Hatis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory The most typical example of this approach is American con- tract law where the battle of the theories is worse than the battle of the forms(cf. Gordley 1991: 230 and Cheffins 1999: 202-206) However. in other Common law countries. the situation is not much different. For example, in England, theories like classical bargain theory and doctrines like privity are often so rigidly applied that they defy even common sense itself(see generally Collins 1993;1999 On the other hand. contract scholars in Civil law countries adopt a very different approach(see generally Merryman 1990) The great majority of studies are purely doctrinal, there are few references to philosophical, economic or other theories(and when there are, they are largely outdated)and the topics are ex tremely restricted, since the discussion on many issues seems to have come to a conclusion and the interpretation of the statutes ap. pears to be exhausted. With the exception of certain"new"issues of some interest, like collective bargaining agreements, standard form contracts and electronic commerce. the rest of the law review articles are analogous to their counterparts in the low-ranking American law reviews and the specialized aba journals Why is there such a marked difference? What is the reason for this almost total absence of theoretical discussion on contract the black-letter law and to train ethical practitioners. See relatively the reactions to his essay in the Symposium(1993), esp. Posner(1993)(even though much of the scholarly output is trivial and ephemeral, this is the unavoidable price of body of creative scholarship that has more practical relevance and value as the- ory compared to the doctrinal formalistic: 8 In the major English and Canadian law journals, there is also an ongoing lively Law, the only specialized journal in the field. See particularly Cheffins(1999 9 This is also true of treatises. The new editions do not contain any significant changes. They usually have just more cases to report(supporting a particular interpretation) and new law review articles to cite, or a more detailed treatment of new developments to includ
Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory 6 The most typical example of this approach is American contract law, where the battle of the theories is worse than the battle of the forms (cf. Gordley 1991: 230 and Cheffins 1999: 202-206). However, in other Common law countries, the situation is not much different. For example, in England, theories like classical bargain theory and doctrines like privity are often so rigidly applied that they defy even common sense itself (see generally Collins 1993; 1999).8 On the other hand, contract scholars in Civil law countries adopt a very different approach (see generally Merryman 1990). The great majority of studies are purely doctrinal, there are very few references to philosophical, economic or other theories (and when there are, they are largely outdated) and the topics are extremely restricted, since the discussion on many issues seems to have come to a conclusion and the interpretation of the statutes appears to be exhausted.9 With the exception of certain “new” issues of some interest, like collective bargaining agreements, standard form contracts and electronic commerce, the rest of the law review articles are analogous to their counterparts in the low-ranking American law reviews and the specialized ABA journals. Why is there such a marked difference? What is the reason for this almost total absence of theoretical discussion on contract the black-letter law and to train ethical practitioners. See relatively the reactions to his essay in the Symposium (1993), esp. Posner (1993) (even though much of the scholarly output is trivial and ephemeral, this is the unavoidable price of a body of creative scholarship that has more practical relevance and value as theory compared to the doctrinal formalistic scholarship). 8 In the major English and Canadian law journals, there is also an ongoing lively theoretical debate. See also the contents of the Australian Journal of Contract Law, the only specialized journal in the field. See particularly Cheffins (1999: passim, esp. 200-202). 9 This is also true of treatises. The new editions do not contain any significant changes. They usually have just more cases to report (supporting a particular interpretation) and new law review articles to cite, or a more detailed treatment of new developments to include
Commentaries on Law& Economics, Vol. 2(2002) law in Civil law countries? How can we account for such stagna- tion when there is such intellectual orgasm in the Common law? Are theoretical problems considered resolved in continental Europe? Is there an indifference towards theory and a predilection towards results in the Civil law countries, or is it just technical conservatism? Or is civil contract law dead? Killed not by its two implacable enemies, torts and restitution, but by its own children (commercial law, labor law, corporate law, insurance law, antitrust law, consumer protection law, law of sales, etc. )that have grown immensely by eating the flesh of their father? I. All of the above are more or less true Contract law in Civil law countries is not what it used to be. However. it remains the core of any Civil code qus commune), the model of most legal relationships and of course the basis of the Law of obligations (and, in some jurisdictions, of the General Principles of Civil Law) In addition it seems that a renaissance of contract law has occurred O To be fair. there is some theoretical discussion on contract law. however it is rather occasional and restricted to the journals specializing in legal theory and philosophy of law and is usually undertaken by the scholars who have the rela- tive tenure(professors of philosophy or sociology of law). Their debate concerns mainly themselves, since the overwhelming majority of legal scholars do not take part in this dialogue, because they consider Justice or Fairness as separate from"positive law and they regard philosophy of law as distinct from the laws dogmatic elaboration. This is a result of the increasing specialization and gation within Civil law scholarship. Professors of philosophy of law cannot teach contracts(or vice versa) and they are usually supposed to occupy themselves with the great philosophical problems("what is law?")rather than with the ap. plication of legal theory towards solving particular doctrinal problems that are considered to lie within the territory of doctrinal scholars. In turn, doctrinalists occupied with the practical problems of interpretation, see the broader philoso- phical discussion as irrelevant, if not completely worthless(for similar observa- tions but different conclusions, see Gordley 1991). Thus, leafing through the various specialized and general Civil law reviews, one can find references, pres- entations, even critiques of particular theories developed in the United States or elsewhere. but there is little chance of seeing such discussions in the context of articular legal questions (of course, with a few exceptions). The situation has slowly started to change after the emergence of law Economics in Europe and the challenges it has posed to mainstream scholarship
Commentaries on Law & Economics, Vol. 2 ( 2002) 7 law10 in Civil law countries? How can we account for such stagnation when there is such intellectual orgasm in the Common law? Are theoretical problems considered resolved in continental Europe? Is there an indifference towards theory and a predilection towards results in the Civil law countries, or is it just technical conservatism? Or is civil contract law dead? Killed not by its two implacable enemies, torts and restitution, but by its own children (commercial law, labor law, corporate law, insurance law, antitrust law, consumer protection law, law of sales, etc.) that have grown immensely by eating the flesh of their father? II. All of the above are more or less true. Contract law in Civil law countries is not what it used to be. However, it remains the core of any Civil code (jus commune), the model of most legal relationships and of course the basis of the Law of Obligations (and, in some jurisdictions, of the General Principles of Civil Law). In addition, it seems that a renaissance of contract law has occurred 10 To be fair, there is some theoretical discussion on contract law; however, it is rather occasional and restricted to the journals specializing in legal theory and philosophy of law and is usually undertaken by the scholars who have the relative tenure (professors of philosophy or sociology of law). Their debate concerns mainly themselves, since the overwhelming majority of legal scholars do not take part in this dialogue, because they consider Justice or Fairness as separate from “positive law” and they regard philosophy of law as distinct from the law's dogmatic elaboration. This is a result of the increasing specialization and segregation within Civil law scholarship. Professors of philosophy of law cannot teach contracts (or vice versa) and they are usually supposed to occupy themselves with the great philosophical problems (“what is law?”) rather than with the application of legal theory towards solving particular doctrinal problems that are considered to lie within the territory of doctrinal scholars. In turn, doctrinalists, occupied with the practical problems of interpretation, see the broader philosophical discussion as irrelevant, if not completely worthless (for similar observations but different conclusions, see Gordley 1991). Thus, leafing through the various specialized and general Civil law reviews, one can find references, presentations, even critiques of particular theories developed in the United States or elsewhere, but there is little chance of seeing such discussions in the context of particular legal questions (of course, with a few exceptions). The situation has slowly started to change after the emergence of Law & Economics in Europe and the challenges it has posed to mainstream scholarship
Hatis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory in the last decade, for two reasons: (a) the triumph of the free mar ket and capitalism in Europe-at-large which led, in Eastern Europe to a drafting or revision of civil codes(esp. contract and property law) that are better-suited for free market economies and more conducive to economic development(Ostas 1992; Ostas Leete 1995 and Rubin 1994: 1997; cf. Atiyah 1995: 27-34), and(b) the growing concern of the European Union for the unification of European private law in general and contract law in particular, well as the trend toward the internationalization of contract law ( Farnsworth 1990: 227-230) Therefore, European contract law is not dead. It is wounded but alive and it seems that it has a good chance of recovery. Ho the continuing absence of general theories developed in Europe or influenced by the ones developed in Common law do- mains seems puzzling for Common law scholars, until they realize what the most plausible explanation of this phenomenon is: in Civil law there is no need for theories since the legislator, mainly through the codes, has proclaimed what the law should be and the judge is(supposedly) a mere interpreter, useful only for accommo- dating trivial twists of facts. In such a static universe, where is the need for theory? II See esp. Lando & Beale(1995), Hondius(1989 1994a; 1994b), Hartkamp et al. (1994), Hartkamp(1998), as well as the papers in the Symposium(1997). For international developments towards unification, see also Kozyris(1989),Vis- casillas(1996), Honka(1996)and the Symposium (1995)on"The UNIDROIT Principles of International Commercial Contracts"and Hartkamp(1994)for a comparison of the UNIDROIT and European law principles of contract law with CISG. See also Ruston Works(1980), Bennett(1980), Williams(1986)and Lando(1987)on the1980 European Community Convention on the Law Ap- plicable to Contractual Obligations. But see the pessimistic remarks by Horla- her(1994). More generally, on the problem of the unification of national laws, ee Gazes(1997: 41-67, esp. 59 n. 109). Sykes(1999)is also a skeptic concern- ing regulatory harmonization, preferring a legal system that tolerates regulatory differences subject to legal constraints, and that relies on mutual recognition
Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory 8 in the last decade, for two reasons: (a) the triumph of the free market and capitalism in Europe-at-large which led, in Eastern Europe, to a drafting or revision of civil codes (esp. contract and property law) that are better-suited for free market economies and more conducive to economic development (Ostas 1992; Ostas & Leete 1995 and Rubin 1994; 1997; cf. Atiyah 1995: 27-34), and (b) the growing concern of the European Union for the unification of European private law in general and contract law in particular, as well as the trend toward the internationalization of contract law (Farnsworth 1990: 227-230).11 Therefore, European contract law is not dead. It is wounded, but alive and it seems that it has a good chance of recovery. However, the continuing absence of general theories developed in Europe or influenced by the ones developed in Common law domains seems puzzling for Common law scholars, until they realize what the most plausible explanation of this phenomenon is: in Civil law there is no need for theories since the legislator, mainly through the codes, has proclaimed what the law should be and the judge is (supposedly) a mere interpreter, useful only for accommodating trivial twists of facts. In such a static universe, where is the need for theory? 11 See esp. Lando & Beale (1995), Hondius (1989; 1994a; 1994b), Hartkamp et al. (1994), Hartkamp (1998), as well as the papers in the Symposium (1997). For international developments towards unification, see also Kozyris (1989), Viscasillas (1996), Honka (1996) and the Symposium (1995) on “The UNIDROIT Principles of International Commercial Contracts” and Hartkamp (1994) for a comparison of the UNIDROIT and European law principles of contract law with CISG. See also Ruston & Works (1980), Bennett (1980), Williams (1986) and Lando (1987) on the “1980 European Community Convention on the Law Applicable to Contractual Obligations.” But see the pessimistic remarks by Horlacher (1994). More generally, on the problem of the unification of national laws, see Gazes (1997: 41-67, esp. 59 n.109). Sykes (1999) is also a skeptic concerning regulatory harmonization, preferring a legal system that tolerates regulatory differences subject to legal constraints, and that relies on mutual recognition where appropriate
Commentaries on Law Economics, Vol 2(2002) By contrast, in Common law, theory is necessary even since there are no Codes(capable of offering not only solutions to particular problems, but also -and most significantly-a unified ap proach). The need for theories has evolved in Common law(espat the end of the 19th century) in order to provide a sense of security to the contracting parties who did not place any trust in the caprices of individual judges and were looking for a more objective basis for their economic relationships(see generally Atiyah 1979) Common law has for centuries been(and today continues to be)in the process of its formation and Common lay tried to resolve issues by borrowing ideas, rules, and even theories from multiple sources(Roman law, Civil law, law merchant Canon law, etc ). With the advent of the industrial revolution and the pressure applied by novel commercial relations, and society in general, judges and scholars increasingly felt the need to inject the law with a theory that would provide a sense of stability and secu- rity to the contracting parties. The classical bargain theory that de veloped and flourished in the 19th century was then considered (given the socio-economic conditions and the prevalent ideology of the time)the perfect theory for a capitalist economy a typical characteristic of Common law theories, that is also a good illustration of our point, is the desperate attempt of Com mon law scholars to prove that their theories and their approaches 2 Despite the maxim(in Latin!)nolumus Angliae leges mutare. Above all,see he prodigious work by Gordley (1990 and 1991)and also, for England, Nicho- las(1974), Simpson(1975b), de Zullieta Stein(1990), Donahue(1992)and Seipp(1993). For the United States, see Helmholz(1992), Hoeflich(1992). Whitman(1987), Riesenfield(1989) and Joerges(1994). See also, more gener- ally, Helmholz(1990), Stein(1992)and Reimann(1993). The influence of Civil aw touches even upon Australian Common law(Ladbury Paterson 1997). In Greek bibliography, see Zepos(1937), but also Gazes(1997: 32-33, with cita 13 For this era, see generally(among others)Lindley(1993), esp on the impact of economic change on contract law(id. 13-25 and 281-295)(a capital-intensive economy inevitably pro large concentrations of economic power that
Commentaries on Law & Economics, Vol. 2 ( 2002) 9 By contrast, in Common law, theory is necessary even today, since there are no Codes (capable of offering not only solutions to particular problems, but also -and most significantly- a unified approach). The need for theories has evolved in Common law (esp. at the end of the 19th century) in order to provide a sense of security to the contracting parties who did not place any trust in the caprices of individual judges and were looking for a more objective basis for their economic relationships (see generally Atiyah 1979). Common law has for centuries been (and today continues to be) in the process of its formation and Common law judges have tried to resolve issues by borrowing ideas, rules, and even theories, from multiple sources (Roman law, Civil law, law merchant, Canon law, etc.).12 With the advent of the industrial revolution and the pressure applied by novel commercial relations, and society in general, judges and scholars increasingly felt the need to inject the law with a theory that would provide a sense of stability and security to the contracting parties. The classical bargain theory that developed and flourished in the 19th century was then considered (given the socio-economic conditions and the prevalent ideology of the time) the perfect theory for a capitalist economy.13 A typical characteristic of Common law theories, that is also a good illustration of our point, is the desperate attempt of Common law scholars to prove that their theories and their approaches 12 Despite the maxim (in Latin!) nolumus Angliae leges mutare. Above all, see the prodigious work by Gordley (1990 and 1991) and also, for England, Nicholas (1974), Simpson (1975b), de Zullieta & Stein (1990), Donahue (1992) and Seipp (1993). For the United States, see Helmholz (1992), Hoeflich (1992), Whitman (1987), Riesenfield (1989) and Joerges (1994). See also, more generally, Helmholz (1990), Stein (1992) and Reimann (1993). The influence of Civil law touches even upon Australian Common law (Ladbury & Paterson 1997). In Greek bibliography, see Zepos (1937), but also Gazes (1997: 32-33, with citations to opposing views). 13 For this era, see generally (among others) Lindley (1993), esp. on the impact of economic change on contract law (id. 13-25 and 281-295) (a capital-intensive economy inevitably produces large concentrations of economic power that threaten contract's social utility)
0 Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory are not only better normative theories, but also perfect positive ones(Ulen 1996: 793). As a result, a rather strange phenomenon occurs in Common contract law review articles: after the exposi tion of a theoretical framework, the rebuttal of opposite theorie and the discussion of several cases which are characteristic for their "compatibility"with the theory expounded, the author exam- ines a number of controversial cases with the purpose of demon strating that, deep down, these"irregular"cases are compatible with his theory, despite the opposite wording or even outcome Only in extreme cases is a decision characterized as forth right wrong or(at least) opposed to the theory developed, and consequently dismissed. Of course, another scholar may easily support a theory that is in diametric contradiction, and may inter- pret the decisions accordingly. This need for an"approval"by the already adjudicated cases( signifies the insecurity and the des- perate need for coherency in Common law and is telling of the de finitive power of precedent even today. This phenomenon of procrusteanism"in Common law theory leads, according to one of he leading legal historians and Common law scholars, A WB Simpson, to a sort of"doctrinal monism": TThere has al ways in he common law been a tendency towards a sort of doctrinal mo- nism-there must be one test for the formation of contract(offer For a typical example(in otherwise excellent studies), see Yorio Thel's (1991)general approach or Remington's(1999: 646) ambitious approach to the tort of interference: No hint of this approach is to be found in judicial opinions yet it does such a remarkable job of explaining the outcomes of cases that one can only suspect that it comes closer to describing the intuitions of judges than the judgesown explanations of what they are doing. "Ithe emphasis is ours See e.g. Hillman(1997: 60-74)and compare with Yorio Thel (1991).A characteristic historical example of this problem is the famous scene between Samuel Williston and Arthur Corbin in a session of the first restatement drafting committee, as described by Gilmore(1974: 62-63). See also the excellent obser vations in Weir(1992) 6 For recent critiques of the Common law process, see Ulen(1996: 805-806) and Hillman(1997: 164-166); see also Gazes(1997: 33-34) Monotheorism"for Weir(1992)
Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory 10 are not only better normative theories, but also perfect positive ones (Ulen 1996: 793). As a result, a rather strange phenomenon occurs in Common contract law review articles: after the exposition of a theoretical framework, the rebuttal of opposite theories and the discussion of several cases which are characteristic for their “compatibility” with the theory expounded, the author examines a number of controversial cases with the purpose of demonstrating that, deep down, these “irregular” cases are compatible with his theory, despite the opposite wording or even outcome.14 Only in extreme cases is a decision characterized as forthright wrong or (at least) opposed to the theory developed, and is consequently dismissed. Of course, another scholar may easily support a theory that is in diametric contradiction, and may interpret the decisions accordingly.15 This need for an “approval” by the already adjudicated cases (!) signifies the insecurity and the desperate need for coherency in Common law and is telling of the definitive power of precedent even today.16 This phenomenon of “procrusteanism” in Common law theory leads, according to one of the leading legal historians and Common law scholars, A.W.B. Simpson, to a sort of “doctrinal monism”:17 “[T]here has always in the common law been a tendency towards a sort of doctrinal monism -there must be one test for the formation of contract (offer 14 For a typical example (in otherwise excellent studies), see Yorio & Thel's (1991) general approach or Remington's (1999: 646) ambitious approach to the tort of interference: “No hint of this approach is to be found in judicial opinions; yet it does such a remarkable job of explaining the outcomes of cases that one can only suspect that it comes closer to describing the intuitions of judges than the judges' own explanations of what they are doing.” [the emphasis is ours]. 15 See e.g. Hillman (1997: 60-74) and compare with Yorio & Thel (1991). A characteristic historical example of this problem is the famous scene between Samuel Williston and Arthur Corbin in a session of the first Restatement drafting committee, as described by Gilmore (1974: 62-63). See also the excellent observations in Weir (1992). 16 For recent critiques of the Common law process, see Ulen (1996: 805-806) and Hillman (1997: 164-166); see also Gazes (1997: 33-34). 17 “Monotheorism” for Weir (1992)