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
Date Written: June 21, 2017
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: Suggested Citation