Reviewing Larry DiMatteo and Irma Russell and Barbara K. Bucholtz, Part II

This is the second post in my series on  Larry Di Matteo‘s Principles of Contract Law and Theory (Principles) and Irma Russell and Barbara K. Bucholtz‘s Mastering Contract Law (Mastering).  The aim is to all some attention to these two books while using them to stimulate my thinking as I once again consider how to teach contracts law to first-year students.  The two books are very different.  Principles is a scholarly textbook addressing advanced topics at a very high level of sophistication.  Mastering is a study-guide for first-year students.  They both have their charms, but they are very different.  Each entry in this series will cover a chapter in each book, with some splitting of chapters because the books don’t have the same number of chapters.  Most weeks, the chapters will not cover corresponding subject-matters.  So be it.

The second chapter of Principles is a foray into comparative contracts law.  It covers the differences between civil and common-law approaches, reciprocal influences, the internationalization of contracts law, and hard and soft law.  

Principles identifies two virtues of the comparative perspective.  First, knowing other traditions leads us to the humbling recognition that our way of doing things is not the only plausible way.  Second, we can take some comfort as Professor DiMatteo reminds us of Hugh Beale’s insight: despite differing terminologies that seem to divide the traditions, commonalities predominate. (36-37) Some of these commonalities are the product of legal transplants, and Principles highlights some imports into our common-law system that come from surprising sources. (37). Especially in private law, convergence between common law and civil law is the norm, either through revision or transplant.  (40) Exceptions are rare. Specific performance is a standard remedy in the civil system and extraordinary in the common law. (45) Civil law enforces penalty clauses; common law does not. (45-46) More fundamentally, civil law is code based, and courts fill gaps through extrapolation and analogy.  Common law courts are suspicious of legislation and construe statutes narrowly to avoid sudden jolts to the slow liquidation of legal norms based on precedent. (40)

One area of notable difference that occupied a lot of time at the recent KCON Conference is good faith.  The concept is fundamental in civil law, an implied term in contracts in the U.S., and largely avoided in UK law, outside of the context of consumer contracts. (41-43) Unlike in the U.S., civil law imposes a duty to negotiate in good faith, and failure to do so might result in an award of reliance damages to the non-breaching party. (46-47) 

The traditions also differ in interpretive matters.  Common law courts attempt to get at the intentions of the parties.  Civil courts attempt to determine what category of contract the parties intended and then use the statutes relevant to that category to fill in gaps. (48) Civil law also recognizes fault in contract, and thus the breaching party can sometimes allege that the non-breaching party was negligent or contributed to the fault. Fault comes into the common law indirectly through doctrines like good faith, unconscionability, and other defenses to formation. (49-50)

Internationalization came to contracts through the CISG, which was adopted in 1988 and now has been ratified by over 100 states.  It illustrates internationalization but also convergence, as it was the product of negotiations among representatives of both the civil and the common  law traditions.  Principles then provides a summary of some differences between the CISG and the UCC/common law, contrasting the more seller-friendly approach of the former with the latter’s more buyer-friendly approach. (50-53) Finally, Principles discusses hard law obligations found in international agreements and the soft law obligations that make up the lex mercatoria, comprised of trade usages, business practices, and commercial customs. (54-55)

Chapter II of Mastering provides a short road map of definitions and guiding principles.  The Authors begin with a brief, clear, helpful discussion of what a contract is and how the word “contract” relates to similar terms, such as “bargain” or “agreement.” (13-14) An agreement, the Authors explain, entails a bargain, but it may go beyond that, as the agreement of the party may entail implied terms. Not all agreements are contracts, in the sense that courts may not enforce an agreement in certain circumstances, for example if it is a contract to perform some illegal service. (14-15)

Next, the Authors introduce the concept of freedom of contract, but they also note that freedom is tempered by public policy.  (15).  They illustrate the limitation on freedom on contract with a discussion of illegal contracts. In that section, they also note that freedom of contract entails the freedom not to contract. (15-17) The stage-setting proceeds very rapidly.  This was a very short chapter.  Some of the chapters to come are far more lengthy and may end up getting split into multiple posts.

The first post in this series can be found here.