Further to my previous blog posts about the Roman and the Germanic legal traditions, I will now categorise and earmark the common law. ‘The’ common law? Well, there are probably hundreds of differences amongst all those jurisdictions that would classify themselves as originating from the English common law (or British Commonwealth) tradition. Still, in cross-border commerce, it streamlines thinking to a certain extent if you could position a legal system somewhere in your expectation (as well as in your incapability to know everything about all legal systems worldwide) whilst staying in business.
In the common law systems, vast codifications of private law have never been developed or, at least, they never achieved an authority given to it on the European continent. For the U.S., for example, codifications have been made for corporate law, partnership law, various types of transactions in movable property (embodied in state codifications of the Uniform Commercial Code) and federal topics such as competition law, intellectual property law, arbitration, securities laws and regulations and bankruptcy law (‘Chapter 11′). Subject matters that are not covered by these codifications have often been developed in the common law (i.e. case law). Accordingly, legal concepts such as ‘mistake’ or ‘set-off’ are based on court precedents. The influence of legal doctrine is, at least in the U.S. state laws, very limited if relevant at all. To state that legal concepts such as ‘good faith and fair dealing’ can be excluded contractually is exaggerated, but to say that the typical common law attorney is well able to appreciate its scope often contradicts practical experience.
Other than in the Roman and Germanic traditions, the default remedy in common law systems is payment (in cash) of damages. Whether or not an injunction or specific performance may be awarded may depend on the adjudicated court, except that parties can always contractually provide for remedies.
Although this is not the place to elaborate on differences between legal systems, it may be helpful to cite a few relevant provisions of the U.S. Restatement (Second) of Contracts[1], an academic reflection of the mainstream U.S. principles of contract law.
§ 201. Whose meaning prevails
(1) Where the parties have attached the same meaning to a promise or agreement or a term thereof, it is interpreted in accordance with that meaning.
(2) Where the parties have attached different meanings to a promise or agreement or a term thereof, it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made:
(a) that party did not know of any different meaning attached by the other, and the other knew the meaning attached by the first party; or
(b) that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party.(3) Except as stated in this Section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent.
§ 202. Rules in aid of interpretation
(1) Words and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight.
(2) A writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together.
(3) Unless a different intention is manifested:
(a) where language has a generally prevailing meaning, it is interpreted in accordance with that meaning;
(b) technical terms and words of art are given their technical meaning when used in a transaction within their technical field.(4) Where an agreement involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection is given great weight in the interpretation of the agreement.
(5) Wherever reasonable, the manifestations of intention of the parties to a promise or agreement are interpreted as consistent with each other and with any relevant course of performance, course of dealing, or usage of trade.
Of course, U.S. state laws may deviate on details, but the key message here is that the differences with European contract laws are not as significant as it may seem.
[1] American Law Institute, Restatement (Second) of Contracts, 17 May 1978.
