Abstract
The present chapter analyses the interpretation of what is a “grossly unreasonable” unilateral determination of price or other contract terms under Art 74 of the draft CESL. This analysis is carried out in a comparative perspective, taking into account German and Dutch law, the PECL, and the DCFR. The chapter reaches two conclusions. Firstly, the term “grossly unreasonable” should be interpreted as “manifestly unreasonable” in the procedural sense. Hence, the lack of reason in the unilateral determination must be plain to see. The term “grossly” should not be read as a substantive or quantitative criterion. Secondly, and in view of possible future attempts to unify European sales law, the replacement mechanism in case of an invalid unilateral determination should be changed back to the wording “a reasonable price or term” as it is found in Art 6:105 PECL and Art II-9:105 DCFR, since the wording that was proposed for Art 74 para 1 CESL that refers to the price “normally charged” and “at the time of conclusion of the contract” is not capable of giving sufficient effect to the interests and economic considerations of the parties, particularly in long-term relationships.
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Notes
- 1.
“Les conventions légalement formée tiennent lieu de loi à ceux qui les ont faites.”
- 2.
Cooter and Ulen, Law and Economics (6th ed, 2014) 275.
- 3.
Shavell, Foundations of the Economic Analysis of Law (2004) 299–301.
- 4.
The determination of contractual obligations by a third party (Art 75 CESL) is not covered here, as this article deals only with Art 74. However, the language of Art 75 CESL is very close to Art 74, and the issues are quite similar. This similarity is also reflected in the fact that some legal systems deal with the unilateral determination and the third-party determination in one provision, see. eg the Dutch Art 7-904 para 1 Burgerlijk Wetboek.
- 5.
See H Unberath, ‘Der Dienstleistungsvertrag im Entwurf des Gemeinsamen Referenzrahmens’ in G Wagner (ed), The Common Frame of Reference: A View from Law and Economics (2009) 87, 139.
- 6.
Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law, COM(2011) 635 final, 2011/0284 (COD) (11.10.2011).
- 7.
See infra, at 14.5.
- 8.
We will disregard here the question of whether the buyer would still be interested in the goods at this price, and just assume that he is, possibly because the goods are very important to him.
- 9.
See extensively Unberath (n 5).
- 10.
Entry “gross”, in The New Shorter Oxford English Dictionary (1993) 1149.
- 11.
Ibid, entry “grossly”.
- 12.
Langenscheidts Enzyklopädisches Wörterbuch der englischen und deutschen Sprache (9th ed, 2002), part II, vol 1, 717. In favor of a substantive reading of “grob“: J Kleinschmidt, RabelsZ 76 (2012) 785, 800.
- 13.
Looschelders and Makowsky, in Schmidt-Kessel (ed), Der Entwurf für ein Gemeinsames Europäisches Kaufrecht (2014) Art 74 margin no 3 (translation ours).
- 14.
Kleinschmidt, ‘Contractual Terms, Subsequent Determination’, in Basedow, Hopt & Zimmermann (eds), The Max Planck Encyclopedia of European Private Law, Vol 1 (2012) 396, 397.
- 15.
“[…] manifesta iniquitas eius appareat […] “Paulus Digests 17.2.79; see Hofer, in: Schmoeckel, Rückert and Zimmermann (eds), Historisch-kritischer Kommentar zum BGB (2007) §§ 15–319 margin no 5.
- 16.
Art 1349 par. 1 codice civile.
- 17.
Warendorf, Thomas and Curry-Sumner, The Civil Code of the Netherlands (2013) 938.
- 18.
“[…] als de grensen zijn overschreden.” MacLean and Van den Hevel, in Castermans (ed) Bijzondere Overeenkomsten (2006) Vol 2, Art 904 note 2.
- 19.
“[…] alleen ernstige gebreken in de beslissing” make it voidable, Hoge Raad, 12/09/97, (1998) Nederlands Jurisprudentie, nr 382, 2175.
- 20.
Würdinger, in Münchener Kommentar BGB (6th ed, 2012) § 319 margin no 7.
- 21.
BGH, 3/11/95, (1996) Neue Juristische Wochenschrift, 452, 454.
- 22.
Würdinger (n 22) § 315 margin no 29 and 30; for historic references see also Kronke, AcP 183 (1983) 113, 139.
- 23.
Lando and Beale (eds), Principles of European Contract Law, Parts I and II (2000).
- 24.
Von Bar and Clive, Principles, Definitions and Model Rules of European Private Law, Draft Common Frame of Reference, Full Edition, Vol I (2009) 602.
- 25.
See the reference by Kleinschmidt (n 12) 800 fn 72.
- 26.
Lando and Beale (n 23) at 310.
- 27.
Ibid, at 312.
- 28.
See supra.
- 29.
Unberath (n 5) 87, 139.
- 30.
Unberath (n 5) 105 et seq.
- 31.
Looschelders and Makowsky (n 13) Art 74 margin no 5: “High requirements” for an invalidation.
- 32.
Kleinschmidt (n 12) 800–801.
- 33.
See supra.
- 34.
Also described as “tertiary costs”, see Calabresi, The Costs of Accidents (New Haven, 1970) 28.
- 35.
For the inherent problems of inexpert court evaluation see supra.
- 36.
See supra.
- 37.
Note that we are not concerned here with the question of who carries which costs at the end of a lawsuit. Distribution of costs is irrelevant if we look at total social welfare.
- 38.
Note also that the social gain of correcting an unreasonable unilateral determination is not identical with the private losses and gains by the parties, as the issue from a social point of view is not which party gets the amount in controversy, but whether the allocation reflects the optimal use of resources.
- 39.
See supra.
- 40.
Among traders, of course, Art 85 (k) CESL is not applicable, but Art 86 CESL may help.
- 41.
EM Kieninger, in Schulze (ed), Common European Sales Law (2012) Art 74 para 9.
- 42.
Kieninger (n 42) Art 74 para 10.
- 43.
Schulte-Nölke, in Schulze (ed), Common European Sales Law (2012) Art 5 para 6–7.
- 44.
See supra.
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Halfmeier, A., Dornis, T.W. (2016). Art. 74: The “Grossly Unreasonable” Unilateral Determination of Price or Other Contract Terms and Its Substitution Under the Proposed Art 74 CESL. In: Colombi Ciacchi, A. (eds) Contents and Effects of Contracts-Lessons to Learn From The Common European Sales Law. Studies in European Economic Law and Regulation, vol 7. Springer, Cham. https://doi.org/10.1007/978-3-319-28074-5_14
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