English Commercial Law - Civil law system on Good faith,
Good faith or the need to act reasonably toward the other party to the transaction, is another fundamental shared by civil law systems. Particularly, this has an impact on the length and depth of information of civil law contracts. There is less need to "cover all the bases" in terms of what each party needs do specifically to fulfill its commitments because the parties are required to operate in good faith. This extends to a principle known as "abuse of right," according to which it may be illegal to demand that another party perform an obligation exactly as agreed upon if doing so would place an unreasonable burden on them, as would be the case when something has drastically altered the situation. The courts may declare the contract unenforceable if fulfilling duties becomes challenging or impossible. In the Dutch Civil Code, good faith supersedes not only the terms of a contract but also the impact of custom and even statutes on the contract. This is an example of good faith appearing in a civil jurisdiction.
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English Commercial Law - Material or form?
Common law systems sometimes prioritize form over content. That is, regardless of superseding principles, only what the law expressly states is applicable. As a result, lawyers frequently view their role as "drafting around the law" to ensure that their client falls within a gap in the law or otherwise benefits marginally from the circumstance. But in civil systems, attempts to circumvent norms will fail due to reasons of public policy, therefore it does not function. A civil lawyer will be aware that such an effort would be futile, whereas a lawyer practicing in a common law country might devise a highly intricate manner to structure a deal in order to make it, for example, tax effective. In keeping with the aforementioned example of UK lawyers having to understand civil law issues in the form of EU legislation, it should be noted that EU competition rules prioritize substance over form, thus smart drafting won't help one avoid fines for, for instance, anticompetitive behavior. It's interesting to note that when the UK updated its own draftable form-based competition laws, it adopted the EU system and produced the substance-based Competition Act of 1998, which focuses on the substance of the agreements between the parties rather than the precise wording of the contract's terms. In civil law systems, equality and fairness are frequently seen as general concepts. As a result, a contract may be unenforceable if the benefits received by the parties are unequal. In some cases, the price agreed upon must also reflect the market value of the products. English Commercial Law - Consideration
In common law jurisdictions, consideration is often necessary for a contract to. You perform action X, and in exchange, I will perform action Y. The quid pro quo need not be equal; in English law, there is the idea of the 2.3.5 "peppercorn," which is a nearly worthless consideration but sufficient to establish a contract. According to English law, it is up to the parties to strike a contract and determine whether they are getting a decent deal. Therefore, a court won't question if what either party to the contract is receiving from it is sufficient. In civil law systems, consideration does not exist. However, a contract must have a "cause" in many legal systems, such as French law, in order to exist. A party must enter into a contract with a reason or goal in mind, and his expectations must be reasonable. A cause, however, is not required in some civil systems, such as Germany, and a contract is legal as long as the parties desire it to be. English Commercial Law - groupings of contracts
There are essentially three types of contracts in civil law systems: public law (which governs relationships between the State and individuals or private entities), civil law (which governs relationships between individuals), and commercial law (which is a subset of civil law but has distinct rules for relationships between businesses). Although it should be kept in mind that there may be special regulations regulating particular contracts, such as for the sale of goods, common law systems normally view all contracts as falling under one category. Different regulations apply to each of the three types of contracts under civil systems. Determining the type of contract is essential in order to apply the appropriate set of regulations. A apparently insignificant change to a contract could have a significant impact because, following the change, the contract as a whole might be subject to a different set of rules. English Commercial law - Common law jurisdictions' characteristics
Common laws, on the other hand, are designed to stand alone. In a common law country, an Act of Parliament is meant to provide you with all the information you require regarding a certain law, in such a thorough manner as to leave minimal room for judicial interpretation. The parties may only rely on the provisions of the contract, excluding any rights or obligations expressly granted by statute. As a result, contracts are meticulously (and laboriously) constructed to precisely reflect what has been agreed. Common law jurisdictions rarely employ overarching concepts that direct the course of the law. Statutes, which are particular and in-depth, direct the course of the law. Human rights may be one of the key areas where overriding general principles are used in common law. For instance, UK lawyers have had to adjust to the possibility of challenging UK statutes if they violate human rights. However, it is uncommon for additional principles to be in play, such as the need that contracts be fair (despite the fact that statute imposes this for consumer transactions). A key component of common law systems is precedent. The rulings of higher courts are frequently binding on lower courts. Therefore, decisions made by higher courts must take into account the potential impact on hundreds of cases pending in courts below them. Although it may seem like a burdensome duty, it is important to keep in mind that common law statutes and contracts tend to be quite explicit, which means that logic usually rules the day. Therefore, rather than being bound by what they believe to be the proper application of general principles to the situation, judges are more constrained by what the law or the contract specifically says. English Commercial Law -Civil law jurisdictions' characteristics
The public is supposed to have access to civil laws. As a result, they are frequently written simply and include generalizations. Governmental decrees and rules are in charge of providing specific regulation. Instead of analyzing the particular phrase, interpretation is based on broad principles and the legislative body's overall purpose. For instance, a clause in the Treaty on the Functioning of the European Union mandates that workers shall have the freedom to travel between States. It is up to secondary legislation and judicial interpretation to determine how this is accomplished. The same interpretive strategy used for law also applies to contracts. There is less incentive to include every possible detail when creating a contract since judges have the discretion to interpret it in a way that makes it effective. Additionally, civil law principles such as contract creation and fulfillment are governed by the general norm of good faith, which is considerably different from common law jurisdictions. In civil law jurisdictions, precedent is uncommon, so judges can make decisions without worrying about how they will affect other decisions in the future. This allows them to focus more on the merits of individual cases. Although there may be more inconsistent decision-making as a result, there may also be more situation-specific decisions as a result of this. The verdicts in civil law cases are also typically brief and lack in-depth analysis. This implies that, in contrast to common law regimes, where the decision is typically lengthy enough to be clear and not subject to a broad diversity of meaning, the interpretation placed on them by academic writers is of more relevance. English Commercial Law – Common Law and Civil Law
It is important to understand that legal jurisdictions can be categorized as either civil law or common law jurisdictions when dealing with cross-border business transactions. Although the two countries' core components are similar, a commercial lawyer needs to be aware of their unique qualities. A second challenge for attorneys in the UK is that, although if their country has a common law system, they still need to have a working understanding of civil law systems to represent clients doing business in the EU, which is a country with many parallels to civil law countries. EU legislation will continue to have a big impact even after Brexit. Equally, as many international transactions are handled by UK or American law (another common law jurisdiction), lawyers from civil law jurisdictions engaged in international trade must be knowledgeable with common law systems. The majority of Arab nations, the former French Indo-China, Latin and South America, Russia, Japan, Turkey, South Korea, China, South Africa, and Sri Lanka are among the nations that practice civil law. Other civil law nations include many European nations like France, Belgium, Luxembourg, Spain, Italy, Germany, and Switzerland. Louisiana and Quebec in North America and Canada both have civil law systems. Keep in mind that these countries' civil laws differ from one another in many ways. Common law nations include former British colonies like England and Wales, the USA (except for Louisiana), Canada (except for Quebec), Australia, New Zealand, India, Pakistan, Ireland, several African nations, Hong Kong, the Cayman Islands, and Gibraltar, among others. English Commercial Law - What is covered by the UCC?
Seven sections make up Article 2, which are generally divided into the following topics: scope and definitions; form, formation, and variation of the contract, including assignment; obligations and construction, including delivery and quality; title, including retention of title; performance; breach and repudiation; and remedies. Both the CISG and the UCC (in Article 2) particularly address contracts for the sale of products, and as a result, they have some similarities. The conceptual range of the UCC is wider. Additionally, it is more accurate. For instance, there are implicit warranties relating to merchantability (Section 2-314) and suitability for purpose when defining the obligations of the parties (Section 2-315). Unless otherwise specified, the UCC shall always be referred to as Article 2. English Commercial Law - When is the UCC in effect?
If the parties decide to incorporate it into the contract or decide to have US state law govern it, it can be relevant in an international agreement. English Commercial Law - United States Commercial Code (UCC)
As we've seen, the UCC is one of the uniform acts that the US has passed in an effort to harmonize the laws governing sales and other types of business transactions throughout all 50 states. Eleven Articles comprise it, and they cover a wide range of significant business transactions, including sales, leases, bank deposits, fund transfers, and securities. The rules pertaining to product sales are found in Article 2. While there may be slight changes from state to state, such as in sales laws, there is a high degree of consistency because the Code has been accepted (in one form or another) in all US states. |
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