Category Archives: Contract Law

Pre-Contractual Duties of Information in English & French law and the Consumer Rights Directive: Conclusion (5/5)

This is the conclusion of my series of blog posts on the topic of pre-contractual duties of information in English, French and EU contract law.

Go to: Introduction -> Part II -> Part III -> Part IV -> Conclusion

As we have seen, there is a certain level of convergence between French and English law with regards to false representations inducing a party to enter into a contract. This pre-contractual information duty to not mislead relies on different concepts but produces broadly similar outcomes.

The chasm occurs when one turns to positive duties to provide information. English law still largely abides by contractual freedom and, accordingly, does not recognise any broad doctrine of contractual behaviour involving a positive duty of information at the pre-contractual stage. There has, nonetheless, been a move towards a dynamic market individualistic approach and, therefore, some intervention, notably on consumer grounds, has been accepted. French law, by contrast, has developed an obligation d’information based on the concept of good faith in contracting. This is a remarkable collaborative framework which attempts to put weaker parties on a more equal footing by ensuring they possess all the facts which may influence their decision to contract1.

Reconciling these differences is a considerable challenge, especially when attempting to draw up common European principles of disclosure. It is interesting to note that article 4:107 of the Principles of European Contract Law, relating to disclosure, clearly endorses the French and civil law approach. Yet in doing so, it envisages that the question of whether a duty to disclose exists will rest upon, inter alia, not only the expertise of the party and the importance of the information to the other party, but also the cost of acquiring such information and whether the other party should have reasonably been able to acquire it by himself2. As Gilliker convincingly argues, this represents “a merger of common and civil law concerns”3 and paves the way for a potential compromise.

Common principles will, however, be meaningless if national courts are unable to transcend their dogmatic context and develop a consistent interpretation of these4. As such, one may wish for strong external intervention, perhaps from the European Court of Justice which could, perhaps, be accompanied with a focus on an economic perspective analogous to that adopted in EU competition law5.

This prospect appears fanciful when one considers the Consumer Rights Directive, which, as we have seen, is disappointing in its lack of ambition. Given the limited scope of maximum harmonisation, traders targeting consumers in other EU countries will still be faced with multiple standards of information duties, especially those falling under the umbrella of ‘general concepts of contract law’6. As a result of article 6 of the Rome I Regulation7, these traders will not be in a position to exclude these national information duties.

Therefore, the limited scope of the changes introduced by the Consumer Rights Directive can only increase the pressing need for a Common European Sales Law. This would, in the absence of a fully fledged European contract law, provide us with an optional instrument, that would be classified as a ‘second national regime’ under the Rome I Regulation8, and thus finally bring about a uniform trading platform for business and consumers throughout Europe.9

  1. Pierre Legrand Jr, ‘Information in formation of contracts: a civilian perspective’ [1991] 19 Canadian Business Law Journal at 336 []
  2. 4:107(3);  See also: Draft Common Frame of Reference, article II.–7:205 []
  3. Paula Gilicker, ‘Regulating Contracting Behaviour: The Duty to Disclose in English and French Law’ [2005] 5 European Review of Private Law at 636 []
  4. Ibid. at 639 []
  5. See for eg. Simon Bishop and Mike Walker, The economics of EC competition law : concepts, application and measurement (3rd ed. Sweet & Maxwell 2010); Kim Lane Scheppele, Legal secrets : equality and efficiency in the common law (University of Chicago Press 1988) []
  6. Peter Rott, ‘Information obligations and withdrawal rights’ in Christian Twigg-Flesner (ed.), The Cambridge Companion to European Union Private Law (Cambridge University Press 2010) at 200 []
  7. Rome I Regulation’ – Regulation 593/2008/EC of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations []
  8. Martijn Hesselink, ‘How to Opt into the Common European Sales Law? Brief Comments on the Commission’s Proposal for a Regulation’ [2012] 1 European Review of Private Law at 195 []
  9. Ewoud Hondius, ‘The Proposal for a Directive on Consumer Rights: The Emperor’s New Clothes’, [2011] 2 European Review of Private Law at 164; Christoph Busch and Ronny Domröse, From a Horizontal Instrument to a Common European Sales Law: The Development of European Consumer and Market Law in 2011 [2012] 1 Journal of European Consumer and Market Law at 50 []

Pre-Contractual Duties of Information: EU Private Law and the Consumer Rights Directive (4/5)

This is Part IV of my ongoing series of blog posts on the topic of pre-contractual duties of information in English, French and EU contract law.

Go to: Introduction -> Part II -> Part III -> Part IV -> Conclusion

“In hardly any other area of the law have European legal acts given such a long lasting impetus to the laws of many Member States”1

A) Pre-contractual information duties under EU law

The European Union is now the main driver in the field of information obligations2. As Rott shows, this is due to the EU’s goal of reducing legal barriers to inter-state trade and to foster competition in the internal market.

EU law has tended to impose very specific information duties, as opposed to more general duties. Such duties are to be found in a number of directives including: the Doorstep Selling Directive (85/577), the Package Travel Directive (90/143), the Unfair Terms Directive (93/13), the Timeshare Directive (94/47), the Distance Selling Directive (97/7), the Price Indications Directive (98/6), and the Consumer Sales Directive (99/44).

B) The Consumer Rights Directive: end-of-the line for maximum harmonisation?

“This Directive establishes rules on information to be provided for distance contracts, off-premises contracts and contracts other than distance and off-premises contracts.“3

The Directive on Consumer Rights (CRD) was adopted by the Council on 25 October 2011. This new directive replaces the directives on distance contracts and on contracts away from business premises, modifies those on consumer sales and unfair contract terms, and of particular interest to this discussion, introduces general information duties for consumer contracts, regardless of the object or situation in which they are concluded.

1) Maximum harmonisation for distance and off-premises contracts

Article 6 of the Directive, introduces information requirements for distance and off-premises contracts. It should be noted that in both instances these contracts must be between a trader and a consumer4). The CRD introduces common information requirements for both types of contracts5, as well as requirements as to the form of the information to be provided6.

The information which must be given in a “clear and comprehensible manner”, is mainly derived from existing directives such as the Distance Selling Directive and includes: the main characteristics of the product, the geographical location and identity of the trader, conditions for delivery, payment information, information about contract termination and rights of withdrawal. Notably, Member States may maintain or introduce language requirements in order to ensure that information is clearly understood by the consumer7.

* Side effects of this harmonisation on general contract law

As this article is aiming for maximum harmonisation, Member States may not impose any further requirements for the fulfilment of the information obligations set out for these kind of contracts. Article 3(5), does, however, state that the Directive shall not affect national general rules of contract law, such as those governing the validity or the formation of the contract, insofar as they are not regulated in the Directive.

As Busch and Domröse observe, this brings up an interesting question as to whether general contract law concepts, such as good faith, may be used to introduce additional information requirements8. To escape these murky waters, Caufmann suggests the question may be construed as to whether the non-disclosure of certain information (beyond the directive’s requirements) would have caused the consumer to enter into the contract and that these principles may, accordingly, be applied9. Concepts such as réticence dolosive would, therefore, be able to live on. This cannot be said of the general obligation de renseignement which has developed through case law, which would have to see its scope restricted, as not all the resulting information duties can be said to relate to the ‘main characteristics of the goods or services’10.

Bearing in mind the above, a report prepared for the Directorate General for Internal Policies, on the potential effects of the Directive on general contract law in Member States, may shed some light on these concerns. It gives the example of a number of duties which will only be able to be maintained for persons not acting as consumers, for the purpose of these contracts, such as: information about legal restrictions on the use of the products or information as to certain dangers associated with the product, which are not necessarily ‘main characteristics’11.

2) Minimum harmonisation for other business to consumer contracts

Article 5 of the Directive, introduces information requirements for all other consumer contracts which do not fall under article 6 and are not excluded from its scope by article 3 (such as, for example, contracts for the transfer of property, or for financial services). Furthermore, per article 5(3) Member States are not required to apply these requirements to contracts involving ‘day-to-day transactions’ which are ‘performed immediately at the time of their conclusion’.

As this particular article is not aiming for maximum harmonisation, Member States are free to introduce or maintain additional requirements per article 5(4).

3) Much ado about nothing?

The Draft Common Frame of Reference, a merger of the acquis and the PECL12,  represents a useful benchmark against which to evaluate the CRD13. The contrast between the DCFR and the CRD is stark, whereas article II-3:101 DCFR provides for a general duty of disclosure and article II-3:103 recognises a duty “to provide information when concluding a contract with a consumer who is at a particular disadvantage”, the CRD’s maximum harmonisation only affects “information requirements for distance and off-premises contracts”.

Similarly, the DCFR in article II-3:107 expressly sets out remedies (which include damages under art II-3:501) for the breach of pre-contractual information duties, whereas in the CRD, with the exception of “additional charges”, remedies are largely left to the applicable law14.

On the whole, it is clear that the directive bears little resemblance to the Commission’s original plan of a broad regime of maximum harmonisation in the consumer sphere15. This approach does have the advantage of allowing Member States to retain or adopt higher levels of consumer protection, which would not be possible in the case of undifferentiated full harmonisation16.

As Busch and Domröse convincingly argue, the fate of the Directive mirrors the change in European Consumer policy, which now favours a move from ‘harmonisation’ to ‘complementation’17.

  1. Reiner Schulze, ‘Precontractual Duties and Conclusion of Contract in European Law’ [2005] 6 European Review of Private Law at 847 []
  2. Christian Twigg-Flesner, ‘Information duties’ in Hans Schulte-Nölke, Christian Twigg-Flesner and Martin Ebers (eds.), EU Consumer Law Compendium (Sellier European Law Publishers 2008) 758-789 []
  3. “Consumer Rights Directive” – Recital 9 of Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights []
  4. Consumer Rights Directive, articles 2(7) and 2(8 []
  5. Consumer Rights Directive, article 6 []
  6.  Consumer Rights Directive, articles 6 and 7 []
  7. Consumer Rights Directive, article 6(7) []
  8. Christoph Busch and Ronny Domröse, ‘From a Horizontal Instrument to a Common European Sales Law: The Development of European Consumer and Market Law in 2011’ [2012] 1 Journal of European Consumer and Market Law  49 []
  9. Caroline Cauffman, ‘The Consumer Rights Directive Adopted’ [2012] at 3 []
  10. Frank Alleweldt, Peter Rott, Christian Twigg-Flesner and Senda Kara, ‘Information Requirements in the Consumer Rights Directive Proposal and in Other Directives’ [2010] at 16-17 []
  11. Ibid. at 17 []
  12. Castronovo C, ‘Information Duties and Precontractual Good Faith’ [2009] 4 European Review of Private Law at 562 []
  13. Communication from the Commission, COM [2004] 651; but see: Green Paper from the Commission on policy options for progress towards a European Contract Law for consumers and businesses, COM [2010] 348 []
  14. Ibid.; Horst Eidenmüller, Florian Faust, Hans Christoph Grigoleit, Nils Jansen, Gerhard Wagner and Reinhard Zimmermann, ‘Towards a Revision of the Consumer-acquis’ [2011] Common Market Law Review at 15; Christoph Busch and Ronny Domröse, ‘From a Horizontal Instrument to a Common European Sales Law: The Development of European Consumer and Market Law in 2011’ [2012] 1 Journal of European Consumer and Market Law at 50 []
  15. Ewoud Hondius, ‘The Proposal for a Directive on Consumer Rights: The Emperor’s New Clothes’, [2011] 2 European Review of Private Law at 163 []
  16. Cauffman C, ‘The Consumer Rights Directive Adopted’ [2012] at 6 []
  17. Christoph Busch and Ronny Domröse, ‘From a Horizontal Instrument to a Common European Sales Law: The Development of European Consumer and Market Law in 2011’ [2012] 1 Journal of European Consumer and Market Law at 50 []

Pre-Contractual Duties of Information: Self-induced ‘mistake’ due to the omission of information by the other party (3/5)

This is Part III of my ongoing series of blog posts on the topic of pre-contractual duties of information in English, French and EU contract law.

Go to: Introduction -> Part II -> Part III -> Part IV -> Conclusion

In this part, I shall consider situations where one party knows, or should have known, that the other party is mistaken and fails to provide him with information to correct this assumption1. I shall look at how both English and French law deal with such situations, and the extent to which they encourage, or mandate, disclosure or more generally the provision of pre-contractual information.

A) England: the refusal of any general duty of disclosure

The general proposition under English law is that a party who knows that the other party is entering into a contract under some mistake is under no legal obligation to disclose this2. Indeed, per Blackburn J: “whatever may be the case in a court of morals, there is no legal obligation on the vendor to inform the purchaser that he is under a mistake, not induced by the act of the vendor”3. This proposition was later extrapolated by Lord Atkin, into a principle of general application beyond the law of sale4. In effect: “the principle of caveat emptor applies”.

1) Requirements and ‘encouragement’ of disclosure

There are, however, certain situations where a party will be under a duty to disclose information during contractual negotiations. These duties take two forms: disclosure as to the terms of transaction and, more rarely, disclosure as to the facts surrounding the transaction.

– Common law requirements of disclosure as to the terms

The common law has developed a number of requirements of disclosure, ranging from the requirement that standard form terms must be communicated before the contract is concluded5, to the requirement that particularly onerous conditions must be brought to the attention of the co-contractor in a fair manner6.

In the words of Collins: “the sum of all these rules is to require the parties to disclose the terms of a proposed contract in good time for their consideration, clearly, fully and drawing the other party’s attention to any unusual and onerous clauses”7.

– Statutory requirements of disclosure

There exist a number of statutes and regulations which impose duties of disclosure for certain contracts8). It is interesting to note that most of these are the result of European law9.

– Contracts uberrimae fidei and particular types of contract

One further exception to this principle is to be found in the case of contracts uberrimae fidei (of the utmost faith), in which full knowledge of the facts is a condition of validity of the contract10. These contracts include contracts of insurance, and to a varying extent, contracts to subscribe for shares of a company, for family settlements and for suretyship11.

A breach of any of these contracts will create a right of recision, although it will not give rise to liability in damages, in the absence of a voluntary assumption of responsibility, either at common law or under the Misrepresentation Act s.2(1)12.

– Relationships of trust, confidence or dependence

Another source of such duties is to be found in fiduciary relationships, such as between principal and agent, business partners, or directors of a company. The parties in these relationships will be required to provide full disclosure of information, in the absence of which the contract may be voidable and the party in breach may have to account for any profits made as a result of the non-disclosure13.

This principle has been extended through the equitable jurisdiction to avoid contracts on grounds of undue influence14. As a result of this doctrine, we can now identify a number of situations which will give rise to a duty to disclose information.

One such situation is to be found in Lloyds Bank v Bundy15, in which a bank assumed a relationship of trust and confidence as a result of dealings over the years with a farmer. A duty to ensure that all the information about the credit transaction be disclosed to the farmer was found to exist in those circumstances. Similarly, duties have been found to exist in dealings between shareholders of small family firms, as well as between beneficiaries under a will16.

2) Misrepresentation

As we have seen previously, false or misleading statements may give rise to liability for misrepresentation. By extension, statements or silence may be found to be misleading where they omit certain material facts to the transaction, as the facts not disclosed may, depending on the circumstances of the case, be impliedly represented to not exist17.

Furthermore, where a statement is made and subsequently becomes false prior to the formation of the contract, one may expect this fact to be disclosed18.

It should be noted that the courts have permitted contractual clauses that negative any breach of duty to disclose information, thus denying any implied representation19. These exclusion clauses will, however, need to be evaluated in light of the requirement of reasonableness per section 3 of the Misrepresentation Act 196720.

3) Implied terms

Implied terms, which are construed by the court on the ground that they are necessary to give efficacy to the transaction, also provide a strong mechanism for encouraging disclosure at the pre-contractual stage21. Indeed, these terms may constitute warranties which may spur the co-contractor to supply information so as to avoid a potential breach of contract.

Under the Sale of Goods Act 1979 section 1422, a seller, acting in the course of business, is held to imply that his goods are of satisfactory quality and reasonably fit for their usual purpose. The seller will be able to avoid liability by disclosing any defects to the buyer before the contract is concluded. Conversely, if the buyer makes evident the purpose for which he is buying the goods, then the seller may be held to an implied warranty that the goods are fit for this purpose. As liability cannot be excluded in contracts with consumers as a result of the Unfair Contract Terms Act23, and in other contracts their exclusion is subject to a test of reasonableness, there is, therefore, a strong incentive to disclose information.

Furthermore, the desire to avoid the imposition of judicially-implied terms may also lead the seller to provide information to the other contractual party24.

4) Attempts to introduce a general duty

In 1786, Lord Mansfield attempted to introduce a general duty to disclose, saying: “good faith forbids either party by concealing what he privately knows to draw the other into a bargain from his ignorance of that fact and his believing the contrary”. Beyond the concrete application to insurance contracts, this doctrine did not survive as a general principle25. Lord Denning attempted a similar feat in 1975, by seeking to establish a doctrine of ‘inequality of bargaining power’, where relief could be granted where one party was impaired by “his own ignorance coupled with undue influence… by one who may be moved solely by his own self-interest”26.

Beyond dogmatic concerns27, it has been argued that one of the reasons why these doctrines never took root lies in English law’s preference to developing propositions of law incrementally, which is to be contrasted with the civil law method of induction-deduction from general principles28.

B) France: from party autonomy to contractual solidarity

Early interpretations of the Code Civil, as reflected in the wording of article 1134, adopted a similar posture to the English one, seeing party autonomy and self-reliance as going hand-in-hand29. Since the late 1950s, however, France has increasingly recognised pre-contractual information duties30. Beyond penalising active fraudulent behaviour, as seen above, the courts have allowed, in certain circumstances, for passive fraudulent behaviour to be challenged31. This was then reinforced by specific pre-contractual information duties provided by statute, without the need to show a defect of consent.

1) Fraud by silence (réticence dolosive)

In 1971, the Court de Cassation held that “dol may be constituted by the silence of a party hiding from his co-contractor a fact which, if it had been known to him, would have stopped him from entering into the contract”32. As a result of this, for silence to be actionable one no longer had to be mistaken as to the substance of the contract33.

This concept has been applied in a broad variety of situations34 such as a failure to disclose the widening of a road, or even failure to disclose a planning scheme which would eliminate a level crossing and sharply diminish the number of customers of the business being sold.

By contrast, the French courts have generally taken a different approach to fraudulent silence by the buyer. In the Baldus case, the Cour de Cassation held that a buyer is not required to inform the seller of the real value of the goods being sold35. This was reiterated in 2007, in a case involving the sale of land by a consumer to a professional buyer, where the court found that the buyer was under no obligation to disclose his knowledge regarding the value of the land36. These cases would appear to be limited to disclosure as to value and will not prevent a claim, for réticence dolosive, where, for example, a professional buyer did not disclose his knowledge of an impending change to the planning permission of the land37, thereby affecting the value of the property, or when the buyer is under an obligation of disclosure38.

There would, therefore, appear to be a judicial trend towards limiting the scope of these duties39. Indeed, the Court de Cassation has recently recognised that an erreur inexcusable by the alleged victim may now prevent an action for réticence dolosive40. This  gives strength to the assertion that there is also a duty to inform oneself41.

2) A free-standing duty to inform

Besides obligations of disclosure which arise as part of the doctrine of fraudulent silence, there seems to exist a separate duty to inform based on a general principle of good faith and fair dealing (devoir de loyauté) developed under articles 1134-3 and 113542. The courts have used this doctrine, without reference to either mistake or fraudulent silence, to impose liability for non-disclosure43. This obligation would seem to require the following elements44 : (i) a party who possesses actual knowledge or is deemed to have it as a result of his profession; (ii) this information must be of determining importance; (iii) the other party’s lack of knowledge must not be inexcusable; (iv) this reliance must be legitimate.

Accordingly, in 2003, a bank was held to be in breach of its duty to contract in good faith, where it failed to make the guarantor of a loan aware of its knowledge as to the financial situation of the debtor45.

The degree of information required may range from a simple duty of disclosure to a duty to advise the other party, in complex contracts where one has a particular expertise, as to the expediency of the contract. The courts have gone even further, requiring in some cases the professional party to seek out information in order to be able to inform the other party. As can be expected, certain categories of professionals such as lawyers, notaries or doctors will have more onerous duties imposed upon them.

3) Specific statutory duties

Article L111-1 of the French Consumer Code says: “All business suppliers of goods or services must, prior to conclusion of the contract, ensure that the consumer is made aware of the essential characteristics of the goods or services.” ((Chapter I: ‘General obligation of information’, article article L111-1
- translation on legifrance.gouv.fr ))

This provides strong protection, absent all allegations of fraud, as the consumer buyer does not need to prove the existence of the obligation and need only show a breach46. This wide ranging duty is supplemented by numerous other specific duties47.

C) Comparative remarks

We have seen the common law’s opposition to a general obligation of disclosure. This is reinforced by the exceptional imposition of duties by statute or by the courts in specific and limited circumstances. Nevertheless, one can clearly see dynamic market individualism at work, whereby paradigms such as contracting as self-interested dealing and free agreement are somewhat tempered by commercial practice and opinion48. Indeed, various devices have been used by the courts, such as judicially implied or statutorily implied terms, as well as a broadening of the concept of misrepresentation, in order to fill the information gap, by prodding contracting parties towards disclosure. These devices have been used sparingly and are limited in their scope. This should come as no surprise given that one of the main rationales behind limiting information duties lies in concerns over contractual certainty49.

By contrast, building upon a solidarist perspective, French law does not presuppose an abstract equality between the parties and has, accordingly, recognised that certain classes of contracting parties deserve higher levels of protection50. In summary, besides a general duty to inform, where good faith demands it and where this might determine the other party’s consent, French law also reinforces a professional seller’s duty to inform consumers by legislation. We have also seen that the concept of fraudulent silence, which has been instrumental in developing these information duties as a general principle of contract law, has recently seen its scope narrowed by the courts51. In particular, the recognition that one party’s ‘inexcusable’ fault may prevent him from claiming against his co-contractor who withheld information, and that there is no obligation of information as to the value between buyer and seller, are to be welcomed as common-sense limitations of the scope of contractual solidarity and as discouraging undue reliance.

In effect, both systems recognise the importance of freedom of contract but appear to give it a different weight in light of the value attached to either commercial certainty or consumer-welfare and contractual morality52.

  1. Regarding the use of this terminology see: John Cartwright, Misrepresentation, mistake and non-disclosure (3rd ed. Sweet & Maxwell 2012) at [16-04] []
  2. Smith v Hughes (1871) LR 6 QB 597; Hugh Beale, Denis Tallon, Stefan Vogenauer, Jacobien W. Rutgers, Bénédicte Fauvarque-Cosson, Contract Law (Ius Commune Casebooks for the Common Law of Europe): 5 (2nd ed. Hart Publishing 2010) at 514; Hugh Beale (ed.), Chitty on Contracts: Volume 1 – General Principles with 3rd Supplement (30th ed. Sweet & Maxwell 2011) at [6-142] []
  3. Ibid. at 607 []
  4. Bell v Lever Bros [1932] AC 161; Pierre Legrand Jr, ‘Pre-contractual Disclosure and Information: English and French Law Compared’ [1986] 6 Oxford Journal of Legal Studies at 323 []
  5. Hollier v Rambler Motors (AMC) Ltd [1972] 2 QB 71 []
  6. Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987] EWCA Civ 6 []
  7. Hugh Collins, The law of contract (4th ed. Butterworths 2003) at 201 []
  8. John Cartwright, Contract law : an introduction to the English law of contract for the civil lawyer (Hart Publishing 2007) at 167; See for eg. Marine Insurance Act 1906, article 18(1 []
  9. See for eg. Financial Services and Markets Act 2000, sections 80 and 81; Consumer Protection (Distance Selling) Regulations 2000 SI 2000/2334; Financial Services (Distance Selling) Regulations 2004/2095 []
  10. Hugh Collins, The law of contract (4th ed. Butterworths 2003) at 209 []
  11. John Cartwright, Contract law : an introduction to the English law of contract for the civil lawyer (Hart Publishing 2007) at [17-03]-[17-32] []
  12. Hugh Beale (ed.), Chitty on Contracts: Volume 1 – General Principles with 3rd Supplement (30th ed. Sweet & Maxwell 2011) at [6-143] []
  13. Boardman v Phipps [1966] UKHL 2; Hugh Collins, The law of contract (4th ed. Butterworths 2003) at 210 []
  14. John Cartwright, Contract law : an introduction to the English law of contract for the civil lawyer (Hart Publishing 2007) at 168 []
  15.  Lloyds Bank Ltd v Bundy [1974] EWCA Civ 8 []
  16. Hugh Collins, The law of contract (4th ed. Butterworths 2003) at 211 []
  17. See for eg. Nottingham Brick & Tile Co v Butler (1889) 16 QBD 778; SM Waddams, ‘Precontractual Duties of Disclosure’ [1991] 19 Canadian Business Law Journal at 349 []
  18. See for eg. With v O’Flanagan [1936] Ch 575; John Cartwright, Misrepresentation, mistake and non-disclosure (3rd ed. Sweet & Maxwell 2012) at [3-09] []
  19. Hugh Collins, The law of contract (4th ed. Butterworths 2003) at 205 []
  20. See: Unfair Contract Terms Act 1977, section 11(1); John Cartwright, Misrepresentation, mistake and non-disclosure (3rd ed. Sweet & Maxwell 2012) at [9-01]-[9-39] []
  21. Stephen Smith and Patrick Atiyah, Atiyah’s introduction to the law of contract (6th ed. Oxford University Press 2006) at 251; Hugh Collins, The law of contract (4th ed. Butterworths 2003) at 205; John Cartwright, Contract law : an introduction to the English law of contract for the civil lawyer (Hart Publishing 2007) at 168 []
  22. Sale of Goods Act 1979, section 14 []
  23. Unfair Contract Terms Act 1977, section 6 []
  24. Pierre Legrand Jr, ‘Pre-contractual Disclosure and Information: English and French Law Compared’ [1986] 6 Oxford Journal of Legal Studies at 324 []
  25. See for eg. Lord Mustill in Pan Atlantic Insurance v Pine Top Insurance [1995] 1 A.C. 501 HL at 543 []
  26. Per Lord Denning in Lloyds Bank Ltd v Bundy [1974] EWCA Civ 8 []
  27. See for eg. Stephen Smith and Patrick Atiyah, Atiyah’s introduction to the law of contract (6th ed. Oxford University Press 2006) at 243-245; John Cartwright, Misrepresentation, mistake and non-disclosure (3rd ed. Sweet & Maxwell 2012) at [16-04] []
  28. Ruth Sefton-Green (ed.), Mistake, Fraud and Duties to Inform in European Contract Law (Cambridge University Press 2005) at 25 citing Nicholas (The Pre-contractual Obligation to Disclose Information: English Report) []
  29. Paula Gilicker, ‘Regulating Contracting Behaviour: The Duty to Disclose in English and French Law’ [2005] 5 European Review of Private Law at 630 []
  30. Pierre Legrand Jr, ‘Information in formation of contracts: a civilian perspective’ [1991] 19 Canadian Business Law Journal at 329 []
  31. Paula Gilicker, ‘Regulating Contracting Behaviour: The Duty to Disclose in English and French Law’ [2005] 5 European Review of Private Law at 631 []
  32. Cass. Civ. 15 January 1971 []
  33. Pierre Legrand Jr, ‘Pre-contractual Disclosure and Information: English and French Law Compared’ [1986] 6 Oxford Journal of Legal Studies at 333 []
  34. PDV Marsh, Comparative contract law : England, France, Germany (Gower 1994) at 127 []
  35. Cass. Civ. 3 May 2000 []
  36. Cass. Civ. 17 January 2007 []
  37. Cass. Civ. 15 November 2000 []
  38. Cass. Civ. 17 January 2007 []
  39. Philippe Delebecque and Frédéric-Jérôme Pansier, Droit des obligations : contrat et quasi-contrat (4th ed. Litec 2006) at 71 []
  40. Cass. Civ. 4 June 2009 []
  41. Pierre Legrand Jr, ‘Information in formation of contracts: a civilian perspective’ [1991] 19 Canadian Business Law Journal at 339 []
  42. Cass. Civ. 15 mars 2005; Muriel Fabre-Magnan, De l’obligation d’information dans les contrats. Essai d’une théorie (Librairie générale de droit et de jurisprudence 1992); Simon Whittaker, Good Faith in European Contract Law (Cambridge University Press 2000) at 36 []
  43. Muriel Fabre-Magnan, Les obligations (Presses Universitaires de France 2004) at 293; []
  44. Ibid.; Barry Nicholas , The French law of contract (2nd ed. Oxford University Press 1992) at 105; Pierre Legrand Jr, ‘Information in formation of contracts: a civilian perspective’ [1991] 19 Canadian Business Law Journal at 337 []
  45. Cass. Civ. 13 May 2003 []
  46. Ruth Sefton-Green, ‘Duties to Inform versus Party Autonomy: Reversing the Paradigm (from Free Consent to Informed Consent)? – A Comparative Account of French and English Law’ in Geraint Howells, André Janssen and Reiner Schulze (eds.), Information Rights and Obligations (Ashgate 2005) at 180 []
  47. See for eg. ‘Loi Doubin’ no. 89-1008 of 31 December 1989 regulating the provision of information in distribution agreements, article 1; French Civil Code, articles 1602 [general information duty for the seller], 1641-1648 [on latent defects] []
  48. Roger Brownsword, Contract law : themes for the twenty-first century (2nd ed. Oxford University Press 2006) at 143 []
  49. Guenter Treitel, Treitel on the Law of Contract (11th ed. Sweet and Maxwell 2003) at 390 []
  50. Philippe Delebecque and Frédéric-Jérôme Pansier, Droit des obligations : contrat et quasi-contrat (4th ed. Litec 2006) at 71; Pierre Legrand Jr, ‘Information in formation of contracts: a civilian perspective’ [1991] 19 Canadian Business Law Journal at 332 []
  51. Paula Gilicker, ‘Regulating Contracting Behaviour: The Duty to Disclose in English and French Law’ [2005] 5 European Review of Private Law at 638; John Cartwright, Misrepresentation, mistake and non-disclosure (3rd ed. Sweet & Maxwell 2012) at [16-04] []
  52. Ibid. at 639 []

Pre-Contractual Duties of Information: ‘Mistake’ induced by misleading information (positive representation by the other party) (2/5)

This is Part II of my ongoing series of blog posts on the topic of pre-contractual duties of information in English, French and EU contract law.

Go to: Introduction -> Part II -> Part III -> Part IV -> Conclusion

In this part, I shall adopt a functional approach, briefly outlining the position under both systems, before offering some comparative remarks. I use ‘mistake’ as a generic term and do not intend to refer to the doctrine under English law

A) Fraudulent statements

1) English Law

Under English law, one will be able to bring a claim for fraud provided the following conditions are met: (i) a false representation; (ii) knowledge thereof, or a lack of belief in its truth, or recklessness or carelessness as to the truth1. Once fraud is established, one will be able to recover damages under the tort of deceit, sue for recision of the contract, or both((Archer v Brown 1985 QB 401; Hugh Beale (ed.), Chitty on Contracts: Volume 1 – General Principles with 3rd Supplement (30th ed. Sweet & Maxwell 2011) at [6-042])).

2) French Law

Under French law, article 1116 of the Code Civil provides that a contract may be annulled where, as a result of the ‘schemes of one the parties’, it is ‘obvious’ that the other party would not have entered into the contract2 . Such an action may be supplemented with a claim for damages under the general heading of delictual liability provided for in article 13823 .

B) Negligent or innocent statements

1) English Law

Under the Misrepresentation Act 19674, where a person has entered into a contract as a result of a fraudulent misrepresentation, he will be in a position to rescind the contract, claim damages, or both (as long as there is no double recovery)5. Section 2(1) of the Act imposes liability by reference to fraudulent misrepresentation (a ‘fiction of fraud’), the effect of which is to reverse the burden of proof, so that the other party must show they were not negligent in making the statement and had reasonable grounds to hold that belief6. A further cause of action may lie in a claim under tort law7.

As for innocent misrepresentations, where the other party had reasonable grounds to believe that their statement was true, the statute allows for the remedy of recision8. Statutory rescission in both situations is governed by s.2(2) of the Act, which provides the court with the discretion to refuse rescission and award damages in lieu, where it would be ‘equitable’ to do so.

2) French Law

Article 1116 will not come into play for negligent or innocent statements as it requires intent, as evidenced by the use of the term ‘manoeuvres’ (broadly translated as ‘machinations’).

Instead, article 11109, which provides that error “is [a] cause of nullity where it relates to the very substance of the thing which is the object of the agreement”, may be relied upon. The courts have interpreted this as meaning “the essential qualities of the thing, without which the party would not have contracted”10. If the seller knew, or from the circumstances of the sale, should have known the essential objective qualities of the object, then this requirement will be fulfilled. This may also be satisfied by an examination of the purchaser’s intentions, provided the seller was aware that a given quality constituted a determining objective for the purchaser.It should be noted that relief may be denied to a mistaken party whose error may be described as ‘inexcusable11’.

An innocent misrepresentation which leads to an erreur, within the conditions set out above, will only entitle the misled party to ask for the contract to be annulled. By contrast, a party which has been negligently misled, will, in addition to an action for annulment under article 1110, be entitled to seek delictual damages12.

C) Comparative remarks

First, it may be observed that both systems have very similar approaches to fraud13. Provided there is an intent to deceive and knowledge thereof, the other party will be able to claim for damages and obtain recision.

By contrast, there are differences in the way negligently and innocently made misleading statements are treated. It may be said that whereas French law focuses on the consequences on the misled party (provided this brings about an ‘error as to the substance’), English law is solely preoccupied by the actions of the misleading party.

Secondly, as mentioned above, French law will always allow the contract to be annulled once an erreur under article 1110 is established, with the rare exception of ‘inexcusable mistakes’. Under English law, in cases of negligent and innocent misrepresentations, discretion is granted to the court to allow damages in lieu of rescission. A similar outcome may be found in French law if one is unable to establish the existence of an erreur and has to pursue a claim under the heading of delictual responsibility.

I should note that I have deliberately omitted the English doctrine of mistake from this discussion given its extremely narrow scope, as the mistake must be fundamental and it must be shared14.

Overall, this may well be an area where the praesumptio similitudinis of comparative law applies, and, accordingly, broadly similar solutions are reached by different means: mistake under French law and misrepresentation under English law15.

  1. Derry v Peek (1889) 14 App. Cas. 337; Hugh Beale, Denis Tallon, Stefan Vogenauer, Jacobien W. Rutgers, Bénédicte Fauvarque-Cosson, Contract Law (Ius Commune Casebooks for the Common Law of Europe): 5 (2nd ed. Hart Publishing 2010) at 433 []
  2. French Civil Code, article 1116 []
  3. French Civil Code, article 1382 []
  4. Misrepresentation Act 1967: Chapter 7 []
  5. Hugh Beale (ed.), Chitty on Contracts: Volume 1 – General Principles with 3rd Supplement (30th ed. Sweet & Maxwell 2011) at [6-042] []
  6. John Cartwright, Misrepresentation, mistake and non-disclosure (3rd ed. Sweet & Maxwell 2012) at [7-03] []
  7. See: Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 and Esso Petroleum Co Ltd v Mardon [1976] EWCA Civ 4 []
  8. Misrepresentation Act 1967, section 2(1) []
  9. French Civil Code, article 1110 []
  10. PDV Marsh, Comparative contract law : England, France, Germany (Gower 1994) at 122 []
  11. Ibid. at 124 []
  12. French Civil Code, article 1383 []
  13. Hugh Beale, Denis Tallon, Stefan Vogenauer, Jacobien W. Rutgers, Bénédicte Fauvarque-Cosson, Contract Law (Ius Commune Casebooks for the Common Law of Europe): 5 (2nd ed. Hart Publishing 2010) at 432-440 []
  14. John Cartwright, Misrepresentation, mistake and non-disclosure (3rd ed. Sweet & Maxwell 2012) at [15-10], [15-14] []
  15. Hugh Beale, Denis Tallon, Stefan Vogenauer, Jacobien W. Rutgers, Bénédicte Fauvarque-Cosson, Contract Law (Ius Commune Casebooks for the Common Law of Europe): 5 (2nd ed. Hart Publishing 2010) at 507-509, 529-531 []

Pre-Contractual Duties of Information in English & French law and the Consumer Rights Directive – Introduction (1/5)

This is an introduction to my upcoming series of blog posts on the topic of pre-contractual duties of information in English, French and EU contract law.

Go to: Introduction -> Part II -> Part III -> Part IV -> Conclusion

“[an] investigation of the scope of the “duty to disclose” on a comparative law basis is most rewarding; it leads us straight to the heart of the philosophy underlying the law of contracts”1

The issue of pre-contractual information duties takes us to the very core of European private law, which must wrestle with competing conceptions of the negotiation process. How one views this stage, be it as an adversarial, or cooperative adventure, or even a hybrid thereof, will invariably inform the scope of these obligations. This is, arguably one of the areas where the divide between common and civil law is the most apparent. As such, a comparative study of the English and French approaches seems an opportune way to delve into this fascinating debate. This is even more so the case in light of the continuing pressure towards the development of common approaches at the European level.

It is submitted, in line with Sefton-Green’s reasoning2, that information duties not only imply positive duties to provide information but also providing accurate and non misleading information. This series of blog posts will, therefore, look at both types of information duties.

Accordingly, I shall show that English and French contract law, in light of their competing dogmatic underpinnings, have markedly different approaches to positive information duties, and, therefore, present significant obstacles to harmonisation. Taking this into account, I shall argue that the new Consumer Rights Directive represents a timid step towards harmonisation in this area.

To do so, I shall first consider how both legal systems deal with defective information at the pre-contractual stage (Part II), I shall then evaluate the extent to which they recognise a positive duty of information and the means used thereto (Part III). This will lead me to evaluate the acquis communautaire in this area and the new Consumer Rights Directive in light of the challenges of harmonisation (Part IV).

  1. Friedrich Kessler and Edith Fine, ‘Culpa in Contrahendo, Bargaining in Good Faith, and Freedom of Contract: A Comparative Study’ [1964] 77 Harvard Law Review at 438 []
  2. Ruth Sefton-Green, ‘Duties to Inform versus Party Autonomy: Reversing the Paradigm (from Free Consent to Informed Consent)? – A Comparative Account of French and English Law’ in Geraint Howells, André Janssen and Reiner Schulze (eds.), Information Rights and Obligations (Ashgate 2005) at 174 []