The Role of the State in Contract Law: The Common-Civil Law Divide

49 Pages Posted: 8 Oct 2016 Last revised: 7 Mar 2018

See all articles by Mariana Pargendler

Mariana Pargendler

Fundação Getulio Vargas Law School at São Paulo; New York University School of Law; European Corporate Governance Institute

Date Written: March 1, 2018

Abstract

This Article reveals a clear, but thus far overlooked, pattern in the comparative law of contracts. The civil law places more limits on the scope of contractual obligations, whereas the common law more forcefully constrains the remedies available for breach of contract. It then offers two interpretations for these differences. On the one hand, the civil and common law systems reflect a different role of the state in contract law. In the civil law, the state plays a greater part in all respects: it goes further in providing and policing the substantive terms of the agreement but, once the contract passes muster, it is willing to sanction breaches with more severe consequences. Common law systems embrace the opposite, more restrained, approach: the state is less willing both to meddle with contract terms and to supply strong remedies for non-performance. On the other hand, the treatment of contract rights and remedies in each legal tradition can be viewed as complementary. Policing the terms of the contract and limiting the consequences of breach serve as alternative, though not equivalent, strategies to mitigate the effects of harsh bargains.

Keywords: good faith, mandatory terms, specific performance, penalty clause, fresh start

JEL Classification: K12, K20, K35, P51

Suggested Citation

Pargendler, Mariana, The Role of the State in Contract Law: The Common-Civil Law Divide (March 1, 2018). Yale Journal of International Law, Vol. 43, No. 1, pp. 143-189, 2018; NYU Law and Economics Research Paper No. 17-01. Available at SSRN: https://ssrn.com/abstract=2848886 or http://dx.doi.org/10.2139/ssrn.2848886

Mariana Pargendler (Contact Author)

Fundação Getulio Vargas Law School at São Paulo ( email )

R. Rocha, 233, Bela Vista
São Paulo, 01330-000
Brazil

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

European Corporate Governance Institute ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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