Commentaries on Law Economics, Vol 2(2002) and acceptance), one principle governing possession, one test for the action-ability of promises. (Simpson 1975a: 325) 1. 2. The"Efficiency"of Roman Law and of Contemporary Civil Contract Law L. In stark contrast with Common laws century-long struggle for coherency, Roman law in continental Europe was so compre- hensive, successful, coherent(esp after its elaboration by the Pan- dectist school--see generally Whitman 1990, Coing 1989 and also Gazes 1995)and abstract, as to offer judges useful guidelines for he regulation of economic activities with no serious conflicts with he needs of economic life. despite the age of the statutes It characteristic that the history of contract theory developed by Common law within the last two centuries was, to a great extent 8 Most roman institutions related to the law of obligations are still alive in all major European codifications. It is characteristic that the contemporary law of sales in the continental legal systems is nearly identical to Roman law. For the reasons behind the success of Roman law, see generally Gazes(1995, esp. 19 29)and the citations therein 19 Before the Pandectists. numerous scholars had elaborated on roman law. In Western Europe, Roman law was developed by the 12th-century Glossators, the 14th and 15th centuries Commentators, led by Bartolus and Baldus, the 16 century Humanists led by Hugo Donellus, the late Scholastic, Spanish natural law school and the early modern Romanists(see generally Watson 1981; Gord- ley 1990 and 1991, as well as Stein 1993)and in Southeastern Europe, by a host of eminent Byzantine scholars for over a thousand years(see generally Panta- zopoulos19741:199-294,1979i:79-167;,1979ii:90-195 and traianos1999) 20 According to Phourkiotes(1964: 30, n 1), Roman lawyers were particularly interested in the relationship between law and economy and the consequences of legal rules on economic life. Thus, the Roman Praetors and other Roman lawyers were often more interested in the efficient regulation of commercial relations an I conceptual or moral system 2I James Whitman has developed a theory according to which this compatibility was to a great extent helped"in the 19th century by the theoretical constructs of a number of German professors of liberal political ideology, mainly of Jhering See Whitman(1990: passim and also 229-243 ). See also Rolland (1990: 143- 145)
Commentaries on Law & Economics, Vol. 2 ( 2002) 11 and acceptance), one principle governing possession, one test for the action-ability of promises.” (Simpson 1975a: 325). 1.2. The “Efficiency” of Roman Law and of Contemporary Civil Contract Law I. In stark contrast with Common law's century-long struggle for coherency, Roman law in continental Europe was so comprehensive, successful,18 coherent (esp. after its elaboration by the Pandectist school--see generally Whitman 1990, Coing 1989 and also Gazes 1995)19 and abstract, as to offer judges useful guidelines for the regulation of economic activities with no serious conflicts with the needs of economic life,20 despite the age of the statutes.21 It is characteristic that the history of contract theory developed by Common law within the last two centuries was, to a great extent, 18 Most Roman institutions related to the law of obligations are still alive in all major European codifications. It is characteristic that the contemporary law of sales in the continental legal systems is nearly identical to Roman law. For the reasons behind the success of Roman law, see generally Gazes (1995, esp. 19- 29) and the citations therein. 19 Before the Pandectists, numerous scholars had elaborated on Roman law. In Western Europe, Roman law was developed by the 12th-century Glossators, the 14th and 15th centuries Commentators, led by Bartolus and Baldus, the 16thcentury Humanists led by Hugo Donellus, the late Scholastic, Spanish natural law school and the early modern Romanists (see generally Watson 1981; Gordley 1990 and 1991, as well as Stein 1993) and in Southeastern Europe, by a host of eminent Byzantine scholars for over a thousand years (see generally Pantazopoulos 1974i: 199-294; 1979ii: 79-167; 1979iii: 90-195 and Troianos 1999). 20 According to Phourkiotes (1964: 30, n.1), Roman lawyers were particularly interested in the relationship between law and economy and the consequences of legal rules on economic life. Thus, the Roman Praetors and other Roman lawyers were often more interested in the efficient regulation of commercial relations than in developing a conceptual or moral system. 21 James Whitman has developed a theory according to which this compatibility was to a great extent “helped” in the 19th century by the theoretical constructs of a number of German professors of liberal political ideology, mainly of Jhering. See Whitman (1990: passim and also 229-243). See also Rolland (1990: 143- 145)
Hatzis. Th Nature of Civil Law Co Scholarship and the Need for an Economic Theory he history of the adoption and development of concepts that were nd practi Roman time (or at least since the major codifications in Western Europe) The codification of roman law by Justinian and the subse- quent development of this law(see Watson 1981 and Stein 1993), always within the boundaries of the great codifications, and, at the same time, the successful and uninterrupted application of Civil law in continental Europe and elsewhere, has offered the contract- ing parties in Civil law countries a stable, coherent and positive legal framework, including a set of default rules that they can bar gain around (and thus further develop)(f Mattei 1997: 207-208) Its usage has also created a tradition of a particularistic elabo- ration of issues and economic relations. which is based not on a case-by-case treatment, that needs a general theory in order to re main stable and coherent, but on a regulation of special types or categories of contractual relationships by means of a unified set of rules imprinted in the civil codes. These rules have for centuries been the object of further treatment, elaboration and improvement by judges, scholars, and of course, the contracting parties them- elves. This"fermentation" process has shaped legal orders that are time-honored and thus highly sophisticated. Therefore, it is no co- incidence that roman law was a decisive factor for the creation of he first commercial societies in Europe and for the rise of capital 22 Alan Watson describes Roman law as comprised of numerous self-contained locks"(Watson 1981: 18-20) 23 For the relation of roman law with commerce and its contribution to the crea ion of the first commercial societies", see Whitman(1994 and 1996). Roman economy was essentially a market economy. According to Wacke(1993: 2) The ground rule of the Roman emperors with regard to private eco- nomic activity may be described (in line with Rostovtzeff and Eichel- heim, the"Classicists"of ancient economic and social history) as lais sez-faire liberalism, which only sought to regulate to a limited extent the production of mainly agrarian and household goods, as well as their distribution on the predominantly small-scale markets [. The market- economy principle of free competition remained, by and large, undis-
Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory 12 the history of the adoption and development of concepts that were part of Civil law's contract theory and practice since Roman times (or at least since the major codifications in Western Europe). The codification of Roman law by Justinian and the subsequent development of this law (see Watson 1981 and Stein 1993), always within the boundaries of the great codifications, and, at the same time, the successful and uninterrupted application of Civil law in continental Europe and elsewhere, has offered the contracting parties in Civil law countries a stable, coherent and positive legal framework, including a set of default rules that they can bargain around (and thus further develop) (cf. Mattei 1997: 207-208). Its usage has also created a tradition of a particularistic elaboration of issues and economic relations, which is based not on a case-by-case treatment, that needs a general theory in order to remain stable and coherent, but on a regulation of special types or categories of contractual relationships22 by means of a unified set of rules imprinted in the Civil codes. These rules have for centuries been the object of further treatment, elaboration and improvement by judges, scholars, and of course, the contracting parties themselves. This “fermentation” process has shaped legal orders that are time-honored and thus highly sophisticated. Therefore, it is no coincidence that Roman law was a decisive factor for the creation of the first commercial societies in Europe and for the rise of capitalism.23 22 Alan Watson describes Roman law as comprised of numerous self-contained “blocks” (Watson 1981: 18-20). 23 For the relation of Roman law with commerce and its contribution to the creation of the first “commercial societies”, see Whitman (1994 and 1996). Roman economy was essentially a market economy. According to Wacke (1993: 2): The ground rule of the Roman emperors with regard to private economic activity may be described (in line with Rostovtzeff and Heichelheim, the “Classicists” of ancient economic and social history) as laissez-faire liberalism, which only sought to regulate to a limited extent the production of mainly agrarian and household goods, as well as their distribution on the predominantly small-scale markets [...] The marketeconomy principle of free competition remained, by and large, undis-
naics It is illustrative of the contribution of roman law to the eco- nomic development and the modernization of European legal sys- tems that the enemies of roman law in germany attacked it as law that was" rationalistic;“ commercial”and“ ' materialistic”(see Whitman 1994: 228). In a series of papers and books, Prof. James Whitman has established the close relation between the reemer gence of roman law and the birth of the first commercial society in Holland. Its moral menace" feature proved quite useful in the bat tle of commercial needs with the prevalent native Christian law hat nsuitable for commercial develo ording to Whitman, Roman law did not cause the rise of a new commercial morality in seventeenth-century Holland; it helped justify the rise of a new commercial morality"(Whitman 1996: 1845; see also Koschaker 1938) IL. The major codifications that started in the beginning of the 19th century and ended in the early 20th century offered a modernized version of Roman law, especially under the sway of turbed by these state activities, which were important, but which re mained peripheral to the general economic system As a result, its ius civile(as well as its ius gentium for its subjects) was devel- oped in order to meet commercial needs and to regulate an advanced commercial lety and transactions(see e.g. Gazes 1995: 19; above n 19). See also the esting concurring comments by Phourkiotes (1964: 2)and the citations 24 Watson(1981: 23)adopts Max Weber's"logically formal rationality"to de scribe the rationalistic character of Roman law. For Trubek(1972: 730; also cited by Watson), "logically formal rationality"operates through a highly logical systemization, making the resolution of specific problems depend on processes of specialized deductive logic proceeding from previously established rules or principles 25 For a similar conflict that took place in Greece between the German-educated proponents of Roman law(as taught by the Pandectists)and the advocates of the historical school who supported the preservation of the"popular"native Greek customary law, see Pantazopoulos(1945) 26 See mainly Zimmermann(1990). However, see Stein(1992: 1591-1594) The roman law of the classical period, the first two centuries A D. when it reached its highest point of technical development, is in many respects closer in
Commentaries on Law & Economics, Vol. 2 ( 2002) 13 It is illustrative of the contribution of Roman law to the economic development and the modernization of European legal systems that the enemies of Roman law in Germany attacked it as a law that was “rationalistic”,24 “commercial” and “materialistic” (see Whitman 1994: 228). In a series of papers and books, Prof. James Whitman has established the close relation between the reemergence of Roman law and the birth of the first commercial society in Holland. Its “moral menace” feature proved quite useful in the battle of commercial needs with the prevalent native “Christian law”, that was unsuitable for commercial development. According to Whitman, “Roman law did not cause the rise of a new commercial morality in seventeenth-century Holland; it helped justify the rise of a new commercial morality” (Whitman 1996: 1845; see also Koschaker 1938).25 II. The major codifications that started in the beginning of the 19th century and ended in the early 20th century offered a modernized version of Roman law,26 especially under the sway of turbed by these state activities, which were important, but which remained peripheral to the general economic system. As a result, its ius civile (as well as its ius gentium for its subjects) was developed in order to meet commercial needs and to regulate an advanced commercial society and transactions (see e.g. Gazes 1995: 19; above n.19). See also the interesting concurring comments by Phourkiotes (1964: 2) and the citations therein. 24 Watson (1981: 23) adopts Max Weber's “logically formal rationality” to describe the rationalistic character of Roman law. For Trubek (1972: 730; also cited by Watson), “logically formal rationality” operates through a highly logical systemization, making the resolution of specific problems depend on processes of specialized deductive logic proceeding from previously established rules or principles. 25 For a similar conflict that took place in Greece between the German-educated proponents of Roman law (as taught by the Pandectists) and the advocates of the historical school who supported the preservation of the “popular” native Greek customary law, see Pantazopoulos (1945). 26 See mainly Zimmermann (1990). However, see Stein (1992: 1591-1594): “The Roman law of the classical period, the first two centuries A.D. when it reached its highest point of technical development, is in many respects closer in
Hatis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory he German historical school (whose influence was greater than generally believed and which effectively connected law in books with law in action in the Continent ) These codifications rendered the law more compatible, in certain respects, with the economic developments of the period. Further, they were the product of an extensive theoretical discussion and were greatly influenced by the social and economic theories that prevailed at the time, which were not very different from the present mainstream ones(Whitman 1994) Following the tradition of roman law, the new Civil Codes have not espoused any particular theory, especially in the area of Contract Law (with the exception of a modified will theory for contract formation, that was essentially an idealistic/liberal cover for the actually dominant objective theory of consent, itself a later development, but under the influence of roman laws general ap proach). The main concern for the codifiers was to solve all major heoretical and practical problems by choosing the best possible character to the common law than it is to modern civil-law syster rived from Roman law. See also Stein(1993: 14). This is, to a certain extent, true,as Stein aptly demonstrates. But this similarity between classical Roman law and modern Common law is rather an indication of the immaturity of the latter than a sign of the deviation of Civil law from its historical roots. See e.g Gazes(1997: 33, n. 30). See also Zepos(1937, esp. 473-474). This does not mean that the progress of Civil law since Roman times has consistently been an improvement process. See esp. Stein(1992: 1600-1601) See Whitman (1990: 200-228), Joerges (1994), Ruckert(1989),Klenner (1989)and also Ascheri(1996)and Gazes(1995: 34-35). The influence of the historical school on the drafting of the german Civil Code was also definitive for other European legal systems 28 For Dawson (1982: 596), problem solving rather than high-level speculation was the great skill of Roman jurists(as this is evident in the Digesta) 29 For the theory of consent as the covert basis of contractual obligation in Greek contract law, see Hatzis(1999a: 134-169) Roman lawyers cared little for the sweep of general principle. Theirs was a nominalist world of particulars, principally particular types of transactions [ The Romans eschewed any effort at system or wide-ranging organizational principle. This left them at something of a
Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory 14 the German historical school (whose influence was greater than generally believed27 and which effectively connected law in books with law in action in the Continent). These codifications rendered the law more compatible, in certain respects, with the economic developments of the period. Further, they were the product of an extensive theoretical discussion and were greatly influenced by the social and economic theories that prevailed at the time, which were not very different from the present mainstream ones (Whitman 1994). Following the tradition of Roman law,28 the new Civil Codes have not espoused any particular theory, especially in the area of Contract Law (with the exception of a modified will theory for contract formation, that was essentially an idealistic/liberal cover for the actually dominant objective theory of consent, itself a later development, but under the influence of Roman law's general approach).29 The main concern for the codifiers was to solve all major theoretical and practical problems30 by choosing the best possible character to the common law than it is to modern civil-law systems that are derived from Roman law.” See also Stein (1993: 14). This is, to a certain extent, true, as Stein aptly demonstrates. But this similarity between classical Roman law and modern Common law is rather an indication of the immaturity of the latter than a sign of the deviation of Civil law from its historical roots. See e.g. Gazes (1997: 33, n.30). See also Zepos (1937, esp. 473-474). This does not mean that the progress of Civil law since Roman times has consistently been an improvement process. See esp. Stein (1992: 1600-1601). 27 See Whitman (1990: 200-228), Joerges (1994), Ruckert (1989), Klenner (1989) and also Ascheri (1996) and Gazes (1995: 34-35). The influence of the historical school on the drafting of the German Civil Code was also definitive for other European legal systems. 28 For Dawson (1982: 596), problem solving rather than high-level speculation was the great skill of Roman jurists (as this is evident in the Digesta). 29 For the theory of consent as the covert basis of contractual obligation in Greek contract law, see Hatzis (1999a: 134-169). 30 Roman lawyers cared little for the sweep of general principle. Theirs was a nominalist world of particulars, principally particular types of transactions [...] The Romans eschewed any effort at system or wide-ranging organizational principle. This left them at something of a
Commentaries on Law Economics, Vol 2(2002) solution for the welfare of the parties(see Kotz 1983), as this wel fare was perceived under the liberal ideology of the day, which was also heavily influenced by Christian ethics (esp. equity), and cer- tainly within the boundaries set by the rules, standards and princi- ples that had proven successful for many centuries Consequently, in the Civil Codes one can find answers to almost all the doctrinal and theoretical problems which have pre occupied and still preoccupy Common law theory(e. g. the basis of contract, the rigidity of the "privity" doctrine, the enforcement of penal clauses, liquidated damages or third-party beneficiary con- tracts, the choice between different types of damages and specific performance, the problem of quasi contracts and unjust enrichment the puzzle of precontractual liability, the controversial unconscion- ability defense the nature of the "good faith"requirement, the compensation paradox, the differentiation between commercial practicability with other similar cases of frustrations of contract, etc.). Civil law thus provided definitive and authoritative solutions to all the aforementioned problems, but without restricting the par ties by heavily regulating their contract In addition, most of the clauses in Civil Law Codes(esp. in e Law of obligations books) are default, non-mandatory(op- tional)rules. The Codes routinely endow the judges with broad discretion by way of a series of general standards( see e.g. recently Hartkamp 1992). Regardless of the practice of Civil law judges their independence is not similar in nature to that of their Common law colleagues, since they need not be creators but interpreters of loss when questions arose as to why certain rules had the content they did. Little in Roman law was explained by reference to something more abstract, something "underlying "the play of the rules. The only re- sponse was" That is the way we do things. "[Patterson 1991: 1433, the emphasis is mineI See also Gazes(1995: 23): [Romans] [used concepts, solutions and institutions only for practical needs and never oretical purposes. See, however,a different approach by Watson(1981: 83-84)
Commentaries on Law & Economics, Vol. 2 ( 2002) 15 solution for the welfare of the parties (see Kötz 1983), as this welfare was perceived under the liberal ideology of the day, which was also heavily influenced by Christian ethics (esp. equity), and certainly within the boundaries set by the rules, standards and principles that had proven successful for many centuries. Consequently, in the Civil Codes one can find answers to almost all the doctrinal and theoretical problems which have preoccupied and still preoccupy Common law theory (e.g. the basis of contract, the rigidity of the “privity” doctrine, the enforcement of penal clauses, liquidated damages or third-party beneficiary contracts, the choice between different types of damages and specific performance, the problem of quasi contracts and unjust enrichment, the puzzle of precontractual liability, the controversial unconscionability defense, the nature of the “good faith” requirement, the compensation paradox, the differentiation between commercial impracticability with other similar cases of frustrations of contract, etc.). Civil law thus provided definitive and authoritative solutions to all the aforementioned problems, but without restricting the parties by heavily regulating their contract. In addition, most of the clauses in Civil Law Codes (esp. in the Law of Obligations books) are default, non-mandatory (optional) rules. The Codes routinely endow the judges with broad discretion by way of a series of general standards (see e.g. recently Hartkamp 1992). Regardless of the practice of Civil law judges, their independence is not similar in nature to that of their Common law colleagues, since they need not be creators but interpreters of loss when questions arose as to why certain rules had the content they did. Little in Roman law was explained by reference to something more abstract, something “underlying” the play of the rules. The only response was “That is the way we do things.” [Patterson 1991: 1433, the emphasis is mine]. See also Gazes (1995: 23): “[Romans] [u]sed concepts, solutions and institutions only for practical needs and never for theoretical purposes.” See, however, a different approach by Watson (1981: 83-84)