contract Law (PECL). This was done with the permission of the Commission on European Contract Law (the Lando Commission), who created PECL1. The DCFR also includes a lot of new material. The purpose of this contribution is to explain why, and how, PECL has been changed. It will concentrate on changes of a general nature rather than specific changes in the content of particular articles, and it will concentrate on Books I to III of the DCFR because those are the books that overlap with PECL. Later books contain entirely new material. This will be mentioned but not explored in detail.
Nothing said here should be regarded as detracting in any way from the outstanding merits of PECL. It will be obvious to anyone who reads both texts that PECL was the indispensable basis for Books I to III of the DCFR. PECL is carried forward in these books, not only in substance but also in form. But time does not stand still, and inevitably there are some changes. There is a reason for every single change made to the PECL rules. There will not be space here to go through the articles one by one and comment on every slight drafting change. However, the reasons for major changes will be explained and the general factors that have resulted in many small changes will be mentioned.
The first version of the DCFR is in English, and so some of the following remarks will be of particular relevance for provisions drafted in English. Some may be of little relevance with respect to non-English versions. The fact that the DCFR will be translated into many languages has, however, been taken into account in its preparation. Following the example of PECL, it tries to avoid technical legal terms derived from one particular legal system and to prefer ordinary descriptive language that can be translated without the danger of using the wrong technical term or carrying unwanted baggage.
Virtually the whole of PECL is incorporated in Books I to III of the DCFR. Only seven articles from PECL have no equivalent in the DCFR.
Two general articles2 near the beginning of PECL are omitted. These articles attempted to regulate the way in which PECL might be used as an optional instrument, and the effect on national mandatory rules of an opt-in by contracting parties. These are not matters that can be regulated from within a soft-law instrument. They have to be regulated from outside. The inclusion of articles on these lines would have been particularly inappropriate in the DCFR, given that the question of its use as the basis for an official optional instrument is currently under debate.
Article 1:107 of PECL has also been omitted. This provided that these principles applied with appropriate modifications to agreements to modify or end a contract, to unilateral promises, and to other statements and conduct indicating intention. The reason for omitting the first part (agreements to modify or end a contract) is that such agreements would already be contracts under the definition of the word used in the DCFR3. The reason for omitting the second part is that the technique of applying contractual rules to unilateral juridical acts is not entirely satisfactory. The rules on interpretation, for example, are different because in the latter case there can be no reference to the common intention of the parties. It is not easy for the reader to know what appropriate modifications to make. The rules on formation also have to be different. The DCFR therefore deals specifically with unilateral juridical acts in many later articles. Any gaps would be filled by the application of the general rules on interpretation and development of the rules, which already provide in effect for application by analogy4.
The remaining four omitted articles5 are all in the chapter on the authority of agents and all deal with the topic of indirect representation. There will be indirect representation where A mandates B to do something for A in relation to a third party but in such a way as not to involve A in any direct legal relationship with the third party. For example, A mandates B to look for and buy, in B's own name, some rare object and agrees to buy it from B at the price B paid for it plus a commission. The material on this topic fitted rather uneasily in the chapter on the authority of agents. Its inclusion was criticised at a stakeholders' meeting, and, after further discussion and consideration, the co-ordinating committee of the Study Group on a European Civil Code6, at a meeting held in Tartu in December 2005, decided to delete it, at least from that chapter7. The internal relationship between the principal and the representative under such contracts is governed by the 'Part on Mandate' in Book IV, and some special rules on the transfer of ownership of property acquired or transferred by the representative will be included in a later book on the transfer of ownership in movables.
The DCFR includes not only the material from PECL but also model rules for particular contracts and contractual relationships. Already in the Interim Outline Edition there are model rules on sale of goods; lease of goods; services (including construction services, processing services, storage services, design services, information and advice services, and treatment services); mandate; commercial agency, franchise, and distributorship; and personal security. Model rules on loans and donations will be added later in 20088. This new material is potentially important in the European context. Some of these topics ought, in theory at least, to be among the first to be considered for uniform regulation at European level. Comprehensive uniform rules (as opposed to partial and fragmented rules) on the sale or lease of goods, and the provision of services, and on the establishment and regulation of marketing framework relationships, would seem, for example, to be rather appropriate for an internal market and pre-eminently the sort of thing that could be achieved only by action at European level.
The DCFR also already includes in the Interim Outline Edition model rules on benevolent intervention in another's affairs, unjustified enrichment, and non-contractual liability arising out of damage caused to another. Rules on trusts and proprietary securities will be added later on in 2008. The 'internal market' argument for uniform European rules concerning these topics is perhaps not so immediately apparent. And yet it can hardly be denied that there would be benefits to the European insurance industry in having uniform rules on non-contractual liability for damage, and that there would be a more level playing field in European commerce generally if there were uniform rules on proprietary securities and as to what could be done by the use of trusts. The rules on benevolent intervention and unjustified enrichment differ significantly from country to country at present (more significantly than the rules on contracts and on contractual rights and obligations). These branches of the law play a useful supplementary role in filling gaps and preventing injustice. It is clear that distortions could occur if other rules were uniform but these were not.
Thus, the most immediately obvious difference between the DCFR and PECL is that the DCFR includes a great deal of material on special contracts and other matters that is of great potential relevance for the development of European private law. This material takes account of, and sometimes follows quite closely, existing EU directives, but it has been drafted so as to fit well, at the technical level of drafting and terminology, with Books I to III of the DCFR.
Books II and III of the DCFR contain substantial blocks of rules derived from material provided by the European Research Group on Existing EC Private Law (the Acquis Group). There are rules on non-discrimination in the provision of goods and services available to the public9; on marketing and pre-contractual duties10; and on the right of withdrawal from certain contracts within a short 'cooling-off' period11. There are more extensive rules on unfair contract terms12.
One of the challenges in producing the DCFR was to merge the 'classical' contract law approach of PECL with the newer, more overtly functional and 'policy-based', approach of the acquis. Adjustments were necessary in both directions. For example, the Acquis Group's approach to 'writing' and 'signature' (designed to cater for the electronic age)13 has been adopted throughout the DCFR. The same applies to the Acquis Group's use of the term 'business' rather than 'professional'. These decisions in themselves account for a number of changes to the PECL rules. On the other hand, the rules provided by the Acquis Group often...