Art. 74: The 'Grossly Unreasonable' Unilateral Determination of Price or Other Contract Terms and Its Substitution Under the Proposed Art 74 CESL

Contents and Effects of Contracts-Lessons to Learn From The Common European Sales Law, Springer, 2016

Posted: 23 Jun 2017 Last revised: 29 Jun 2017

See all articles by Tim W. Dornis

Tim W. Dornis

Leuphana University of Lueneburg; New York University School of Law

Axel Halfmeier

Leuphana Universität Lüneburg

Date Written: June 21, 2017

Abstract

The present chapter analyses the interpretation of what is a “grossly unreasonable” unilateral determination of price or other contract terms under Art 74 of the draft CESL. This analysis is carried out in a comparative perspective, taking into account German and Dutch law, the PECL, and the DCFR. The chapter reaches two conclusions. Firstly, the term “grossly unreasonable” should be interpreted as “manifestly unreasonable” in the procedural sense. Hence, the lack of reason in the unilateral determination must be plain to see. The term “grossly” should not be read as a substantive or quantitative criterion. Secondly, and in view of possible future attempts to unify European sales law, the replacement mechanism in case of an invalid unilateral determination should be changed back to the wording “a reasonable price or term” as it is found in Art 6:105 PECL and Art II-9:105 DCFR, since the wording that was proposed for Art 74 para 1 CESL that refers to the price “normally charged” and “at the time of conclusion of the contract” is not capable of giving sufficient effect to the interests and economic considerations of the parties, particularly in long-term relationships.

Keywords: CESL, DCFR, PECL, unilateral determination, contract law, comparative law, law & economics

JEL Classification: K12, K15, K33

Suggested Citation

Dornis, Tim W. and Halfmeier, Axel, Art. 74: The 'Grossly Unreasonable' Unilateral Determination of Price or Other Contract Terms and Its Substitution Under the Proposed Art 74 CESL (June 21, 2017). Contents and Effects of Contracts-Lessons to Learn From The Common European Sales Law, Springer, 2016, Available at SSRN: https://ssrn.com/abstract=2990668

Tim W. Dornis (Contact Author)

Leuphana University of Lueneburg ( email )

Universitätsallee 1
Lüneburg, 21335
Germany

HOME PAGE: http://https://www.leuphana.de/en/institutes/lls/persons/tim-w-dornis.html

New York University School of Law ( email )

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

Axel Halfmeier

Leuphana Universität Lüneburg ( email )

Scharnhorststraße 1
Lüneburg, 21335
Germany

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