Judicial Control of Standard Terms and European Private Law – A Law & Economics Perspective on the Draft Common Frame of Reference for a European Private Law

Abstract:     
With the Draft Common Frame of Reference of European Private Law updated in 2009, the European Union is striving for a uniform legal framework for judicial control of standard terms. The draft offers a chance to point out perspectives for European private law from the view of law and economics without being burdened by the constraints of current national laws or European directives. The basic issue to be dealt with is the question for the regulatory purpose of judicial clause control, which is not to be found in superior market power on the part of the user of standard terms. Rather, the informational asymmetries which cannot or can only partially be overcome by market mechanisms, are the justification for judicial intervention in the private allocation of risks via standard terms. On this basis, perspectives for the future development of the European and national understanding of the law of standard terms will be presented: we will suggest a form of clause control limited to the positive contract value-information cost-relationship together with a control cap for business contracts, an equal standard for controlling consumer and business contracts, and, a differentiating approach towards preserving a clause by adjusting the excessive risk allocation to a permissible maximum (salvatory reduction).

Number of Pages in PDF File: 28

Keywords: European Private Law, Standard Terms, Draft Common Frame, Harmonization

JEL Classification: K00, K12

working papers series