Part III of this book and its constituent chapters, Chapters 8 through 12, are devoted to the civil and commercial codes that have most significantly shaped the contemporary law of commercial contracts in the civil and common law systems. The present chapter is devoted to the Code Civil of 1804. The Code Civil was selected for special coverage because it has been the most influential of all of the private law codes of the civil law world. Even those codes that have adopted different policies and drafting methods (which by now are many) had to establish their normative “personality” by taking into account what the Code Civil did or did not do and either emulate or reject it. This chapter will be followed by others devoted to the French Commercial Code (Code de Commerce), the German Civil and Commercial Codes (BGB and HGB, respectively) and their sequels or functional equivalents in Latin America, Russia and China. Once we have discussed these codes, we will turn to key aspects of the English law of commercial contracts to the socio-economic and legal forces that shaped commercial contract law in the United States.
The contrast between lawmaking through codes and case law (and its compilations, including “Restatements” of the law in the United States) is not without interest from the standpoint of the development of scientific ideas and methods of thinking. Recently, I read some of the conversations between Leonard Mlodinow, a talented physicist and fiction writer who spent some time at the California Institute of Technology, and the famous physicist Richard Feynman.1 Feynman was the theoretical physicist who, in the opinion of many, was the legitimate successor of Albert Einstein. According to Mlodinow, the following is what Feynman told him about two seminal contributions to physics:
The Babylonians made western civilization’s first great strides in understanding numbers and equations, and in geometry. Yet, it was the later Greeks—in particular, Thales, Pythagoras and Euclid—whom we credit with inventing mathematics. This is because Babylonians cared only whether or not a method of calculation worked—that is, adequately described a real physical situation—and not whether it was exact, or fit into any greater logical system. Thales and his Greek followers, on the other hand, invented the idea of theorem and proof—and required that for a statement to be considered true, it had to be an exact logical consequence of a system of 246explicitly stated axioms or assumptions. To put it simply, the Babylonians focused on the phenomena, the Greeks on the underlying order.2
Despite the enormous disciplinary distances between law and physics, much of what Feynman attributed to the Babylonian approach to physics is equally attributable to the common law method of lawmaking. What he attributes to Greek mathematics and its search for the underlying order of physical reality is present in the European method of private law codification.
While there were a number of earlier private law codes in Europe, the Code Civil was the model for much subsequent codification. On the one hand, it incorporated some of the political and economic ideas designed to replace the remnants of French feudalism. On the other hand, the legal institutions (definitions, classifications, principles, and rules) it introduced were regarded by its drafters as components of a legal order that would be not merely of the here and now, but also permanent and universal. As will be apparent in a later chapter, the drafters of the German Civil Code of 1900 (BGB) took this approach to an even higher level of universality and “system building.”3
Hence, the use of the verb “is”4 by the French codifiers in the definition of key institutions of the law of contracts was more than a grammatical tool. When Article 1101 of the Code Civil stated: “A contract is an agreement that binds one or more persons, towards another or several others, to give or to do or not to do something,”5 it attempted to synthesize the essential features of a legal institution it deemed part of an immutable and universal legal order; simply put, a contract, anywhere and at any time, could not be anything else but what it defined.
These definitions were supported by normative principles of equal permanence and universality. As set forth in the constitutional-sounding proclamation of Article 1134 of the Code Civil: “Contracts, lawfully formed, have the force of law among those who made them.”6 The drafting style of this principle, and of many of the Code Civil definitions, was inspired by the axiomatic Roman regulae iuris previoiusly encountered.7 However, unlike the original Roman regulae, the substance of the French principles, definitions, and classifications bore the imprint of rationalism—an intellectual movement associated with the age of enlightenment and of natural law—and a body of philosophical and theological thought whose meaning often varied with its formulator.
The following sections will first identify the theories that most influenced the written or codified law of contracts of the nineteenth century. Thereafter, it will describe salient socio-economic features of pre-codification France and identify those features that are most closely associated with the archetypal contractual behavior reflected in the Code Civil.
For many European intellectuals, the seventeenth and eighteenth centuries comprised the era of “Enlightenment”:
[A] movement of thought and belief concerned with the interrelated concepts of God, reason, nature, [freedom] and man…. Although diverse in emphases and interests, the Enlightenment attacked the established ways of European life and, in its conviction that right reason could discover useful knowledge, aspired to the conquest of man’s happiness through freedom.8
A self-evident axiom by the philosopher Baruch Spinoza (transcribed in the following section) provides a good illustration of an “enlightened” point of view. In it, he praises The Netherlands, a country in which he, as a philosopher, was free to think and express his thoughts, and suggests that for such a freedom to thrive, it must be governed by the rule of law. Similar concerns about the role of freedom and its relation to law in post-feudal states can be found in the writings of John Locke, Voltaire, Jean-Jacques Rousseau and David Hume among many others, including Thomas Jefferson’s Declaration of Independence of the United States. Unlike the writings of the scholastics, their writings opposed the view that religious dogma or revelation was the primary source of knowledge and wisdom on how to govern. In varying degrees, these members of the Enlightenment era were influenced by Spinoza’s thought that ultimately God and Nature were one, as was the law that emanated from the Supreme Being.
The Enlightenment writers were also inspired by Newton’s scientific method.9 This method was perceived as a combination of a philosophy intended to reveal the orderliness of nature, the universe, and the mathematics of axiomatic proof. Many of the thinkers of the Enlightenment thus asked themselves: Why not apply Newton’s method to political and legal philosophy? For God did not seem to rule arbitrarily, but through natural laws observable in His nature.10 For these thinkers, then, God, reason and nature had to be the ultimate inspirers of codes.
As a by-product of the Enlightenment, rationalism entails a “Reliance on reason … as the only reliable source of human knowledge.”11 Rationalism offered an alternative method of thinking to the religious accounts of human nature, conduct and 248events.12 More specifically, it asserted that significant knowledge of the world can best be achieved by a priori use of a mathematically-inspired logic. Thus, it could be distinguished from the also nascent empiricism (especially in Great Britain) that relied on observation, experimentation, and a posteriori verification of suggested explanations.
One of the first codes written during the Enlightenment in 1672 was by Gottfried Whilhelm Leibniz, a German mathematician and philosopher: the Corpus Juris Reconcinnatum.13 Leibniz was convinced that all human knowledge could be summarized through logical calculus. During the same period, Benedict de Spinoza also applied geometric logic and Cartesian mathematics to draft rules of moral behavior capable of creating a perfect social order; an order mindful of the preeminent role of human freedom. In referring to his debt to Holland, where his family escaped after the expulsion of the Jews from Spain in 1492, Spinoza said the following in his Theological-Political Treatise:
Considering the great joy that has been granted to us of living in a republic where there is freedom of opinion for everybody and everybody can observe his religion in the way his conscience dictates … it is a task of gratitude and benefit to show that said freedom can be granted without pain to the public good….14
Referring to the contribution of reason to attain the best society within the rule of law, Spinoza drafted the following proposition, capable of proof through the logic of geometry:
Any man guided by reason has more freedom in a State where he lives under the rule of law than if living in solitude and only obeying himself….15
Thus, this method contrasted (and measured) the freedom of a solitary life against life under the rule of law, and showed that the radius of freedom is enlarged where human conduct is governed and inspired by law. As will be recalled from our previous discussion of geometric logic,16 this type of logic was first used by the Greek mathematicians and philosophers and was subsequently applied by Roman jurists, especially in their formulation of legal axioms known as regulae iuris. And, as will also be remembered,17 the Roman jurists were the first to employ the geometric logic in order to measure the dimensions of rights and obligations in actual or potential lawsuits.18
Roman juristic measurements were made possible by reliance, beginning with the regulae iuris as well as on substantive law rules consistent with the regulae and 249remedial provisions set forth in the praetor’s edict. Analogy also played a significant role in this analysis. It was supported by Euclidean principles such as “figures equal to a third are equal among themselves.” A fortiori reasoning, which was frequently relied upon by jurists to remind their readers that he who can do the greater, must also be allowed to do the lesser, also depended upon analogy. Such reasoning was supported by Euclid’s principle that a total dimension is larger than that of its component parts.19
As pointed out by the Chilean legal historian, Professor Alejandro Guzmán,20 the idea of a revision and consolidation of pre-existing law in a summary or synthetic fashion was already apparent in the sixteenth-century writings of the so-called “Humanistic” movement. One of its aims was to revise Justinian’s Corpus Juris Civilis as well as the writings of the medieval glossators and commentators in order to adapt them to Renaissance Europe. The Humanists’ awareness of the difficulties of adapting Roman legal institutions to the conditions of their time was reflected in the natural law writings of seventeenth-century jurists such as Hugo Grotius and Samuel Pufendorf.
The solution was codification “under the inspiration of the mathematical manner (mos mathematicus)…. to reduce the rules to their most brief and concise formulation.”21 At the root of codification, then, was a mathematically-inspired synthesis of rules. Each codified rule had to be synthesized to encompass the largest possible number of factual situations. And the substantive content of the codified rules, as contrasted with the mathematical or formal logic of their drafting method, was in significant measure provided by the law of nature, as espoused by thinkers who did not always agree on what that law was or how to apply it.
For some, natural law justified an absolute form of monarchy, while for others it tolerated only a form of government with limited rights both for the governing class and for the governed. For some, it dictated that commerce had to be completely free from governmental restrictions, including freedom of contract, property rights, and navigation of the world’s oceans. For others, these freedoms were only granted by divine law to those who followed the precepts of the Old or New Testaments as interpreted by a “legitimized” or church-anointed crown. Of the numerous seventeenth- and eighteenth-century versions of natural law, two were particularly influential on the drafting of the first European codes and especially upon the Code Civil and the BGB, codes which, as noted in the previous section, filled many gaps and provided many principles of interpretation for their less-intellectually-ambitious commercial counterparts.
The codification of the European law of contracts in the nineteenth and twentieth centuries was influenced by political and economic doctrines responsible for the above mentioned replacement of a feudal state by a liberal bourgeois state. As will be discussed shortly,22 freedom of contract and ownership of property were about to gain a 250firm foothold in the French and German legal systems. This was in large measure due to the marriage between rationalistic and natural law philosophies.
The rationalistic component required the application of the “right reason,” i.e., a reason that was not only logical, but also moral. The natural law component provided legitimacy to the applied reason. In a still largely authoritarian world, the legitimacy of a new legal order depended upon showing that its rules and principles were inherently universal and permanent in nature. Two seventeenth-century philosophers, Hugo Grotius and Samuel Pufendorf, provided suggestions, with varying degrees of success, on the best application of the right reason to the codified law of contracts.
Hugo Grotius was born in Delft, Holland in 1583 and died in Germany in 1645.23 As a lawyer and legal philosopher, he was one of the most influential natural law thinkers of his time, as apparent not only in the Code Civil, but in public international law. His famous treatise, De Jure Belli ac Pacis (1625), advocated a ius gentium, or law of nations, based on a natural law that relied on the Holy Scriptures, immanent Roman law (in contrast to temporal and, thus, changing law), and on his observation of the “best” natural impulses of man, i.e., man’s association with his peers by means of families and social, peaceful and productive groups.24
Grotius’ natural man was characterized by his “sociability” or cooperation with his peers, especially through commerce. In his polemic monograph, De Mari Libero, Grotius advocated freedom of the seas, particularly for maritime commerce and against the monopolistic and absolutistic pretensions of the Portuguese crown.25 Grotius characterized the notion of contract inherited from Roman law as a voluntary method to acquire goods and services made binding because of the ius gentium voluntarium. In this voluntary method of acquisition, the formalistic delivery of the purchased goods (traditio) was not required even for “real” contracts such as deposits or bailments, a development which, as Grotius pointed out, was part of the Justinian Digest with respect to a conveyance and secured transaction known as constitutum possessorium.26 As will be discussed shortly, the “consensual” approach to the perfection of contract rights advocated by Grotius entailed the transfer of title to the goods sold from the moment that the parties to a sale agreement agreed on subject matter and price. This 251elimination of traditio was adopted by the Code Civil, but not by others partly influenced by it.27
Grotius distinguished between what was changeable and temporal and what was “natural” and immanent in Roman law. On this basis, he identified as an immanent feature of contracts their voluntary nature or intent to transfer what was bought and sold regardless of the actual formality of transfer. Consequently, and as just mentioned, contracts of sale, according to Grotius and to the French codifiers, did not require the delivery of the contractual res for them to have full legal effect; the mere consent of the parties was sufficient to effect the transfer of the title to the contractual res.28 Moreover, Grotius’ consent principle meant that until promises were accepted by promisees, they did not bind promisors and thus were mere “pollicitations.” This corollary of the consent principle was also adopted by Robert Pothier,29 a highly influential doctrinal writer during the pre-codification period whose influence on the Code Civil will be discussed later in this chapter.30
The consequences of Pothier’s adoption of Grotius’ view that unaccepted promises are non-binding on the promisor are painfully visible in the Code Civil, as will be discussed in a later section.31 For Grotius, the binding force of the unilateral promise must be found in the duty to behave truthfully as prescribed by moral theology. To those who invoked the lack of binding effects of the nuda pacta in Roman law, Grotius answered with the same arguments used against the alleged immanence, or for the continued observance of the requirement of traditio. The nuda pacta and the requirement of traditio were the result of temporal conditions and not of the eternal and immanent features of contracts.32
Among other permanent features of contracts was the requirement that they be performed in good faith:
[The Romans] [l]ike the Germans, since ancient times, valued good faith above any other virtue … and they put into practice the idea that all contracts that are based on a reasonable causa (redelicke oorzaek) deserve a right of action … whatever the form and words used, even if the parties were not present in the same place….33
Professor Gorla construes this quote, and especially its reference to good faith, as applicable to any promise to give an amount or a thing that lacks a traditional causa.34 It does not seem applicable to unexecuted bilateral contracts, as these could be revoked up until the moment of the counter-party’s performance. Gorla adds that Dutch law during Grotius’s lifetime, unlike the Code Civil, did not adopt the natural-law-derived “consensual” principle that “the mere consent binds” (solus consensus obligat).35 On the other hand, Dutch law required a reasonable causa and a specific form for formal contracts until well into the twentieth century.36 The drafters of the Code Civil took to heart Grotius’ reminder of the value of good faith and made it a requisite in the performance of contractual obligations.37
It is worth noting that while Grotius believed that contractual promises were not binding until accepted by the promisee, he also suggested that pre-contractual liability for the damages suffered should be imposed as a result of the negligence of the counterparty while the contract was being negotiated. This suggestion anticipated von Ihering’s nineteenth-century doctrine of culpa in contrahendo.38
Samuel Pufendorf was born in Germany in 1632 and died in 1694. He was the author of De iure naturae et gentium libri (1672) and De Officis hominis ac civis iusta legem naturales libri II (1673), among others.39 These writings applied the ideas of rationalist philosophers such as Descartes and Spinoza to legal and ethical behavior. In Franz Wieacker’s words:
In company with Grotius, but in stark contrast with Hobbes, Pufendorf [relies] once again on the natural socialitas of man and his need for help from his fellow man (imbecillitas); for him, however, these are not features due to the revealed will of the redemptive creator, as they were in the Christian natural law tradition, but qualities inherent in man … regardless of his creation.
…
[T]his was the critical step, the enormous leap of thought from the idea of a world created by a creator external to it to the idea of a world whose laws immanently evidence the will of the creator. Because of its inherent orderliness this method enabled Pufendorf to construct … an architecture of the polity, in which every component could be traced back to mathematically formulated axioms.
…
Descartes helped Pufendorf to attain that combination of deduction and induction, axiom and observation, analysis and synthesis, which had characterized thinking in the natural sciences since Galileo’s Discorsi. This enabled him to stay in close touch with social reality. Whereas Grotius treated as authoritative … canonical and literary sources he developed in support of his principles, Pufendorf treated them as merely illustrative and had no hesitation … in adducing the evidence of contemporary events and even foreign practices.40
Through his rationalism and cultural observation, Pufendorf reached axioms both more general and specific than those of the Roman regulae iuris. By incorporating those axioms into a system of natural law, Pufendorf achieved a system of jurisprudence whose traces can be found in both the French and German civil codes. In the BGB, an example can be found in all-encompassing concepts such as that of a “legal transaction” or “juristic act” (Rechtsgeschäft) that include contracts, which Pufendorf placed at the center of the universe of private law.
Taking into account man’s sociability and the function of contracts as tools for the exchange of wealth, Pufendorf classified them in accordance with the observable nature of the exchanges, i.e., onerous (or profitable), gratuitous or beneficent, or a mixture thereof. After listing the empirically ascertainable transactions by paying attention to their economic content, he searched for those principles and concepts applicable to the entire set. In doing this, Pufendorf became, in Wieacker’s words, “the originator of a General Part of the law of obligations [of the BGB].”41 Hence, his influence could be noted in general provisions such as:
§ 241. [Content of obligation] The effect of an obligation is that the creditor is entitled to claim performance from the debtor. The performance may consist of refraining from acting.42
Or:
§ 242. [Performance according to good faith] The debtor is bound to effect performance according to the requirements of good faith, giving consideration to common usage.43
His influence could also be found in concepts designed to gather a set of rules subsumable under a common heading such as “methods for discharging obligations,” which included “performance and substitutes for performance, set-off, release, novation and delegation, change of civil status….”44 This grouping of closely related rules became a favorite tool of the future private law codes.
The private law of France was so diverse in the eighteenth century that, as observed by Voltaire, anyone traveling through France would change laws as 254frequently as horses.45 This variety of laws was accentuated by the presence of customary law (Pays de Droit Coutumier) in the Northern provinces and written law (Pays de Droit Ecrit), largely influenced by Roman law, in the Southern provinces.46 Not surprisingly, a French government account of the codification process found that “[u]nder the [old regime] more than 400 codes of laws were in place in various parts of France…. In addition, [by the time of the drafting of the Code Civil] the revolutionary governments had enacted 14,000 pieces of legislation.”47
Military skills aside, Napoleon Bonaparte was a gifted administrator, keenly aware of the need for a uniform law throughout France. Yet, his intervention in the codification process came about a decade or so after it had started. Following the revolution of 1789 and the resultant overturn of much of the existing law, the newly created Constitutional Assembly voted on July 5, 1790 to review and reform “the civil laws” to reach a simple and clear general code of the laws “appropriate to the constitution.”48 Five attempts to codify the new laws were made during the period of the National Convention and the Directorate.
Thereafter, Napoleon appointed experienced administrative officials and government commissioners to prepare the final drafts of what became the Code Civil.49 The most influential of these officials was Jean-Etienne-Marie Portalis, born in Provence to a bourgeois family. After becoming a lawyer at the highest provincial supreme court of Aix (Parlement), he practiced law in Paris, where he was elected to an important administrative office. He then became a leader of a moderate party opposed to the Revolutionary Directorate, which led him to flee France when faced with the Directorate’s attempts to jail him. When Napoleon established himself as the leader of the highest administrative office (Consulate), he named Portalis as a Counselor of State (Conseiller d’Etat) and charged him and three other distinguished functionaries (of a similar background) to draw up the final version of the Code Civil.50
Napoleon participated in thirty-six of the eighty-seven drafting sessions of the Code Civil and, according to a French official historian, he contributed “a typically Napoleonic mix of liberalism and conservatism, although basic revolutionary gains—equality before the law, freedom of religion and the abolition of feudalism—were 255consolidated…. Property rights, including the rights of the purchasers of biens nationaux [national property] were made absolute.”51
The final draft of this working group was finished in four months and was forwarded to the General Assembly of the Council of State on July 17, 1801. As pointed out by Professor Gordley,52 about two-thirds of the texts have close parallels in the works of two legal commentators strongly influenced by natural law writings, the seventeenth century’s Jean Domat and the eighteenth century’s Robert Pothier. After finishing its review, the Council of State answered favorably and forwarded it to the First Consul, who in turn submitted it to the so-called Tribunate. The Tribunate was comprised of a large number of National Assembly members who were opposed to Napoleon’s legislative initiatives. Fearing a contrary vote in the Assembly, Napoleon withdrew the submitted text before its vote. He then reduced the membership of the Tribunate, excluding his enemies, and created a complex procedure that would enable the adoption of the Code Civil in March 1804.53
In contrast with the BGB of 1900, the Code Civil was written in a clear and accessible form to the layman. Its style is epigrammatic, and of such self-evident persuasiveness that even a great prose writer like Balzac recognized his literary debt to the Code Civil. Much of the persuasiveness of its epigrams was owed to definitions and classifications of an Aristotelian and Thomastic making and to axiomatic or regulae iuris types of rules.54 Consider, for example, the following provisions:
Article 1119: As a rule, one may, bind oneself and stipulate in his own name, only for oneself.
Article 1134: Agreements lawfully entered into take the place of the law for those who have made them.
Article 1168: An obligation is conditional where it is made to depend upon a future and uncertain event, either by suspending it until the event happens, or by cancelling it, according to whether the event happens or not.
Article 1185: A term differs from a condition, in that it does not suspend the undertaking, of which it only delays the fulfilment.
Article 1226: A penalty is a clause by which a person, in order to ensure performance of an agreement, binds himself to something in case of non-performance.
Article 1227: Nullity of the principal obligation involves that of the penalty clause. Nullity of the latter does not involve that of the principal obligation.
Article 2279: In matters of movables, possession is equivalent to a title.55
While the substantive content of many of the rules on contracts was contributed by the writings of Jean Domat and Robert Joseph Pothier, these articles reflected the 256natural law views of Hugo Grotius and Samuel Pufendorf.56 At the same time, and as will be discussed in a later section,57 the newly-enacted rules also reflected the interests of the French bourgeoisie, particularly keen on having, among other contractual legal institutions, unrestricted and certain conveyances of real property.
Robert Joseph Pothier was a prolific eighteenth-century legal commentator. His style was clear even when his analysis was not always persuasive. Pothier’s command of sources has been dismissed by some highly respected legal historians as superficial.58 Nevertheless, his Traité des Obligations, influenced as it was by Grotius and Pufendorf, was highly instrumental in the drafting of the Code Civil. Medieval scholasticism and its Aristotelian inspiration are apparent in Pothier’s method of reasoning. Consider the following definitions and classifications:
A contract is a kind of agreement. To know what a contract is, it is then previously requisite to know what an agreement is. An agreement or a pact (for these are synonymous expressions) is the assent of two or more persons, to form an engagement between them, or dissolve or modify one already formed.59
Following the Aristotelian method of definition, Pothier identified what he believed was essential in the defined object, i.e., that feature which is peculiar or unique to the species of agreements known as contracts, the voluntary creation of obligations or engagements. The purpose of this feature was to distinguish contracts—permanently and universally—from other agreements that extinguish or modify previous obligations, but do not form engagements. Once this essence was identified, Pothier proceeded to place contracts within the genus of agreement.60
Conceivably, the “species” of contract or agreement could also be placed under the “family” of methods for acquiring property, such as the “voluntary” or “conventional obligations” (as was done by Book III of the Code Civil). It could also be placed under the family of voluntary obligations as distinguished from involuntary obligations, such as those derived from the tort of negligence. This interest in classification and taxonomy, surely an Aristotelian legacy, is responsible for distinctions between a contract and an agreement. Despite Pothier’s attempt to distinguish between contract and agreement, few lawyers in our day, and possibly in Pothier’s as well, would have difficulties with the notion that parties who agreed to modify or extinguish an obligation did not actually contract to do so. One could easily dismiss this distinction as one without a difference, except that when each definition is taken seriously (as it has 257been to this day by many readers of Pothier), significant legal consequences could follow, such as denying enforceability to otherwise valid promises.
Pothier continued:
There are other promises, which we make with good faith and with the actual intention to perform them, but without an intention of engaging or binding ourselves and conferring on the party, to whom they are made, the right of requiring their performance. This happens when he, who promises, expressly declares that he does not mean to bind himself, or when this is fairly to be implied and results from the circumstances, or from the relation in which the parties stand to each other.61
To illustrate this supposed exception to the family of binding promises, Pothier gave the example of a father who promises a pleasure trip to his law student son to encourage him to be more diligent in his studies. Such a promise, although made in good faith, was, according to Pothier, unenforceable.62 Nevertheless, Pothier’s adherence to this “voluntaristic” principle (only the will of the promisor binds him and only that of the two parties binds both) makes him an advocate of the principle solus consensus obligat (the mere consent binds).
Pothier repeatedly refers to Grotius and Pufendorf and their versions of natural law in support of voluntarism and consensual contracts. The reverse side of this bilateral voluntaristic coin is that a promisor cannot make his avowedly “firm” promise binding on himself, except when such a promise is accepted by the promisee. Pothier referred to such an unaccepted promise as a “pollicitation.” It cannot become a contract (meaning a contractual type of obligation) for “a contract includes a concurrence of the will of two persons at least, one of whom makes and the other accepts the promise.”63
Pothier added:
The pollicitation, according to the principles of mere natural law, produces no obligation, properly speaking. He who makes this promise, may revoke it, as long as it is unaccepted by him to whom it is made. For there can be no obligation without a right acquired, by the person in whose favor the obligation is contracted, against the person who contracts it. Hence as I cannot, by my own will alone, transfer to another the property of my goods, if his will does not concur in the acquisition of it: for I cannot, by my promise, transfer to another a right on my performance, until his will concur in the acquisition of it by his acceptance of the promise.
…
It is useless to enquire now, whether pollicitations are obligatory in our law. For as the ordinance of 1731, art. 3, has declared that there shall be but two ways of disposing gratuitously of one’s goods, by donation inter vivos and by testament, it follows that it rejects the pollicitation.64
Predictably, the supporting source was Grotius’s natural law.65
Please read Code Civil Articles 1589–1 and–2 as recently enacted in the case law in the appendix to this chapter,66 and ask yourself how compatible is the unenforceability of pollicitation with the need to rely on options to purchase and sell real property.67
According to Pothier, the Roman law classification of contracts bona fidei and stricti juris did not prevail in eighteenth-century France. Instead, contracts were divided into the following categories:68
According to Pothier:
[Such contracts] are those in which each of the contracting parties binds himself to the other, as in the contracts of sale, hire, etc. Unilateral [contracts] are those in which one of the parties only binds himself to the other, as in the loan of money. Among the synallagmatic [or bilateral] contracts, we distinguish those that are absolutely so, and those which are so, qualifiedly. The contracts, which are perfectly synallagmatic or bilateral, are those in which the obligation, which each party contracts, is equally a principal obligation of the contract, as contracts of sale, hire, partnership, etc. For example. In the contract for sale, the obligation, which the seller contracts to deliver the thing, and that which the buyer contracts to pay the price, are equally principal obligations of the contract. The contracts which are qualifiedly synallagmatic, are those in which the obligation of one party alone is a principal obligation of the contract. Such are the contracts of mandate, deposit, loan for use, loan for use, and pledge. In these contracts, the obligation which the mandatory contracts to account, those contracted by the depositary, borrower or creditor, to restore the thing deposited, lent or pledged, are the only principal obligations of the contract. Those which are contracted by the mandator … are but incidental obligations….69
Could it be that Pothier’s imperfect synallagmatic contracts reflected not what took place in the France of his day, but in a Rome where mandates and loans for use (commodatus) were gratuitous?70 Can you conceive of a car or equipment leasing company doing business under the assumption that its loans of use (or rentals) are presumptively gratuitous?
Consensual and real contracts are:
[T]hose which are formed, by the mere assent of the parties, and are therefore called consensual contracts, as sale, hire, mandate, etc. and those in which something else is requisite, as contracts for the loan of money or of things to be used, deposit and pledge, which, from the nature of the contract, require the delivery of the thing that is the object of the contract: These are called real contracts.71
Why should a loan agreement or a promise to lend be unenforceable prior to the lender’s delivery of the amount of the loan? Possibly Pothier was thinking about the Roman loan (mutuum) and of the borrower’s express or implied obligation to return the amount borrowed plus interest. Yet why not allow enforcement of a promise to lend by a borrower who is the recipient of that promise? After all, borrowers would be better off being able to rely on such a promise and might even be willing to pay a higher rate of interest for it if it were enforceable. Further, in accordance with this classification, could a contemporary line of credit agreement in which a bank gives its client an authorization to draw up to a specified amount be enforceable? The same would be true with promises to make the authorized amounts of credit cards available to the holder of the card. Does the fact that a loan agreement and its corollary promise to lend was classified as a “real” contract mean that unless the amount is delivered by the lender to the borrower at the moment of execution of the contract, there is no contract and thus no liability for the promise?
Pothier provided a revealing comment on the use of the formal or notarial deed (acte authentique) in eighteenth-century France and its effect upon the all-important consensual sale of land, especially as executed by the influential bourgeois segment of the population:
Although the mere assent of the parties suffices for the perfection of consensual contracts, yet if the parties in a sale, or hire, or any other kind of bargain, agree to have a [notarial] instrument … with a view that their bargain be not concluded and perfect[ed], till the instrument shall have received its legal form by the signature of the parties and the notary, the bargain will not be complete until the notarial instrument shall become so; and the parties, although they perfectly agree to the terms of the bargain, will be at liberty to recant at any time before the notarial instrument is subscribed.
[Where] the instrument is required for the perfection of the contract, it is not from the nature of the contract, which of itself requires nothing but the assent of the parties; it is because the contracting parties have required it, and because it is lawful for the parties to a contract to render their obligations dependent on what condition[s] they please.
It must be observed that an agreement, that a notarial instrument evidencing the bargain shall be drawn, does not of itself render the perfection of the bargain dependent on the instrument. It ought to appear that the intention of the parties was that it should depend on this. Therefore, it has been adjudged, in a case reported by Mornac, ad. d. l. 17, that a party could not recede from a contract … that there should be a [valid] notarial instrument, although no such instrument had been executed: for it could not be concluded from this clause that the parties had intended to render the completion of their bargain dependent on the execution of a notarial instrument, which might have been thought of in order to provide a lien on the party’s lands, which such an instrument procures, or to obviate the danger of losing a private paper.72
These comments highlight the difficulties with Pothier’s voluntaristic definition of a sales agreement that requires the assent of two or more persons to form an engagement between them or dissolve or modify one already formed. As with the proverbial dog, this definition winds up chasing its own tail and thus contradicting itself.
Assume that a buyer and a seller agree to all of the terms of a sale, including its subject and price, and also agree that they will execute the sale as a notarial deed. The engagement to reduce the agreed-upon terms and conditions to a notarial writing differs from the agreement on subject matter and price in that if either party decides not to sign, there is no agreement at all. Thus, there are two different agreements: one is informal, and the other one depends upon the formality of a public deed. As Pothier admits, if the requirement of a notarial deed were not present and if there were no statute requiring such a formality, the remainder of the consensual agreement would have been enforceable.
This raises the question of what or which was the consensual agreement, that on the subject and price or on the need for an execution of a notarial deed. If the notarial clause is fully enforceable as an integral part of the agreement, it would appear to be contrary to Pothier’s own definition of a consensual sale, which asserts that the consensual sale is enforceable once the parties have agreed on subject matter and price. In other words, contrary to Pothier’s definition, the notarial clause would be an agreement subject to a unilateral termination by either party, and thus the voluntaristic explanation of why contracts are binding would start chasing its own tail.
Could this be the reason why the court decision alluded to by Mornac required that the notarial clause be made an express condition precedent and that short of it, the sale agreement be enforceable? Moreover, what happens when the law itself requires a notarial deed as an essential condition if the agreement involves the sale of land whose value exceeds a certain amount? According to Pothier, contracts whose amount exceeded one hundred livres could not be proved by witnesses.73 As will be discussed in a later section, this requirement was adopted in a number of other civil law jurisdictions and especially in Spain and Latin America with serious legal and economic consequences.74
Another category of contracts includes contracts of interest on both sides, charitable contracts and mixed contracts:
Contracts of interest on both sides are those which are made for the reciprocal interest and advantage of both parties. Such are contracts of sale, exchange, hire, annuity, partnership, and an infinity of others.
Contracts of beneficence [charity] are those which are made only for the advantage of one of the contracting parties. Such are the loan[s] to use, the loan to consume, deposit and mandate.
…
Contracts of interest on both sides are subdivided into commutative contracts and aleatory contracts.
Commutative contracts are those in which each of the contracting parties gives and receives ordinarily the equivalent of what he gives. Such is the contract of sale…. They are [sub-divided] into four classes, Do ut des, facio ut facias, facio ut des, do ut facias [I give so that you give, I do so that you do, I do so that you give, and I give so that you do].
Aleatory contracts are those in which one of the parties, without giving anything on his part, receives something from the other not as a liberality, but as a price of a risk which he runs. All games are contracts of this nature, as are wagers and contracts of insurance.75
How realistic are the above types of contracts in the reader’s transactional world? For example, would the reader consider a loan that would enable the borrower to use or to consume the lender’s object, the contract of deposit or mandate contracts of beneficence? As just noted, is there not an entire financial industry that derives its income from just such types of loans? On the other hand, would donations be deemed contracts in the reader’s jurisdiction and thus enforceable as such? Or, would aleatory contracts in our day not require that the speculator give something in exchange for the expectation of a higher gain?
“Principal contracts are those which intervene principally and for themselves. Accessory contracts are those which intervene to insure the execution of another contract. Such are contracts of suretyship and pledge.”76
This classification has been quite troublesome in banking and financial practice. Consider the following not-so-hypothetical situation. “A,” a lawyer for a mortgage bank “MB,” asks his legal consultant, “C,” whether it would be possible for MB to sell mortgage bonds to the public in the following manner: All the workers of factory “F” interested in buying their F subsidized homes would sign as mortgagors naming MB as the mortgagee and using their homes as the mortgaged collateral. MB would obtain a promise from F, the employer, to guarantee the workers’ payments and to deduct the 262mortgage payments owed to MB from the salaries it pays its workers-mortgagors. All such executed mortgages would be packaged and sold to the public as mortgage bonds or certificates of participation in the pool of mortgages.
Upon the sale of these bonds or certificates to the public, the proceeds of the sale would be distributed among the builders of the future houses for the workers. As was done by counsel to a Central American government bank, C correctly characterized the “sale” of the mortgage bonds to the public as an attempt to borrow construction funds from the buyers of the mortgage bonds. Yet, to sell a mortgage bond (which C would characterize as a security device and therefore as an accessory contract in Pothier’s and many civil codes’ classification), a principal contract (the loan by the buyer of the bond) would have had to pre-exist the sold mortgage. But how could such a loan exist prior to creation of the security interest which by itself embodies the loan? After all, does not the loan come about the moment the security is bought? Thus, a chicken and egg situation results from the fact that an accessory contract such as a mortgage cannot exist prior to the existence of the principal contract. To sell the mortgage bonds to the public, it would be necessary to require that the buyer of each bond first become the lender of each mortgagor-buyer of the future house. However, even this solution would not work because what is sold to the public is not an individual mortgage, but a certificate of participation in a pool of mortgages.
Finally, a last and very important division of contracts is “those which are subjected by the municipal law to certain rules or forms and those which are regulated by natural law alone.”77
Please note that natural law becomes an actual source of contract law for informal contracts. From a legislative standpoint, and to avoid uncertainty, it does make some sense to suggest a source of law for contracts that have not been classified or “typified.” Without a source, they may become unenforceable or their enforcement could be left to the vagaries of analogical interpretation by attempting to apply the law of the closest transactional or legal analogy. Yet, is there not a more certain and predictable source of law to govern informal contracts than an indistinct natural law? If so, what would it be? Would custom, usage of trade, course of dealing, or, for certain contracts, best business practices not be a better source?
In his comment to this classification, Pothier states that the formal contracts in France are the contracts of marriage, donation, bill of exchange and annuity. He adds:
Other agreements are not subjected … to any particular form or arbitrary rule prescribed by the municipal law, provided that they contain nothing contrary to law or good morals, and they be entered into by persons capable of contracting, they are obligatory and give rise to an action. If our laws require that those, the object of which exceeds in value the sum of 100 livres, be reduced to writing, it is only with the view to regulate the manner in which they are to be proved, when their existence is denied.78
The reader should keep this statement in mind when reading about the Formality of Contracts in a later chapter.79 Pothier’s reference to French law could have helped some appellate courts in Spain and Latin America struggling with another classification: formalities ad solemnitatem and ad probationem.
A remarkable similarity exists between Pothier’s and the Code Civil’s classifications of contracts as demonstrated by the following provisions:80
Article 1102: Synallagmatic or bilateral
[When] the contracting parties bind themselves mutually towards each other.
Article 1103: Unilateral
[When] one or more persons are bound towards one or several others, without there being any obligation on the part of the latter.
Article 1104: Commutative
[When] each party binds himself to transfer or do a thing which is considered as the equivalent of what is transferred to him or of what is done for him.
Where the equivalent consists in a chance of gain or of loss for each party, depending upon an uncertain event, a contract is aleatory.
Article 1105: Benevolence
[I]s one by which one of the parties procures a purely gratuitous advantage to the other.
Article 1106: Onerous
A contract for value is one which obliges each party to transfer or do something.
And while there does not seem to be a counterpart to Pothier’s classification of consensual and real contracts, Article 1138 should not be overlooked:
An obligation of delivering a thing is complete by the sole consent of the contracting parties.
It makes the creditor the owner and places the thing at his risks from the time when it should have been delivered, although the handing over has not been made….81
This provision enables the enforcement of a bilateral consensual agreement in which one of the parties undertakes a future delivery. Yet, the requirement of bilateral consent would continue to be essential. Thus, if one of the parties offered the other an option to purchase real estate during a certain period of time, there would have had to be an agreement to the terms and conditions of that option when the option was 264granted to the promisee for it to be enforceable. This could be the reason for an amendment to Article 1589 of the same code, which stated:
A promise of sale is the same as a sale, where there is reciprocal consent of both parties as to the thing and the price.
Where that promise relates to plots already in lots or to be in lots, its acceptance and the agreement that will result therefrom shall be established by the payment of an instalment on the price, whatever the name given to that instalment may be, and by the vesting with possession of the plot.
The date of the agreement, even put into legal form afterwards, is that of the payment of the first instalment.82
What about other executory promises such as that of performing a certain service or paying a certain amount of money in exchange for the performance of services or the giving of money—promises that are not agreed upon when issued, but still intended to be firm promises by their issuer? Does Article 1370 of the Code Civil take care of the enforceability of these promises or just some of them? Article 1370 states that:
Certain undertakings are formed without the intervention of any agreement, either on the part of him who binds himself, or on the part of him towards whom he is bound.
Some of them result from the sole authority of legislation; others arise from an act personal to the one who is obligated.
The former are the undertakings formed involuntarily, such as those between neighbouring owners, or those of guardians and other administrators who may not refuse the duties which are imposed upon them.
Undertakings arising from an act personal to him who is bound result either from quasi-contracts, or from intentional or unintentional wrongs; they constitute the subject-matter of this Title.83
In answering the above question, the reader should review Articles 1371–1381 of the Code Civil (whose official translation is available on the Internet on Legífrance’s website).84 Do any of these provisions support generically the enforceability of executory promises to give or to do that have not been accepted by their promisees when issued? What if some of these promises appear in documents such as promissory notes, bills of exchange, corporate or government bonds or certificates of deposit? Where should one look for answers to the latter question, the Code Civil or the Commercial Code of France? What is the importance of a provision such as Article 1589–2 of the Code Civil, in force since January 1, 2006? Please look up this provision on Legifrance and provide your evaluation in light of the preceding discussion.85
Pothier and Code Civil definitions and classifications offer an appearance of universality, permanence and certainty that are at first sight quite comforting, especially to law students. This comfort comes from the belief that these definitions and classifications are the essence of the law of contracts; the remainder of such a law, as once put to me by a Spanish law student, is mere “relleno” (or the filling of the dish). Yet, once he becomes a practitioner, judge or law professor, that student will realize that Pothier’s classifications and definitions hinder an easy and effective adaptation of contract law to the ever-changing and often untypified or unclassified marketplace transactions.86
As discussed earlier,87 in their search for abstract concepts to explain or justify conclusions, the scholastics relied on purely deductive techniques and not on empirical research to support their syllogistic major premises. If the facts assumed by their major premises were based on defective or unverified observations, or on observations that were valid only for a given place or time (as with Aristotle’s observation that money was a sterile commodity), the effect of making their conclusions permanent and universal rules of law were disastrous indeed.
Recall the medieval regulation of usury:88 Its major premise was based upon an unempirical supposition that assumed that any interest rate was usurious, regardless of whether it was lower than the rate that prevailed in the marketplace. With such a major premise, the conclusion was inevitable that a loan that charged any rate of interest had to be usurious. Similarly, when Pothier drafted the above-transcribed definition of contract (“A contract is a kind of agreement…. An agreement … is the assent of two or more persons, to form an engagement between them, or to dissolve or modify one already formed.”89), its major premise assumed that a contractual type of obligation—for the promisor of an executory promise—arose from a two-party agreement, even for promises issued as binding on the promisor from the moment of their issuance. Accordingly, it became inevitable that a unilateral promise was not a contractually binding promise and was an unenforceable pollicitation until accepted by the promisee.90 Such a definition would have denied enforcement to promises that the nineteenth-century marketplace already deemed necessary, such as those enforced under the German HGB (and many others) as “firm promises,”91 or to promises 266sanctioned by the twentieth-century international customary banking and commercial law such as commercial or standby letters of credit, among many others.92
Perhaps the most important question with respect to Pothier’s and the Code Civil’s classifications pertains to what civil law lawyers refer to as their “constitutive” effect upon rights and obligations, i.e., the power of the classification to validate, invalidate or exclude transactions depending upon whether they fit under the classified categories. If it is a constitutive classification, it is often assumed that, as with the Roman typified contracts, only those contracts that are listed or typified will be enforceable. The burden, then, shifts to the party seeking enforcement who would need to argue that the contract in question is part of the list or is sufficiently analogous to deserve inclusion.
As was discussed in connection with one such classification, i.e., principal and accessory contracts,93 mortgage bonds or certificates could not be issued in some Central American countries because until there was a loan agreement (as the principal contract) there could not be a mortgage (as the accessory contract).
Yet the price paid for such minimal certainty in terms of foregone individual and socio-economic opportunities could be enormous. For example, in contrast to the opinion by counsel for a central bank in a Central American nation during the 1960s that forbade the creation of mortgage bonds until actual loans had been made (thereby depriving the Central American nation of secondary market financing for its low-income housing), European banking lawyers found it possible to approve the issuance of mortgage bonds to finance public and private housing since the eighteenth century. Similarly, the BGB in 1900 provided for bearer mortgage bonds or certificates as part of the so-called territorial debt (Grundschuld).94
In a carefully researched 1994 study quoted earlier,95 Professor James Gordley offered a dissenting view on the influence of seventeenth-century natural law 267philosophies on the drafting of the Code Civil. He quoted a number of influential scholars who asserted that the Code’s reorganization of contract law turned on “modern individualistic principles”96 of freedom of ownership, of contract, and liability for one’s own fault. In the words of Rene Savatier, these were the “[t]hree pillars [that] support the entire construction of the Napoleonic Code.”97 Gordley disagreed, stating that “these principles were not of the drafters. They were the principles of French 19th century treatise writers who read them into the Code. The drafters subscribed to traditional conceptions of private law that were almost old-fashioned when the Code was enacted.”98
Two reasons prompted Gordley’s dissent. First, the drafters acknowledged that they were not breaking with the past. Second, even if the drafters had wished to rebuild private law on new principles, they did not have the time to do so, as they had to finish their draft in four months. And “[a]lthough no one knows how they spent their time, it is striking that about two-thirds of the texts of the Code have close parallels in the works of Domat and the 18th century jurist Pothier.”99
Yet, as was apparent in earlier sections, Pothier frequently relied on Grotius and Pufendorf as sources for his natural law voluntaristic principle that enshrined the will and thus the freedom of the parties to a contract. This is how he justified the enforceability of a notarial clause that could impede the execution of an otherwise executed consensual and informal agreement.100 Moreover, as will be discussed shortly, J.M. Portalis, the principal drafter of the Code Civil, is quoted by Professor Gordley as justifying the rule on “objective lesion” by relying on “rules of justice that are anterior to contracts themselves, and from which contracts draw their chief force.”101 Such justification is directly traceable to the type of natural law advocated by Hugo Grotius.102 Hence, it is not clear why nineteenth-century commentators of the Code Civil would have had to read the above-referred-to natural law principles into the Code when many of them had already found their way into the Code via Pothier’s and Domat’s major contributions. Professor Gordley’s concern, then, must be not so much with the presence of the natural law principles in the Code, but with their original authorship, which he traces in many instances to medieval theologians and canonists.
Undoubtedly, legal history benefits from knowing who the original authors of the key contract law principles adopted by the drafting commission of the Code Civil were. However, because the principles involved here are as general and all-encompassing as freedom of contract and property ownership, their proper application would require 268concrete illustrations of legislative intent. Two helpful admonitions come to mind: Justice Holmes’ “General propositions do not decide concrete cases,”103 and a more recent one by Professor F. H. Lawson:
What I want to emphasize in the natural law of the seventeenth and eighteenth centuries is not its importance as affording a basis for political obligation or individual freedom, but the new vision it gave to legal thinkers. For they came to recognize and grasp the chance of deriving the detailed solutions of the law according to the method of Euclidian geometry from the smallest number of axioms and postulates. We are not to think of the theology or even morals: we are in the most secular of centuries, the age of Reason, of deism, and Tom Paine.104
Therefore, because of the intellectual atmosphere in which the Code Civil was drafted, it was inevitable that the drafters resorted to natural-law-inspired axiomatic formulations. At the same time, it is also worth remembering that Napoleon opposed many of the Revolution’s liberal ideas:
While [Napoleon’s] regime did not restore the guilds outright … it reimposed restrictive or even monopolistic state regulation on such occupational groups as publishers and booksellers, the Parisian building trades, attorneys, barristers, notaries, and doctors. Napoleon wished to strengthen the ties that bound individuals together, which derived from religion, the family, and state authority.105
In light of the tensions between revolutionary and more moderate or conservative Napoleonic policies, the code interpreter becomes all the more dependent upon contextual precision. For this reason, subsequent sections will discuss the socio-economic context of civil code contracts and will identify the distinguishing features of an archetypal “civil” contracting party. This is a party whose contractual predilections were deemed most worthy of attention by Code Civil drafters. The contextual and archetypal analyses should enable future contrasts with commercial archetypes as found in the French, German and United States commercial codes.
Perhaps as a result of Napoleon’s own policies or perhaps because of the views of other “restorers” of the disrupted order in French society, the Code Civil did not reflect the deplorable economic conditions of most of the French population at the time of its drafting. Even after repeated readings of this elegantly and tersely written legislation, I fail to find indications of the economically troubled society for which it supposedly was written. On the contrary, one gets the impression that it was written for a content, stable, and prosperous population largely populated by a strong upper middle class, the Bourgeoisie. Yet, according to a thorough account of French society during the Revolution:106
Poverty was France’s most visible social problem. Nobody could overlook it. All travelers noticed the misery of rural housing, and the poor appearance of the peasantry…. Bands of roving vagabonds struck terror into the hearts of isolated farmers; and the streets of most towns swarmed with beggars. The poor, meaning those without adequate employment or other assured means of support, numbered at the best of times almost a third of the population; eight million people. In bad times two or three millions more might join them, as crops failed and jobs disappeared….
Peasants accounted for 80 per cent of the French population….
[Despite the large rural migration to the French cities] most town-dwellers were poor, and completely unskilled.107
The trades of the artisans and craftsmen, remnants of the guild system, remained exclusive and, with the exception of a few guild-masters, journeymen barely earned a living wage.
In 1776 an attempt was made to abolish the whole structure of guilds, and Parisian artisans celebrated in the streets at the news. A few months later, however, the old structure was largely restored; and in 1781 new controls were introduced….108
By the spring, bread prices in Paris had risen by more than 50 per cent, and riots which began on 27 April … spread within a week throughout [France] to the gates of the royal palace at Versailles, and to the bread markets of the capital itself. It took troops, hundreds of arrests, and two public executions to restore order…. Only after a bumper harvest in 1787 was the grip relaxed.109
In contrast with the penury suffered by most of the inhabitants, the bourgeois, whether of rural or urban origin, did not have to worry “about the price of a four-pound loaf [of bread].”110 In the countryside, they were the largest employers and owners of agricultural equipment and animals. They were also the principal lenders to needy farmers. And when their debtors defaulted, which was quite common, they would foreclose on their mortgages and thereby accumulate more land. In time, the measure of bourgeois success came to mean being able to retire and live on the yield of their accumulated real property. In the French cities, their number seldom exceeded one fifth of the population, and they made their original fortunes in trade and commerce. Their accumulated wealth enabled them to wield economic and political power.
Perhaps the most important reason for their economic and political power was the taxes they paid as members of the “Third Estate.” This was a social class that included peasants, artisans, merchants, and professionals, and did not include the nobility or the clergy. Together this class contributed the largest share of taxes collected in 270France. Quite often, these taxes took the form of periodic payments made by the bourgeois for their massive acquisition of public offices.111
The Oxford History describes the original source of bourgeois wealth and their attitudes towards this source as follows:
Among them were always a handful of successful master craftsmen; but [most bourgeois] … did not have to work with their hands…. There were scarcely more than two million of them…. Their share of the national wealth was enormous. Most industrial and almost all commercial capital, amounting to almost a fifth of all French private wealth, was bourgeois owned. Perhaps a quarter of the land belonged to them…. [s]o probably did the greater part of the capital invested in a field that had proved peculiarly successful in France since the sixteenth century—venal public offices. Bourgeois competition for such offices was pushing the price of many of them to unprecedented heights in the 1780’s….112 The ultimate source of this enrichment was the extraordinary commercial and industrial expansion of the eighteenth century. All bourgeois fortunes began in business…. [Yet] [t]rade and manufacture, however profitable, were not secure; and so as soon as there was money to spare the first instinct was to buy land…. Land was safe…. Above all, land had prestige…. Nobody, therefore, with any aspirations to social consequence could afford to be landless; and those whose ambitions were really serious knew that sooner or later they would have to get out of trade altogether. Very few bourgeois families remained in the business that had enriched them for more than a single generation—unless they were Protestants or Jews debarred by law from everything except making money. Profits not spent on buying property went into buying the next generation a superior education. With that, the way was open to the professions, where mercantile origins could be forgotten.113
As an illustration of the embarrassment suffered by the bourgeois with their commercial origins, The Oxford History quotes from a 1780 letter by a Lyons litigant (who was also a judge), in which he criticizes his adversary’s (another bourgeois’) attitude toward merchants:
I ought not to pass over in silence…. I who am the offspring of a generally loved and respected merchant, the outrage done by Mr. Gesse to commerce in describing those who exercise the profession as “persons from the dregs of the 271people”; it is thus that he speaks of a profession as honorable as it is honoured in this country; yet remember that Mr. Gesse is, as I am, a merchant’s son; he disowns his stock, whereas I honour mine.114
And as also pointed out by the Oxford History:
Evidently the paternal calling was chiefly to be honoured for producing enough money to buy the son an office [as a judge]. And nothing testifies more eloquently to the continuing desire of the bourgeoisie to escape from the stigma of commerce than the becoming market for offices [widespread throughout the entire governmental edifice].115
The effect of populating judicial offices, among others, with bourgeois venal judges was recently noted by Paul G. Mahoney’s description of the judicial system in pre-Revolutionary France:
The highest courts in pre-Revolutionary France, the parlements, were very different from the common-law courts in England. They were part court, part legislature, and part administrative agency…. As a practical matter, judicial offices were salable and inheritable. The purchase of a judgeship or other royal office automatically conveyed noble status and qualified the purchaser and his descendants for entry into the parlements. The return on the investment was straightforward; in addition to obtaining prestige and serious exemption from taxation that accompanied noble status, judges enforced the rigidly controlled system of guilds and monopolies that characterized Bourbon France.116
By the start of the French revolution in 1789, however popular the enlightened and rationalistic and natural law proclamations of liberté, égalité, fraternité were among the non-bourgeois revolutionaries, the fact was that France’s dominant class was the bourgeoisie. As will be discussed now, the Code Civil was quite sensitive to its interests in critical areas of the law of contracts.
The reader will recall the previous discussion of the archetypal picaro in connection with Spanish medieval commerce, and then the discussion of the archetypal brotherly merchant and how these forms of model behavior affected the law of commercial contracts. The law of contracts in the Code Civil revolves around another archetype: the bourgeois contracting party. The enablement of this archetype was made possible by the Code Civil provisions or rules on party autonomy.
Article 1101. A contract is an agreement that binds one or more persons, towards another or several others, to give or to do or not to do something.
Article 1134. Contracts, legally formed, have the force of law for those who made them. They cannot be revoked except with their mutual consent or for causes which the law authorizes. They must be executed in good faith.117
Had these two provisions been in force from the thirteenth to the eighteenth century in France, there would have been no French guild system. On the contrary, and as was just mentioned, the parlements severely restricted the parties’ ability to enter into the everyday contracts that threatened the monopolistic powers of guilds.118 Under such circumstances, the assertion of Article 1134 of the Code Civil was more than a simple statement of the binding effects of a contract; it was, in the words of the late Dean Georges Ripert, the equivalent of granting a contractual “franchise to man, [as] it is necessary to unbind the human will from its constraints” (Il faut donc affranchir l’homme. Il faut dégager de ses entraves la volonte humaine).119
Thus, even though bourgeois parlement judges restricted the participation of non-guild members in everyday contracts, the Code Civil provided the bourgeois with Dean Ripert’s franchise to engage more intensely and securely than ever in the buying and selling of valuable real estate. However, the constraints of typification could still be found with respect to untypified executory promises. As was discussed in an earlier section,120 those executory promises that were not accompanied by an acceptance shortly after their issuance were, at best, of questionable enforcement. They required qualification under the categories specified by the Code Civil121 or had to become part of the text of an enforceable negotiable instrument such as a promissory note, a bill of exchange, or governmental or corporate bonds. Under these circumstances, is it not significant that the above mentioned Article 1589–1 of the Code Civil did not become law until 2006?
In their search for contractual certainty, the bourgeois embraced contractual formalities. Thus, it was not surprising that the Code Civil prescribed that if the value of the land purchased, sold or conveyed to an heir exceeded 500 livres, either “a notarial deed or a writing under private signature” was required.122 It will be recalled that in his discussion of consensual contracts, Pothier had indicated an additional reason for the attractiveness of notarial deeds to the bourgeois: They were regularly used as self-sufficient evidentiary instruments with which to obtain judicial liens on their subject property. Could this have been one of the most tangible benefits of what was discussed previously as “publica fides”?123
As if to underscore the importance of the certainty or predictability of outcome of what had been stipulated in a formal document or notarial deed, the Code Civil added:
[N]o proof by witnesses against or beyond the content of the document, nor as to what is alleged to have been the content previously, at the time or since it was drawn up, shall be allowed, even if the sum or value in dispute is less.124
This provision confirmed a principle expressed elsewhere in the Code:
An authentic instrument is conclusive evidence of the agreement it contains between the contracting parties and their heirs or assigns. Nevertheless in case of a criminal complaint for forgery, the execution of the instrument allegedly forged is suspended by the indictment; and in case of allegation of forgery made incidentally, the courts may, according to the circumstances, suspend temporarily the execution of the instrument.125
Not surprisingly, resort to parol evidence to establish the parties’ course of dealing, usage of trade or custom, a procedural tool quite common in United States commercial contract litigation,126 was precluded by the Code Civil. In addition, the bourgeois-inspired version of contractual justice supported a notion of cause in bilateral or synallagmatic contracts which, but for one notable exception discussed in the following section, required no determination of mutuality of exchange, but merely a correspondence between what the contract stated and what was given and exchanged.127
Bourgeois contractual justice also required good faith in the performance of obligations. However, good faith was measured not by what other promisors, including an ideal or model promisor, would have done or given, but by the meticulous observance of contractual stipulations. Accordingly, the conceptual equality of rights to enter into contracts was confused with the factual equality of bargaining power; it was assumed that the former necessarily entailed the latter. Not surprisingly, Dean Georges Ripert quoted a cryptic but revealing description of what “justice” meant for the drafters and interpreters of the law of contracts in the Code Civil: “Simply stated, all justice is contractual or … he who says contract says justice.”128
Hence, in the eyes of its judicial interpreters, the Code Civil stood for the view that contracts were not mere repositories of the parties’ intent, but also of the parties’ binding conception of what was fair or just in their bargain. These contracts were indeed perceived as having been written on stone tablets.129 This attitude prevailed in France’s highest court well into the twentieth century. Surveying its decisions up until 1968, the late and lamented Vera Bolgár, a collaborator and friend of mine and of 274Professor Hessel Yntema, assessed the attitude of France’s Cour de Cassation on contracts of adhesion as follows:
But in the field of contracts, the Court de Cassation steadfastly clings to the letter of article 1134 … and disregards the requirement expressed further in this article—namely, that they should also be performed in good faith. Doctrinally this trend is justified by considerations of legal security that would, in addition, upset standing economic relations through arbitrary judicial power. Consequently, the Court almost invariably reverses the more liberal decisions of the lower courts….130
An exchange of a rough equivalent of value between promisor and promisee (as contrasted with what the contract stated was to be exchanged and what was actually exchanged) was a requirement only when the seller had sold real property and received a price of less than seven-twelfths of the market value of the property. The Code Civil provides that if the vendor suffered a loss of more than seven-twelfths of the price of a piece of property, he may demand rescission although he expressly donated the excess.131
Please note that the Code Civil remedy of lesion is only given to the vendor. This provision reflects the high esteem in which land was held by the bourgeois and the drafters’ sympathy for someone who unknowingly or unwillingly conveyed one of his most valuable assets for an amount considerably lower than its market value. The economic harm he or she suffered (laesio enormis) could be objectively measured and for this reason was described by doctrinal writers as an “objective” lesion, as distinguished from a “subjective” lesion, or the harm that resulted to a contracting party as a result of his or her inferior bargaining power or physical or mental handicap.132
In his enlightening summary of the drafting committee’s discussions on laesio enormis, Professor Gordley provides ample evidence that its intent was to protect the integrity of the estate of a seller who sold one of his family’s valuable and value-stable assets at a price significantly below that of the market:
According to Portalis, relief would be confined to sales of land because its price was more stable. According to Bonaparte, who took an active part in the discussion, such property was more important. The buyer was denied a remedy, according to Portalis, Tronchet, and Faure, because he was less likely to accept the wrong price through necessity, according to Ségur, because he was less likely to have done so by mistake, and according to Bonaparte, because he was more likely to try to avoid the transaction because his plans had changed…. Portalis responded that while faith in contracts must be respected, “there are rules of justice that are anterior to contracts themselves, and from which contracts draw their chief force….”
…
Now it is admitted that a contract of sale is a commutative contract, that is to say, one in which each party gives only in order to receive an equivalent, or, if one will, a price proportionate to the value of the thing which he transfers. Therefore, [it] is of the essence itself of the contract that it be rescinded when the equivalent of the thing is not provided. Another maxim that is no less certain in law is that there is no obligation without a cause. What are the causes of contracts? In contracts of liberality (bienfaisance) the cause is liberality itself. But in self-interested contracts, the cause is the interest, that is to say, the advantage that the parties find in making them. In [a] sale, this interest is, for the seller, to have the price that represents the thing sold rather than the thing itself; for the buyer, to have the thing rather than the sum of money that represents its value. These principles granted, one can see that there is no cause in a sale unless the price is in proportion to the value of the thing sold.
…
Bonaparte said that “[t]here is not a contract of sale when one does not receive the equivalent of what one gives.” Berlier, who wished to abolish the remedy entirely, was outvoted.133
Despite the drafters’ references to a need for mutuality of exchange in commutative contracts, they afforded protection only to an “objectively-measured” lesion and solely when suffered by the seller when conveying his own or his family’s land. This policy was consistent with that of Articles 1118 and 1313 of the Code Civil which limit lesion to designated relationships.134 Yet, what is the “force” alluded to by Portalis in the above quote? Could this “force” be Grotius’ Natural Law?
Article 1108 of the Code Civil lists the elements of a valid contract:
Four requisites are essential for the validity of an agreement: The consent of the party who binds himself; His capacity to contract; A definite object which forms the subject-matter of the undertaking; A lawful cause in the obligation.135
Implementing Portalis’ above-quoted principle that there is no obligation without a cause, Article 1131 of the Code Civil stated that “[a]n obligation without cause or with a false cause, or with an unlawful cause, may not have any effect.”136 To which Article 1133 added: “A cause is unlawful where it is prohibited by legislation, where it is contrary to public morals or to public policy.”137 This is as far as the clarification of the meaning of causa goes in the Code Civil.
It is worth recalling that causa in Roman law was the basis for typifying contracts. And once contracts were typified, only those contracts whose types were recognized were entitled to enforcement by means of their own actions and defenses. Thus, the causa or the reason for enforcing, say, “formal” contracts was their formality, including the delivery of the thing in “real” contracts; the causa of consensual contracts was their informality and widespread use, and so on. Eventually, the reason for enforcing innominate contracts, or contracts which were not previously typified, was that their common denominator was a quid pro quo. This quid pro quo resurfaced in medieval law as the requirement of a res vel factum and in the common law as “consideration.”138
It is also worth remembering that during the codification debate summarized above by Professor Gordley, Portalis tied causa to Pothier’s classification of contracts. Because of the presence of so many types of performances and counter-performances in Pothier’s classification, causa could mean any of them. It could mean the promised counter-performance or no counter-performance at all, as with the gratuitous contract of donation (unless the promisee’s acceptance of the gift was deemed his counter-performance). It could also mean an objectively determinable expectation of what the counterparty had to perform based upon custom and practice, or it could mean the parties’ motivations, as in the case of the so-called “final or psychological” cause.
In the final analysis, as pointed out by Professor Gorla, the common denominator to all of the versions of causa was causa as the reason for the parties to enter into their agreements.139 Yet, as also pointed out by Gorla, without that common denominator there would be nothing distinctive about the concept of causa. It would be a redundant concept, especially when used to establish whether the parties agreed on the essence of their bargain; for if there was an agreement, there had to be a reason for it. In other words, whenever a court found that the parties had a reason for entering into a contract (except for illegal and immoral reasons), the contract had a valid causa. If so, what did the concept of causa add to that finding? If the parties contended that they had conflicting reasons for entering into the contract, either one of them could claim 277that he or she had been the victim of an essential and contractually disabling mistake. If so, what was the role of causa?140
The redundancy of causa in contemporary Spanish contractual litigation became apparent during class discussions at the doctoral program of Charles III University of Spain during the 2005 and 2006 academic years. Among the doctoral students attending the classes were judges, law professors and practitioners familiar with civil and commercial contract litigation in Spain. Their experience with the judicial application of Article 1275 of the Spanish Civil Code (which transcribes the Code Civil’s Article 1131),141 revealed that causa was regularly used as a procedural sword or shield whose purpose was to prevent the enforcement of the contract in question. In this procedural context, the moving party usually alleges that the contract not only lacks a causa or that it is illegal or immoral, but that he or she was unaware of its non-existence, illegality or immorality when entering into the contract. Further, had the moving party been aware that the counterparty intended an illegal or immoral causa, he or she would not have entered into the contract. In other words, in everyday contract litigation in Spain, causa quite frequently winds up being indistinguishable from mistake of fact because both equally and fatally vitiate the contract’s requisite intent.
The Code Civil was concerned with the morality of causa in both gratuitous and onerous contracts and defined an illicit causa (which rendered the obligation void) as one not only prohibited by law, but also contrary to “public morals” and “public order.” It will be recalled that a gratuitous contract under the Code Civil finds its causa in the donor’s liberality. However, what if the gratuitous conveyance is not to a member of one’s family but to a “stranger” such as the grantor’s mistress? In such a case, code interpreters drew a distinction between the cause that appears stated in the contract and the so-called “final,” “psychological” or “impulsive” cause.142
A 1957 decision by the Cour de Cassation discussed earlier illustrates the meaning of “public morals” and its connection with the final, psychological or impulsive cause.143 A French middle-aged father of a family conveyed the beneficial interest in his life insurance policy to a recently-acquired mistress. His widow and heirs sued the mistress alleging the nullity of her designation as beneficiary. The trial and appellate courts decided that the discernible final causa of the conveyance was contrary to public morals. They based their decision on the factual findings, on the relationship between the father of family and his mistress, and on established case law. In accordance with the case law, a donation in favor of a concubine was not per se invalid. It could be valid when it was made as part of a long-standing adulterous relationship. Yet, the conveyance was null because of the immorality of its causa when, appearing to be a 278donation, it was in reality the payment of a price to procure an extramarital relationship.144
The net effect of the ruling was to discourage conveyances detrimental to the traditional notion of a bourgeois estate, i.e., one accumulated for the benefit of one’s widow and heirs, or perhaps of an extramarital relationship of long duration.
Professor Capitant discusses similar decisions concerning real property rented for purposes of prostitution or for the operation of gambling houses and agreements involving the bribing or corruption of public officials.145 The courts’ distaste for such agreements can be gauged by their unwillingness to order restitution of what was exchanged by the parties during the life of the rescinded contract, despite the fact that normally such restitution is available in rescission cases. As expressed by an indignant court in Bourges in 1889: “Such parties are not worthy of appearing before a court of law.”146 This indignation is reminiscent of that expressed in an earlier section by a litigant son of a merchant who wished to dissociate himself from merchants by referring to them as “persons from the dregs of the people.”147
Contracting among the bourgeoisie was mostly done on a face-to-face or “inter praesentes” basis. If a contract resulted from correspondence, the Code provided very few rules with which to elucidate issues such as whether the mailing of the acceptance by the offeree, its reception by the offeror, or knowledge of its reception by the offeror was when the acceptance became binding. As concluded by Professor Von Mehren, little attention was paid by the French codifier to contracts by correspondence or inter absentes.148 Moreover, while seeming to accept the concept of a third party beneficiary promise, it seriously limited such promises.149
The Code Civil’s concern for the integrity of the family estate of the seller or transferor of land was matched by its lack of concern for third party rights. Thus, the purchaser or mortgagee of real property was subject to secret or unrecorded liens and transfers up until 1855.150 This situation prevailed because of the legal effect attributed by the Code Civil to the will of the contracting parties. By providing that the parties’ agreement, without more, was sufficient to effect the transfer of title to property, Article 1138 of the Code Civil not only “enfranchised” the will of the parties,151 it also did away with the formal requirement of physical or symbolic delivery of the thing sold (traditio), a Roman law formality which provided a modicum of notice to third parties.
Speaking in favor of the principle of immediate transfer of ownership upon execution of an agreement of sale and reflecting the face-to-face nature of bourgeois real estate transactions, Tronchet, one of the drafters, stated: “He who buys does not require that the law adopt special measures for his safety. He has the title before his eyes. He can verify the vendor’s possession.”152 To this, Bigot de Preameneu, another drafter, added the need to protect “family secrets”: “The system of notice (to third parties) precludes families from preserving the secrecy of their affairs…. This secret is always regarded as one of the principal rights of individual liberty.”153
In 2005, Arizona’s neighboring state of Sonora, Mexico announced in a bi-national meeting and press conference that a land registry located in a popular beach resort where many foreigners acquired beach property would be online and available for consultation anywhere in the world. Yet, a Mexican guest onlooker at this press conference was overheard to strongly object to such a development. His objections were very similar to that voiced by Bigot de Preaumeneu: Why should people other than those involved in a recorded transaction be allowed to delve into the private businesses of those who recorded their rights? When a Mexican government official explained that the publicity of the registry was an important inducement to investors and lenders, the onlooker quickly snapped back: “Yes, as it will also immediately attract the kidnappers looking for likely candidates among those who appear to be selling or buying valuable properties lately.” How would you respond to such an argument?
Because the contract of sale created, modified or extinguished rights in rem, regardless of recordation, a mortgagee who had advanced monies on land on the basis of his mortgagor’s recorded ownership could still be subject to an earlier unrecorded transfer of ownership.154 Mutatis mutandis, the contractually-protected owner could “enjoy and dispose of things in the most absolute manner, provided that they are not used in a way prohibited by statutes or regulations.”155
One of the problems with this “absolutistic” provision was that it encouraged such selfish behavior that it became necessary for the courts, in partnership with doctrine, to develop restraints on “abuses” of rights.156 Neighbors had to be told that they could not erect fake chimneys simply for their nuisance value, nor could they erect spires with which to prevent the landing of zeppelins on adjoining property in order to extort a higher price for their own property, etc.157
The preceding discussion makes it possible to sketch the main features of a Code Civil bourgeois contracting party, especially when selling or buying land: 1) He is fully empowered to acquire and sell it; however, his executory promises in bilateral contracts or promises of deferred performance require an immediate acceptance by the promisee. The enforcement of “firm” promises, or promises that are binding from the time they are issued or reach the promisee, is at best uncertain and at worst unattainable under the Code Civil. The same is true with promises extending credit, unless embodied in negotiable instruments. 2) He is as comfortable with formalism and face-to-face transactions as he is uncomfortable with, and distrusting of, informality and inter absentes communications. 3) He favors contractual secrecy even where it is at the expense of third party rights. 4) He is a stickler for his rights, occasionally to the point of abuse. 5) He is unscrupulous enough to charge whatever he can get for what he sells and then trusts the doctrine of “contractual justice” to adjudicate his contractual rights and duties. 6) He expects the law to protect him if he sells his land by mistake or duress for less than seven-twelfths of its market value. 7) The causa of his contracts (understood as the reason for his contractual undertakings) can have serious anti-commercial effects even when the obligation is attempted to be enforced by third party assignees. Even his “commutative” agreements, i.e., those involving reciprocity of exchange, do not truly assure that the other contracting party will receive an equivalent value to that which that party conferred. If the value conferred upon the other party is the one stated in the agreement, however unequal the bargain, contractual justice will assure that it suffices as the causa for the commutative agreement.
The archetypal analysis contextualizes the meaning of public morals in the unlawful cause and adds concrete meaning (contractual justice) to the principle that contracts are the law between or among the parties. At the same time, it warns the interpreter to take the Code Civil Article 1135 reference to equity, custom or usage with a grain of salt. This is especially true when interpreting formal contracts such as notarial deeds for the sale or conveyance of land.
Because, as will be apparent in the following chapter, civil code provisions and principles very frequently act as fillers of normative gaps in the Commercial Code, how influential are these bourgeois features in shaping the law of commercial contracts? Or do French commercial contracts reflect the behavior of a different archetype? These questions will be dealt with in the following chapter.
The purpose of this Appendix is to acquaint the reader with the manner in which French judges and commentators have applied or recommended the application of the Code Civil to issues of considerable commercial importance and to explore the contemporary fate of an important executory promise. The selected topics are: 1) the in rem enforceability of a promise of sale of immovable property; 2) the meaning of an illegal cause in insurance contracts; and 3) the objective standard for adjudication of the remedy of lesion, including the measurement of the value to be compensated.
Citation of French cases is not always standardized. While some cases have names, often they do not and instead use the name of the court, the chamber and the date. Most of the cases refer to decisions by the Cour de Cassation, the highest appellate court in France, usually abbreviated “Cass.” This court is divided into chambers among which the civil and commercial are the most important for this book. “Civ.” denotes civil, “Com.” denotes commercial, and “REQ” indicates an appeal. For a listing of some of the most frequently cited statutory, decisional, and doctrinal sources of the law of representative countries or jurisdictions, see the frequently cited section.
The first case to be discussed in this section of the Appendix158 involves the enforceability of a promise of sale of real property. The decision illustrates a form of analysis popular among mid-nineteenth-century commentators of the Code Civil and, subsequently, of other civil codes influenced by it. This form of analysis was taken to new heights of abstraction and dogmatism by nineteenth-century German “Pandectists.”159 Theirs was, in the words of Rudolf von Ihering, a world of “heavenly concepts” often at odds with the distant world of the marketplace. Much of the juristic thinking that preceded the enactment of the BGB was of this type, as will be discussed in Chapter 12.
This decision also provides a springboard from which to complete the discussion of the evolution of the promises of deferred performance in French private law, starting with the Code Civil and continuing with statutory and judicial additions. The reader will recall that these promises were treated as nuda pacta in Roman law and remained as such throughout much of the history of contracts in civil and common law countries. The reader will also recall Hugo Grotius’ attempt to trace the binding effect of contracts to the will of the parties.160 He or she should also recall that by insisting that, a unilateral promise would only be enforceable if the promisee agreed to it. Grotius and Robert Pothier were responsible for the presence of an unenforceable “pollicitation” (or unaccepted executory promise) in the Code Civil, as dramatically illustrated by the following provisions prompted by purposes other than those Grotius and Pothier had in mind.
The Promise of Sale:
Article 1589:161
The promise of sale shall be deemed a sale when the parties agree on the thing sold and its price.
Article 1589–1:162
The unilateral promise issued with the purpose of acquiring an immovable thing or right by which the promissor promised to pay or paid an amount for this obligation shall be null and void, regardless of its cause or form of execution.
Article 1589–2:163
A unilateral promise of sale of immovable property, a commercial establishment or a right to a lease that involves the whole or part of such immovable property or the shares of stock of business associations referred to in Articles 728 and 1655 of the Tax Code must be confirmed by the execution of a public or private deed and must be recorded within ten days of the date of the acceptance of the beneficiary of the promise.
Earnest Money and the Promise of Sale:
Article 1590:164
If the promise of sale was made against the delivery of an earnest money deposit (arrhes), each of the contracting parties shall be free to abandon the agreement by forfeiting it if it was the party providing the deposit and by returning double the amount deposited if the abandoning party is the recipient of the deposit.
As pointed out by Professor Stephane Prigent of the Faculté de Droit de Brest (UBO),165 the “unilateral promise with the purpose of acquiring an immoveable thing or right” (engagement unilateral souscrit en vu de l’acquistion d’un bien ou un droit immobilier) is the one issued by a consumer or non-professional purchaser of immovable property or of a right in that property.166 The practice that most concerned the drafters of this provision was that of a promise to purchase accompanied by a down-payment. Such a purchaser submitted their promise without receiving from the seller “any guarantee of repayment of that sum in the event of a failure of the execution of the sale” (un engagement d’achat d’un immueble du versement d’un somme d’argent, sans aucune garantie de restitution des fonds en cas de non-realisation de la vente).167 As also pointed out by Professor Prigent, an Article 1589–1 promise or undertaking is an offer to purchase land that would be binding as a contract but only after the offeree’s acceptance (still referred to as pollicitation in present-day French law). In theory, this offer can be revoked by the offeror at any time prior to the offeree’s acceptance, unless the offeror stipulated a certain time for its acceptance or such a period was customarily observed by offerors.168 In addition, a number of down-payment practices made these offers and their accompanying down payments unfair practices against purchasers often likely to lose their down payments.169 The best remedy the legislator could come up with was that of a judicially-enforced nullity or voidness.
Mutatis mutandis, Article 1590 allows the abandonment of a promise of a sale to a buyer willing to forfeit his down payment or to a seller who repays twice the amount of the down payment. My question is whether both parties would not be better and more cheaply protected by their use of a French equivalent of the United States escrow agreement previously illustrated and discussed.170
That agreement would assure in the case of an Article 1589–1 situation that the fiduciary-depositary of the buyer’s down payment would be responsible for returning the down payment in the event of the seller failing to convey title, or for delivering the full purchase price (on behalf of the buyer) to the seller and conveying title to the buyer. In the case of Article 1590, the trusted third party would be responsible for delivering to the aggrieved party (buyer or seller) the proceeds of their respective forfeitures. Can you see the practical advantages of such a contract, in contrast with the above described procedures?171
German notarial practice has developed an extrajudicial and less cumbersome procedure for the options to purchase and promises of sale than that apparent in the above French provisions and in the Mexican Supreme Court decisions. Consider the following advice given by the author of a German manual for real estate transactions:
Practical Advice: In cases where the purchase price is to be initially deposited with the notary, it is also recommended to agree on the hand-over date.
Hand-over before Payment:
In some cases, hand-over (Grundstücksübergabe) before payment is agreed. Under German law, this frequently creates the problem that the transfer of ownership represents an advance performance by the seller for which he still has no security. In this case, provisional payment of part of the purchase price is a solution. This money can be deposited with the notary or paid into a special account (Sperrkonto) to which the buyer only has access in the event of the complete reversal of the transaction.172
Furthermore, to protect the buyer, it is frequently recommended that he should not pay the purchase price direct to the seller but deposit it with the notary. Notary custody (notarielle Verwahrung) gives the credit institutes and banks the necessary security. Another possibility is to initially pay the purchase price into a special account to which the seller only has access under conditions previously defined in detail (Sperrkonto).173
…
Seller’s Strategies:
In Germany, another approach to securing the seller’s rights is frequently chosen: the conditional transfer of property (Eigentumsumschreibung unter Vorbehalt). The conveyance of ownership is already agreed in the purchase contract. However, the notary is instructed by both contracting parties jointly not to file the application for the transfer of property with the land registry office … until payment of the purchase price has been verified to the notary. In such cases, a firm promise of payment or confirmation of financing by the bank involved often are considered to be sufficient.
Practical Advice: The conditional transfer of property has advantages in many cases as a notarised conveyance of ownership already exists. This permits amendments to the contract to be made after the notarisation of the conveyance of ownership in a simple way without renewed notarisation being required (BGH, Urteil vom 6, Mai 1988, BGHZ 104, 277).174
Do you see how this German notarial conditional transfer of property has transformed the discrete promises to sell and buy into a binding contract for both sides? Stated differently, with this notarial form of escrow, discrete promises to sell and to buy are no longer executory, but become executed, albeit conditionally. With the increasing commercialization of real property, pressures to enforce executory and conditional promises will only grow in intensity. Consider, for example, the everyday case of a real estate developer who needs to ascertain that the large tract of land that he intends to develop for residential or commercial purposes has proper access to, say, sufficient water and electricity, or that the soil is strong enough to support his projected multi-story buildings or that it does not contain toxic materials. He is willing to pay a certain amount of money to the owner of the land to investigate these potential problems and is willing to pay a certain price for the land. In exchange, he needs the owner’s promise that he will not attempt to sell the land to any other person during the period of research. Thus, the buyer is willing to issue his promise of purchase conditioned upon finding that his specified conditions have been met. In exchange, the seller is willing to promise that he will sell the land for the price mentioned in the offer of purchase and will not sell during the research period in exchange for payment of a certain amount of money at the time of issuance of his promise to sell at a certain price. Both are conditional promises, yet they need to be made enforceable so that such a transaction could proceed.175
Reporter’s Topics: Unilateral Promise-Obligation to Do v. Obligation to Give—Rights in Personam (Movable Property) v. Rights in rem (Immovable Property).
The Court: Considering that the unilateral promise of sale transfers to its beneficiary neither the ownership nor any other immovable right [droit immobilier] in the property that is the subject of the promise, and that as long as the promisee does not accept the promise in question, the promisor’s obligation is not one to give [donner] but to do [faire] something and it, by itself, creates a claim that is only movable in nature, thus the appealed decision has not violated the law or the facts; on the contrary, it applied the law exactly as it should have…
Observations by M. Pilon: … In this case, the court decided for the first time, from the standpoint of civil law, if a unilateral promise to sell immovable property embodies a movable or an immovable right. This question does not apply to a synallagmatic promise because as stated by Article 1589 of the Code Civil: “The promise of sale is deemed a sale from the moment there is agreement by the parties on 285the thing sold and its price…” Thus, the transfer of the property [once there is an agreement] occurs from the time of the exchange of promises, and the nature of [the right conveyed by] this promise is immovable… and the beneficiary of the promise enjoys a right in rem in immovable property.
The nature of the unilateral promise is quite delicate and controversial when… the promisee performs acts with respect to this offer that fall short of becoming an acceptance. Some commentators believe that… the promisee is entitled to a right that incorporates the nature of the thing involved and thus because it involves a claim to an immovable… they label these actions “personal immovable” [actions personnelles immobilières]. This is the case with actions for the rescission, termination and nullity of the sale of an immovable… The essential point in dispute, however, is whether the promisee-claimant has a right to claim an obligation to do [the payment of damages for the breach of a sale agreement] rather than to claim an obligation to give… [the delivery of the immovable]… If it is the latter, it can result in a forced sale of the property by the court, in which the court conveys title to the property to the promisee-buyer in the promisor’s name. In such a case, the claim by the promisee-buyer would be in the nature of an immovable right [the court in the present case sided with the movable nature of the claim]. The consequences of the court’s decision are important. In the present case, the property involved was promised to be conveyed prior to the enactment of a matrimonial property law now in force which transforms property promised to be conveyed into community property.
Prior to exploring the consequences of this court’s analysis, the reader is strongly encouraged to review the facts of Mexico’s Supreme Court decision in the 1954 Appeal of María Trinidad Gómez summarized in a later chapter.177 Please note how the obligation to sign a deed conveying property promised (in a promise of a sale) by the defendant is characterized as an obligation “to do” and thus requiring of a court decision and order to issue the deed of sale. Please also notice the difficulties that commentators have found with this dichotomy, to which I would add that often it is not easy to tell when an obligation to give is not also an obligation to do. For example, if I promise to act as your surety, surely you are expecting me to “give” my promise as surety to your creditor. But how can I give such a promise without “expressing” or “doing” it? See the later discussion in connection with the remedy of specific performance in French law and Professor Dawson’s illuminating debunking of the myth of an eternal and universal classification of the obligations into “to do” and “to give.”178
The reader may have noticed this translator’s linguistic difficulties with the Court’s conclusion that the promised sale involved neither the ownership nor any immovable right in the property (ni la proprieté, ni aucun droit immobilier sur le bien). The difficulty with droit immobilier is that “immovable” (immobilier) modifies “right” (droit) and thus renders it an inert object. Literally translated then, droit immobilier would mean a right that does not move, a rather odd state for an incorporeal thing such as a right. Yet, this is not the meaning that the Code Civil, the courts, and commentators wished to impart.
The meaning the drafters wished to impart on the concept of right can be gleaned first from Article 516 of the Code Civil. It proclaimed unhesitatingly, in Aristotelian and scholastic fashion, that things were either movable or immovable. Accordingly, if a right was to be characterized as a thing, it had to be either movable or immovable. Article 517, in a similar fashion, classified things in accordance with their “nature,” “destiny” and “the object to which they are applied.”179 Land, buildings, trees and fruits on them, and windmills, among other things, were said to be immovables by their nature.180 Yet, from the moment grains and fruits were collected, severed or cut, they became movables. So far, then, the Code Civil classification was consistent with observable features of things immovable.
Article 524 defines as immovable property by their destiny those “[a]nimals and objects that the owner of an estate placed in it for the service and exploitation of the estate….”181 Among these it lists, farm animals, plows, seeds provided to tenant farmers for joint venture purposes, and other fixtures related to the various types of industries or businesses carried out in the land.
Much of this category of things was not as easily observable as the preceding one, but it had a plausible transactional reference, i.e., things that the parties wished to incorporate in or associate with an immovable to enhance its value.
The third category is found in Article 526. It applied to the least observable group of things: immovable property based on the object to which the things applied or were related.182 These were said to be life estates in immovable property, easements in the same immovable, mortgage charges and judicial actions whose purpose was to recover immovables.
The first three of these “things” were what the Romans referred to as rights in the things of others (iura in re aliena), and the fourth was a court action to enforce these and other rights to things. Not surprisingly, the followers of the German Pandectists who were among the drafters of the BGB, about whom more will be discussed in later chapters,183 had no hesitation in stating in Article 96 of the BGB that: “Rights which are connected with the ownership of a piece of land are deemed to be component parts of the land.”184 Even more confident of the axiomatic existence of this category of things, the drafters of the Mexican Civil Code of 1932 (among others) listed in Section XII of Article 750 as immovable things “the rights in rem in immovables” (“Los derechos reales sobre immuebles”).185
The above method of drafting code rules is algebraic in the sense that it ascribes legal consequences to concepts and after having done so, constructs a formula that incorporates those consequences and leads to judicial or administrative actions or 287remedies. For example, a promise to sell real property is legally characterized as an obligation to do rather than an obligation to give. Obligations to do are characterized as giving right to actions for specific performance, but not for damages. Accordingly, the remedial formula before a court of law asked to enforce a promise to sell real property would be:
“A” (a promise to sell an immovable) + “B” (an obligation to do, i.e., the execution of a deed of sale) = “C” (in personam remedy or remedies).
However, the right to demand specific performance of a promised sale or of any other contract, because it is not a right to a thing, but a contractual right against the person, is in turn characterized as movable or personal property. The consequences of this characterization are not only that it must be claimed in a “declaratory” action, which could take several years before it is adjudicated, but also that it cannot be recorded in a land or real property registry as a lis pendens because being movable or personal property, it can only be recorded in the registry of personal property (if such a registry exists). Consequently, if the person who obtained and paid for a promise to sell him the property cannot record his right to demand specific performance of that promise in the land registry, he cannot protect his investment and his right to purchase the property against third parties.
Now assume that instead of the promise being one to sell property, the parties actually agreed to such a sale. The legal characterization of such a contract under French law and its progeny is that it is a “consensual” contract, which transfers title to the property to the buyer from the moment that there is agreement on the property and its price. The legal characterization of that right is a right in rem, or to the property, “D.” D gives right to an action to replevy or obtain the property (vindicatio rei) and to a recording in the name of the purchaser in the land registry. Thus:
C (the product of A + B) =D ( an in rem or ad rem remedy).
This method of drafting the codified legal institutions departed from market practices that require that promises to sell convey more than contractual obligations to issue a deed of sale, hard to enforce as these are, but instead the obligation to deliver the land once certain agreed-upon conditions are met.
In theory, the above described method of reasoning should render the law more mathematically predictable because it was, after all, an algebraically self-evident law. Yet, as noted in earlier chapters, the self-evidence of this type of rule is only superficial because what made it self-evident was not its empirical verifiability, but the codifier’s often redundant classification of obligations “to do” and “to give.” In addition, this classification is followed, thanks to the poetic license of scholasticism, by an equally suspect definition of rights (inherently intangible objects) as either moveable or immoveable objects depending upon the object with which they are associated. This definition ignores the legal fact that the right to a moveable object, whether to its possession or ownership, is as much of a right in rem or in the thing as the right to the possession of ownership of an immovable. Clearly, legal certainty has not resulted from this type of rulemaking. As once stated to me by a Colombian law professor and commercial litigator: This dichotomy and the fees it has generated in contractual 288disputes have made it possible for many a litigator to afford his childrens’ pretty decent secondary education.
With rules such as these, the judge or code interpreter, especially at the appellate or Cour de cassation level, does not have to focus much on the facts of the transaction or the socio-economic problem involved. All he has to ask himself is: “What kind of a (legal) thing is this promise? Is it movable or immovable?” Such a “slot machine” approach to lawmaking and adjudication obscures the true issues, legal and socio-economic.
There may be reasons why a legislator may not wish to facilitate the creation of a more robust real estate market on promises to enter into future contracts or on options. He may wish to retain a status quo that restricts the holding of real property to a class such as the bourgeois, as was the case with pre-revolutionary and “commercial-speculation-adverse” Napoleonic France. Or, he may wish to encourage only acquisitions or leases by low-income farmers or urban dwellers.
If the latter was the legislator’s intent, it may or may not make sense to state, as was stated by Article 1589–1 of the Code Civil (transcribed above), that “[t]he unilateral promise issued with the purpose of acquiring an immovable thing or right by which the promisor promised to pay or paid an amount for this obligation shall be null and void….”186 This super-“paternalistic” type of consumer protection rule protects some buyers, but will preclude many others, especially low-income potential purchasers or lessees, from acquiring the desired parcel or urban dwelling on terms that they find affordable.
Finally, neither the court decision in question nor code provisions such as Article 1590 would make sense if the desirable socio-economic goal is to encourage the widest possible participation by builders, developers, buyers, lessees and their financiers in an active real estate market. Such a market obviously benefits from increased participation, and one of the most effective means to increase such participation is by allowing the trade-in and enforcement of future rights in real estate, whether by promises of sales or options to buy.
Using a reasoning similar to that in this decision, some civil law jurisdictions treat these promises or options to purchase as unenforceable in rem, despite having been paid for by the potential buyers. Hence, it is not unusual for land registrars in these jurisdictions to reject the filing of these promises or options by concluding that options are movable rights and the land registry is only supposed to record immovable rights. This means that he who relied not only on the promisor’s express promise to sell, but also on his willingness to accept an earnest money payment,187 cannot count on the deterrent effect of a recorded right to purchase vis-à-vis subsequent but competing buyers. Similarly, the ability to ignore an earnest money payment by taking it back or by paying back double its amount seriously diminishes the certainty and attractiveness of a purchase or sale promise not only for the parties of the original transaction, but also for possibly numerous bona fide purchasers in the open marketplace.
In conclusion, the present comment amounts to a plea for legislative and judicial candor. For in the final analysis, the issue is not whether the legal nature of a promise 289or option on real estate is such that it can only be a movable or immovable thing (or perhaps, a hybrid?) but, as von Ihering would remind us, “What are the true interests in conflict and what is it that the legal decision-maker truly wishes to accomplish with his legal institutions?”188
The realities of the commercial and consumer-credit marketplace—especially in the era of the Internet—have finally convinced French legislators and judges that at least some promises of deferred payment and performance should be enforceable even prior to the time of their acceptance by the relevant beneficiaries. Even a quick reading of relatively recent statutory and judicial additions to the Code Civil should persuade the reader that Robert Pothier’s dismissal of unaccepted unilateral promises as nuda pacta pollicitations no longer holds axiomatic sway in French law. Von Mehren and Gordley cite a number of decisions where the French courts significantly qualified the non-binding or revocable effects of a promise or an offer. Significantly, these cases involved a commercial context.189 For example, in Berthault et Compagnie v. Duchesne et Audiart et Rabier, Thirouin et Compagnie,190 the court held that:
Whereas … the court of first instance interpreted properly the intention of the parties and made a proper application of the customs of the Paris Bourse, justified by the needs of commerce and taking into account the circumstances of the negotiations and the difficulty of communication at the time that the offer was made … Rabier, Thirouin and Compnay, as appears clearly from previous correspondence between the parties, knew that Duchesne and Audiart, who were negotiating as direct buyers, were buying [the sugar] for immediate resale; as consequently, the offer made on 16 October 1914 could not be withdrawn before the offeree, having had time to contact potential buyers, could accept or refuse; as the period of not more than four hours … was not long enough….191
In their customary exhaustive manner, these authors also cite to French doctrinal writings supporting a similar approach. For example, A. Colin & H. Capitant, of the Cours Elémentaire de Droit Civil Français,192 under the heading “Case Where the Offer Fixes a Period for the Reply,” state:
The classical theory starts with an exact analysis of the will of the offeror, but this theory generalizes too much. In practice the offeror usually gives the offeree a period within which to accept…. Often, although no period is indicated, one results from the nature of the transaction. It can be said that in commerce all offers are accompanied, expressly or implicitly, by such a period. Is it not clear that the offeror cannot be considered free to withdraw 290the offer before the expiration of the periods fixed by him? Various systems have, therefore, been proposed to temper the classical doctrine.193
The reader is encouraged to review the following legislative additions to the Code Civil and to identify formerly-unenforceable pollicitations and ask himself: Why does such a change have to take place? Does it spell the end of unenforceable pollicitations?
Electronic Offers:
Article 1369–4:194
Whoever in a professional [and commercial] capacity offers to supply goods or services by electronic means shall make available [to the offeree] the general conditions of trade applicable to the transaction in a manner that allows the preservation of a record thereof as well as their reproduction. Aside from the conditions of validity mentioned in the offer, the offeror shall be bound by his offer as long as it can be accessed electronically as a consequence of its issuance.
In addition, the offer shall mention:
1) The different steps that need to be followed in order to sign the contract by electronic means;
2) The technical means that allow the offeree-user to identify the mistakes committed in the entry of data and correct them prior to concluding the contract;
3) The languages proposed as effective in the conclusion of the contract;
4) Where the contract must be archived, the types of archives made available by the offeror and the conditions of access to the archived contract; and
5) The electronic means of consultation of the professional and commercial rules to which the offeror is willing to submit himself should the need arise.
Validity of an Electronic Purchase Agreement:
Article 1369–5:195
For the purchase agreement to be concluded in valid fashion, the offeree must have had the opportunity to verify the total amount of his order and price, as well as to correct possible mistakes prior to the confirmation of his acceptance.
The offeror must acknowledge receipt of what he purchased without unjustified delay and by electronic means.
The purchase order, the confirmation, the acceptance of the offer and the acknowledgment of its receipt will be deemed to have been received when the parties to whom these communications were directed could have access to them.
Validity of an E-Mail Agreement:
Article 1369–7:196
Any simple letter related to the conclusion of a contract can be sent by electronic mail.
The indication of the date of issuance will be the result of an electronic procedure that, unless otherwise proven, is deemed trustworthy in accordance with the requirements set forth by the decree issued by the Conseil d’Etat.
Acceptance and Acknowledgment of Receipt:
Article 1369–9:197
With the exception of the provisions of Articles 1369–1 and 1369–2, the sending of a writing in electronic format shall be effective when the recipient, after becoming aware of it, acknowledges receipt thereof.
If a legal provision requires that the writing be read by its recipient, the sending of an electronic writing to the interested party in the terms specified in the previous paragraph shall have the same effect of a reading by the recipient of the original writing.
On a similarly positive note, it is encouraging to find that some judicial decisions have significantly enabled the enforcement of Pothier’s unenforceable pollicitations in our time. According to the partial compilation of decisions by Dalloz’s annotated versions of the Code Civil, it appears that these decisions were first handed down during the early 1960’s, although it may have happened earlier.198 The following is a translation of some of Dalloz’s selected holdings:199
Civ. 3e, 28 no. 1968 Gaz. Pal. 1. 95:
An offer made to the public and advertised binds the offeror [policitant] to the first acceptor of the offer in the same terms and conditions as an offer made to a specified person.
Com. 6 Mar. 1990, JCP 1990, note Gross, Rev. trim. Dr.civ. 1990:
Among merchants, a proposal to enter into a contract is not an offer unless it indicates the intent of the offeror to be bound by it if the recipient accepts.
TGI, Paris, 12 Feb. 1990:
The expiration of the term of validity of an offer without it being accepted renders it automatically unenforceable.
In addition, French courts have expressed conflicting opinions on issues related to enforceable pollicitations, e.g., “Does the death of the offeror of a firm offer render it unenforceable?”200
Cie d’assurance Le Secours-Vie et Dame. Avenia C. Veuve Guenebaud et Caisse Nationale d’assurances
Reporter’s Topics: Life insurance … immoral or illegal cause, nullity of the designation of the beneficiary.201
(Insurance Company Le Secours-Vie and Mrs. Avenia C. Widow of Guenebaud….)
Summary:
In a life insurance policy where the mistress of the deceased subscriber of the policy—or, in her absence, any of her successors—was designated as the beneficiary to such policy, the trial court held that all designations were affected by nullity because of its immoral cause. Therefore, in the absence of a (valid) designated beneficiary of the policy, the proceeds of the insurance should benefit the estate of the contracting party, in accordance with Article 66 of the Law of July 13, 1930. Further, having determined that the designation of beneficiary was to convince his mistress (a married woman) to commit adultery, and having dismissed the argument of a possible natural obligation of the insured vis-à-vis one of the woman’s children born during the cohabitation but who had not been repudiated by the husband, the appeal is rejected.
The contractual relationships in a life insurance policy must be considered separately; on the one hand is the relationship between the insured and the beneficiary, and on the other is the relationship between the insured and the insurance company; these two relationships have different legal grounds, thus the nullity of the former will not affect the latter.
Therefore, if a clause designating a mistress as the beneficiary of an insurance policy is considered immoral, it is of no interest if said clause was the cause that motivated and determined the subscription of the insurance policy, which was freely entered into. The validity of the insurance remains undisputed with respect to the relationship between the insured and the insurance company….
Facts:
A married man, father of two children, had a mistress (twenty years younger than him) who was, herself, separated from her husband. While he was pursuing separation proceedings from his then wife, the mistress met him in Madagascar where he was sent as the engineer for a company. The trial court noted that, for purposes of convincing her to move there and to live with him, he had designated her as the beneficiary of two group insurance policies with the company where he was employed.
After his death, the mistress claimed the proceeds of the relevant insurance policies. The wife-widow of the deceased informed the two insurance companies that she would object to and challenge all payments made to the designated beneficiary. With respect to one insurance company that—notwithstanding the challenge—had made payments to the mistress, the widow maintained that such payments did not discharge the insurer from its obligation, and that the company should pay such proceeds to his lawful heirs, even though this entailed paying these proceeds for a 293second time. The court of Paris rendered judgment for the complainant.202 Appeal to the Supreme Court was filed by the designated beneficiary of the policies and the insurance companies.
Decision:
The Court—On the only issue on appeal No. 2394 Civ. 55 and on the first issue on appeal No. 2072 Civ, 55:
Whereas … Guenebaud was the holder of two life insurance policies subscribed through his employer, with the National Insurance Company and Secours-Vie, where he designated as beneficiary, in the first policy, his mistress Mrs. Avenia, and in the second policy the same woman “or her successors”; that after Guenebaud’s death, his widow informed the insurance companies that she was going to object to and challenge the payment of the proceeds of the insurance policies from the hands of whoever had them; that the payment from Secours-Vie to Mrs. Avenia is still pending and that the payment from the National Insurance Company had already been made in full.
Whereas, the widow of Guenebaud has, acting on her own behalf and in her capacity as natural and legal guardian of her two children, claimed the nullity of the stipulation in favor of Mrs. Avenia because of its immoral and illegal cause, having complained against the decision in favor of the widow (Paris, June 14, 1955) and holding that the proceeds from the insurance policies should benefit the estate of Guenebaud, since at the time of death of the insured… their cause was based on an illegal relationship; that the widow has not answered the arguments… that the rights in dispute are legal because their purpose is to repair a damage, and that at least one of the contracts must benefit the “successors” in relation to Mrs. Avenia—i.e., her daughter—and in that regard there cannot be an immoral cause;—Further, the Court of Appeals determined from the documents filed that “the designation as beneficiary under both insurance policies was so that Guenebaud could convince Mrs. Avenia—20 years younger than him—to remain with him and to pursue adulterous relations with him”; hence, this was not a reparation of damages with respect to Mrs. Avenia….” that in light of the findings, the court was able to conclude that the entire designation was affected by nullity for having an immoral cause and that, consequently, in the absence of a designated beneficiary, the proceeds of the insurance policies must go to the estate of the insured in accordance with Article 66 of the Law of July 13, 1930….
Annotation by Mr. Esmein: This decision discussed the consequences of an immoral cause underlying a life insurance contract. In the contract, the mistress of the insured is designated as the beneficiary. Following well-established case law, a stipulation benefiting a mistress is not null and void for the sole reason that it benefits a mistress. However, if the contracting parties’ purpose or goal is either to initiate or to continue an immoral relationship, then the provision will be null based on the fact that its cause is contrary to good moral standards.203 Additionally, such a clause or provision will not be considered null if it results from the desire of repairing a damage—i.e., to insure the future or the well-being of a person who dedicated part of 294his/her life to the person who is granting that benefit,204 in every case of adulterous relations.205 In the case at bar, the court determined that the contracts were concluded in order to continue with the adulterous relations, and such provision is null. However, the insurance contract subsists (i.e., remains valid) even without a “formal” designation of a beneficiary.
Increasingly, insurance policies of all types—including life insurance policies—are used for commercial purposes. For example, before a bank makes a loan or extends a line of credit to a for-profit or not-for-profit corporation interested in building its own headquarters, it may require that the corporate borrower take out an insurance policy on the chief executive officer of the corporation and either name the bank or indorse it to it as the beneficiary. Similarly, merchants requesting a line of credit to acquire inventory or equipment for their business are asked to take out a life insurance policy and follow the same procedure just outlined, thereby securing the bank’s collection. Alternatively or additionally, they are asked to take out a fire or accidental destruction of the collateral policy, also naming the secured creditor as beneficiary or endorsing the policy to it.
Why do you think that insurance policies have become such popular collateral? Does the present decision help or hinder the secured creditor’s ability to collect on the above described policies?
Appraisal of the Economic Harm (Lesion) in a Sale of Real Property:
Article 1675:206
In order to determine if there has been a lesion of more than 7/12ths [of the value of real property], it will be necessary to appraise this value in accordance with its condition and value at the time of its sale.
In the case of a unilateral promise of sale, the lesion will be evaluated on the date it was made.
Reporter’s Topics: Sale, Rescission, Lesion, Objective Nature. December 28, 1932.
Summary of Opinion:
A lesion (economic harm) that has been legally verified is, by itself, sufficient reason to rescind a sale, regardless of the circumstances that were related to or that gave rise to such lesion.208
Consequently, the right of the harmed seller to request the rescission of the contract cannot be conditioned upon the demonstration of a moral constraint and, furthermore, it cannot be invalidated by the buyer’s statements to the effect that the sale had been freely consented to.209
Facts:
Mr. Picard had consented to a promise to sell various real estate properties to Société Économique de Rennes, and the latter accepted this promise prior to the death of the promissor. The promissor’s heirs initiated an action for rescission based on a lesion in excess of seven-twelfths [of the value of the property], and such action was granted by a decision of the court of Rennes dated March 6, 1929. The Société appealed.
Alleged Legal Basis for Appeal:
Violation of Arts. 1674 and 1677 of the Code Civil, because the appealed decision granted the action for rescission brought by the seller’s heirs disregarding the buyer’s proof that the seller had freely consented to the promise to sell without being the subject of any moral or other constraints—and that only the presence of such constraints, given the spirit of the law, would grant the rescission because of lesion…
Decision:
The Court: [C]onsidering that pursuant to Article 1674 of the Code Civil, if the seller has suffered a loss greater than seven-twelfths of the price of an immovable property, he is entitled to apply for the rescission of the sale; that a lesion or loss that has been legally verified is in and of itself sufficient reason to rescind a sale regardless of the circumstances that gave rise to such lesion; and consequently, given that the decision under appeal verified existing documentation and, pursuant to Article 1677 of the Code Civil, the probability and seriousness of the facts stated by the plaintiffs, such reasoned decision does not violate the articles listed as legal basis; on the contrary, it has made correct application of such articles. For these reasons, appeal is denied.
Annotation by Mr. Dumas: Lesion is defined as the harm suffered by a person due to the inequality between the benefits that such person obtains and the sacrifices she/he must make to obtain them. This is an objective definition which disregards the origin of the lesion or its results. Should this, however, be the only consideration? Or would it be necessary, in order to accept the validity of a lesion, that the court finds that there was an undue influence—e.g., a moral constraint because the seller was in dire need of the money—or there was an intentional act by the potential buyer to mislead the seller into accepting less-than-favorable conditions?
The drafting process that led to the adoption of the Code Civil leaves no doubt as to the fact that the drafters related lesion with undue influences or other factors that affected a party’s consent. Nonetheless, and however pertinent these considerations might be, the Court of Appeals did not take them into account given that, as a matter of fact, none of the actual provisions of the Code Civil that deal with lesion require that the party who suffered the harm prove that she/he had been under an undue influence. 296It is not for the court to require more than was required by the legislators. This issue became increasingly important following World War I and the dramatic currency devaluation as reflected in this case: the promise to sell took place before the devaluation, but the promise would have materialized following the devaluation. The seller was not subject to any fraud or to any undue influence. The lesion stemmed from circumstances beyond the control of the parties. However, it is likely that such circumstances weighed in on the court’s decision.
Article 1676 of the Code Civil states that the action for rescission due to lesion “shall only be admissible within a period of two years starting from the time of the sale.”210 Still, two years is a long time for a buyer-builder or developer not to know whether his acquisition is final, especially in an active real estate market such as France’s. The main chapter explained why the drafters of the Code Civil deemed it necessary to grant the protection of this remedy. Having read this chapter and these decisions, how would you summarize those reasons, and how much weight would you still ascribe to the protection of the archetypal bourgeois contracting party among these reasons? Are these reasons as valid in a contemporary urban and commercial society as they were in Napoleon’s France? How have commercial buyers, sellers, mortgage lenders, builders and developers of real property adjusted to the lesion uncertainty? How would you have adjusted to it as counsel in your jurisdiction? When we discuss Imperial China’s “conditional sale contracts,”211 you will find that given the “familistic” nature of that society, the family or, better still, the household was the owner of most of China’s rural land. Often, as a result of economic necessity, the family or household had to sell its ancestral land. And unless the contract contained a qualifier such as “irrevocable sale,” the sale was deemed revocable by any member of the family who in the future decided that he could pay back the price originally paid by the buyer. This unlimited right of revocation introduced much uncertainty and endless litigation in Chinese courts. Would that be the case in France, despite its relatively short (two-year) statute of limitations?
__________________________
1 See Leonard Mlodinow, Feynman’s Rainbow: A Search for Beauty in Physics and Life 24–25 (2003).
2 Id. at 24.
3 See infra § 12:2.
4 See supra § 2:2(A).
5 C. Civ. (Fr.) art. 1101 (emphasis added). Unless otherwise indicated, all the English translations of the Code Civil provisions belong to Legifrance (see Frequently Cited).
6 Id. art. 1134.
7 See supra § 4:2(A)(4).
8 Enlightenment, IV Encyclopaedia Britannica 887–88 (15th 1974); see also § 21:10(B) (on the impact of enlightenment on U.S. law).
9 See William Doyle, The Oxford History of the French Revolution 49 (2d ed. 2002). Doyle states:
Nevertheless the new principles continued to be taught, and by the 1760s Newtonian physics in one form or another were standard fare in most colleges. Nature was to be evaluated in terms of what could be shown to work and achieve useful results. It could scarcely be expected that some at least of those who learned this lesson should not have thought about judging human affairs by the same standards….
Id.
10 Id. at 53.
11 Garth Kemerling, Rationalism, Philosophy Pages, http://www.philosophypages.com/dy/r.htm#ratm (last updated Dec. 30, 2011).
12 Id.
13 Wieacker, History of Private Law, at 257–58.
14 Benedict de Spinoza, Tractatus Theologico-Politicus 133 (1908).
15 Id. at 134.
16 See supra § 4:2(A)(4).
17 Id.
18 Geometric logic as applied to legal theory made it so that rights and duties were for the first time measurable and quantifiable. For example, whereas property held in fee simple absolute could be measured as an entire geometrically-measurable circle, a life estate interest in that same property would be a smaller portion of that circle. Geometric logic, therefore, allowed legal rights and duties to be mathematically comparable to one another.
19 See David A. Singer, Geometry: Plane and Fancy (Undergraduate Texts in Mathematics) 1–2 (1998).
20 Alejandro Guzmán, Codificacion y Consolidacion: Una Comparacion entre el Pensamiento de A. Bello y el de A. Teixeira de Freitas, 10 Revista de Estudios Historicos-Juridicos 269, 280 (1985).
21 Id. at 280–81.
22 See infra § 8:2(B)(1).
23 See Wieacker, History of Private Law, at 227–28.
24 Id. at 227–29.
25 Id. at 228. Ironically, the controversy that prompted this writing involved the seizure of a vessel by Grotius’ client. Yet, Holland, once it became a maritime and colonial power, adopted similar monopolistic policies as those criticized by Grotius.
26 Id. at 231. See also Berger, Encyclopedic Dictionary, at 411. Berger refers to the constitutum possessorium as a term not used in classical Roman law but in subsequent legal literature as denoting a situation “of a person who transferred possession (possessio) of a thing to another but continued to hold it (detinere) under another title. Possessory protection is consequently given to the new possessor.” Id. As will be discussed in Chapter 23, this Roman law institution served as a conceptual basis for the Organization of American States Model Law on Secured Transactions. See Kozolchyk & Furnish, A Comparative Analysis, at 245–57.
27 C. Civ. (Fr.) art. 1583 (“It is complete between the parties, and ownership is acquired as of right by the buyer with respect to the seller, as soon as the thing and the price have been agreed upon, although the thing has not yet been delivered or the price paid.”). But cf. Cód. Civ. (Arg.) art. 577 (“Before transmission [traditio] of the thing, the creditor does not acquire any real property right over it.”). See Alejandro Garro, Recordation of Interests in Land, in VI Int’l Encyclopedia of Comp. L., 22–34 (2004) (a thorough and lucid discussion of the evolution of the requirement of traditio in civil law systems compared with common law systems).
28 Id.
29 See Pothier, I Obligations, at 5 (“Hence, as I cannot, by my own will alone, transfer to another the property of my goods, if his will does not concur in the acquisition of it….”).
30 See infra § 8:4.
31 See infra § 8:2(B)(1).
32 Wieacker, History of Private Law, at 233.
33 Gorla I, at 67 (citing Grotius).
34 Id.
35 Id. at 71.
36 Id.
37 Legifrance C. Civ. (Fr.) art. 1134 (“Agreements lawfully entered into take the place of the law for those who have made them. They may be revoked only by mutual consent, or for causes authorized by law. They must be performed in good faith.”)
38 See infra ch. 26.
39 Wieacker, History of Private Law, at 243–48 (a thorough and incisive appraisal of Pufendorf’s contribution to the codification process). The following paragraphs in the principal text summarize Wieacker’s main points.
40 Id. at 244–45 (citations omitted).
41 Id. at 246.
42 The German Civil Code 41 (Ian S. Forrester et al. trans., 1975).
43 Id.
44 Wieacker, History of Private Law, at 246.
45 Von Mehren & Gordley, The Civil Law System, at 48.
46 Frederick Henry Lawson, A Common Lawyer Looks at the Civil Law 35 (1953); see also Francis Deak & Max Rheinstein, The Development of French and German Law, 24 Geo. L.J. 551 (1936).
47 The Napoleon Series, The Civil Code (1995–2008), available at http://www.napoleon-series.org/research/government/c_code.html.
48 Von Mehren & Gordley, The Civil Law System, at 48.
49 Id. at 49. The actual work of codification began under the auspices of the Legislative Convention in 1792 and produced three drafts (a first draft with 715 articles, a second with only 297 articles and a third draft with 1104 articles). Id. at 48. Nonetheless, the political crisis was such that this third version was not successful. Id. at 49. Ultimately, there was a final version under the auspices of the Napoleonic Consulate from 1799 to 1804. Id. On August 13, 1800, Napoleon appointed a drafting commission with the mandate to finish its duties in November of that year. Id. The members of the drafting commission were appellate judges, experienced administrative officials and government commissioners. Id. The previous versions were examined by the drafting commission, which divided the work according to issues and distributed portions of them to each member. Id. After four months of work, the commission submitted its own version to the Cour de Cassation and the courts of appeal for comment. Id.
50 The three other officials were Francois Denis Tronchet, Felix-Julien-Jean Bigot de Preameneu and Jacques de Maleville. Id.; see generally René Lavollée, Portalis, Sa Vie et ses Oeuvres (1869).
51 The Napoleon Series, supra note 47.
52 James Gordley, Myths of the French Civil Code, 42 Am. J. Comp. L. 459, 459–61 (1994).
53 Von Mehren & Gordley, The Civil Law System, at 51.
54 See supra § 4:2(A)(4).
55 Legifrance C. Civ. (Fr.) arts. 1119, 1134, 1185, 1226, 1227, & 2279 (emphasis added); see also supra note 5 and accompanying text.
56 See infra § 8:2(A) & (B).
57 See infra § 8:7.
58 See, e.g., Lawson, supra note 46, at 54. The assessment by two of the most distinguished comparative law writers of the twentieth century states: “Pothier, an unoriginal compiler who tried from time to time to introduce the sort of order and principle into the law which is necessary for exposition to students.” Id. For a similar view, see John P. Dawson, Specific Performance in France and Germany, 57 Mich. L. Rev. 495 (1959). See also infra § 28:7(B)(3).
59 Pothier, I Obligations, at 4 (emphasis added).
60 Id. (“The kind of agreement, which has as its object to form [an] engagement, is what is called a contract.”)
61 Id. at 4–5.
62 Id. at 5.
63 Id.
64 Id. at 5–6.
65 Hugo Grotius, II De Jure Belli ac Pacis (The Law of War and Peace) (1625).
66 See infra § 8:9(C).
67 See infra § 8:9(C)(4) (note however that a number of recent decisions by French courts have significantly qualified the non-binding or revocable effects of a promise or an offer).
68 Pothier, I Obligations, at 10.
69 Id. at 10.
70 On the gratuitous nature of the commodatum (gratuitous loan of a thing) and mandatum (agency) in Roman law, see Berger, Encyclopedic Dictionary, at 399, 575.
71 Pothier, I Obligations, at 11.
72 Id. at 11–12. See also infra § 22:1(A) (discussing the civil “static-ceremonial” contract).
73 Pothier, I Obligations, at 12.
74 See infra § 8:7(B) (discussing the formality of contracts).
75 Pothier, I Obligations, at 12–13.
76 Id. at 13.
77 Id. (emphasis added).
78 Id. at 13–14.
79 See infra ch. 22.
80 Legifrance C. Civ. (Fr.) arts. 1102–1106.
81 Id. art. 1138.
82 Id. art. 1589.
83 Id. art. 1370.
84 Id. arts. 1371–1381, available at http://www.legifrance.gouv.fr/.
85 Legifrance, http://www.legifrance.gouv.fr/.
86 See infra §§ 22:2, 22:4 (discussing the impact of causa and consideration on the formation of contract).
87 See supra § 2:2(A).
88 See supra § 5:7(B).
89 Pothier, I Obligations, at 4.
90 See supra § 8:9(C)(4) (discussing pollicitation).
91 See HGB (Goren, 1998), art. 376, which in relevant part states:
(1) Where it is stipulated that performance by one of the parties should be effected at an exact time or within a specific period, the other party may rescind the contract if performance is not made at the exact time or within the period specified, or in the event that the debtor has defaulted, demand payment of damages for non-performance in lieu of performance of the contract. He may only demand performance if he indicates to the other party, immediately following expiration of the time or the period, that he insists on performance.
(2) Where damages are demanded for non-performance and the goods have an exchange or market price, the difference between the purchase price and the exchange or market price at the time and place of the performance due can be demanded.
(3) The result of another sale or purchase can, in the case where the goods have an exchange or market price, only be taken as the basis for the damage claim if the sale or purchase is effected immediately after the performance time or performance deadline has elapsed. If it does not occur at a public auction, the sale or purchase must be carried out at the current price by a broker officially authorized to conduct sales or by a public auctioneer.
(4) The provisions of § 373 Subsection 4 applies to the sale at public auction. The creditor must promptly notify the debtor of the sale or purchase; in case of failure to do this, he is liable for damages.
92 See Kozolchyk, Commercial and Standby Letters of Credit, in III U.S. Law of Trade & Investment, at 24–17.
93 See supra § 8:4(B)(6).
94 See BGB arts. 1191–1198. In 1900, the articles allowed the creation of mortgage bonds or certificates in bearer fashion. For a brief survey on mortgage banking in Europe since the eighteenth century, see BRE Bank Hipoteczny, SA, The History of Mortgage Banks and Mortgage Bond (on file with author).
95 Gordley, supra note 52.
96 Id. at 459. Gordley cited many highly-respected French doctrinal writers. Id. at 459 nn. 1, 2; J.–L. Halperin, L’Impossible Code civil 56–57, 276–78 (1992); A.–J. Arnaud, Les Origines doctrinales du Code civil francais (1969); J. Carbonnier, I Droit civil 66 (11th ed. 1977); A. Colin, H. Capitant & L. Juillot de la Morandière, I Traite de droit civil 129 (1957); G. Cornu, I Droit civil 107 (4th ed. 1990); Ghestin & Goubeaux, I Traite de droit civil 96 (2d ed. 1983); L. Josserand, I Cours de droit civil positif français 32–33 (1938); H. Mazeaud, L. Mazeaud & J. Mazeaud, I Leçons de droit civil 63 (4th ed. 1967); A. Weill & F. Terré, Droit civil Introduction générale 98 (4th ed. 1979).
97 Gordley, supra note 52, at 459 (citing R. Savatier, Les Metamorphoses économiques et sociales du droit privé d’aujourd’hui 5–6 (2d ed. 1959)).
98 Gordley, supra note 52, at 459.
99 Id. at 460.
100 See supra § 8:4(D)(7).
101 Gordley, supra note 52, at 475.
102 See supra § 8:2(B)(1).
103 Lochner v. New York, 198 U.S. 45, 76 (1905) (Holmes, J., dissenting).
104 Lawson, supra note 46, at 31.
105 See France, Everyhistory.org, http://everyhistory.org/2011countries9.html.
106 See Doyle, supra note 9, at 14–25. The following paragraphs in the principal text will summarize key features of pre-revolutionary France found in this fine scholarly account.
107 Id. at l4, 16, 18.
108 Id. at 20.
109 Id. at 21–22.
110 Id.
111 Id. at 24. As indicated in the following note, many taxes paid by the bourgeois were in the form of payments for the acquisition of public offices.
112 Id. at 22–23. According to the Oxford History:
Originating in the sixteenth century as a way of enabling the king to borrow money … the sale of public offices became a basic institution of French social life … office-holders were permitted, on payment of an annual tax, to pass them on to their children or re-sell them to third parties. This made offices as sound a social investment as land, and in response to continued demand the Crown made most public functions venal. The whole judicial hierarchy, from the highest presidents in the parlements to the humble tipstaff in the obscurest rural jurisdiction, bought their positions…. Under Louis XVI there were over 70,000 venal offices, representing capital value of perhaps 900 million livres, increasing rapidly as the market value of most of them went up.
Id. at 25.
113 Id. at 22–24.
114 Id. at 24.
115 Id.
116 Paul G. Mahoney, The Common Law and Economic Growth: Hayek May be Right, 30 J. Legal Stud. 503, 509–10 (2001).
117 C. Civ. (Fr.) arts. 1101, 1134.
118 Mahoney, supra note 116, at 510.
119 Georges Ripert, La Regle Morale Dans Les Obligations Civiles no. 2 (3d ed. 1935).
120 See supra § 8:4(C).
121 See supra § 8:4(D).
122 C. Civ. (Fr.) art. 1341.
123 See supra § 7:3(A)(3).
124 C. Civ. (Fr.) art. 1341.
125 Id. art. 1319.
126 See infra ch. 23.
127 As will be apparent in the discussion of the doctrine of “excessive onerousness” in Italian and Latin American law, this version of contractual fairness is still much alive in the court and doctrinal interpretation of contracts in the above jurisdictions. See infra ch. 27.
128 Ripert, supra note 119, at no. 22 (“Toute justice est contractuelle. Ecrit simplement; qui dit contractuelle dit juste.”).
129 There is support in medieval religious law for the proposition that a fair price is reached by the mere fact that a bargain has been struck. See Richard Henry Tawney, Religion and the Rise of Capitalism 40 (5th prtg. 2008). With regard to the notion of cause, legal doctrine since the sixteenth century generally eschewed the use of concepts which by giving greater power to the judges would compromise the stability of contracts. A. Weill & F. Terre, Les Obligations no. 253 (2d ed. 1975).
130 Vera Bolgár, The Contract of Adhesion: A Comparison of Theory and Practice, 20 Am. J. Comp. L. 53, 67–68 (1972) (citations omitted).
131 C. Civ. (Fr.) arts. 1674, 1686.
132 The “subjective” doctrine of lesion, which considered the exploitation of the promisee’s contractual weakness and particularly his lack of bargaining power, was not adopted by the Code Civil. As noted by Georges Ripert, the Code Civil had not provided a remedy for the case of contractual weakness other than the “somewhat brutal theory of incapacity or the hazardous theory of vice of consent.” Ripert, supra note 119, at no. 102. See BGB, art. 138(2), which provided a remedy of “subjective” lesion when stating in relevant part:
A legal transaction is also void whereby a person exploiting the need, carelessness or inexperience of another, causes to be promised or granted to himself or to a third party in exchange for a performance, pecuniary advantages which exceed the value of the performance to such an extent that, under the circumstances, the pecuniary advantages are in obvious disproportion to the performance.
The German Civil Code, supra note 42, at 21.
133 Gordley, supra note 52, at 475–76 (citations omitted).
134 Legifrance C. Civ. (Fr.) art. 1118 (“Loss vitiates agreements only in certain contracts and with regard to certain persons, as will be explained in the same Section.”); Id. art. 1313 (“Adults are entitled to rescission for loss only in the cases and subject to the conditions specially laid down in this Code.”); see also Kozolchyk, Commercialization, at 9 (with the exception of the discussed seller of real property who receives less than one-half of the market price, the others involved familial legal relationships such as between a decedent and his heirs, or between legatees and devisees as a result of an improper division or due to events supervening the acceptance of the inheritance share).
135 Legifrance C. Civ. (Fr.) art. 1108.
136 Id. art. 1131.
137 Id. art. 1133.
138 Gorla I at 45.
139 Id. at 77–84.
140 Id.
141 C.C. (Spain) art. 1275 (“Contracts without cause or with an illegal cause have no effects whatever. A cause is illegal when it conflicts with law or morals.” (Los contratos sin causa, o con causa ilícita, no producen efecto alguno. Es ilícita la causa cuando se opone a las leyes o a la moral.)).
142 Weill & Terre, supra note 129, at nos. 280–81 (a brief review of the morality of cause in gratuitous contracts).
143 Cour de cassation [Cass.] [supreme court for judicial matters] 1e civ., Oct. 8, 1957, JCP 1957 II 10234 (Fr.); for the text of this decision, see infra § 8:10, for an earlier discussion see supra § 4:4(D)(3)(a), and for a later reference to it see infra § 22:2(C).
144 See infra §8:10.
145 Henri Capitant, de la Cause Des Obligations 226–27 (3d ed. 1927).
146 Judgment of 13 June 1889, Bourges, D.P.1889.5.329 (cited in Capitant, supra note 145 at 243).
147 Doyle, Oxford History, supra note 9, at 24.
148 Arthur Von Mehren, The Code and Contract—A Comparative Analysis of Formation and Form, in The Code Napoleon and the Common Law World 110–11 (B. Schwartz ed., 1956), (a comparative discussion of some of the Code Civil’s shortcomings in the regulation of contract law).
149 Id.
150 Kozolchyk, Mexican Land Registry, at 312–13; Kozolchyk, Commercialization, at 12.
151 Legifrance C. Civ. (Fr.), art. 1138 (“An obligation of delivering a thing is complete by the sole consent of the contracting parties.”).
152 M. Planiol, I Civil Law Treatise 543 (La. St. L. Inst. trans., 1959), cited in Kozolchyk, Commercialization, at 12 n.42.
153 Pierre-Antoine Fenet, 15 Recueil complet des travaux préparatoires du Code Civil 237 (1827). (This author’s translation.) This quote is characteristic of the codal attitude toward third party rights, “individual liberties” and “family secrets”:
Le système de publicite est une interdiction aux families de garder le secret de leurs affaires…. Ce secret a toujours été regarde comme un des principaux droits de la liberte individuelle.
Id. See also Kozolchyk, Commercialization, at 12 n.42.
154 Kozolchyk, Mexican Land Registry, at 312–13.
155 Legifrance C. Civ. (Fr.) art. 544 (“Ownership is the right to enjoy and dispose of things in the most absolute manner, provided they are not used in a way prohibited by statutes or regulations.”).
156 See generally Vera Bolgár, Abuse of Rights in France, Germany, and Switzerland: A Survey of a Recent Chapter in Legal Doctrine, 35 La. L. Rev. 1015 (1975); Julio Cueto-Rua, Abuse of Rights, 35 La. L. Rev. 965 (1975); Shael Herman, Classical Social Theories and the Doctrine of “Abuse of Right”, 37 La. L. Rev. 747 (1977).
157 Bolgár, supra note 156, at 1021.
158 All of the decisions discussed in this Appendix have been extracted from Henry Capitant, Alex Weill & Francois Terre, Les Grands Arrêts de la Jurisprudence Civile (7th ed. Dalloz, 1976) [hereinafter Arrêts Civile].
159 See Glossary, “Pandectists.”
160 See supra § 8:2(B)(1)(a)–(b).
161 C. Civ. (Fr.) art. 1589.
162 Id. art. 1589–1.
163 Id. art. 1589–2.
164 Id. art. 1590.
165 See Stéphane Prigent, Les difficultés d’interprétation de l’article 1589–1 du Code Civil, AJDI 166 et. seq. (2003) (on file with author).
166 Id. at 167.
167 Id.
168 Id. at 168.
169 Id.
170 See infra § 10:9(E).
171 Id.
172 Real Estate Investments in Germany: Transactions and Development 104 (Michael Mütze et al. eds., 2007).
173 Id. at 105 (emphasis added).
174 Id. at 106.
175 See generally Boris Kozolchyk et al., Enhancement of Mexican Commercial Adjudication by Improved Transactional Fact-Finding, Application of Equitable Principles, and Drafting of Standard Contracts and Best Contractual Practices, 27 Ariz. J. Int’l & Comp. L. 325, 325–691 (2010). Consult this recent symposium issue if you are interested in how Mexico may be poised to resolve this problem caused by its respect for the Code Civil approach.
176 Arrêts Civile, supra note 158, at 609–12 (Cour de cassation [Cass.] [supreme court for judicial matters] Nov. 26, 1935, D.P. 1936.1.37 (Fr.) (citations omitted)).
177 See infra § 22:10(K).
178 See infra § 28:7. See also Dawson, supra note 58.
179 C. Civ. (Fr.) art. 517.
180 Id. arts. 518–520.
181 Id. art. 524.
182 Id. art. 526.
183 See infra ch. 12.
184 BGB art. 96 (Goren, 1994) (emphasis added).
185 Código Civil Federal [CC] [Federal Civil Code], as amended, Diario Oficial de la Federación [DO], art. 750 (XII) (Mex.).
186 C. Civ. (Fr.) art. 1589–1; see also supra § 8:9(C).
187 Id. art. 1590.
188 See von Ihering, a Means to an End, at 445–48.
189 See infra § 22:8(C) (for instances of revocable offers in commercial transactions).
190 Berthault et Compagnie v. Duchesne et Audiart et Rabier, Thirouin et Compagnie, Cour d’appel [CA] [regional court of appeals] Paris 6th ch., Mar. 13, 1917, Gaz. Pal. 1917–1918, 978 (Fr.).
191 Von Mehren & Gordley, The Civil Law System, at 874–75.
192 A. Colin & H. Capitant, Cours Elementaire de Droit Civil Francais 35–36 (10th ed. 1948).
193 Von Mehren & Gordley, The Civil Law System, at 875.
194 C. Civ. (Fr.) art. 1396–4. Legifrance.
195 Id. art. 1369–5.
196 Id. art. 1369–7.
197 Id. art. 1369–9.
198 C. Civ. (Fr.) 714 (Dalloz 1992–93).
199 Id.
200 Id. (a list of these decisions).
201 Arrêts Civile, supra note 158, at 707–12. (Cour de cassation [Cass.] 1e civ., Oct. 8, 1957, JCP 1958 II 10234 (Fr.)).
202 Cour d’appel [CA] [regional court of appeal] Paris, June 11, 1955, JCP 1955, II, 9303, note Rabut (Fr.).
203 Cour de cassation [Cass.] Civ., Mar. 26, 1860, D.P. I 253 (Fr.); Cour de cassation [Cass.] Civ., Oct. 14, 1940, D.H. 1940 174 (Fr.).
204 Cour de cassation [Cass.] Civ., Mar. 11, 1918, S. Jur. I 1918, 110 (Fr.).
205 Cour de cassation [Cass.] Civ., Oct. 16, 1956, Gaz. Pal. 1956, 2, 306 (Fr.); see also Julliot de La Morandière, Vol. II, No. 742.
206 C. Civ. (Fr.) 1675.
207 Arrêts Civile, supra note 158, at 617–19.
208 C. Civ. (Fr.) art. 1674: “Where a seller has suffered a loss greater than seven-twelfths of the price of an immovable, he is entitled to apply for the rescission of the sale, even though he may have expressly renounced in the contract the ability to apply for that rescission and had declared his intention to donate the surplus.”
209 C. Civ. (Fr.) art. 1677: “Proof of loss may be allowed only through judgment, and in the case only where the facts alleged are probable and serious enough to induce a presumption of loss.”
210 C. Civ. (Fr.) art. 1676.
211 See infra § 18:1(B)(1)(a).