Formation of Contract in Western Europe

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02/02/18 Free Law Essays Reference this

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The Carthaginians also tell us that they trade with a race of men who live in a part of Libya beyond the Pillars of Heracles. On reaching this country, they unload their goods, arrange them tidily along the beach, and then, returning to their boats, raise a smoke. Seeing the smoke, the natives come down to the beach, place on the ground a certain quantity of gold in exchange for the goods, and go off again to a distance. The Carthaginians then come ashore and take a look at the gold; and if they think it represents a fair price for their wares, they collect it and go away; if, on the other hand, it seems too little, they go back aboard and wait, and the natives come and add to the gold until they are satisfied. There is perfect honesty on both sides; the Carthaginians never touch the gold until it equals in value what they have offered for sale, and the natives never touch the goods until the gold have been taken away. Herodotus, The Histories, Book IV, 196; translated by Aubry de Selincourt.

The writer illustrates the formation of contract in England, Germany, France and the Netherlands.

After a small synopsis of each contractual philosophy in each country he continues to refer comparative to the major elements that synthesize the nature of a contract dividing them in different chapters. The first one is the agreement, and the different approaches towards an agreement, i.e. the objective approach, the subjective approach and the hybrid or intermediate approach. Thus, the writer successfully introduces the reader to the basic outlines of contractual behavior and practice in each country. Then he continues referring to another basic concept, the Offer and Acceptance model and how this is absorbed in each system. Finally he mirrors the contractual significance in the contrast between Offers and Invitations to treat and the Display of Goods.

First of all it would be appropriate to try to synoptically refer to those basic features. The objective approach, according to which the error should be referred to an important point for the entire transaction (not required to duplicate the entire contents thereof) based on estimates of the average trader in this area of transaction.

B) Whereas the subjective approach, during which sought determination of the hypothetical party of a contract and the importance he attaches to the point of error, in accordance with the purpose of the transaction, and any economic or moral interests of its design.

There should be a cause

The French Civil Law has an important Rule (art 1131 CC) of the necessary cause. It tries to identify the reason why someone enters into a transaction.

> For example, a driving instructor sells his patent. The buyer does not pay. The court ruled in his favor, because you can get the free license of the state. The contract is not based on any cause.

The question is used to ensure that the contract is reasonable and is not incorrect.

b) In English law: consideration

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The English are the toughest for the binding: we need delivery-cons, even if the mere promise is worth nothing ? exchange.

> For example, a person who receives a promise .- must also promise something in return. It is not necessary to be much, but it must materialize the exchange. For example, someone buys a Bentley for 1 pound.

Cause is irrelevant

Consideration, followed by agreement an intention to be legally bound, validates a contract. Thus, the outward appearance of the contractual terms and agreements are enough to create legal bindings i.e. a contractual relationship, without having to deal with the real intentions or with what was in mind of the contractors.

This essential contrast can be mirrored in the fact that in English law, a donation is not a contract.

A contract cannot be based solely on the willingness of the parties. In English law there must be a “consideration” = each party agrees to its detriment something: I sell my bike, but the other party also has a disadvantage: payment of price ==> we must materialize the fact that everyone suffers a detriment. The consideration is a mutual disadvantage.

The English saw the contract as an exchange, not really a manifestation of will.

The systems that follow an intermediate approach establish an objective and a subjective criterion for determining the existence of material error in the elements of a contract: according to the objective criteria, the error is material if it shows ignorance or erroneous knowledge of reality to the subject property (or person), which is important for the entire transaction, according to the agreement of the parties (which may be express or implied or implicit in the negotiations) or the good faith and practices. The subjective criterion is the significance of the disputed element, so that the party would not contract if he knew the real situation.


The objective approach towards an agreement to determine whether a statement is an offer or not. Thus the outward appearance of the intention constitutes if a statement is valid to be considered an offer or not. The

German law also follows an objective approach to determine whether a statement (declaration of intention) can be considered as an offer. But what is an important difference with English law, is the added element of good faith 1

It is the firm proposal to conclude a specific contract on terms determined that the mere acceptance definitively conclude the contract.

More objectively, it is a unilateral expression of will by which a person who is the bidder proposes to another person the conclusion of a contract determined under conditions such that the mere acceptance of these conditions allows the conclusion of final contract.

In France this model is followed in the formation of a contract, however the doctrine of subjective approach should always be followed, I.e. an offer and acceptance should equal with the real intentions. The only case where the offer and acceptance model is followed literally is in sales contracts. 2

The model of offer and acceptance is an ingredient of Dutch contract law since it is clearly introduced in Dutch Civil law 3. BW demontrated the important elements that should consist an offer I.e. an offer should be definite and should contain the essential elements of the contract. 4

1 German Civil Code (Burgerliches Gesetzbuch; BGB), section 242

2. Art. 1583 Code Civil

3 6:217 (1) DCC

4 6.227 BW

Invitation to treat or an offer?

An invitation to treat in England indicates a person’s willingness to negotiate a contract.

In Harvey v. Facey 3, an indication by the owner of property that he or she might be interested in selling at a certain price, for example, has been regarded as an invitation to treat.

In Gibson v. Manchester council the words “may be prepared to sell” were held to be a notification of price and therefore not a distinct offer, though in another case concerning the same change of policy and stopped the sale of council houses to their tenants Storer v. Manchester City Council, the court held that an agreement was completed by the tenant’s signing and returning the agreement to purchase, as the language of the agreement had been sufficient and clear and that signature on behalf of the council completed the formal format.

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The courts have tended to take a consistent approach to the identification of invitations to treat, as compared with offer and acceptance, in common transactions. The display of goods for sale, no matter where they are displayed, is treated as an invitation to treat and not as an offer.

In Germany, advertisements, catalogues, and prospectuses are also treated as invitations to treat. Those who are interested should make an offer the one who invited to treat.

As far as the rule in Netherlands is concerned, the idea is whether there need to be additional bargaining i.e. characteristics that are essential to describe the object or the service and also if there need to be extra information concerning the contracting individuals.

In French Law it the contradiction between offer and invitation to treat is not clear. However it seems from the ��code judgee�� that mostly the advertisements are treated as invitations to treat.

5 [1893] A.C. 552


English contract law, like English law in general, follows the principles arising from case law. However, in some areas, the law that has occurred is to codify existing case law, or to transpose international instruments or European.

Despite this lack of codification, the English law of contract often experiences the same principles as the French law. Thus, at the time of contract formation formalism is absent and an agreement can be oral or written, the causes of nullity of contracts are identical to those of the French law: mistake, violence (force natura), influence, illegality and misrepresentation.

However some differences, which are mainly due to the spirit of Anglo-Saxon law, must be underlined. The English court, as opposed to the French judge, focuses far more on the actual wording of contractual terms and the terms of the contract, without seeking whew as in France, the common intention of the parties beyond these contractual provisions is identified.

The intention of the parties is not, nevertheless, totally absent in English law. In terms of the validity of the contract, for example, the English law of contract requires, besides the meeting of two wills, of an offer and acceptance, two additional conditions: the parties intended to create legal binding and enforceable agreement (otherwise, the agreement will have the value of a gentleman’s promise, which will prevent the parties to go to court for breach of agreement), and the consideration (“consideration”) to the undertaking, which is equivalent to the notion of cause in French law. It also notes a tendency to develop a doctrine called “purposive interpretation of contracts” resulting in trying to interpret an actual situation.

Unlike U.S. law English law does not recognize the principle of good faith performance of contracts. Otherwise the English courts will not enforce an undertaking to negotiate in good faith.

English contract law has traditionally been divided between the contractual obligations which are voluntarily undertaken and owed to a person or a group of people data, responsibility and obligations that are imposed as compensation for an injury, requirement legally and sometimes due to a larger number of people. Recently, a third category of bonds has been accepted, the refund obligations (restitutionary obligations), based on an “unjustified enrichment” (unjust enrichment), akin to unjustified enrichment.

Overview of English contract law

The rights of common law contracts pose four questions:

When and where a contract is formed?

When a party may withdraw it from its obligations (under the assumption that the contract was formed under duress or by means of a misrepresentation)?

What meanings and effects can be given under the contract?

What remedy can be made to a breach of contract?

Training Contract [edit]

The contract will exist when there is an agreement, consisting of an offer and acceptance, consideration and intention to create a legal relationship. However, in a deed, no consideration is required – the council’s solicitor, notary equivalent of civil law countries are supposed to claim consideration.

Other conditions of the contract may involve:

Form of contract: Under certain assumptions, the formalities are required for that contract is formed.

Ability of the contractor: the parties must be legally capable of concluding a contract.

Consent agreement must be made freely. Consent may be vitiated by duress or undue influence

Legality: The contract must not be contrary to law or public policy.

A contract that has all these qualities is valid. The absence of an essential element vitiates the contract or makes it unenforceable. In some situations, a collateral contract may exist.

Meaning and effect of contract terms

Many cases were either contractual disagreement between the parties on the terms of the contract, which requires each party to do or not do something. So many rules of contract law that refer to the interpretation of terms are vague or ambiguous.


“An agreement whereby one or more persons undertake, to one or more others to give, to do or not do something. “4

The contract will appear in the strict sense, as a special convention. The agreement differs from the contract yet. Indeed, the agreement can generate effects of any rights (or pass off legal obligations). The contract is going to have a creative role: it will create legal effects and these effects will juridiques1 bonds.

The Code Civil enumerates four essential conditions for the validity of agreements 5 :

Free and informed consent of the parties;

The ability of parties to contract; (capacity)

A certain object and determined;

Law abiding cause.

The first two conditions are related to an essential aspect of the contract, which represents the will of the parties. The latter allows classifying the contracts into several types.

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6 In Article 1101 of the French Civil Code

7 In Article 1108, the French Civil Code

In contract law, the object of the obligation is a condition for its formation 1. The contract only creates obligations and it is these that have a purpose. 6

It is important to distinguish in a contract the object (objet) between the obligations 7. The purpose of the contract is the juridical operation referred to in its entirety, while the object of the obligation is the actual ��delivery�� to be provided by each party. For example in a contract of sale of a house, the contract is the sale and the object of the obligation is part of a home, on the other hand the sum agreed between the parties to this sale.

In a unilateral contract, there is only one object, whereas in a bilateral contract, there are two objects.


The original German law of contracts makes a distinction between the sales contract itself and the transfer of ownership. Indeed, the contract of sale is a generative act of the bonds, but it does not operate the transfer of ownership of the thing contracted for.

At this point, the seller only takes a commitment to transfer ownership to the buyer if the latter undertakes to pay the price. To transfer ownership of moveable property must, in addition, that the owner actually delivers the goods to the buyer and there, on both sides, of the minds for such transfer.

The contract is similar to French law: there must be offer, acceptance and agreement between them. However, contrary to French law, the offer is irrevocable principle, unless the offeror has expressly provided otherwise. In commercial matters, silence is acceptance.

8 Section 1126 of the Civil Code defines the contract as an obligation to give, do or not do.

9 Article 1108 of the French Civil Code

Besides the Inco-terms, widespread in Germany, German law knows of commercial Specific baldmoglichst freibleibend (without commitment – the seller may be relieved of his obligation to deliver if it respects the rules of loyalty and mutual confidence in conformity with usage).

German law does not consider the pricing as an element of the contract and its failure would not automatically void the agreement. Indeed, if the parties intended (as interpreted by Justice of the contract, section 433 BGB) that the price is that of the Exchange or market, or the list price, the contract will be valid.

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