The Negotiation and Drafting of International Contracts Course of Mr. Robert Simpson
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Some important ideas to retain from a study of the development of common law include:
° Emphasis on procedure: a plaintiff needed to find an existing cause of action recognized by the royal courts (hence the description of common law: "remedies precede rights." ° There developed only a specific number of causes of action. ° There was no distinction between private and public law (all was public). ° The existence of a rigid and complex procedural framework excluded any large-scale resort to concepts of Roman law. ° Jurists had to learn common law and its procedures from practice, not from studying Roman law at universities; there thus developed at an early date an independent bar of practicing lawyers. ° The importance of the concept of natural law (a body of higher laws, basic and unchangeable, which direct human conduct and to which human laws must or should conform); today this might be called "the rule of law". ° The concept of the supremacy of law as a limitation on government (the sovereign as a limited power). Consider the "Magna Carta" (1215) which established that there are certain laws even the King must obey. Example: "No free man shall be seized, or imprisoned, or dispossessed, or outlawed, or in any way destroyed; nor will we condemn him, nor will we commit him to prison, excepting by the legal judgment of his peers, or by the laws of the land.” ° The importance of the dicta of Coke in Dr. Bonham's Case, 8 Coke's Reports 114a (1610): common law will control acts of Parliament and sometimes hold them to be void "if against common right and reason, or repugnant, or impossible to be performed." This principle later became very important in the development of common law in the U.S. ° Common law courts became the sole guardians of common law constitutional limitations even as against Acts of Parliament. ° Development of the concept of the legal rule or the law of the particular case (as opposed to obiter dicta, comments by the judge in his decision that are not directly part of the holding of the case). English law became a law based on court decisions. ° The fundamental technique of the practice of English law became the technique of distinctions: distinguishing the fact situation of one decision from that of another. c. Further development of common law and the emergency of equity (1485-1800's). Over a period of time, the king delegated his judicial functions, especially the power to issue writs, to his chancellor. The writs and actions on the case were too limited and rigid to allow the royal courts to render justice in all circumstances. Thus, plaintiffs would go to the king to seek special relief. These cases were usually referred to the Chancellor (the king's counselor and "conscience") who considered the "equity" of the particular case. If the situation was harsh enough, the chancellor granted special relief. By the 15th Century, the chancellor became almost an independent judge. Development of chancellery courts. Consider the following order of James I (early 1600's) to his chancellor: We do will and command that our Chancellor or Keeper of the Great Seal for the time being, shall not hereafter desist to give unto our subjects, upon their several complaints now or hereafter to be made such Relief in Equity as shall stand with the Merit and Justice of their Cause and with the former, ancient and continual Practice and Presidency of our Chancery. This in fact gave equity predominance over common law. Equitable relief was discretionary. Equity would intervene only when the remedy at common law was inadequate. At first equity was "a roguish thing and "varied like the Chancellor's foot" since the concept of "justice, equity and good conscience" was subjective. Equity courts followed procedure inspired by Canon law and principles from Canon and Roman law. Its proceedings were secret. However, equity soon became as rigid as common law because it was based on ideas of "equity" in the 15th and 16th Centuries as seen by the various chancellors. Common law vs. equity Equity was not new law. "Equity follows the (common) law." Some examples: ° The common law remedy for breach of contract was damages. Equity developed the decree of specific performance (not a new law, but a new remedy). ° At common law, parties needed proof. However, common law courts could not force parties to produce evidence. Equity developed the discovery order. ° The common law action of duress covered only physical violence. Equity covered mental violence (undue influence). ° At common law, a trustee of a trust was the owner of the property, though he held it in trust for another. However, common law could not force him to do so. Here again, equity courts allowed specific performance. It is seen from the above that equity acts in personam; the chancellery courts acted by orders or injunctions addressed to a specific person. Equitable remedies were discretionary and one had to come into court with "clean hands", and there could be no "laches". d. Ascendancy of common law and Parliament (1800's - present) Influence of democratic ideas (e.g., Bentham). Development of Parliament. Because of the rigidity of equity, Parliament stepped in to fill the gaps and abuses of common law. Common law, through Acts of Parliament, again became dominant. Common law also absorbed commercial law. However, the equity jurisdiction of the chancellery courts continued until the Judicature Acts of 1873-1875 abolished the distinction between the common law courts and the chancellery courts. Thereafter, all superior courts (courts of general jurisdiction) became competent to hear all actions. The 20th Century has seen increased legislation, plus administrative regulations. Much of the old common law has become statutory law. Comparison with civil law Neither France nor Germany had a common law in the sense of a general body of law common to the whole country. They achieved a centralized administration of justice at a much later period than did England. The Civil Codes (France 1804, Germany 1900) were fresh starts for their legal systems. Legal situation in France prior to the Codes Four factors: ° Struggle within the more decentralized French feudal system between local seigniorial judges and central (royal) power. ° Conflict between church and state. ° Overlapping jurisdictions. ° Administration of justice was slow, complicated and expensive. There was never any unification of French law under the ancien regime. Voltaire: "The traveler changed his law as often as he changed horses." One of the drafters of the French Civil Code described the French scene prior to the promulgation of the Code: "What a spectacle opened before our eyes! Facing us was only a confused and shapeless mass of foreign and French laws, of general and particular customs, of abrogated and non-abrogated ordinances, of contradictory regulations and conflicting decisions; one encountered nothing but a mysterious labyrinth, and, at every moment, the guiding thread escaped us. We were always on the point of getting lost in an immense chaos." The greatest achievement of the French Civil Code was to give France a national, unified and coherent body of law. This newly-found unity is symbolized by a provision of the law promulgating the Code: From the day on which these laws enter into force, the Roman laws, the ordinances, the general and the local collections of customs, the statutes, the regulations all cease to have the force of law in the matter covered by the laws which comprise the Code. Legal unity was even longer delayed in Germany. Modern Germany did not achieve political unity until the final decades of the 19th Century. Before the Civil Code became effective, at least six systems of law were in force within the territory of the new state. These systems were subject to change by local law and custom. The law as to succession, for example, often varied from one contiguous locality to another. Some of the laws in force were written in German, others in French, others in Greek, Latin, or Danish. The situation prior to 1900, the date the German Civil Code took effect, is well characterized by the observation: “That such an anomalous state of things could have been tolerated for so long a time is a legal mystery which remains to be solved.” Modern tendency of the convergence of the common law and civil law systems (e.g. harmonization and even codification in common law countries and greater resort to jurisprudence in civil law countries). 2. Adaptation of English common law in the United States Problems with adopting English common law in the U.S.: ° English common law procedure was too archaic. ° There were not enough American jurists trained in the technicalities of English law. ° Common law was developed in a feudal society that was repugnant to the colonialists. ° Roscoe Pound: "Ignorance was the principal factor in the development of American law. " ° Importance of the decisions in Dr. Bonham's Case (above) and Calvin's Case (1608). The latter held that English common law was applicable in the colonies but only to the extent appropriate to life in the new world. The 18th Century saw development of commerce and an improvement of living conditions. The need for a more evolved law led to a more general application of English common law. However, U.S. law accepts only such portion of English common law as conforms to the institutions of the U.S. and its form of government and is applicable to the habits and conditions of its society. The common law applicable in the U.S. is the common law of England prior to (and not after) 1776. The fabric of the American society has woven into it certain fundamental ideas, policies, or institutions which over the years have been fostered and protected by its legal system. 2 How to brief a case: 1. Identify the plaintiff and defendant (sometimes subsequently called the appellant or the respondent if one party is appealing the decision of a lower court). 2. State the essential facts. (What is the plaintiff’s claim? What is the defendant’s position?) 3. For which party did the court decide and what is the court’s holding? 4. Describe the court’s reasoning? 5. What is the rule of the case? 6. Is there any obiter dicta? 7. Did the court consider any reasons of public policy? 3 (First Amendment) “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.” 4 (Second Amendment) “A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.“ 5 (Fourth Amendment) “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. 6 (Fifth Amendment) No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any property, without due process of law; nor shall private property be taken for public use, without just compensation.” Right against self incrimination. No witness may be compelled to answer a question which will tend to expose him to a criminal prosecution or subject him to a penalty or forfeiture. The Fifth Amendment right against self-incrimination attaches when the defendant is questioned by law enforcement officers after he has been taken into custody or otherwise deprived of his freedom in any significant way. In this situation, no statements by the defendant are admissible as evidence at trial unless he has been warned a) that he has a right to remain silent; b) that anything which he says may be used against him in evidence; c) that he has a right to the presence of counsel; and d) that if he cannot afford counsel, counsel will be appointed for him. Miranda v. Arizona, 384 U.S. 436 (1966). 7 (Sixth Amendment) Any statement by defendant is inadmissible if obtained in violation of defendant’s right to counsel. This right attaches at any "critical stage" of the criminal proceedings. After a defendant is arrested or indicted, he may no longer be interrogated without the presence of counsel. 8 (Seventh Amendment) In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law. 9 All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws. 10 See Restatement sec. 330. In awarding damages, compensation is given for only those injuries that the defendant had reason to foresee as a probable result of his breach when the contract was made. If the injury is one that follows the breach in the usual course of events, there is sufficient reason for the defendant to foresee it; otherwise it must be shown specifically that the defendant had reason to know the facts and to foresee the injury. The following factors are useful in determining how foreseeable a particular breach is: i. the degree of fault associated with the breach; ii. the relationship between the risk imposed on the defendant and the price of the contract; iii. the respective abilities of the plaintiff and defendant to assume the risk; iv. the reasonableness of the plaintiff's reliance on the contract in extending his commitments; v. the character of the loss to be compensated (out of pocket losses; anticipated profits); and vi. the speculative character of the loss and the feasibility of determining the damages. 11 Arguments in favor of upholding provisions for liquidated damages: (i) enhances likelihood promises will be kept by providing possibility of a strong penalty; (ii) eliminates plaintiff's burden of proving his damages (if defendant breaches contract why should the plaintiff be stuck with a difficult burden of proof?) (iii) sets up a precise measure of damages; (iv) minimizes litigation. Arguments against such provisions: (i) likelihood of unjustly enriching one party; reliance and expectation interests exceeded; purpose of contract damages is compensation, not windfall gains; (ii) proliferation of contracts of adhesion - inequality of bargaining power - to extend freedom of contract to the area of remedies further distorts the inequality of bargaining power; (iii) at the time a contract is made, most people exaggerate their ability to perform and do not give sufficient attention to provisions relating to damages. 12 For example, the 1980 Vienna Convention on Contracts for the International Sale of Goods (“CISG”) applies “to contracts for the sale of goods between parties whose places of business (étabilissements) are in different States (Article 1). Such Article goes on to provide: “Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention.” The 1968 Brussels Convention on Jurisdiction and Enforcement of Judgments (Article 17) and the related Regulation of December 2000 (Article 23) as to jurisdiction of courts in the European Union allow for the parties to choose which country’s courts will have jurisdiction if the parties have their domicile in different States. The 1980 Rome Convention on the Law Applicable to Contractual Obligations provides (Article 1) that: “The rules of this Convention shall apply to contractual obligations in any situation involving a choice between the laws of different countries.” Said otherwise, the Convention applies to contractual obligations in situations involving a conflict of laws. In international treaties, there seems to be a preference for more objective tests rather than less precise economic tests. 13 The most successful example of state contracted international commercial law is the 1980 Vienna Convention on Contracts for the International Sale of Goods (“CISG”) developed by the UNCITRAL. As of October 2002, there were 62 states which had signed this Convention. The CISG contains rules governing the making and interpretation of international contracts for the sale of goods. It also provides rules governing obligations and remedies of the parties to such transactions. The CISG does not deprive sellers and buyers of the freedom to mold their contracts to their specifications. Generally, they are free to modify the rules established by the Convention or to agree that the Convention is not to apply at all…. The CISG does not apply to contracts to provide services alone. Generally, it does not apply to sales of goods bought for personal, family or household use. For example, ordinarily, it would not apply to the sale of a camera or clothing to a foreign tourist. It does not apply to sales of ships, vessels, or aircraft or to contracts covering the sale of electricity…. Over 1,000 judicial and arbitral rulings on the CISG have been identified…. To exclude the application of the CISG: The experts suggest language that specifically rules out the application of the Convention, e.g., "the law of North Carolina, excluding the CISG" or "Article 2 of the UCC as enacted in New York" or "the law of France, excluding the CISG." The reason for this is that the CISG is the law of North Carolina, New York 14 The European Union, notably through its various treaties and the issuance of regulations, directives, opinions and recommendations by the Council or the Commission, has contributed significantly to the development of laws applicable throughout the member states. The Commission is currently considering various possibilities for a harmonization of principles of European contract law (including the elaboration of a model law along the lines of the American Restatement of contract law) based upon the work of the Lando Commission. In France, pursuant to Article 55 of the 1958 Constitution: … les traités ou accords régulièrempent ratifies ou approuvés ont, dès leur publication, une autorité supérieure à celle des lois, sous reserve, pour chaque accord ou traité, de son application par l’autre partie(…) Under French case law, Community law (whether it be one of the constituitive treaties (Rome, Maastricht, Amsterdam, Nice; l’Acte unique) or norms established by Community regulations, directives or decisions, prevails over provisions of French internal law even if the latter are contained in a law enacted after the relevant European law (Cour de Cassation 1975, arrêt Jacques Vabre; Conseil d’Etat, 2 octobre 1990). Article 6 of the US Constitution provides: This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or the laws of any State notwithstanding. In English law, however, a treaty signed by the UK is applicable internally only when the Parliament votes a law containing the provisions of the treaty. 15 UNIDRIOT’s Principles of International Commercial Contracts (1994) (“PICC”). The purpose of these principles are set forth in their Preamble: These Principles set forth general rules for international commercial contracts. They shall be applied when the parties have agreed that their contract be governed by them. They may be applied when the parties have agreed that their contract be governed by "general principles of law", the "lex mercatoria" or the like. They may provide a solution to an issue raised when it proves impossible to establish the relevant rule of the applicable law. They may be used to interpret or supplement international uniform law instruments. They may serve as a model for national and international legislators. 16 The Lando Commission’s Principles of European Contract Law (1994, revised edition 1998)(“PECL”). Introduction to the Principles of European Contract Law Prepared by The Commission on European Contract Law: A businessman is negotiating a contract with a company in another State of the European Union, but neither party wishes to apply the law of the other country. A lawyer is advising parties to a contract involving parties in different States. An arbitrator has to decide a dispute under a contract "to be governed by internationally accepted principles of law". A professor of law wants his students to gain an understanding of the way in which contracts are treated by the laws of the different States of the European Union, and to learn the common principles. A legislator is drafting a code or a statute on the law of contracts. An European Union official is drafting a new Directive affecting contracts. All these need to know the principles of contract law shared by the legal systems of the Member States and to have a concise, comprehensive and workable statement of them. The Principles of European Contract Law Parts I and II(1), which has now also been published in the Italian langauge(2), and the coming part III will provide this. ... The Principles have been drawn up by an independent body of experts from each Member State of the European Union under a project supported by the European Commission and many other organisations. The principles are stated in the form of articles with a detailed commentary explaining the purpose and operation of each article. In the comments there are illustrations, ultra short cases which show how the rules are to operate in practice. Each article also has comparative notes surveying the national laws and other international provisions on the topic. The Principles of European Contract Law Parts I and II (hereinafter referred to as PECL I and II.) cover the core rules of contract, formation, authority of agents, validity, interpretation,, contents, performance, non-performance (breach) and remedies. The Principles previously published in Part I (1995) are included in a revised and re-ordered form Throughout Europe there is great interest in developing a common European civil and commercial law. The European Parliament has twice called for the creation of a European Civil Code. The Principles of European Contract Law are essential steps in these projects. 17 PICC: Article 2.16 - Duty of Confidentiality Where information is given as confidential by one party in the course of negotiations, the other party is under a duty not to disclose that information or to use it improperly for its own purposes, whether or not a contract is subsequently concluded. Where appropriate, the remedy for breach of that duty may include compensation based on the benefit received by the other party. PECL: Article 2.302 (ex art. 5.302) - Breach of Confidentiality If confidential information is given by one party in the course of negotiations, the other party is under a duty not to disclose that information or use it for its own purposes whether or not a contract is subsequently concluded. The remedy for breach of this duty may include compensation for loss suffered and restitution of the benefit received by the other party. 18 Article 2.11 - Modified Acceptance (1) A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer. (2) However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offeror without undue delay, objects to the discrepancy. If the offeror does not object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance. 19 Article 2.208 (ex art. 5.209) - Modified Acceptance (1) A reply by the offeree which states or implies additional or different terms which would materially alter the terms of the offer is a rejection and a new offer. (2) A reply which gives a definite assent to an offer operates as an acceptance even if it states or implies additional or different terms, provided these do not materially alter the terms of the offer. The additional or different terms then become part of the contract. (3) However, such a reply will be treated as a rejection of the offer if: (a) the offer expressly limits acceptance to the terms of the offer; or (b) the offeror objects to the additional or different terms without delay; or (c) the offeree makes its acceptance conditional upon the offeror's assent to the additional or different terms, and the assent does not reach the offeree within a reasonable time. 20 Article 66 Loss of or damage to the goods after the risk has passed to the buyer does not discharge him from his obligation to pay the price, unless the loss or damage is due to an act or omission of the seller. Article 67 (1) If the contract of sale involves carriage of the goods and the seller is not bound to hand them over at a particular place, the risk passes to the buyer when the goods are handed over to the first carrier for transmission to the buyer in accordance with the contract of sale. If the seller is bound to hand the goods over to a carrier at a particular place, the risk does not pass to the buyer until the goods are handed over to the carrier at that place. The fact that the seller is authorized to retain documents controlling the disposition of the goods does not affect the passage of the risk.
Article 68 The risk in respect of goods sold in transit passes to the buyer from the time of the conclusion of the contract. However, if the circumstances so indicate, the risk is assumed by the buyer from the time the goods were handed over to the carrier who issued the documents embodying the contract of carriage. Nevertheless, if at the time of the conclusion of the contract of sale the seller knew or ought to have known that the goods had been lost or damaged and did not disclose this to the buyer, the loss or damage is at the risk of the seller. Article 69 In cases not within articles 67 and 68, the risk passes to the buyer when he takes over the goods or, if he does not do so in due time, from the time when the goods are placed at his disposal and he commits a breach of contract by failing to take delivery. (2) However, if the buyer is bound to take over the goods at a place other than a place of business of the seller, the risk passes when delivery is due and the buyer is aware of the fact that the goods are placed at his disposal at that place. (3) If the contract relates to goods not then identified, the goods are considered not to be placed at the disposal of the buyer until they are clearly identified to the contract. Article 70 If the seller has committed a fundamental breach of contract, articles 67, 68 and 69 do not impair the remedies available to the buyer on account of the 21 Note: The right of first refusal referred to in the letter of intent is now set forth in the Company’s statuts. Directory: FACULTY FACULTY -> Dsci 3870: Management Science FACULTY -> Handling Indivisibilities FACULTY -> Course overview FACULTY -> Curriculum vitae wei chen professor FACULTY -> Digital image warping FACULTY -> Samples of Elements Exam Question III contains All Prior Exam Qs III except FACULTY -> 【Education&Working Experience】 FACULTY -> References Abe, M., A. Kitoh and T. Yasunari, 2003: An evolution of the Asian summer monsoon associated with mountain uplift —Simulation with the mri atmosphere-ocean coupled gcm. J. Meteor. Soc. Japan, 81 FACULTY -> Ralph R. Ferraro Chief, Satellite Climate Studies Branch, noaa/nesdis FACULTY -> Unit IV text: Types of Oil, Types of Prices Grammar: that/those of, with revision Download 0.79 Mb. Share with your friends:
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