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

28 Pages Posted: 11 Dec 2009

See all articles by Hans-Bernd Schäfer

Hans-Bernd Schäfer

Bucerius Law School; University of Hamburg

Patrick C. Leyens

University of Bremen; Erasmus University Rotterdam (EUR) - Rotterdam Institute of Law and Economics; European Corporate Governance Institute (ECGI)

Date Written: December 8, 2009

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).

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

JEL Classification: K00, K12

Suggested Citation

Schaefer, Hans-Bernd and Leyens, Patrick C., 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 (December 8, 2009). Available at SSRN: https://ssrn.com/abstract=1520457 or http://dx.doi.org/10.2139/ssrn.1520457

Hans-Bernd Schaefer

Bucerius Law School ( email )

Jungiusstr. 6
Hamburg, 20355
Germany

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

Patrick C. Leyens (Contact Author)

University of Bremen ( email )

Universitaetsallee GW I
Bremen, D-28334
Germany

Erasmus University Rotterdam (EUR) - Rotterdam Institute of Law and Economics ( email )

Burgemeester Oudlaan 50
PO box 1738
Rotterdam, 3000 DR
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
Brussels
Belgium

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