Legal Translations of European Contracts
Unlike the rather aligned contract law of the United States (UCC, Restatement of Contract Law, etc.), Europe does not have a single law of contracts. Instead, every Member State has its own code (or in some cases codes) that govern this area of law. Thus, a contract will be adjudicated differently in Germany than it would in France – making the issue of where to file suit for breach of contract a major component to any litigation. There’s also the issue of foreign language translation, although such codes as the German Civil Code does have an English language translation available on the Federal Ministry of Justice’s website.
Despite these differences, several ‘European’ generalizations can be made. The starting point for European contract law is generally the Principles of European Contract Law, a treatise prepared by the Commission on European Contract Law and the closest equivalent to the US Restatement. What is interesting is that this treatise does provide a basic comparison between the principles of contract law in Europe and the US. For example, under US contract law, a party who makes an offer can typically revoke the offer at any time. In Europe, however, the offeror typically must keep the offer open for a ‘reasonable’ period of time.
To get a clearer picture of these differences, and how they may effect the entering into of an international contract, we will look at several basic provisions:
A gratuitous promise is a promise to do something or to give something without receiving anything in exchange. In the US, a court will generally not enforce a gratuitous promise unless there is a specific, legally recognized basis for enforcement (such as consideration or reliance). In other words, in order for an agreement to be enforceable there needs to be consideration for the promise, known as the requirement for exchange or the ‘bargain theory of consideration’.
In contrast, Europe generally recognizes and enforces gratuitous promises. According to the Principles of European Contract Law, a contract is ‘concluded’ if a) the parties intend to be legally bound and b) they reach a sufficient agreement without any further requirement. Thus, a US business in negotiations with a European business could find themselves in an enforceable contract in Europe when they were operating under the belief that they were still in the informal negotiation stage of the process.
The Requirement of ‘In Writing’ (Statute of Frauds)
A staple in US contract law is the Statute of Frauds. Although most oral promises are enforceable regardless of whether or not any record was written, the majority of states have passed specific legislation making such promises unenforceable without evidence by a writing signed by the individual making the promise.
In Europe, on the other hand, a contract does not have to be concluded or evidenced in writing and may be proved by alternative means, including witness testimony. However, with that being said, there are exceptions, particularly within the laws of the individual Member States. For example, some countries require a writing (or notarization) for contracts involving the sale of land or those dealing with a value in excess of a certain amount. Regardless, it is essential that one understand this general principle and caution one’s client on it – and to involve a foreign language interpretation of all negotiation to ensure that no promises are unintentionally made!
Revocation of Offers
As a final example of the differences between the principles of US and European contract law, there is the issue of revoking an offer. In the US, the person making an offer can generally revoke it prior to the other party’s acceptance of it. However, in Germany, the statute specifically states that an offeror is not allowed to revoke an offer unless the offer clearly states that it is revocable and/or subject to change. If not noted, all offers will remain in effect until it lapses or is rejected by the offeree.
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