The Common Frame of Reference for European Contract Law
- and its Interaction with English and German Law

European Contract Law and the 'Common Frame of Reference'

The Europeanization of contract law is one of the most important current developments in private law. For more than twenty years, various scholarly initiatives have worked towards a pan-European contract law. The European Parliament and the European Commission have promoted or endorsed initiatives in this area, and in April 2008 the Council of the European Union subscribed to creating a CFR. The CFR is conceived as 'a set of definitions, general principles and model rules' in the field of general contract law, including consumer law. For the time being, it is intended to provide non-binding guidelines to be used by the Community legislator. However, the CFR could develop into a set of directly applicable rules of contract law which the contractual parties might choose as the applicable law for their transaction ('optional instrument'). Ultimately, it might even serve as a basis of a European Contract Code.

In 2005, the European Commission commissioned a network of researchers to elaborate a Draft Common Frame of Reference (DCFR). The black letter rules of the DCFR were published in early 2009.[1]The final version of the DCFR with comments and notes is due to be published towards the end of 2009. The European Commission is currently in the process of deciding whether it should suggest that this academic proposal be turned into a 'political CFR', i.e. an instrument that is vested with authority by the legislative organs of the European Union. It is as yet not clear whether this will be done and, if so, to what extent the model rules of the DCFR will be adopted in the CFR. It is, however, to be expected that the scope of the CFR will be considerably narrower than that of the DCFR which also covers matters other than general contract law. The CFR is therefore likely to correspond broadly to Books I-III which deal with general rules on contract law.

There is, at present, a vivid debate amongst contract lawyers all over Europe on the merits and demerits of the idea of a CFR in general, and of the DCFR in particular. This debate concerns a variety of topics, such as the constitutional implications of the European Union acting in the area of contract law and the methodological problems of harmonising a central area of private law that is still marked by notable differences between legal systems. Some authors have also provided detailed criticism of parts of the DCFR.

The Interaction Between the Common Frame of Reference and National Law

The present project examines a different, but equally important aspect of European contract law that has not received much attention so far: it will analyze how the CFR rules, once used for their intended purposes, will interact with the legal environment in which they are to operate, namely the domestic legal systems of the Member States; where appropriate, the book will also set forth proposals for improving this interaction.

The adoption of a CFR would fundamentally alter the relationship between European and national contract laws. Present EU contract law is characterised by a multitude of directives which are at best loosely connected. They deal with selected aspects of consumer protection, particular types of contracts, or even specific contract clauses. This fragmented ('sector specific') approach leaves it to each domestic system to ensure, by way of implementation, that European rules are made to dovetail with other rules of that system. A CFR with a coherent structure, substance, style and terminology which covers all of general contract law will result in a very different interaction with national law, even if the CFR is, as is currently envisaged, (only) enacted as a non-binding guideline for the Community legislator. As a standalone set of rules, the CFR will, within its scope of application, cover all general contract law questions from pre-contractual duties over formation, policing, performance and remedies. The CFR thus will serve as a yardstick for legislative and judge made contract law reform in the Member States. It will also influence the interpretation of domestic contract rules.

Moreover, a complete new set of interfaces will have to be defined for the interaction of CFR rules with domestic rules on particular contracts, on adjacent areas, such as tort or unjust enrichment, or even with more remote areas like property law, civil procedure and conflict of laws. A very careful analysis of the differences and similarities between CFR rules and national laws will be required to reveal those interfaces, to identify problems, and to propose solutions. The DCFR, to give just one example, has generalised from particular pieces of EU legislation a wide-ranging set of pre-contractual information duties which go far beyond any similar duties imposed by English contract law. Once formulated as general rules rather than as narrowly confined provisions of several EC consumer directives, their considerable effects on the English doctrines of consideration and privity will become all the more apparent, and may cause many to rethink whether what under English law belongs to tort law should be rather considered as forming part of contract law rules. Another example for such an "interface" issue concerns the binding offers which consumers can make on standard forms provided by a business under German law, and how this relates to the rights of withdrawal which EC consumer law offers for a variety of contracts.

Further challenges would arise if the CFR was indeed turned into an optional instrument. One potential application of the CFR that has been widely discussed is that e-businesses which market goods internationally should be allowed to offer consumers a choice of CFR based rules for their electronic distance sales contracts by clicking on a 'blue button' (representing the European flag)[2] which, as a Eurobarometer survey has found, most consumers would find more attractive than the national law of the e-shop. An optional instrument for such 'blue button contracts' would have wide-ranging repercussions on other rules of domestic laws, notably on jurisdiction and choice of law (albeit now widely harmonised throughout Europe), property law (concerning the goods), and domestic law which has gone beyond minimum harmonisation rules, as for example the much stricter control of standard terms under §§ 305 et seq BGB in Germany, on collective procedures relating to the validity of standard terms, or on unfair competition law which goes beyond the Unfair Commercial Practices Directive.

None of these issues has been fully explored so far, and our project aims to fill this gap by focussing on two of the most important legal systems in the EU, namely those of England and Germany, as representatives of the common law and the civil law tradition. It will provide a reality check for the existing model rules in Books I-III DCFR, and it is hoped that the results of the study can feed into the eventual formulation of the final CFR. In the unlikely event that a final CFR will have been formally adopted before the publication of the book, the book will of course take this final version of the instrument as a point of reference.

[1] C von Bar, E Clive and H Schulte-Nölke (eds), Principles, Definitions and Model Rules of European Private Law: Draft Common Frame of Reference (DCFR), Outline Edition. Prepared by the Study Group on a European Civil Code and the Research Group on EC Private Law (Acquis Group). Based in part on a revised version of the Principles of European Contract Law (Munich, Sellier, 2009).

[2] H Schulte-Nölke, 'EC Law on the Formation of Contract - from the Common Frame of Reference to the 'Blue Button'' (2007) 3 European Review of Contract Law 332-349.

Gerhard Dannemann, Berlin
Stefan Vogenauer, Oxford