INTRODUCTION

Honore de Balzac proclaimed that to enter into a marriage contract was one of the holiest duties of a couple about to get married. In his novel Le contrat de mariage he describes the long and intricate negotiations that traditionally took place in France before marriage, not only in aristocratic but also in bourgeois families. Contracts with regard to matrimonial property are to date an integral part of most Continental European legal systems, as is the ensuing freedom of contract. In English common law, on the contrary, pre- or post-nuptial contracts were for a long time considered to violate public policy, and only recently have courts begun to accord them a role in the granting of financial relief upon divorce.

This controversy about party autonomy and its boundaries goes to the heart of marriage and family law: in family law, contracting can affect either the parentchild relationship, as do agreements on the exercise of parental responsibility, or affect affiliation or surrogacy agreements. Such contracts involve children as third parties, who are in particular need of the state's protection. Different questions generally arise when adults enter into agreements concerning their relationship: why and to what extent should they be free to determine the rights and obligations during the existence or upon the dissolution of their relationship? The degree to which couples may regulate their partnership by contract raises fundamental questions as to the role of marriage law in pluralistic societies. What is the state's role vis-a-vis increasingly diverse forms of partnerships and in view of a growing acceptance of different life styles and religious or ideological views? The answers to these questions vary: on the one hand, according to a postmodern view, we can dispense with marriage law completely and the regulation of intimate relationships should be left to private ordering. On the other hand, there is a marked tendency to create new types of partnerships in response to the increasing diversity of family life. In many Western countries, registered partnerships or civil unions provide new options for couples. In some parts of the US, state-sponsored alternative forms of marital agreement such as covenant marriages have been introduced. State regulation of de facto relationships or cohabitation has also increased, especially with regard to the provision of certain financial adjustments upon the dissolution of the partnership.

INTRODUCTION

European legislators have come up with different legal regimes to provide for situations in which a person – due to old age and/or disease – is unable to make decisions for him- or herself. One of these instruments is the living will, also known as an “advance decision” or an “advance directive” concerning medical care. This legal instrument has been constructed to ensure that a person's will concerning medical treatment is adhered to even at a time when the patient is unable to make the required decisions. This does not apply to elderly people only, but also to people with terminal illnesses and people who, for religious reasons, object to special medical treatments.

Providing health care directions for a future incapacity is a legal undertaking which stands at the threshold between many legal disciplines. The link to health law and the law dealing with incapacity is obvious. However, health care directions are also linked to criminal law when it comes to the question of differing between rightful medical treatment, to which the patient consented, and penalized treatment causing bodily harm or even homicide, where the patient did not consent. Here physicians need clear guidelines on the existence of a valid consent. Public law is also involved when it comes to the questions of how far the duty of a state with respect to the protection of life goes, and how far the selfdetermination of a patient reaches respectively.

This article will focus on the private law aspects of living wills as part of the law on incapacity. Before I go into the details of the German law on living wills, I would like to provide a short overview of the legal rights and interests concerned; followed by a detailed analysis of the preconditions and legal consequences of a living will as set out in the German Civil Code. I conclude with a short analysis of whether the German law succeeds in striking a balance between the rights and interests involved.

THE PROTECTION OF ELDERLY PERSONS ESP. CONCERNING MEDICAL CARE

RIGHTS AND INTERESTS

Low birth rates and a slow but steady increase in life expectancy characterise the age structure in the European Union.

Entire agreement clauses and no oral amendments clauses as clauses provided in alien contracts

Entire agreement clauses, also known as merger clauses as well as no oral amendments clauses, are not a usual part of traditional Italian contractual practice for two main reasons.

The first reason is that in traditional Italian practice, contracts, including those between companies, are usually short and the parties agree only on the main issues, leaving statutes to rule on the other issues: Article 1374 of the Italian Civil Code accordingly provides that ‘a contract binds the parties not only as to what is expressly provided, but also to all the consequences deriving from it by law or, in absence, according to usage and equity’ (emphasis added).

The second reason is that the problem of oral agreements made prior to or at the same time as the written agreement, or after the drawing of the document, is expressly covered by two articles of the Italian Civil Code. Article 2722 states that ‘proof by witnesses is not permitted to establish stipulations which have been added or are contrary to the contents of a document, and which are claimed to have been made prior to or at the same time as the document’, while Article 2723 states that ‘when it is alleged that, after the drawing of a document, a stipulation has been made, in addition or contrary to its contents, the judge can admit proof by witnesses only if, in consideration of the character of the parties, the nature of the contract, and any other circumstances, it appears likely that verbal additions or modifications have occurred’.

Commercial transactions are increasingly global in scope, spanning jurisdictions and indeed legal families and traditions. Within the comparative law framework, globalisation elevates the prominence and relevance of legal convergence through legal transplants, as attempts have been made under private law regimes to achieve certain minimal levels of contractual standardisation. Legal convergence theory, a currently popular yet controversial comparative law concept, holds that different legal systems may apply different technicalities, but in the end arrive at similar results. In essence, significant distinctions between legal systems are frequently only on the surface.

Testing the validity of total convergence theory, this chapter examines specific, commercially important contractual provisions known in the Anglo-American legal family as ‘exculpatory clauses’. Section 1 of this chapter explores the weight and necessity of the comparative legal method. It also further sets the groundwork for this by introducing legal convergence within the context of exculpatory clauses. Section 2 reviews how exculpatory clauses are treated in the US legal context, analyses the legal theory of unconscionability and examines the divergent treatment such clauses receive in different US jurisdictions. While convergence scholarship often involves the comparison of legal concepts between different legal families, this section explores the use of exculpatory clauses within a single legal family, the common law legal tradition. Accordingly, Section 3 utilises a comparative approach, reviewing the use of exculpatory clauses in the context of an important commercial industry, tow and towage, under Anglo-American law. The chapter concludes by surmising that total convergence is problematic.

Introduction

Courts must sometimes apply German law to a contract in spite of the fact that its terms are based on common law contract models. Problems may arise from such a mismatch between applicable law and contract terms. Their solutions straddle the borderline between substantive law, i.e., rules that tell us whether there is a contract and which rights and obligations arise under such a contract, and private international law, i.e., rules that tell us which country's law applies.

Normally, if a contract has been formulated with a particular contract law in mind (for example, English law), private international law rules will point to the application of that law. Within the EU, this question is governed by the Rome I Regulation, which provides:

If parties have given any thought to the question of which law should be applicable, they will normally choose the same law that they have used as a model. If the contract contains no choice-of-law clause, obvious reliance on one particular legal system in the formulation of a contract can sometimes be seen as demonstrating a choice by the terms of the contract.

Introduction

Using a critical approach, the aim of this chapter is to analyse the use of international contracts in day-to-day business in order to assess the limits and the enforceability of clauses contained in standard documents with respect to local legislation. The use of common structures becomes the normal way of drafting international contracts, and these documents are the basis for the discussion between the parties. But where do those standard documents come from? It is important, especially for in-house lawyers, to critically understand the origin of these common contractual structures in order to assess problems that may be related to their use. This analysis will then start by explaining the origin of such standardisation practice and the reasoning behind it.

The globalisation of business, due to the global footprint of corporate transactions, allowed the development of standard international contracts. Terminology and legal concepts related to these international contracts do, in fact, come more often from common law environments rather than from civil law systems. The reason for this influence by the common law system can be found in the strong economic push given in the last century to the development of business by the Anglo-American system. The continuous use of the same type of international contracts creates standard documentation for day-to-day business.

On the other hand, companies have a strong need for internal standardisation, which in turn enhances the use of standard documentation in day-to-day working life.

Today, international commercial contracts are, with only a few exceptions, drafted on the basis of common law models. As Part 1 of this book showed, these models are only to a limited extent adapted to meet the requirements of the contract law that will govern them. As seen in Part 2, the simple adoption of a contract model inspired by common law may not be deemed to be a tacit choice of common law to govern the contract (particularly because common law is not a defined system). Part 2 also showed the difficulty of harmonising general contract law on an international level. Thus, contracts often present clauses and terminology that are not tailored to, or even not compatible with, the applicable law.

This drafting practice creates a need for coordinating the legal concepts upon which the contract is based, with the legal concepts that the governing law imposes on the contract.

There are various examples of clauses that are obviously inspired by a common law system and do not have a corresponding provision in the chosen law, if the law chosen by the parties to govern the contract belongs to a civilian system. For example, in a contract subject to a civilian law and with an exclusive jurisdiction clause in favour of the courts in a civilian country, a clause regulating the use of equitable remedies such as estoppels would not make sense. These are a phenomenon of common law and do not exist in civilian laws.

General background

Scandinavian law is often regarded by comparative lawyers as one particular group under the civil law family. There is no common Scandinavian law, except for particular parts of contract law and the law of obligations. There is a common Scandinavian approach in several respects and there is thus some common legislation. This is particularly true within parts of private law, the particular area of law covered in this book.

Following Nordic legislative cooperation at the end of the nineteenth and the first half of the twentieth centuries, a substantial amount of private law legislation from this period is common or similar in the different Scandinavian countries. Thus, for example, the Maritime Codes from the 1890s, the Sales of Goods Acts from the early-twentieth century, the Contracts Acts from around 1915–1920 and the Acts on Promissory Notes from the end of the 1930s were more or less common. Apart from the Maritime Codes of the 1990s, which are largely common for all the Nordic countries, the situation has partly changed. Thus, for example, in spite of all Nordic countries having adhered to the United Nations (Vienna) Convention on Contracts for the International Sale of Goods (CISG), there are currently differences between the Nordic Sales of Goods Acts. Some amendments have been made to the Contracts Acts, the most important amendment being that regarding §36, the so-called general clause. In Sweden, this amendment was made in 1976.

Introduction

Commercial law does not exist as a separate branch of law in Hungarian private law. Hungarian private law is built on a unified system where the Civil Code covers the regulation of contracts, including the general framework and limits of freedom of contract for merchants as well as for other parties. As commercial contracts are neither defined nor covered by specific legislation, the Civil Code is to be applied to commercial contracts as well. There is specific legislation for contracts of foreign trade providing more liberal regulation compared to the Civil Code, but the applicability of this law decree – still in force as one of the reminders of the socialist legislation – is in question, as in defining its scope it refers to the Foreign Trade Act, which is no longer in force. There is ongoing reform aimed at recodification of Hungarian private law, which would abolish this regulation discrepancy. The New Hungarian Civil Code – expected to come into force in about 2013 – would provide unitary (monistic) legislation and would cover commercial transactions as well.

As a main rule, the provisions of the Civil Code concerning the rights and obligations of the parties are default rules which become the content of the contract insofar as the parties did not agree otherwise. The paradigm of Hungarian contract law is freedom of contract, which necessarily implies that contract law rules are not mandatory.

The Scandinavian law of obligations – and of contracts – is a part of the law with old traditions

From a Norwegian perspective, a modern law of obligations and of contracts was launched in the early 1850s, with the publication of a textbook incorporating the existing statutes and court decisions. By the 1870s, the law of obligations was a well-established discipline, both academically and in legal practice. The law of obligations was strengthened at the same time by the establishment on a governmental level of Scandinavian cooperation on legislation in the field of the law of obligations. One of the best known fruits of this is the joint Scandinavian Sales of Goods Act (1905–1907). It was not, however, a wholly Scandinavian invention, but was to a large extent a pragmatic simplification of concepts from English, French and German law. It can be noted that this pragmatic legislation was one of the cornerstones for CISG; it was very familiar to Ernst Rabel, who had initiated the publication of a German version of Tore Almén's extensive commentary on the Sales of Goods Act.

Thus, Scandinavian law has long been regarded as a separate entity from English, French and German law, a law family of its own. The law of contracts is the main core of Scandinavian private law, and textbooks and court decisions from one of the countries is regarded more or less as on the same level as internal sources of law.

Introductory remarks

In line with the general topic of this book, the purpose of the present chapter is to ascertain to what extent different terms of a commercial contract based upon the concepts of Anglo-American law are compatible with Russian law, if the latter is applicable. This chapter focuses mainly on substantive law issues, leaving aside the issues of Russian private international law (PIL).

Naturally, Russian law is influenced to a certain extent by the laws of other countries, Anglo-American law not being an exception. Contracts of finance lease, agency, franchise and entrusted management of property governed by the Civil Code of the Russian Federation (RCC) may be cited as examples. However, Russian legal rules dealing with such contracts are adapted to the continental law system, to which Russia belongs.

Another channel for such an influence is the international conventions in which Russia participates. The most notable example here is the 1980 United Nations (Vienna) Convention on Contracts for the International Sale of Goods (‘CISG’). The impact of Anglo-American legal concepts can be traced in some provisions of the CISG. When the currently-in-force RCC was elaborated in the 1990s, the CISG was taken into account not only with regard to sales contracts, but also when drafting the general provisions of contracts.

The European Union system and circulation of common law contract models

There are several ways to assess the reception by a legal system of contract models from another legal system.

The easiest way is to examine how a national judge applies his or her law to a foreign contract model. For instance, within the area of contract law could be considered the case law of the Cour de Cassation or the appellate courts and tribunals, in terms of their ability to enforce contract models from different systems of common law.

While not strictly speaking a specialist in contract law but rather in EU and comparative law, I will suggest another line of enquiry. My aim will be to try to show that EU law and, particularly, the case law of the European Court of Justice compel national lawyers to welcome into their systems legal situations located in another Member State. Thus, European law promotes the movement of models and leads the national lawyer to handle rules of foreign systems.

An almost perfect example: the Courage case

In an attempt to illustrate my demonstration, I will rely on an almost ‘perfect’ example: the Courage ruling: ECJ, 20 September 2001, Case C-453/99.

The referral requesting a preliminary ruling originates from a dispute in England involving a brewery and a publican, who were both bound by a lease agreement and an exclusive purchasing clause. The disagreement concerned the settlement of various bills corresponding to deliveries of beer.

Introduction

Germany was the world champion of exports for a few years. The economic transactions leading to that result are all based on contracts which possess an international element. Many if not most of these contracts are drafted in English and use common law terminology. Some typical contract clauses stem specifically from the United States. Even between German merchants, contracts that are completely in English are not unfamiliar. However, international contracts other than sales or distribution contracts are frequently written in English, the modern lingua franca. This is particularly true for international construction contracts which are often based on the FIDIC (Fédération International des Ingénieurs-Conseils) contract form. It is thus not rare that German courts – and particularly arbitration tribunals – have to deal with such contracts. A specific problem that can arise in the construction of these contracts is the possible discrepancy between the common law style of the language of the contract and the applicable contract law that, in these cases, will often be German law. To exaggerate only slightly, there may be a ‘clash of legal cultures’.

This specific kind of tension between the terms of a contract and a different applicable law has been the subject of some debate in Germany in recent years. Nonetheless, the general phenomenon that parties act on a legal basis different from the applicable law has long since been well known in German private international law. It is termed ‘Handeln unter falschem/fremdem Recht’ (acting under wrong/foreign law).

The analysis carried out in this book shows that there is a gap between the way in which international contracts are written on the one hand and the way in which they are interpreted and enforced on the other. Contracts are often written as if the only basis for their enforcement were their terms and as if contract terms were capable of being interpreted solely on the basis of their own language. However, as Part 3 of this book showed, the enforcement of contract terms, as well as their interpretation, is the result of the interaction between the contract and the governing law. Considering contracts to be self-sufficient and not influenced by any national law, as if they enjoyed a uniform interpretation thanks to their own language and some international principles, thus proves to be illusionary. This contract practice may lead to undesired legal effects and is not optimal when examined from a legal point of view. Seen from a wider perspective, however, it may turn out to be more advantageous than employing large resources in order to ensure legal certainty.

International commerce fosters self-sufficient contracts

The gap between the parties' reliance on the self-sufficiency of the contract and the actual legal effects of the contract under the governing law does not necessarily derive from the parties' lack of awareness of the legal framework surrounding the contract.