1 TRANSNATIONAL CONTRACT LAW 1
Part Ⅰ General 1
1.1 Introduction 1
1.1.1 Modern Contract Law:Nature of the Parties or Type of Contract? 1
1.1.2 The Effect of Globalisation 5
1.1.3 Content and Coverage of this Chapter 9
1.1.4 Modern Contract Theory 10
1.1.5 A New Model of Contract Law? 15
1.1.6 Modern Contract Theory and the Normative Interpretation Technique 19
1.1.7 The Challenge of E-commerce 21
1.2 Formation of Contracts in Civil and Common Law 23
1.2.1 The Development of Contract Law and the Role of Parties' Intent in Civil Law.The Notion of Consensus as the Basis for Contract Validity 23
1.2.2 The Notions of Consideration,Exchange or Bargain in the Common Law of Contract.Meaning of Intent,Offer and Acceptance 27
1.2.3 The Development of the Consideration Notion in Common Law.The Modern Alternative of Detrimental Reliance 30
1.2.4 Contracts:Construction and Remedies in Common and Civil Law.The Parole Evidence Rule 35
1.2.5 The Practical Significance of the Consideration Requirement in Common Law 37
1.2.6 The Common Law Notion of Consideration and the Civil Law Notion of Causa Compared 39
1.2.7 Other Aspects of Contractual Validity:Capacity and Authority 42
1.2.8 Other Aspects of Contractual Validity:Formalities 43
1.2.9 Other Aspects of Contractual Validity:Definiteness 45
1.3 The Normative Interpretation Technique in Practice:The Civil Law Notion of Good Faith,the Common Law Alternatives,and the Role of Other Sources of Private Law 46
1.3.1 The Modern Normative Approach and the Concept of Dynamic Contract Law 46
1.3.2 Roman Law,Ius Commune,Nineteenth-century Thinking,and the Modern Revival of Multiple Sources of Contract Law 49
1.3.3 The Notion of Good Faith in Civil Law 52
1.3.4 Good Faith as a Multifaceted Notion in Civil Law 55
1.3.5 Institutional Aspects of the Operation of the Notion of Good Faith in Civil Law 60
1.3.6 Good Faith,Legal Positivism and System Thinking in the Codification Manner.The Bridge to the Common Law and the Connect with the Transnationalisation Process of Private Law in the Professional Sphere 62
1.3.7 Good Faith in Common Law.Alternatives.Equity Distinguished 65
1.3.8 EU Notion of Good Faith 69
1.3.9 Good Faith and Sources of Law in the CISG,UNIDROIT and European Contract Principles.The DCFR 71
1.3.10 When is Good Faith a Mandatory Concept? 73
1.3.11 Practical Effects of Good Faith or Normative Thinking:The Nature of Pre-contractual Information and Disclosure Duties,Meaning of Consensus,Mistake,Misrepresentation,and Gross Disparity 75
1.3.12 Practical Effects of Good Faith or Normative Thinking:Pre-contractual Negotiation Duties,Co-operation Duties,and Abuse of Contractual Rights 78
1.3.13 Practical Effects of Good Faith or Normative Thinking:The Status of Commercial Letters of Intent 80
1.3.14 The Practical Effects of Good Faith or Normative Thinking:Force Majeure and Change of Circumstances in Professional Dealings 81
1.4 Performance of the Contract,Defences,Default,and Excuses,Termination 83
1.4.1 Performance in Kind/Specific Performance 83
1.4.2 Lack of Consensus or Defences to Performance:Invalidity and Rescission 87
1.4.3 Excuses and the Meaning of Promises,Conditions and Warranties in Connection with Performance in Common Law.Conditions,Representations/Warranties and Covenants in Financial Contracts 92
1.4.4 Default or Breach and Damages 96
1.4.5 Force Majeure and Change of Circumstances 98
1.4.6 The Definition of the Concept of Force Majeure.Frustration and Economic Impossibility.Development in Civil and Common Law 101
1.4.7 Unforeseen Circumstances and the Balance of the Contract:Hardship and Renegotiation Duties 103
1.4.8 Modern Legislative Approaches to a Change in Circumstances 109
1.4.9 Contractual Hardship Clauses 111
1.5 Privity of Contract 112
1.5.1 Privity of Contract or Third Party Rights and Duties under a Contract 112
1.5.2 Development of Contractual Third-Party Rights and Duties in Civil Law 120
1.5.3 The Situation in Common Law and the Changes in the USA and England 122
1.6 The UNIDROIT and European Principles of Contract Law:Vienna Convention and UCC Compared.The Draft Common Frame of Reference in the EU(DCFR) 125
1.6.1 Unification of Contract Law.Formal and Academic Efforts.The EU Activity in this Area 125
1.6.2 The Unitary Approach 128
1.6.3 The UNIDROIT Principles for International Commercial Contracts 130
1.6.4 The European Principles of Contract Law(EPCL) 134
1.6.5 The Draft Common Frame of Reference(DCFR) 137
1.6.6 Interpretation and Supplementation in the Principles and the DCFR.Sources of Commercial and Financial Law,Hierarchy and Lex Mercatoria 140
1.6.7 Approach to Contract Formation:Consensus and Exchange Notions,Capacity,Formalities and Specificity 142
1.6.8 Defences and Excuses.The Question of Continued Validity of the Contract 145
1.6.9 Performance,Breach,and Excuses 146
1.6.10 Privity of Contract 147
1.6.11 The Nature and Impact of the Contract Principles and DCFR 147
Part Ⅱ Contracts for the International Sale of Goods 151
2.1 The Main Aspects of the International Sale of Goods 151
2.1.1 Introduction 151
2.1.2 The Minimum Requirements of the Sales Agreement:Special Features and Risks of International Sales 153
2.1.3 Legal Risk in International Sales 156
2.1.4 Special Arrangements to Cover the Risks of International Sales 159
2.1.5 International Sales as Contracts between Professionals:Applicable Law 161
2.1.6 Currency and Payments in International Sales:Free Convertibility and Transferability of Money 164
2.1.7 The Transfer of Title in International Sales 165
2.1.8 Conform Delivery and the Passing of Risk in International Sales 167
2.1.9 The Passing of Risk in the Sale of Goods in Civil and Common Law 171
2.1.10 Proprietary Sales Price Protection in Civil and Common Law 176
2.1.11 The Retention Right of the Seller 182
2.1.12 Alternatives to the Reclaiming Rights in International Sales.The Letter of Credit 183
2.2 Ancillary Arrangements in International Sales.The Role of Intermediaries and Documents 184
2.2.1 The Safe Harbour Function:Agents and Documents of Title 184
2.2.2 The Use of Agents:Their Position 186
2.2.3 The Use of Negotiable Documents of Title in International Sales:Bills of Lading and Warehouse Receipts 187
2.2.4 Documents of Title in Payment Schemes in International Sales:Bills of Lading 188
2.2.5 The Use of Negotiable Instruments in International Sales:Bills of Exchange 190
2.3 The Uniform International Sales Laws.The CISG 192
2.3.1 Origin and Scope 192
2.3.2 The Coverage of the Vienna Convention 194
2.3.3 The System of the Vienna Convention:Directory or Mandatory Rules? 197
2.3.4 Applicability of the Vienna Convention 198
2.3.5 The Sales Law of the Vienna Convention.Formation 200
2.3.6 The Sales Law of the Vienna Convention.Substance,Default and Remedies 201
2.3.7 Supplementation and Interpretation of the Vienna Convention 206
2.3.8 The Interpretation of International Sales Contracts under the Vienna Convention:Meaning of Conduct and Custom in Terms of Contract Interpretation 212
2.3.9 Supplementation of the Vienna Convention:Private International Law and the Rome Convention on the Law Applicable to Contractual Obligations 215
2.3.10 The Main Rules of the 2008 EU Regulation on the Law Applicable to Contractual Obligations 217
2.3.11 The Vienna Convention and the Different Trade Terms in International Sales 222
2.3.12 Incoterms,Their Status and Relation to the UCC and Vienna Convention 225
2.3.13 The Vienna Convention and the ICC Model International Sales Contract.The 2004 Principles of European Law:Sales 228
2.3.14 The Law Merchant Concerning International Sales 228
Part Ⅲ Contractual Agency 231
3.1 The General Notion of Agency 231
3.1.1 The Use of Agents:Their Position 231
3.1.2 The Role of the Agent:Explicit and Apparent Authority 235
3.1.3 The Notion of Independence,Apparent Authority and Agencies of Necessity 238
3.1.4 The Consequences of Agency:Conflicts of Interests,Rights and Duties of the Agent 241
3.1.5 Undisclosed and Indirect Agencies 243
3.1.6 The Civil Law Indirect Agency.The Relationship between Principal and Third Party.Customers' Assets 245
3.1.7 The Economic Importance of Modern Agency 250
3.2 International Aspects of Agency 251
3.2.1 Private International Law Aspects of Agency 251
3.2.2 Treaty Law Concerning the Law Applicable to Agency 253
3.2.3 The Lex Mercatoria and Agency 255
3.2.4 The EU Commercial Agent Directive 256
2 TRANSNATIONAL MOVABLE PROPERTY LAW 259
Part Ⅰ Ownership,Possession and Limited,Future,Conditional or Temporary Proprietary Rights in Chattels and Intangible Assets 259
1.1 Introduction 259
1.1.1 Proprietary Laws in Common and Civil Law 259
1.1.2 Types of Assets.Claims 268
1.1.3 Types of Movable Assets and the Requirement of Economic Value and Commerciability.Notions of Identity,Specificity and Definiteness and their Inherent Constraints 271
1.1.4 Importance of the Law of Chattels and Intangibles in Civil and Common Law.Its Development besides Land Law 277
1.1.5 The Traditional Physical and Anthropomorphic Approach to Property Rights.Modern Developments 280
1.1.6 The Effect of Financial Law and the Need for New Financial Structures 282
1.1.7 Comparative Law,Transnationalisation,and the DCFR 286
1.2 The Types of Proprietary Rights in Civil Law 288
1.2.1 The Difference between Proprietary and Obligatory Rights in Civil Law 288
1.2.2 Nature and Structure of Proprietary Rights and their Special Manner of Protection in Civil Law.The Numerus Clausus Notion 290
1.2.3 The Traditional Proprietary Rights in Civil Law and the Way They are Held.Common Law Compared 294
1.2.4 The Way Proprietary Rights are Protected in Civil Law:Constructive Possession and Holdership 300
1.2.5 The Acquisitive Prescription and its Importance in Civil Law.Difference with the Protection of Bona Fide Purchasers 304
1.2.6 Civil Law Proprietary Defences in Bankruptcy 307
1.2.7 The Civil Law Relativity or Priority Principle in Respect of Proprietary Rights:The Difference with the Relativity of Obligatory Rights 310
1.3 The Types of Proprietary Rights in Common Law:The Practical Differences with Civil Law.Modern Functional Theories 312
1.3.1 Legal and Equitable Interests in Chattels 312
1.3.2 Ownership and Possession of Chattels in Common Law 316
1.3.3 Equitable Proprietary Interests in Chattels 319
1.3.4 The Common Law System of Proprietary Defences:Tort Actions Based on Better Rather Than Absolute Rights 321
1.3.5 Constructive Possession in Common Law.The Absence of Acquisitive Prescription.Statutes of Limitation 325
1.3.6 The Situation in Bankruptcy 326
1.3.7 Practical Differences between the Common and Civil Law Approaches to Proprietary Rights in Chattels 328
1.3.8 Approximation of the Common and Civil Law Systems of Proprietary Law in Chattels.Emphasis on User,Enjoyment and Income Rights.The Unifying Impact of Modern Financial Structures and the Requirements of Modern Risk Management.The Need for and Effect of Legal Transnationalisation 329
1.3.9 Virtues and Pitfalls of the Numerus Clausus Notion.Modern Functional Approaches 335
1.4 Transfer of Proprietary Rights in Chattels in Civil and Common Law 340
1.4.1 The Legal Requirements for the Transfer of Chattels 340
1.4.2 The Formalities of a Sale:Contract or Delivery(Physically or Constructively);Double Sales,the Real or Proprietary Agreement in Civil Law 343
1.4.3 The Importance of Identification.Effect on the Transfer.Sales of Future Assets,Bulk Transfers,and De Facto Transfers of Title 348
1.4.4 The Development of the Rules Concerning Delivery as a Formal Requirement of Title Transfer in Civil and Common Law 351
1.4.5 Legal Capacity and Disposition Right.Causes of Contractual Invalidity.Effect on the Title Transfer.Future,Conditional and Temporary Sales 354
1.4.6 The Transfer Agreement:The Abstract and Causal System of Ownership Transfer.The Finality Issue 358
1.4.7 The Origin of the Abstract and Causal Views of Title Transfer 365
1.4.8 Disposition Rights and their Failure:The 'Nemo Dat' Rule and the Protection of Bona Fide Purchasers.Its Contribution to Finality 371
1.4.9 On the Origin of the 'Nemo Dat' Rule and the Principle of Bona Fide Purchaser Protection 375
1.4.10 The Retention Right of the Seller in the Case of Default of the Buyer 381
1.5 Proprietary Rights in Intangible Assets in Civil and Common Law 386
1.5.1 Asset Status of Intangibles.Proprietary Rights in Intangible Assets and the Possibility and Method of their Transfer 386
1.5.2 Assignments,Conditions and the Meaning of Notification.Bulk Assignments.The Situation in Double Assignments.Civil Law Development. 388
1.5.3 The Development in Common Law.Equitable Assignments and Bulk Transfers 394
1.5.4 Assignment of Rights and Delegation of Duties.The Transferability of Entire Contracts.The Debtor's Defences 398
1.5.5 The Status of Closely Related Rights and Duties and the Impact of Contractual Restrictions on the Transfer.Amendment of the Underlying Contract 401
1.5.6 The Assignability of Future Claims 406
1.5.7 Assignment,Novation,Amendment,Subrogation and Subcontracting 410
1.5.8 Different Types and Objectives of Assignments 413
1.5.9 The Better Right of the Assignee.The Notion of Abstraction,Independence and Finality.Comparison with Negotiable Instruments 417
1.5.10 The Notion of Abstraction or Independence and the Liberating Effect of Payment by the Debtor 420
1.5.11 The Ranking between Assignees,The Nemo Dat Rule in Assignments 423
1.5.12 Contractual and Proprietary Aspects of Assignments.Mandatory Rules.Applicable Law and Party Autonomy 427
1.5.13 Special Assignment Issues:Warranties,Conditions and Default 429
1.5.14 Bankruptcy Aspects of Assignments.Recourse and Non-Recourse Financing 430
1.5.15 Uniform Rules Concerning Assignments? 434
1.6 Trusts,Constructive and Resulting Trusts,Tracking and Tracing.Agency.The Civil Law Response 435
1.6.1 Basic Features of the Common Law of Trust 435
1.6.2 Definitional Issues,Fiduciary Duties and Court Intervention 441
1.6.3 The Practical Significance of Trusts in Common Law Countries 443
1.6.4 Constructive Trusts,Tracing and Tracking,Resulting Trusts,Statutory Trusts and Charitable Trusts 445
1.6.5 Trust and Agency.Trust and Bailment 448
1.6.6 Related Civil Law Structures 449
1.6.7 Private International Treaty Law and Trust Law Principles 452
1.7 Secured Transactions and Conditional Sales.Floating Charges 456
1.7.1 The Importance of Conditional Sales in Finance and the Difference with Secured Transactions 456
1.7.2 What are Sale-Repurchase Agreements or Finance Sales?The Characterisation Issue.Property-based and Security-based Funding 456
1.7.3 The Evolution of Conditional and Temporary Transfers in Civil and Common Law 460
1.7.4 When are Finance Sales Converted into Secured Transactions? 463
1.7.5 The Operation of Finance Sales.Effect of the Conditionality of the Transfer.Proprietary Effect of Conditions.Duality of Ownership and of Possession in Civil Law.Openness of Proprietary Systems? 469
1.7.6 Examples of Finance Sales:Finance Leases,Repos and Factoring.Finance Sales as Executory Contracts,Cherry Picking and Netting 472
1.7.7 The Outward Signs of Security Interests and Ownership-Based Funding.Possession or Filing. 475
1.7.8 Attachment and Perfection of Security Interests in Movable Property under the UCC in the US.Meaning and Weakness of the Filing System 482
1.7.9 Floating Charges in Common and Civil Law.Extended Reservations of Title.The Concepts of Bulk Transfers,Asset Substitution and Tracing and the Inclusion of Future Assets.The Facility to Sell Goods Free and Clear 484
1.7.10 Uniform Security Law and Principles of Security Laws 486
1.8 Private International Law Aspects of Chattels 487
1.8.1 When Conflicts Arise 487
1.8.2 The Application of the Lex Situs 490
1.8.3 The Notions of Equivalence and Adaptation;Conditional Ownership,Security and Retention Rights 496
1.8.4 Trusts:The 1985 Hague Convention on the Law Applicable to Trusts and Their Recognition 499
1.8.5 The Details of the Trust Convention 502
1.8.6 Uniform Laws Concerning the Proprietary Aspects of Chattels 505
1.8.7 The Lex Mercatoria Concerning Chattels 506
1.9 Private International Law Aspects of Assignments 506
1.9.1 The Various Aspects of Assignments.Conflicts of Law Issues especially in respect of Bulk Assignments 506
1.9.2 Terminology and Characterisation Issues 512
1.9.3 Mandatory Proprietary Laws Relating to Assignments.Lex Situs Issues 514
1.9.4 Current Approaches to Choice of Laws Issues in Assignments:Different Approaches to the Legal Situs of Debts 516
1.9.5 EU Regulation and Treaty Law Approaches to the Law Applicable to Assignments:The Choice of Law Provision of Article 14 of the EU Regulation and the Uniform UNCITRAL Convention on the Assignment of Receivables in International Trade 523
1.9.6 The Lex Mercatoria Concerning Bulk Assignments 526
1.10 The Modern Law of Chattels and Intangibles 527
1.10.1 Traditional and New Approaches 527
1.10.2 The Modern Structure of Proprietary Rights as Promoted by International Commerce and Finance.Transnationalisation 533
1.10.3 Paucity of Modern Property Theory 540
1.11 The European Draft Common Frame of Reference(DCFR) 550
1.11.1 Introduction 550
1.11.2 Chattels and their Transfer.The Problem of Physical Possession 552
1.11.3 Intangible Assets and their Assignment.The Problem of Asset Status 554
1.11.4 Security Interests.Treatment of Finance Sales and Floating Charges 555
1.11.5 Trusts.The Question of Systemic Integration 557
1.11.6 Certainty,Finality and Predictability 558
1.12 Uniform or Harmonised Statutory Law or Transnationalisation 559
1.12.1 Consumers and Professionals 559
1.12.2 Different Sources of Law in the Professional Sphere 559
1.12.3 Dynamic Movable Property Law 560
Part Ⅱ Negotiable Documents of Title and Negotiable Instruments 563
2.1 The Role of Documents 563
2.1.1 Bills of Lading and Warehouse Receipts 563
2.1.2 The Concepts of Document of Title and Negotiability 566
2.1.3 The Origin and Nature of the Bill of Lading and its Operation in the Proprietary Aspects of the Transfer of Goods 569
2.1.4 Consequences of the Different Attitudes to Documents of Title when Goods are Transferred to Transferees Other than through a Transfer of the Bill of Lading 575
2.1.5 The Transfer of Risk 576
2.1.6 The Named or Straight Bill of Lading and Sea Waybills 577
2.1.7 Private International Law Aspects of Bills of Lading 578
2.1.8 Lex Mercatoria and Uniform Treaty Law Concerning Bills of Lading.The Hague,Hague-Visby,Hamburg and Rotterdam Rules 580
2.2 Negotiable Instruments 583
2.2.1 Bills of Exchange 583
2.2.2 Acceptance and Discounting of Time Drafts 587
2.2.3 The Persons Liable under a Bill of Exchange:Recourse 588
2.2.4 The Principle of Independence or Abstraction 589
2.2.5 The Holder in Due Course.Personal and Real Defences.Other Types of Holders 590
2.2.6 Cheques 592
2.2.7 Modern Use of Bills of Exchange and Cheques 593
2.2.8 Bills of Exchange and Competing Assignments of the Underlying Claim 594
2.2.9 Position of the Holder in Due Course of a Bill of Exchange Compared to the Bona Fide Holder of a Bill of Lading 595
2.2.10 Foreign Bills of Exchange:Private International Law Aspects 595
2.2.11 Uniform Treaty Law 599
2.2.12 The Lex Mercatoria Concerning Bills of Exchange 600
2.3 The Dematerialisation of Documents of Title and Negotiable Instruments;Electronic Transfers 601
2.3.1 The Traditional Use of Documents of Title and Negotiable Instruments.Their Inconveniences and Risks.Sea Waybills and Indemnities 601
2.3.2 Electronic Systems and Their Importance in Replacing Transportation Documents.The CMI Rules and Bolero.Clearing and the Use of Central CounterParties? 605
2.3.3 The Situation with Regard to Bills of Exchange:Electronic Bank Transfers.The Facility of '@Global Trade' 609
Part Ⅲ Investment Securities 610
3.1 The Different Types of Shares and Bonds 610
3.1.1 Traditional Distinctions.Negotiable Instruments and Transferable Securities.Dematerialisation 610
3.1.2 The Notions of Immobilisation,Bookentry Systems,Security Entitlements,and Compartmentalisation.Securities Accounts and Bank Accounts Distinguished 614
3.1.3 Transfer Instructions and Finality.Tiered and Chained Systems of Transfer 621
3.1.4 Negotiability and Transferability of Investment Securities under Domestic and Transnational Law.Use of Securities Entitlements to Enhance Transferability and Liquidity 623
3.1.5 The Risk Factors in the Holding and Transfer of Investment Securities and Securities Entitlements.Bankruptcy Issues and Risk Reduction Techniques.The EU Settlement Finality Directive 627
3.1.6 Modern Clearing and Settlement Systems.Their Internationalisation 633
3.1.7 The Evolution towards Security Entitlements.Depository Receipts and the Earlier Developments towards Dematerialisation and Immobilisation 635
3.2 The Internationalisation of Custodial and Settlement Systems and its Opportunities 638
3.2.1 The Role of the Euromarket for Bonds and the Effect on International Share Trading.The Dominant Role of International Practices and the Bankruptcy Law Implications 638
3.2.2 Law Applicable to Transactions in Investment Securities of the Book-entry Type 645
3.2.3 The Lex Mercatoria concerning International Investment Securities Transactions 652
3.2.4 Uniform Law:The EU Financial Collateral Directive.The UNIDROIT Project 655
3.2.5 EU Activities in the Field of Clearing and Settlement 658
Index 661