Mistake Fraud and Duties to Inform in European Contract Law The Common Core of European Private Law

General EditorsMauro Bussani, University of Trieste Ugo Mattei, University of Turin and University of California, HastingsCollege of Law Honorary Editor Rodolfo Sacco, University of Turi

European Contract Law

This examination of twelve case studies about mistake, fraud andduties to inform reveals significant differences about how contractlaw works in thirteen European legal systems and, despite the factthat the solutions proposed are often similar, what divergent valuesunderlie the legal rules of these jurisdictions Whereas some

jurisdictions recognise increasing duties to inform in numerouscontracts so that the destiny of mistake and fraud (classical defects ofconsent) may appear to be uncertain, other jurisdictions continue torefuse such duties as a general rule, or fail to recognise the need toprotect one of the parties where there is an imbalance in bargainingpower or information Avoiding preconceptions as to where and whythese differences exist, this book first examines the historical originsand development of defects of consent, then considers the issues from

a comparative and critical standpoint

r u t h s e f t o n - g r e e n is a lecturer in law at University of Paris 1(Panthéon-Sorbonne) She has received a Master’s degree from theUniversity of Oxford, and was awarded her PhD in Law from theUniversity of Paris 1 (Panthéon-Sorbonne)

c o n t r i b u t o r s

Florence Bellivier, Laura Caldwell, John Cartwright, Isabelle Corbisier,Craig Coyle, Eva Grassl-Palten, Martijn Hesselink, Philippe Jouary,Armand Kacenelenbogen, Damien Keaney, Roswitha Kundi, AlbéricLuciani, Raimund Madl, Luis Menezes Leitao, Alberto Musy, HelmutOfner, Elisabeth Poulou, Stéphane Reifegerste, Francisca SanchezHernanz, Martin Josef Schermaier, Ruth Sefton-Green, Lasse Simonsen,Joe Thomson

General Editors

Mauro Bussani, University of Trieste

Ugo Mattei, University of Turin and University of California, HastingsCollege of Law

Honorary Editor

Rodolfo Sacco, University of Turin

Late Honorary Editor

Rudolf B Schlesinger, Cornell University and University of California,Hastings College of Law

Editorial Board

James Gordley, Cecil Turner Professor of Law, University of California,Berkeley; Editor in Chief of the American Journal of Comparative LawAntonio Gambaro, Professor of Law, University of Milano; President ofthe Italian Society of Comparative Law

Franz Werro, University of Freiburg and Georgetown University LawCenter

Rodolfo Sacco, President of the International Association of LegalScience (UNESCO)

For the transnational lawyer the present European situation isequivalent to that of a traveller compelled to cross legal Europe using

a number of different local maps To assist lawyers in the journeybeyond their own localityThe Common Core of Europe Private Law Project

was launched in 1993 at the University of Trento under the auspices

of the late Professor Rudolf B Schlesinger This is its fifth completedbook

The aim of this collective scholarly enterprise is to unearth what isalready common to the legal systems of European Union memberstates Case studies widely circulated and discussed between lawyers ofdifferent traditions are employed to draw at least the main lines of areliable map of the law of Europe

Books in the Series

Mistake, Fraud and Duties to Inform in European Contract Law

Edited by Ruth Sefton-Green

0 521 84423 1 Hardback

Security Rights in Movable Property in European Private Law

Edited by Eva-Maria Kieninger

0 521 83967 X Hardback

Pure Economic Loss in Europe

Edited by Mauro Bussani and Vernon Valentine Palmer

0 521 82464 8 Hardback

The Enforceability of Promises in European Contract Law

Edited by James Gordley

0 521 79021 2 Hardback

Good Faith in European Contract Law

Edited by Reinhard Zimmermann and Simon Whittaker

0 521 77190 0 Hardback

in European Contract Law

edited by

Ruth Sefton-Green

Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São PauloCambridge University Press

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Published in the United States of America by Cambridge University Press, New Yorkwww.cambridge.org

hardback

eBook (NetLibrary)eBook (NetLibrary)hardback

Ruth Sefton-Green

2 Mistake, misrepresentation and precontractual duties

Martin Josef Schermaier

3 The rise and fall of mistake in the English law

Case 3: Emile v Far Eastern Delights 164

5 Comparative conclusions 369

Ruth Sefton-Green

General editors’ preface

This is the fifth book in the seriesThe Common Core of European Private Law.

TheCommon Core of European Private Law Project was launched in 1993 at

the University of Trento under the auspices of the late Professor Rudolf

B Schlesinger The methodology used in the Trento project is novel Bymaking use of case studies it goes beyond mere description to detailedinquiry into how most European Union legal systems resolve specificlegal questions in practice, and to thorough comparison between thosesystems It is our hope that these volumes will provide scholars with avaluable tool for research in comparative law and in their own nationallegal systems The collection of materials that the Common Core Project

is offering to the scholarly community is already quite extensive and willbecome even more so when more volumes are published The availabil-ity of materials attempting a genuine analysis of how things are is, inour opinion, a prerequisite for an intelligent and critical discussion onhow they should be Perhaps in the future European private law will beauthoritatively restated or even codified The analytical work carried ontoday by the almost 200 scholars involved in theCommon Core Project is a

precious asset of knowledge and legitimization for any such normativeenterprise

We must thank the editors and contributors to these first publishedresults With a sense of deep gratitude we also wish to recall our lateHonorary Editor, Professor Rudolf B Schlesinger We are sad that wehave not been able to present him with the results of a project in which

he believed so firmly No scholarly project can survive without mitted sponsors The Dipartimento di Scienze Giuridiche of the Uni-versity of Trento, its past and present directors and its excellent staffmust be thanked The European Commission has partially sponsoredsome of our past general meetings, having included them in their High

com-xi

Level Conferences Program The Italian Ministry of Scientific Research

is now also funding the project, having recognized it as a ‘research ofnational interest’ The Istituto Subalpino per l’Analisi e l’Insegnamentodel Diritto delle Attività Transnazionali, the University of Torino, theUniversity of Trieste, the Fromm Chair in International and Compara-tive Law at the University of California and the Hastings College of Lawhave all contributed to the funding of this project Last but not least,

we must thank all those involved in our ongoing Trento projects incontract law, property, tort and other areas whose results will be thesubject of future published volumes Our home page on the internet

is at http://www.jus.unitn.it/dsg/common-core There you can follow ourprogress in mapping the common core of European private law

Late Honorary Editor:

r u d o l f b s c h l e s i n g e r (Cornell University and University ofCalifornia, Hastings)

Editorial Board

James Gordley, Cecil Turner Professor of Law, University of California,Berkeley; Editor in Chief of the American Journal of Comparative LawAntonio Gambaro, Professor of Law, University of Milano; President ofthe Italian Society of Comparative Law

Franz Werro, University of Freiburg and Georgetown University LawCenter

Rodolfo Sacco, President of the International Association of LegalScience (UNESCO)

This project was conceived in Paris at a meeting with Jacques Ghestin,Horatia Muir Watt and myself at the request of Mauro Bussani The orig-inal cases were formulated by Horatia Muir Watt, Stéphane Reifegersteand me in June 1996 Our questionnaire become the subject of a brain-storming session in Trento in July with all the members of the contractgroup present which was most useful I subsequently became editor ofthe project

I am indebted to Jacques Ghestin for formulating the theme of theproject and to Horatia Muir Watt for her initial contribution and con-stant encouragement I would like to record my thanks to StéphaneReifegerste for his active participation in the early stages of the projectand particularly the group work he carried out with the students ofthe DEA de droit anglais et nord-américain des affaires at the UniversityParis I (Panthéon-Sorbonne) in the years 1997 98 I am also grateful toMuriel Fabre-Magnan for her friendly counsel and consistent support.Above all, I would like to record my warmest thanks to the nationalreporters of this project with whom I would like to think we have formed

a team I would like to make special mention of the friendships and cussions which have ensued by e-mail and in our annual meetings inTrento and notably the intellectual and moral support I received fromJohn Cartwright and Martijn Hesselink I am immensely grateful to JohnCartwright for contributing a paper on ‘The rise and fall of mistake inthe English law of contract’ and also to Martin Schermaier for his con-tribution on ‘Mistake, misrepresentation and precontractual duties toinform: the civil law tradition’ The team was greatly helped by ourround-table discussions held at the UMR de droit comparé of the Uni-versity Paris I in May 1999 I am very grateful to the director of the UMR(then Mireille Delmas-Marty) and her co-directors (Hélène Ruiz-Fabri and

dis-xiii

Horatia Muir Watt) for having made this meeting possible The ing was extremely valuable for all who attended Several people helpedwith the organisation of our two-day meeting: my thanks once again toSophie Guy for her administrative assistance and Martine Kloepfer andMaxime Dequesne for their material and intellectual support and hardwork.

meet-Last, but certainly not least, I would like to thank the general editors

of the Common Core of European Private Law Project, Ugo Mattei andMauro Bussani, for their hospitality and support They are of course theoriginal inspiration for this particular project in the widest sense Myparticipation in the Common Core Project has enriched my understand-ing and teaching of comparative law and its methodology and encour-aged these to evolve continually For this I owe them an incommensu-rable debt for it is in action that our understanding grows

The reports were all originally written in the period 1998 2002, butwhere possible reporters have updated their reports to reflect the law as

at March 2004

Ruth Sefton-Green

Université Paris 1

March 2004

The case studies have been prepared:

for Austria byEva Grassl-Palten, Raimund Madl, Roswitha Kundi and Helmut Ofner, University of Vienna

for Belgium byIsabelle Corbisier, Bruxelles

for England byJohn Cartwright, Christ Church, Oxford

for France byStéphane Reifegerste (University of Maine), and Ruth

Sefton-Green (University of Paris 1 Panthéon-Sorbonne) with the

assistance ofFlorence Bellivier (University of Paris X), Philippe Jouary, Armand Kacenelenbogen and Albéric Luciani, Comparative Law Research

Group, University of Paris 1 (Panthéon-Sorbonne) With thanks to thestudents of the DEA de droit anglais et nord-américain des affaires1997 98, University of Paris 1

for Germany byMartin Josef Schermaier, University of Münster

for Greece byElisabeth Poulou, University of Athens

for Ireland byDamien Keaney, Barrister-at-Law, Dublin

for Italy byAlberto Musy, University of Piemonte Orientale,

Novara

for the Netherlands byMartijn Hesselink, University of

Amsterdam

for Norway byLasse Simonsen, University of Oslo

for Portugal byLuis Menezes Leitao, University of Lisbon

for Scotland byLaura Caldwell, Craig Coyle and Joe Thomson, University of

Mistake, misrepresentation and precontractual duties to inform:the civil law tradition by Martin Josef Schermaier, University of

Münster

General introduction, comparative observations and comparativeconclusions byRuth Sefton-Green, University of Paris 1

(Panthéon-Sorbonne)

Table of legislation and international instruments

(including CISG (United Nations Convention on Contracts for the national Sale of Goods (1980)), EC Directives, PECL (Principles of Euro-pean Contract Law) and UNIDROIT Principles of International Commer-cial Contracts)

Inter-Note: (t) after a page number indicates where the text of that part of the

legislation under discussion may be found

Insurance Contract Law 1959

5(1) 269

CISG (United Nations Convention on Contracts for the International Sale of Goods (1980))

Concluded Away from

Law 84 148 of 1 March 1984(prevention and friendlysettlement of businessdifficulties), 48 312

Law 96 597 of 2 July 1996(modernisation of financialactivities) 272 3

Germany

Civil Code 1900 (BGB)

Civil Code 1900 (cont.)

242 387;see also Civil Code 2002

Sale of Goods and Supply of

Civil Code (cont.)

Damages Act (Norway), 5 1 324

General Companies Act 1997(Norway), 17 1 279

Insurance Contract Act (Norway)3 2(2) 337

Sale of Goods Act (Sweden)

3.5 58

3.7 117

Car and Universal Finance Ltd v.Caldwell [1965] 1 QB 525

Crédit Lyonnais Bank Nederland

NV v Burch [1997] 1 All ER

144 135 n 14

Dick Bentley Productions Ltd v.

Harold Smith (Motors) Ltd

[1965] 1 WLR 623 169

EIC Services Ltd v Phipps [2003]

EWHC 1507, [2003] 1 WLR

2360 80 n 58,80 n 62

Etridge v Royal Bank of Scotland

(No 2) [2002] UKHL 44:see

Royal Bank of Scotland v

Etridge (No 2) [2001] UKHL

44, [2002] 2 AC 773

Fredrick E Rose (London) Ltd v

William H Pim Jnr & Co Ltd

(International) Ltd,The Great

Peace [2002] EWCA Civ 1407,

Lister v Romford Ice & ColdStorage Co Ltd [1957] AC

Magee v Pennine InsuranceCompany [1969] 2 QB

Oscar Chess Ltd v Williams [1957]

Civ 1, 28 January 1913, S., 1913 1

Civ 1, 24 November 1954, JCP1955.II 8565, note HB 230

Civ 1, 13 February 1967, Bull civ I,

Civ 1, 19 June 1985, Bull civ I,

Civ 3, 20 December 1995, Bull

civ II, No 628, Cont Conc

Com 8 November 1983, Bull civ IV,

No 298; Confirmed Civ 1, 26November 1991, Bull civ I,

No 331 313 14

Com 23 October 1984,D.1985.IR.74 291

Com 18 July 1989 (Mme Bich v.Coquerel), Rep Def 1990,

Paris 12 April 1996, JCP1996.II.22705 273 4

Paris 5th ch B, 2 May 1997, Bull.

(Kunstharz-BGHZ 63, 369 = NJW 1975, 970(Jawlensky) 101,141,176 7

Carroll and another v Carroll(unreported) 146 7

Gahan v Boland (unreportedjudgment of Supreme Court

of 20 January 1984) 208 9

Glorney v O’Brien (unreportedjudgment of the High Court(14 November 1988)) 235

Noonan v O’Connell(unreported) 147

O’Connor v Donnelly (1944) Ir Jur.Rep 1 180

282

Cass 26.1.1995, n 975 181

Cass 25.3.1995, n 3550 (Automegas.p.a v Pezzillo) 182 3

Cass 1960, n 2119 181 2,236

Cass 1960, n 2119 (ManifattureSpugne v

(Baris/Riezenkamp) 348

HR, 19 June 1959, NJ 1960, 59(Stevensweerd KantharosCase) 113 14,151

HR, 10 May 1963, NJ 1963, 288(Vouwapparaat) 237

322

HR, 9 October 1992, NJ 1994, Nos

287 and 289(Steendijkpolder) 213 14

HR, 2 April 1993, NJ 1995, 94

151

HR, 25 June 1993, NJ 1994, 291(Kilometerteller) 213 14

HR, 20 February 1998, RvdW 1998,

HR, 10 April 1998, NJ 1998(Offringa/Vinck en VanRosberg) 213 n 79

NJ 1986, 747 212

Mumford/Smith v Bank ofScotland (1994) SCLR 856;[1994] 1 AC 180 325

Austria

ecolex Ecolex Fachzeitschrift für Wirtschaftsrecht

EvBl Evidenzblatt der Rechtsmittelentscheidungen des

Obersten Gerichtshofs

Klang H Klang,Kommentar zum ABGB (Vienna, 1968)

Koziol/Welser H Koziol and R Welser,Grundriß des bürgerlichen

Rechts (10th edn, Vienna, 1995)

MietSlg Sammlung mietrechtlicher Entscheidungen

¨

Rummel P Rummel (ed.),Kommentar zum ABGB (2nd edn,

Vienna, vol I 1990, vol II 1992)

Gerichtshofes in Zivilsachen

Belgium

Act dr Actualité du droit

Ann dr Louvain Annales du droit de Louvain

xxxvii

Ann Fac Dr Lg Annales de la faculté de droit de Liège

Chron D.S Chronique Dalloz-Sirey

DC/CR Droit de la consommation/Consumentenrecht

De Page,Traité élémentaire H De Page,Traité élémentaire de droit civil

belge (3rd edn, Paris, vol I 1962, vol II

1964; vol IV 1938, vol V 1941, vol VIII/11944)

Limb Rechtsl Limburgs Rechtsleven

Meinertzhagen-Limpens, A Meinertzhagen-Limpens,

(Brussels, 1997)

Rechtspr arb Br Rechtspraak van de arbeidsgerechten van

Brussel

Res Jur Imm Res et Jura Immobilia

Rev not b Revue du notariat belge

responsabilités

T Agr R Tijdschrift voor agrarisch recht

T not Tijdschrift voor notarissen

Trib comm Tribunal de commerce

Trib trav Tribunal de travail

England

date)

All ER All England Law Reports (from 1936 to

Chitty on Contracts J Chitty,Chitty on Contracts (28th edn, London,

1998)

1952 to date)

P & CR Property and Compensation Reports (formerly

Planning and Compensation Reports)

SGA 1979 Sale of Goods Act 1979

SGSA 1980 Supply of Goods and Services Act 1980

Ass Plén. Assemblée plénière

Bull civ Bulletin civil de la Cour de cassation