Source: https://www.filodiritto.com/errore-comune-e-annullamento-del-contratto-nel-diritto-contrattuale-internazionale-ordinamento-inglese-e-francese-confronto
Timestamp: 2020-07-11 22:52:46
Document Index: 768115767

Matched Legal Cases: ['art. 1110', 'EWCA ', 'UKHL ', 'EWCA ', 'art. 1101', 'art. 1108', 'art. 1110']

Errore comune e annullamento del contratto nel diritto contrattuale internazionale: ordinamento inglese e francese a confronto | Filodiritto
Errore comune e annullamento del contratto nel diritto contrattuale internazionale: ordinamento inglese e francese a confronto
An Analysis of Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] from an Anglo-French Comparative Perspective - Un’analisi del caso Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] in una prospettiva di confronto tra diritto Inglese e diritto Francese
di Elena Butti
articoli professionisti, diritto dei contratti e delle obbligazioni, Diritto dei Paesi dell’UE, Diritto del commercio internazionale, Diritto della navigazione e dei trasporti, Inglese giuridico
Il presente elaborato ha lo scopo di analizzare il caso della Corte d’Appello britannica Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] da una prospettiva di confronto tra il diritto contrattuale dell’ordinamento inglese e di quello francese. Questo caso ha contribuito sensibilmente allo sviluppo del diritto inglese. In primo luogo, ha riconfermato un alto standard per il concetto di errore. In secondo luogo, ha limitato in maniera significativa la possibilità di ottenere nel sistema di equity un annullamento di un contratto per un errore comune.
A partire da un’analisi di Great Peace, questo elaborato intende comparare i diversi approcci inglese e francese al concetto di errore come fattore che vizia la validità di un contratto. Verrà anche analizzato il particolare ruolo assunto nel diritto inglese dal sistema di equity come complementare alla common law, sistema di cui non si trova invece traccia nel diritto francese. In conclusione, si avanzerà l’ipotesi che, se il caso fosse stato sottoposto alla giurisdizione francese, la sentenza di Great Peace sarebbe potuta essere diversa.
The present study focuses on an analysis of the English case Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] from an Anglo-French comparative perspective on contract law. This case significantly contributed to the development of English law. Firstly, it reconfirmed the traditional “strict” standard of mistake, delimiting the doctrine of mistake to “very narrow limits”[1]. Secondly, it greatly restricted the possibility of obtaining rescission in equity due to common mistake.
Taking this case as a starting point, I will compare the different English and French approaches to the notion of error as a vitiating factor. I will also discuss the peculiar role that equity plays in English jurisdiction as supplementary to Common law, outlining how no trace of this distinction can be found in French jurisdiction. An interesting feature of this analysis is that it may lead to the conclusion that, under French jurisdiction, Great Peace could possibly have had a reversed outcome.
Tsavliris Ltd, a company in the business of salvaging ships, agreed to salvage a stricken vessel in the South Indian Ocean. He thus decided to hire for five days the merchant vessel Great Peace, which was thought to be 35 miles apart (12 hours away) from the stricken vessel. It was unknown by both parties that the two vessels were actually 410 miles apart (39 hours away).
Tsavliris Ltd discovered the true positions about two hours after having entered the contract with Great Peace Ltd. Consequently, after having looked for and found another vessel which could provide the same services and was closer to the stricken vessel, he cancelled the agreement with Great Peace Ltd. Great Peace Ltd sued Tsavliris Ltd for breach of contract.[2]
The court of first instance (Queen’s Bench Division Commercial Court) found for Great Peace Ltd and Tsavliris Ltd appealed on the grounds that the contract was to be considered void under Common law for common mistake (the parties shared the wrong assumption that the vessels were “in close proximity”). Alternatively, he claimed a right to rescission in equity, was the Court to consider the mistake not fundamental enough to render the contract void in Common law.
The legal questions in front of the Court of Appeal (Civil Division) were:
(1) Is the mistake of such a fundamental nature as to render the contract void?
Note that the “high standard” of mistake (which needs to be fundamental to render a contract void) was laid down in Bell v Lever Bros [1932].
(2) If the answer to (1) is negative, is there an alternative way of rescission available in equity?
Note that this was suggested by the decision of the Court of Appeal in Solle v Butcher [1950].
Question (2) was divided by Lord Phillips in three sub-questions:
(2.1) Did such equitable doctrine exist before Bell?
(2.2) Could such doctrine stand with Bell?
(2.3) Is the Court of Appeal nonetheless bound to apply such doctrine, given the decision in Solle?[3]
(1) According to Lord Phillips, who referred back to the standard in Bell, the mistake was to be considered fundamental only if it constituted “an underlying assumption without which the parties would not have made the contract.”[4] In other words, only if the service provided under the mistaken assumption was “something essentially different from that to which the parties had agreed.”[5] Lord Phillips considered this not to be the case, as Tsavliris Ltd did not try to cancel the agreement until he knew that another vessel was available to assist. This showed that the services Great Peace could provide, even though in a different position than initially thought, were not essentially different from the ones agreed upon[6]. Thus, the contract was valid under Common law.
(2) After giving a negative answer to (2.1), based on an analysis of preceding case law, Lord Phillips agreed with the first-instance judgment that the test set in Bell and the one available in equity were not distinguishable.[7] He thus gave an affirmative answer to (2.2). The problematic issue of whether Solle could be overruled was solved by considering Solle an “erroneous decision”[8] because it was irreconcilable with Bell. This negative answer to (2.3) meant that, being Solle overruled, no possibility of obtaining rescission for common mistake was made available in equity (legal question (2) was thus answered negatively).
The contract was declared neither void in Common law nor voidable in equity, and the Court of Appeal hence found for Great Peace Ltd.
An Anglo-French comparative perspective on Great Peace
If Great Peace was judged by a French Court, the judgment would arguably differ both in form and in substance.
The judgment given by a French court would probably be significantly shorter and laid down in the form of a practical syllogism: a major (general premise), consisting in the general rule (the article of the code at issue); a minor (marked by the expression “whereas”), discussing whether the particular case falls within the general rule; a conclusion (marked by the expression “on these grounds”), stating the outcome of the judgment.
The presence of this structure outlines how the French way of reasoning is essentially different from the English one – it is based on “deductive reasoning from general principles, [while] the principles in English law are reached by induction from the decided cases.”[9] Hence, past cases retain far less authority under French jurisdiction. The long discussion regarding the legitimacy for the CA of overruling Solle would be given less attention in a French judgment, because French courts are not bound by precedents (although past decisions retain persuasive authority).
Furthermore, the courts would justify the overruling of Solle differently: while the English judge justified it by referring back to other cases, a French judge would focus on a different interpretation of the written code.
The discretion which English and French courts enjoy is, in fact, concretized in two different ways: distinguishing on the one hand, interpreting on the other. The English one is an “’open system’, the evolution of which proceeds through distinctions” which the judges are “free” to draw. In the French one, instead, the rules are “numerous enough and framed in such general terms” that the courts can nearly always enjoy some degree of “[discretionary] interpretation.”[10]
With regard to the substance of the judgment, a French court would deal with the notions of contract, error and equity differently from an English court.
Two different notions of contract
The two jurisdictions identify the essential element of a contract differently. As Nicholas notes, in French law a contract is an “agreement [“convention”[11]] between two parties”. The stress in French jurisdiction is on the state of mind of the parties. The first “condition” which is “essentiel pour la validité d’une convention”[12] is that there is a coincidence of wills (“le consentement de la parte qui s’oblige”13).
In English jurisdiction, contrarily, a contract is generally considered a bargain[13], that is, “a promise in return for good consideration”[14], its validity being assessed according to the standard of the reasonable bystander.
The French approach is hence more dogmatic and subjective, and it gives greater weight to moral arguments, while the English one is more pragmatic and objective, and it gives greater weight to economic arguments[15]. Whereas the French convention is an “exchange of consents”, the English agreement is simply an “exchange”.
Mistake v erreur
Mistake, in English law, is one of the vitiating factors which can render a contract void. The kind of mistake in Great Peace was a common mistake, one in which both parties “share the same mistake about the circumstances.”[16] In Bell v Lever Bros Ltd [1932] a “strict” test for common mistake was established: Lord Atkin held that, for a mistake to be operative, it must be one of fundamental nature – one which leads to a performance essentially different (not just different) from the one agreed upon.
In French jurisdiction, conversely, the primary authority to which judges have to refer back to is not case law, but the Code Civil. According to art. 1110, “l’erreur n’est une cause de nullité de la convention quelorsqu’elle tombe sur la substance même de la chose.”[17]
The French notion of erreur is wider than the English notion of mistake[18]. Although, in order to be operative, the erreur needs to be ‘essential’, the standard for the French ‘essential’ is much less strict than the one for the English ‘fundamental’. Even if a term is objectively of minor importance (qualified by the Code as “accessory”), “it is nevertheless essential if, at the time of entering into a contract, one of the parties considered it such.”[19] The test is clearly again a subjective one – and thus a less restrictive one. Under French jurisdiction, it makes no difference whether the mistake was objectively fundamental or not. For it to render a contract void, it is enough if it is subjectively essential in the eyes of one of the parties.
The rationale behind this is that “the binding force of a contract could only be justified by the fact that it rested on the will of the parties, and a will induced by mistake could not be regarded as a true will.”[20]
It follows that, in Great Peace, the answer to question (1) regarding the fundamental nature of mistake would be irrelevant in a French judgment. Rather, a French judge would discuss whether there was “consentment de le partie” 14, that is, whether the parties subjectively consented to the very terms of the contract. In this case, this consonance of wills was arguably not present, as the parties were mistaken on the facts.
Conversely, Great Peace Ltd could possibly argue that the mistaken term was not truly subjectively essential. The fact that Tsavliris Ltd, before cancelling the contract with Great Peace Ltd, made sure that there was an alternative vessel which could substitute Great Peace could suggest that Tsavliris Ltd did not consider the mistaken term such a subjectively essential one – if he had considered it to be such, he would have cancelled the contract straight away, without looking for another vessel first. However, literature and past cases[21] suggest that French courts tend to consider a term subjectively essential much more often than English courts consider a term objectively fundamental. Therefore, under French jurisdiction, the contract in Great Peace would probably be considered void, and judgment would be given for Tsavliris Ltd, as a true consentment was prevented from taking place by the presence of a mistake, which would most likely be considered to concern a subjectively essential term.[22]
This probable difference in outcome is coherent with the different ways in which the two jurisdictions approach the notion of contract – the French one giving a higher importance to subjective mental state, the English one to objective performance. In judging this case, a French judge would reason: although performance is not substantially different, the minds do not agree, thus the contract is void. On the other hand, the English judge reasoned: although the minds do not agree, performance is not substantially different, thus the contract is valid.
Traditionally, French courts have been more inclined than English courts to declare contracts void for mistake.[23] One of the motives could be the fact that, unlike English courts, French courts retain the compensatory power to award damages to the non-mistaken party so that he does not suffer any loss for the other party’s mistake.[24]
Court of Equity v codified equitable principles
In Great Peace, the possibility of alternative means available in equity for obtaining rescission of contract due to the presence of a mistake played a significant role in the discussion (although eventually legal question (2) was answered negatively). This issue, however, would play little or no role in a French court.
In England, equity developed as a supplementary system with the purpose of softening the rigour of the Common law writ system. “The rules of equity did not openly contradict those of the Common law and did not seek to replace them. Instead, equity added marginalia, glosses, and supplements.”[25] Equity is traditionally considered to take fairer and more discretionary decisions than the “standard” courts of Common Law. When, in English law, a limit appears to be too strict, an alternative remedy is often sought for in equity – this is what happened in Great Peace. With regard to mistake in particular, scholars agree that, generally speaking, the Courts of Equity have been readier than the Courts of Law to accept lower standards for mistakes.[26]
Such a distinction between “standard” law and equity, which is a “feature”[27] of English law, makes little sense in French Civil law. This is because equitable principles, in Civil law, are already incorporated in the Codes according to which cases are decided. In the development of English law, a need was felt of a higher degree of discretion available for the judiciary, too constrained in the writ system. In Civil law, contrarily, this discretion is already broad enough, as the judiciary can decide “without regard to precedent.”[28]
The aim of this analysis has been to examine some of the key differences between English and French jurisdiction with regard to the notions of error and equitable principles. I have compared the arguments used in the judgment of the English case Great Peace, which deals with these issues, with the ones a French court could use in judging the same case.
From a formal point of view, the line of reasoning adopted by the French court would be deductive and theoretical rather than inductive and practical; also, the authority on which to rely would be the Code Civil rather than precedent cases.
From a substantial point of view, the approach to the notion of contract in French law would be subjective rather than objective. As a consequence, a mistake would not need to be objectively fundamental to be operative, but only subjectively essential, and the contract in Great Peace would probably be declared void. Finally, the debate on equity, of such importance in the English judgment, would most likely be absent in a French judgment.
This analysis emphasizes how the “different approaches and different principles”[29] on which Common law and Civil law jurisdictions are based can lead to significantly diverse results.
Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ No. 1407
Lever Bros Ltd v Bell [1931] UKHL 2
David, R., English Law and French Law, Stevens & Sons 1980
De Gregorio, M., ‘Impossible Performance or Excused Performance – Common Mistake and Frustration after Great Peace Shipping’, King’s College Law Journal 16 (2005), 69-98
De Moor, A., ‘Contract and Agreement in English and French Law’, Oxford Journal of Legal Studies 6 (1986), 275-287
Dickson, B., Introduction to French Law, Pitman Publishing 1994
French Civil Code, English version, retrieved online at lexinter.net
Fuller, H. F., ‘Mistake and Error in the Law of Contracts’, Emory Law Journal 33 (1984), 41-93
Hare, C., ‘Inequitable Mistake’, Cambridge Law Journal 62(1) (2003), 29-32
Harris, D., &Tallon, D., Contract Law Today: Anglo-French Comparisons, Clarendon-Oxford Press, 1989
Mckendrick, E., Contract Law (7th ed.), Palgrave Macmillan 2007
Newman, R. A., ‘Equity in Comparative Law’, The International and Comparative Law Quarterly 17 (1968), 807-848
Nicholas, B., The French Law of Contract (2nd ed.), Claredon-Oxford Press, 1992
Slapper, G., & Kelly, D. English Law (3rd ed.), Routledge Cavendish 2006
Zweigert, K., and Kötz, H., An Introduction to Comparative Law (2nd ed.), Clarendon-Oxford Press, 1987
[1]Mckendrick, Contract Law, Palgrave Macmillan 2007, p. 302
[2]Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ No. 1407 (henceforward: Great Peace), par. 6
[3]Great Peace, par. 98
[4]Great Peace, par. 45
[5]Great Peace, par. 88
[6]Great Peace, par. 163
[7]Great Peace, par. 118
See also Hare, ‘Inequitable Mistake’, Cambridge Law Journal 62(1)(2003), p. 31
[8]Great Peace, par. 158
[9] Harris &Tallon, Contract Law Today: Anglo-French Comparisons, Clarendon-Oxford Press, 1989 (henceforward: Harris &Tallon), p. 389
[10] David, English Law and French Law, Stevens & Sons 1980 (henceforward: David), p. 19
[11]Code Civil, art. 1101
[12]Code Civil, art. 1108
[13]Dickson, Introduction to French Law, Pitman Publishing 1994 (henceforward: Dickson), p. 284
[14] Nicholas, The French Law of Contract, in: De Moor, ‘Contract and Agreement in English and French Law’, Oxford Journal of Legal Studies 6 (1986) (henceforward: De Moor), p. 275
[15] Harris &Tallon, p. 386
[16]Slapper, & Kelly, English Law, Routledge Cavendish 2006, p. 221
[17]Code Civil, art. 1110
[18]Dickson, p. 287
[19]De Moor, p. 280
[20]David, p. 102
[21]Dickson, De Moor
[22]David follows a similar line of reasoning when he suggests that, had Bell been judged by a French court, the contract would have been considered void for common mistake, as decided by the CA, rather than valid, as decided by the HL (David, p. 103)
[23]De Moor, p. 279
[24]Dickson, p. 287
[25]Zweigert, &Kötz, An Introduction to Comparative Law, Clarendon-Oxford Press, 1987 (henceforward: Zweigert&Kötz), p. 197
[26]Zweigert&Kötz, p. 449
[27] Harris &Tallon, p. 381
[28] Newman, ‘Equity in Comparative Law’, The International and Comparative Law Quarterly 17 (1968), p. 831
[29] Harris &Tallon, p. 379