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Excerpt from Vanessa Mak, Performance oriented remedies in European sale of goods law, Hart Publishing (2009) 222 p. The Introduction to this book is reproduced below with the permission of the publisher. Click here to order the entire text from the publisher's online bookstore; for U.S. orders, click here.

Performance oriented remedies in European sale of goods law

INTRODUCTION

While Murphy's [1] law does not apply universally, it is a common occurrence for things to go wrong in the execution of contracts. Unfortunately but inevitably, parties will not always be able to live up to the obligations that they have (voluntarily) undertaken towards their contracting partner. If they did, the courts would be significantly less burdened with cases than they currently are. An attenuation of the pain of defective or nonperformance may, however, be found in the law of remedies. When difficulties are experienced in the execution of a contract, the parties may turn here to find a solution, a 'remedy' for the unsuccessful performance. It will determine what their rights are and who has to bear the burden of the unsatisfactory performance, and it may also suggest a solution as to whether and how the parties are able to continue their cooperation and fulfill the contract after all.

Whereas the majority of commentators put remedies at the end of the chain of elements that make up the law of contract (formation, contents, vitiating factors such as mistake, frustration and misrepresentation), their place appears to be more central in practice than this ordering suggests. It is only when things do not go according to plan that the contents of a contract are truly put to the test. If all goes well and the contract is executed as envisaged, the parties may never even look at the contract again and, so to speak, may leave it lying in a drawer somewhere. Where things do go wrong, however, it becomes important for the parties to find out (i) what their rights are under the contract, and (ii) whether they will be able to enforce them.[2] Remedies may have their main impact on the second question, but they appear to be of relevance to the first point as well. After all, parties may decide to what degree they want to be bound by contractual obligations on the basis of what remedies they will have to provide to the other party in the event that they are unable to live up to their promises.

Remedies, therefore, are of central importance to contracts and may influence a party's decision to enter into a contract, as well as on what terms to do so. As a consequence, where there is uncertainty as to the contents of the remedial scheme that governs a contract, it may discourage parties from entering into that contract. This may be the case not only when there are ambiguities in the remedies provisions found in the domestic law of the country in which a party is resident, but also where a party has insufficient information as to the substantive law of possible other systems that may govern the contract. For example, where the contracting parties are both resident in different countries, one party may (for practical reasons) be forced to accept the law of the other party's country as the governing law of the contract.[3] However, this may put him at a disadvantage because he is likely to be less familiar with the law of that country than with his own domestic law. Where this is likely to occur on a regular basis, it is thought that a case for harmonisation of laws may be made.

Harmonisation -- but where to start and how to achieve it? This book aims to contribute to the approximation of contract laws in Europe by providing a model for the remedial scheme in the most common type of contract, the contract of sale. A comparison of domestic laws and international rules will be used as a basis to formulate some guidelines for possible harmonisation in this area. A second aim of the book, linked to the question of harmonisation but also valid independently from that, is to use the comparison between different systems in order to highlight particular problems in the remedial schemes of individual systems and to see whether a better solution may be borrowed from elsewhere.

The focus will in particular be on a type of remedy that in continental legal systems is generally available to an aggrieved buyer, but the availability of which in the English common law system is much more restricted: the remedy aimed at performance. Remedies that fit this category may, depending on the jurisdiction considered, include specific performance, repair, replacement, and even cure offered by the seller.[4] A reason to focus on these is that they go straight to the heart of the contractual interest which remedies for non-performance or breach seek to protect, namely the interest of the aggrieved party in obtaining the performance that he contracted for. This interest, now commonly referred to as the 'performance interest',[5] has long been recognised as the core of the remedial schemes in civil law jurisdictions, and in recent years appears to have gained prominence in the English common law system as well. What comes to the fore is not just the interest of the aggrieved party in obtaining a remedy that gives him the value of the performance which he expected to receive under the contract, but rather his interest in obtaining a remedy that gives him the actual performance that he would have received had the contract been performed satisfactorily.[6] Weighing the tension between performance-oriented remedies and other remedies that seek to protect this interest -- in particular compensatory damages -- in light of different approaches taken by civil law and common law systems in Europe, this book makes a plea for a primary position for performance-oriented remedies in the harmonisation of European sales law.

I. SCOPE OF THE PROJECT

The main part of the book will look at existing rules on performance-oriented remedies in several European jurisdictions, seeking to find a common core or to identify common principles that could lie at the basis of future harmonisation or review of domestic rules on remedies in European sale of goods laws. The scope of the project may be further defined, first, by setting out briefly which jurisdictions and other relevant sets of rules are taken into account and, secondly, by making some observations about the substantive scope of the comparison.

1. Jurisdictions and Legal Rules under Consideration

The comparison takes account of solutions found in English, Dutch and German law, and also considers how these systems have been influenced by existing European legislation (such as the Consumer Sales Directive).[7] The national jurisdictions were selected for several reasons. To begin with, since the main legal traditions represented in the EU are the common law and the civil law, a realistic picture of the possibilities for harmonisation will only be obtained by comparing systems that fall within either category. This is especially true in relation to performance-oriented remedies, where the approaches of common law and civil law systems, at least at first glance, appear to be markedly different. As to the choice of systems to compare within these traditions, English law naturally represents itself as the example of a common law system, since it is one of the few in Europe and, without a doubt, the most influential one. With regard to civilian systems, which make up the majority of legal systems in the EU, the choice is somewhat less straightforward. German and Dutch law were chosen for two reasons. First, these systems represent some of the most recent codifications of sales laws in Europe, German law recently having seen an extensive reform of the law of obligations and Dutch law having introduced a new Civil Code in 1992. In the re-codifications of sales law, both systems took account of international uniform rules on sales, such as CISG [8] and the Consumer Sales Directive. Therefore, not only are these sales laws up-todate with recent developments, they also reflect international standards for sale of goods law that may form a basis for future harmonisation in Europe. Secondly, the Germanic tradition is widely represented in Europe and it therefore makes sense to focus on systems falling within this tradition in order to identify common underlying principles that could also further the goal of harmonisation. On this ground, it would have been interesting also to take account of the Romanist legal tradition, of which French law is the prime example. Regrettably, since the research was carried out in the course of a doctoral degree and therefore had to comply with time regulations as well as the constraints imposed by a maximum word limit, a choice had to be made to leave this system out of the comparison. For a comprehensive comparison of French and English law on remedies in contract law, I refer to Yves-Marie Laithier's dissertation on the subject, published in 2004.[9]

In addition to the comparison between English, Dutch and German law, where appropriate for illustrative purposes, reference will occasionally be made to Scots law. The Sale of Goods Act 1979 applies not only to England and Wales, but also to Scotland. While, because of the civil law influences found in the system, differentiations may be made for Scottish law, it is thought to be instructive in certain instances to compare the application of the Act in this system with its application in England and Wales. Examples can be found in the chapters on specific performance and cure.[10]

The comparison of domestic systems will be complemented by a comparison with several instruments of a European or international nature. Sets of rules that are taken into account in this context are CISG, the Principles of European Contract Law (PECL), the Unidroit Principles of International Commercial Contracts (PICC), and the Consumer Sales Directive. It is recognised that each of these instruments has a somewhat different scope, some restricted to either commercial or consumer contracts, others containing general rules of contract law. Moreover, unlike the other instruments, the PECL and the PICC are 'soft law' and therefore not binding on contracting parties unless expressly stipulated in the contract or otherwise found to be incorporated.[11] The aim of the comparison, however, is to determine if and to what extent each of these instruments may provide a basis for future harmonisation or review of sale of goods law in Europe, with a particular focus on remedies. Regardless of their official standing, it is thought that the content of these instruments could be a model for harmonisation, for example as proof of what would be an acceptable solution for international contractual dealings, or of the type of compromises that may be made between different legal systems within different (common law and civil law) traditions. The divergent scopes of these instruments, moreover, makes them relevant to the general aim of harmonisation projects relating to sale of goods law in Europe, which focus on commercial as well as consumer contracts in the domestic and in the cross-border context.

2. Limitations to the Substantive Scope of the Project

While the project relates to remedies for defective performance in a wide range of sales contracts, a choice has been made to limit its scope to contractual aspects of sale. Other areas that may have a bearing on remedies, such as personal property law or tort liability for defective products, have been left out of the present comparison for a number of reasons.

The main reason for this limitation is that the scope for performance-oriented remedies on the basis of tort or property claims is very limited. Tort-based claims for liability for defective products are aimed at securing compensation for individuals who have been harmed as a result of the defective functioning of a product. While a claim in damages based on this ground may -- where there is a contract between the injured party and the supplier or manufacturer -- be made in addition to a contractual claim for repair or replacement of the product, there is no direct link between the claims and they may be brought alongside each other. There may, of course, be instances of potential overlap where an injured buyer is able either to claim damages based on tort liability or damages for consequential loss. The question of damages for consequential loss, however, also has no direct bearing on the current project. After all, just as it may be possible to award damages for consequential loss on top of the losses suffered directly as a consequence of breach, it may be possible to award such damages in addition to an order for specific performance. As long as the damages award does not relate to the same interest that the specific performance order seeks to protect, nothing would normally stand in the way of such a judgment.[12]

Though, with regard to property claims, some overlap may exist with contractual remedies for non-delivery or non-conformity, the issue appears otherwise outside the scope of the current project. In cases where there is a defect in title preventing the passing of property in the goods to the buyer, this may be classified as a non-conformity to which the normal, contractual rules apply that also govern other non-conformities such as defects in description or quality.[13] A discussion of property claims in other cases does not seem warranted in the present context, since performance-oriented remedies such as specific performance, repair or replacement have little relevance outside situations where contractual liability for non-conformity or non-delivery exists. The question of passing of property, for example, may be relevant to determine the moment of passing of risk and so to determine whether the seller or the buyer shall bear the loss of goods being lost or destroyed, damaged or deteriorated.[14] In cases where the risk lies on the seller and he fails to deliver goods, the buyer may be able to obtain replacement goods from the seller or, if the seller cannot effect this, a remedy in damages. In cases where goods are delivered and at the buyer's risk, however, a buyer may not be entitled to refuse to accept them if they are otherwise in conformity with the contract. In these circumstances, the buyer will not be entitled to specific performance or a related remedy such as repair or replacement.

The question of passing of risk may, however, be relevant to the current project in one respect: a number of legal systems ties the time of assessment of the conformity requirement to the moment of passing of risk. For example, a rule to this effect applies in German and in Dutch law,[15] and it may also be found in article 36(1) of CISG. However, though the time of passing of risk therefore may be relevant for determining at what point in time a conformity obligation -- or rather the breach of it -- gives rise to remedies for the buyer, there is no objective reason for tying the assessment of the conformity requirement to the question of risk. In the systems just mentioned, the time for passing of risk happens to coincide with that of delivery, which may also be a good time to assess conformity. In other systems, however, the time of passing of risk may be a different one. For example, in English law risk passes with the property,[16] which may be at the time of conclusion of the contract or of appropriation of unascertained goods to the contract.[17] But English law does not specify at which time the conformity requirement becomes effective. The fact that the two issues are not linked in this system suggests that they may be assessed independently from one another. It may well be that other factors, such as the agreed time for performance of the contract or the time of delivery (which in practice may well be the same thing), provide a better indicator than the time of passing of risk.[18] In light of this, issues of property and passing of risk have been left outside the scope of this book.

This is not to say that the issues of tort liability, property and the passing of risk should be left aside in the process of harmonisation of European contract and sales law. While there may not be enough overlap to necessitate discussion of them in the context of the current project, these issues are relevant in the wider harmonisation project and should be considered in this context. To pick certain topics for harmonisation whilst leaving other issues unregulated creates the risk of fragmentation, making parts of contract law subject to uniform rules whilst referring to (divergent) national rules in relation to issues outside the harmonising legislation.[19] The fact that tort and property issues in sales law have proved difficult to harmonise -- as exemplified by CISG which for this reason explicitly excludes them from its scope[20] -- may, however, mean that harmonisation will take place at a slower pace than it may for the contractual rules on sale.[21]

II. BACKGROUND AND THEORETICAL FRAMEWORK

Having set out the scope of the project, another preliminary matter requires attention. In order to make a realistic assessment of the proximity of the different laws under consideration and the possibilities for harmonisation or review, it is necessary to set out the background against which the book should be read. On what grounds is harmonisation of sales law in Europe desirable? Is it feasible? And if so, how do we find common principles in systems that, at least in relation to performance-oriented remedies, appear to diverge radically in the ways that they tackle similar problems? Chapters two and three will deal with these issues in more detail. As an introductory point, however, it is thought helpful to set out the approaches to contract theory found in each of the jurisdictions under consideration, so as to determine a common angle from which the systems may usefully be studied. It will be seen that despite differences inherent to the different legal traditions, a promissory theory of contract may be used in each of the systems as a justification for the availability of performanceoriented remedies and as a starting point for determining the scope of the remedies.

1. The Civilian Tradition: German and Dutch Law

German and Dutch law, in this regard, may well be discussed together, since they are closely linked systems. Not only do they share similar foundations -- both being members of the civil law tradition that developed in Western Europe since the Middle Ages, with roots going back to the classical law of the Roman Empire -- but even today the content and structure of their civil codes bear striking similarities.[22] The drafters of the most recent re-codification of the Dutch civil code, the Burgerlijk Wetboek (BW), left behind the more loosely structured model of the previous code, which was Napoleonic in origin and closely linked to the French code civile. Instead, a layered structure was adopted, based on the German pandect tradition of legal scholarship. It imposed a more strongly defined framework of legal principles and concepts, with general rules laid down in earlier parts of the code permeating it throughout and providing the background against which to read more specific rules in other parts of the code. The content, also, was more firmly -- and possibly more rigidly -- determined, as new rules were introduced in the code that filled gaps in the earlier code and that reflected solutions developed in the case law of the courts.

The dogmatic, principle-based nature of the codes appears to be in line with the contents of the rules that they contain. Both German and Dutch law, starting from the principle of sanctity of contract or pacta sunt servanda, regard specific performance type remedies as central to the protection of contractual interests. This is reflected in the fact that the remedies aimed at performance are of general availability and, moreover, that they are given a primary position in relation to other remedies, such as damages or termination.[23] In this respect, the systems -- at least at first sight -- stand apart from English law, where a more reluctant attitude is adopted towards the availability of specific performance.[24] Painting with a broad brush, the civil law and common law traditions, on this particular point, may be contrasted on the basis of their tendency either to adhere to legal principle or to give preference to considerations of a more pragmatic nature. For German and Dutch law, the rules on remedies appear to be inspired by principle more than by pragmatism, in line with the dogmatic attitude found in the codes as well as in legal scholarship in these systems. The primary nature of performance-oriented remedies may be justified on the basis of one principle in particular -- the binding nature of a promise.

As shown by Unberath in a comprehensive study of the philosophical foundations of remedies for breach of contract, German contract theory relies on two important premises: first, that contractual promises are binding; and secondly, that a promisee may protect his contractual interest in performance through an enforcement mechanism that gives him the actual performance that he contracted for (Leistungszwang).[25] Similar principles underlie the rules on remedies for breach of contract in the Dutch civil code.[26] The leading principle in both systems is pacta sunt servanda, that is, the principle that obligations are binding on the parties who have created them. Obligations, thus, are regarded as rights acquired by the promisee, so that he has an entitlement to or an interest in the performance of the promise.[27]

In German and in Dutch law, the logical conclusion drawn from this is that, in order to protect the interest that the promisee has in the performance of the promise, the law should enable him to enforce this performance. In other words, a natural link is made between the promisee's subjective right to performance, his entitlement to enforce the right (ius agendi), and the procedural instrument generally used to achieve this.[28] This is in line with Kant's view of the principle of corrective justice, which promulgates that any disregard of a party's subjective entitlement to performance creates an imbalance between the parties, which the law must correct.[29] In this view, the means of enforcement does not change the content of the original, subjective right of the promisee but merely seeks to ensure its performance. It is the responsibility of the state to provide the best possible means to secure this right and, while there may be different means of doing so, the principle of corrective justice prescribes that the protection offered must in any case not give less to the promisee than the interest embodied by his subjective right to performance.[30] The actual performance of the promise, giving the promisee that which he contracted for, by definition offers the best protection of this interest.[31]

From this perspective, performance-oriented remedies are regarded as primary remedies for breach, ranking in hierarchy above substitutory remedies such as damages, which may compensate the promisee to a certain extent but which will not give him the exact performance that he contracted for. Nevertheless, both German and Dutch law recognise that this rule cannot be absolute -- in order to do justice to the interests both of the promisee and of the promisor, it is necessary to put in place certain limitations on the availability of performance-oriented remedies. Therefore, the codes provide, for example, that specific performance will not be ordered where performance has become impossible, and that repair or replacement of defective goods may not be ordered where it is disproportionate on the seller.[32] Limitations may thus be placed on the principle that performance-oriented remedies are of general availability to the promisee. Justifications for these limitations may be found in economic theory, for example in considerations related to the proportionality and efficiency of the remedies. These justifications will be further explored in chapter three.

In sum, the main focus in these systems remains on the performance interest of the promisee. Apart from the case of impossibility,[33] the limitations recognised in relation to performance-oriented remedies in general only operate where there are alternative ways to compensate the promisee. For example, replacement of defective goods may be regarded as disproportionate if the defect is minor and if it can be remedied easily through repair; or, in a different situation, if substitute goods cannot be obtained by the seller but the buyer is able to obtain them elsewhere, in which case damages may be a more appropriate remedy. In cases in which performance is possible, however, the starting point remains that the buyer is entitled to a performance-oriented remedy; disproportionality is the exception rather than the rule. Thus, it can be seen that in German and in Dutch law the emphasis is on the promise, which is embodied in the subjective right acquired by the promisee. The starting point for analysis of the rules on remedies in sale of goods law in these systems, therefore, may well be found in a promissory theory of contract.

A final point should be added to this -- besides the justifications for the scope of remedies found in promissory theory, insights into the scope of the modernday rules of sales law may be gained in other ways. For example, it is possible to rely on historical research of legal systems, which may show how rules developed in reaction to developments in society and how different rules may thus have come into being depending on the challenges faced by a particular jurisdiction at a particular time. Thus, tracing back the origins of liability rules for non-conformity in sale of goods case, it can be seen that Roman law rules relating to sales of specific goods have gradually been adapted as other types of sale, such as sale by description (ie sale of generic goods), became more commonly used in international trade.[34] A historical excursion may thus offer an explanation for the shape that these rules have today, and it may shed light on the origins of particular problems faced by sale of goods laws. Another way of analysing rules of contract law is by looking at them from the perspective of general legal principles found in a legal system. For example, it has been suggested that the content and scope of liability rules in Dutch contract law may be explained on the basis of principles normally found in other areas of law, such as the subsidiarity and proportionality principles found in administrative or in criminal law.[35] To what extent this proposition holds true may be debated. Controversy may occur over the extent to which principles may be extrapolated from one area of law to the other, especially in common law systems where an overlap like this would not normally be recognised.[36] In legal systems where a certain coherence of principles underlying the system as a whole may be recognised, however, this type of analysis may give some beneficial insights into the content of rules of law and the way in which they operate.

While these approaches may on occasion be referred to at different points in the book, the theoretical framework for the comparison will mainly focus on a rights-based, promissory theory of contract. Not only does this theory offer explanations for the scope and content of the rules found in German and Dutch sale of goods laws, it also offers insights in the justifications for adhering to these particular rules. In this way, the theory may help to uncover common principles underlying the rules, which may shed light on the possibilities for harmonisation of sales law in Europe.

2. The Common Law Tradition: English Law

An analysis based on a promissory theory of contract, it is suggested, also enables a comparison with the other main legal tradition in Europe, the common law. A theory that may usefully be adopted in this context is the rightsbased, promissory theory of contract developed by Fried.[37] Like the theories underlying the remedial schemes in German and Dutch contract law, this theory starts from the premise that promises create obligations that are binding upon the parties and that give the promisee an interest in the performance of the promise. This so-called 'performance interest', in Fried's theory, deserves full protection through legally enforceable remedies.

Of course, one may wonder how this theory fits with the rules of English contract law as they stand today -- the limited availability of specific performance may suggest that the system's recognition and protection of the performance interest is less than whole-hearted. It may be questioned whether the damages remedy, which, in contrast to specific performance, is of general availability, is equally well suited to compensate the promisee to the full extent of his contractual interest, in particular where the value of the interest is hard to assess.[38] However, while theories may be cited in support of a more reluctant approach to the protection of the performance interest, it is thought that none of these offers sufficiently convincing arguments to be favoured over Fried's theory of the bindingness of promises.

On a sliding scale, a contract theory may recognise one of four different levels of protection of the contractual interests of the promisee[39]: protection of the performance interest, of the 'expectation interest', or of the 'reliance interest'; or finally, it may be thought that no particular protection for any of these interests is offered by the contract itself and that it is merely a tool that the promisee may use in order to obtain a remedy. The current debate in English law focuses mainly on the first two levels; the latter two, whilst having had eminent support in the literature, do not appear to reflect the stance nowadays taken towards the protection of contractual interests. The reliance interest finds some protection in the current law, but has not become the main benchmark against which to assess contract damages, as advocated by Fuller and Perdue in a well-known 1936 article.[40] Their view was that damages should be assessed on the basis of losses suffered in reliance on the contract, rather than on the basis of the interest in the performance of the contract. After all, the argument ran, why should a claimant be compensated for something he never had?[41] The reality of contract law is, however, that courts are prepared to acknowledge that the promisee obtains something from the promise -- an expectation of performance, or an interest in the performance of it. Therefore, as stated by Fried, '[t]here is reliance because the promise is binding, and not the other way around'.[42]

An acceptance of the binding nature of promises also defies the fourth theory, of which Atiyah's contract theory is the prime example. According to this theory, bindingness of contract is nothing more than a procedural technique related to proof, serving to establish liability which exists independent of the contract itself. In other words, contracts are mere admissions of a liability that exists on the basis of other obligations, outside of the contract.[43] From a dogmatic perspective, it is hard to see how such a theory could be upheld. Subjective rights would become meaningless, as a contract would not by itself be able to create rights. The better view, as suggested by Smith,[44] would seem to be that promises can create rights in a way similar to property rights. The obligation so created embodies the promisee's ownership of the duty created by the promisor to perform the promise. Private individuals, thus, are able to create legally enforceable rights where none existed before.[45] Rather than as suggested by Atiyah, contractual obligations therefore give rise to subjective rights from the moment of their creation, and the promisee has an entitlement to the promise from that moment and may require the promisor to fulfill it.

The main tension that has emerged in English contract law in the last decades, then, relates to the extent to which the interests created by promises deserve protection through the courts. How far does the bindingness of contractual promises reach? Should remedies for non-performance or defective performance reflect the promisee's expectation interest, or should they reflect his performance interest? The former reflects the value of the promised performance, whereas the latter is concerned with the promisee's interest in the actual performance of the promise, which may encompass more than just economic value.[46] While there is a certain overlap in remedies reflecting both interests, at least in measure, the difference between them becomes apparent in cases where the value of the promised performance covers more than purely economic interests, or where it is hard to quantify. A famous example of such a case is Ruxley Electronics and Construction Ltd v Forsyth,[47] where the cost of cure of a defective performance -- a swimming pool built six feet short of the contractually required depth -- was very high, especially considering the economic loss suffered by the claimant, which the court deemed to be nil. The fact that, in these circumstances, the court was not prepared to award damages for the cost of cure indicates that English law does not have a whole-hearted commitment to the performance interest.[48] The claimant was compensated for loss suffered as a result of the breach of contract (in this case, the award was given only for loss of amenity), but did not receive damages that would enable him to obtain the performance that he contracted for. The decision is not uncontested, however,[49] and it may be that damages for breach will gradually be expanded to give greater protection to the performance interest.

The tension between the expectation interest and the performance interest in English law also becomes apparent in relation to the subject-matter of this book: performance-oriented remedies. In effect, courts will only award specific performance or related remedies (such as repair or replacement) if their aim is to protect the performance interest. These remedies, after all, go further than compensatory damages, not only by having an inherent ability to protect an interest that encompasses more than the economic loss suffered by the claimant, but also by enforcing the performance of the contract. They ensure that the promisee gets the actual performance that he contracted for, and thus exemplify the ultimate protection of the performance interest. A debate about widening the scope of these remedies, therefore, necessarily touches upon questions as to which interests deserve protection in English law. The widening of the availability of specific performance in cases of commercial uniqueness,[50] or the introduction of new remedies aimed at performance in consumer sales law,[51] therefore, need to be regarded in the light of the overall discussion about protection of the performance interest.

Fried's theory of the bindingness of promises appears an appropriate basis for further exploration of the question to what extent the performance interest deserves protection through performance-oriented remedies in English law, though the theory itself may not be able to give an answer to that question. It does not clarify in what way the performance interest should be protected, eg whether this should be through performance-oriented remedies or whether an award of damages might suffice. Nevertheless, as a basis for exploring the nature of contractual interests and the extent to which the law should offer protection of those, it appears not only to fit with, and to offer explanations for, the current state of English contract law,[52] but also to lay bare principles underlying the rules of contract that may provide solutions for problems that the current law faces. One such problem is to determine what scope performance-oriented remedies should have in English law.

Principles of English law thus unearthed may then, through comparison with the German and Dutch approaches to performance-oriented remedies, yield some answers as to the way in which harmonisation of European sales laws in this area may develop. An additional argument for referring to Fried's theory in this context, it is submitted, is its relative independence from the more temporal, social elements of contract law. While Atiyah's theory, for example, appears to be greatly influenced by sociological developments with regard to the role of contract in modern, Western societies, Fried takes a more neutral position which -- though linked to societal values[53] -- starts from a broader, moral premise about the nature of promises. As such, it is not defined by sociological parameters to the same extent that Atiyah's theory is -- the bindingness of promises is regarded as a fundamental principle that lies at the roots of contract law at any time in any given (Western) society. It is not, however, dependent upon the view taken in that society on other values that the law seeks to reflect, for example in relation to where it strikes the balance between autonomy and solidarity between contracting partners.[54] Though such values have a role to play in the shaping of rules of contract law, and also in specific contracts such as sale of goods transactions, Fried's view appears to reflect a standpoint more commonly adopted in case law and legal scholarship that regards the bindingness of promises as following from the moral principle pacta sunt servanda. As a timeless and widely-adhered-to principle, it reflects a common basis of contract law in many European systems, regardless of the shifting sociological make-up of these countries. Therefore, at least as a basis for legislative harmonisation, the principle provides a good starting point. This is so despite the fact that sociological factors may of course impact on the implementation and practical usage of new rules. While this is likely to influence the degree to which harmonisation may practically be deemed successful, problems of uniform implementation and enforcement of legal rules can be observed in any legal system, even with regard to internal rules.[55]

III. OUTLINE OF THE PROJECT

The underlying issues of contract theory will be further explored in chapter three. Further background relating to the process of harmonisation of contract law in Europe, and the role of sales law, will be given in chapter two.

Having determined the extent to which harmonisation is feasible and desirable, and having identified the theoretical underpinnings of contract law that may be of help in determining the appropriate scope of performance-oriented remedies, these two chapters lay the basis for the detailed discussion of the different performance-oriented remedies in chapters four to seven. The remainder of the thesis is concerned with the functioning of these remedies in European jurisdictions. The main question running through these chapters is to what extent existing rules reflect the principles set out in chapter three -- is it possible to identify common underlying principles that may enable future harmonisation of European sales laws, or at least the rules related to performance-oriented remedies? On the basis of the findings made in these chapters, the final chapter seeks to formulate some guidelines for future projects on harmonisation of sale of goods laws.


FOOTNOTES

1. The rule that everything that can go wrong, will go wrong.

2. In relation to the second point, compare R Zakrzewski, Remedies Reclassified (Oxford, Oxford University Press, 2005).

3. This will often be the case where a weaker party (for example a consumer) can only obtain a contract if he agrees to the standard terms of business of the other party.

4. For a more detailed classification of the performance-oriented remedies, see ch 3, p 52.

5. A term first coined by D Friedmann, 'The Performance Interest in Contract Damages' (1995) 111 Law Quarterly Review 628 at 629.

6. Compare E McKendrick, Contract Law: Text, Cases and Materials, 2nd edn (Oxford, Oxford University Press, 2005) 1048-49.

7. Directive 99/44/EC of the European Parliament and of the Council on certain aspects of the sale of consumer goods and associated guarantees [1999] OJ L171/12 (Consumer Sales Directive).

8. UN Convention on Contracts for the International Sale of Goods (adopted 11 April 1980, entered into force 1 January 1988) 1489 UNTS 3 (CISG).

9. Y-M Laithier, Étude comparative des sanctions de l'inexécution du contrat (Paris, LGDJ, 2004).

10. See ch 4, pp 105-6; ch 6, pp 180 ff.

11. See further ch 2, pp 32-4.

12. E Peel (ed), Treitel on the Law of Contract, 12th edn (London, Sweet & Maxwell, 2007) [20-034].

13. Compare for English law s 12(1) of the Sale of Goods Act 1979; AG Guest (ed), Benjamin's Sale of Goods, 7th edn (London, Sweet & Maxwell, 2006) [4-006]. For Dutch law, see art 7:15 BW; J Hijma, Asser V(I) Bijzondere Overeenkomsten. Koop en Ruil, 6th edn (Deventer, WEJ Tjeenk Willink, 2001) [270]. In German law, § 433 I and § 437 BGB; D Reinicke and K Tiedtke, Kaufrecht (Munich, Luchterhand, 2004) [391].

14. Compare Benjamin's Sale of Goods (n 13 above) [6-001].

15. Reinicke and Tiedtke, Kaufrecht (n 14 above) [390]; Hijma, Asser V(I) Bijzondere Overeenkomsten (n 13 above) [332].

16. Benjamin's Sale of Goods (n 13 above) [6-002].

17. ibid, [5-017], [5-067].

18. See further ch 6, p 159.

19. Compare M Loos, Spontane harmonisatie in het contracten- en consumentenrecht (Den Haag, Boom, 2006) 6; W van Gerven, 'A Common Law for Europe: The Future Meeting the Past?' (2001) 4 European Review of Private Law 485 at 490-91.

20. CISG arts 4 and 5. Compare P Schlechtriem and I Schwenzer (eds), Commentary on the UN Convention on the International Sale of Goods, 2nd English edn (Oxford, Oxford University Press, 2005) 70.

21. See ch 2, p 32.

22. See generally K Zweigert and H Kötz, Introduction to Comparative Law, 3rd revised edn (Oxford, Oxford University Press, 1998) 75 ff, 132 ff. For the development of the rules on liability for non-conformity in sale of goods law from Roman times to modern, German law, see R Zimmermann, The New German Law of Obligations (Oxford, Oxford University Press, 2005) 82 ff.

23. With regard to the hierarchy of remedies, see ch 5, p 123; ch 7, pp 200 ff.

24. See below, p 11.

25. H Unberath, Die Vertragsverletzung (Tübingen, Mohr Siebeck, 2007) 217 ff.

26. Compare AS Hartkamp, Asser IV(I) Verbintenissenrecht. De verbintenis in het algemeen, 12th edn (Deventer, Kluwer, 2004) [14]; Hijma, Asser V(I) Bijzondere Overeenkomsten (n 13 above) [373].

27. Some authors even put these rights on par with rights of ownership. See further ch 3, p 48.

28. Compare Unberath, Die Vertragsverletzung (n 25 above) 183, 219; Hartkamp, Asser IV(I) Verbintenissenrecht (n 26 above) [32]. See also ch 3, p 51.

29. Compare Unberath, Die Vertragsverletzung (n 25 above) 85.

30. See Unberath, Die Vertragsverletzung (n 25 above) 219.

31. See further ch 3, pp 59 ff.

32. §§ 275 I and II BGB; § 439 III BGB. Arts 6:74(2) and 7:21(4) BW.

33. See further ch 4, pp 97-8.

34. Compare Zimmermann, The New German Law of Obligations (n 22 above) 85-7.

35. A model of how this may be applied in Dutch law has been proposed by MM Stolp, Ontbinding, schadevergoeding en nakoming; De remedies voor wanprestatie in het licht van de beginselen van subsidiariteit en proportionaliteit (Kluwer, Deventer 2007).

36. Principles may however be extended to areas which are linked; for example, s 62(2) of the SGA provides explicitly that general contract principles, except in so far as they are inconsistent with the Act, also apply to sale of goods. Compare Benjamin's Sale of Goods (n 13) [1-007].

37. C Fried, Contract as Promise (Cambridge MA, Harvard University Press, 1981).

38. See ch 4, pp 88-9.

39. A possible fifth category, the restitution interest, will not be explored here. Its relevance to the theory related to the binding nature of promises appears limited, since restitution may be an issue in non-contractual as well as in contractual contexts.

40. LL Fuller and WR Perdue, Jr, 'The Reliance Interest in Contract Damages' (1936) 46 Yale Law Journal 52 and 373.

41. LL Fuller and WR Perdue, Jr, 'The Reliance Interest in Contract Damages' (1936) 46 Yale Law Journal 53.

42. Fried (n 37 above) 19.

43. PS Atiyah, The Rise and Fall of Freedom of Contract (Oxford, Clarendon Press, 1979) 184 ff.

44. L Smith, 'Understanding Specific Performance' in N Cohen and E McKendrick (eds), Comparative Remedies for Breach of Contract (Oxford, Hart Publishing, 2005). See also SA Smith, Contract Theory (Oxford, Oxford University Press, 2004) 73-4. A similar view may be taken in German law; see Unberath (n 25 above) 217.

45. Compare SA Smith (n 44 above) 73.

46. McKendrick (n 6 above) above; compare also E McKendrick, 'The Common Law at Work: the Saga of Alfred McAlpine Construction Ltd v Panatown Ltd' (2003) 3 Oxford University Commonwealth Law Journal 145 at 167 ff.

47. Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344 (HL).

48. McKendrick (n 6 above) 1017.

49. Compare B Coote, 'Contract Damages, Ruxley and the Performance Interest' (1997) 56 Cambridge Law Journal 537 at 566-7; McKendrick (n 6 above) 1028.

50. See ch 4, pp 84 ff.

51. See ch 5.

52. Compare SA Smith, Contract Theory (n 44 above) 103.

53. Fried, Contract as Promise (n 37 above) 17; compare also SA Smith, Contract Theory (n 44 above) 71.

54. Compare PS Atiyah, An Introduction to the Law of Contract, 5th edn (Oxford, Oxford University Press, 1995) 15.

55. For further discussion of factors that may influence the successfulness of harmonisation, see ch 2, pp 21 ff.


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