Wednesday, April 13, 2011

Invited introduction to a New book on “Comparative Contract Law and Economics” by Mitja Kovač

‘May the Sun of Justice Enlighten Us,’ has been the motto of Utrecht University since its beginning in 1636, and indeed a passionate comparatist could not find a more suitable motto for his own research. The quest for a new, deeper understanding of the apparent similarities and differences between different legal systems, between their doctrines, rules and decisions presents the ultimate challenge for every comparatist. If one combines this sustained fascination with inspiration and encouragement from several outstanding scholars (to whom I owe everything what I know in the field of comparative contract law and economics) then an obvious result would be a search for a new multi-disciplinary international comparative law method which could form the basis of a universal legal science. Great comparatists like Lando, Markesinis, Hondius, Kötz and Zweigert have always instructed me that a true comparatist should strive for understanding, for the unraveling of seemingly widely accepted beliefs, follies and half-truths; he should, once he has isolated this quest from its national legal backgrounds, then bridge the apparent divisions; and he should fill in the gaps created by previous researches, where, indeed, the sun of justice should be the enlightening, inspiring motive. A traditional handbook on comparative contract law usually contains short summaries of different legal systems and tries to demonstrate significant differences between the compared legal systems, and especially between civil and common law. What surprised me, however, was the lack of any deeper, methodological framework for the evaluation of the differences or similarities. Being trained in law and economics, the benefits of an interdisciplinary approach, where an economically-inspired optimal model rule would serve as a uniform term of comparison, seemed clear. The more I analysed these differences from an economic perspective, the more I became convinced that many of them were matter-of-fact similarities. The question arose in my mind as to whether compared legal systems are, in the field of contract law, indeed as different as many comparatists tend to believe and if there is, apart from the simple borrowing of historical and cultural reasons, something more at stake explaining established legal changes, inconsistencies and similarities. Employing an economically-inspired optimal model rule as the uniform term of comparison, the presented essays assess some of the most controversial contractual issues, that is pre-contractual duties of disclosure, unforeseen contingencies and unilateral termination of contracts. In each of these essays, law and economics literature is surveyed and systematized into a coherent optimal model rule, which then serves as a uniform term of comparison. After each legal system is compared, it is followed by an examination of the current legal doctrine, and of the related law in action. The law and economics, and comparative contract law literature on all of these issues provide several striking insights. Following conclusions appear repeatedly in an unprecedented form: (1) All three assessments reveal that compared legal systems differ less than comparatists tend to believe. (2) Provided comparisons surprisingly reveal a growing trend from inefficient towards efficient legal practices. (3) All comparisons reveal wealth maximization as the main driving force behind the judicial decision making. (4) In all examinations economically inspired optimal model rule provides an objective framework for explaining inconsistencies or similarities, and an objective justification for certain statutory provisions or decisions, where doctrinal justification failed. (5) All assessments also offer path for statutory reform. In a quest for a truly international comparative contract law, these results appear rewarding and mutually beneficial. They may offer an additional explanation, justification and objective evaluation framework for traditional comparative contract law, as they may offer a pool of possible solutions and comparisons to legal and economic scholarship. In general, it is open to further investigation to confirm the observed pattern and to investigate even deeper into the real driving forces behind observed legal changes. This might lead to an improved understanding of all compared legal systems and may offer additional, welfare-maximizing propositions for statutory and judiciary reforms. The fruitfulness of further research along the same lines of analysis would provide ultimate recognition. This post is based on introductory part of my book: “Comparative Contract Law and Economics,” Edward Elgar Publishing, 2011. See:

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