Eight Principles of European Contract Law
On a summer evening in 1974 1 had dinner with a prominent official in the European Commission, Dr Winfried Hauschild. Dr Hauschild was then assisting the working group that drafted what later became the Rome Convention on the Law Applicable to Contractual Obligations. We discussed whether the planned 'choice of law' rules would establish the uniformity necessary for an integrated market. Would they give the enterprises trading in Europe the necessary feeling of security?
Anyone doing business abroad knows that some of his contracts with foreign partners will be governed by a foreign law. The unknown laws of the foreign country are one of his risks; they are often difficult for him and his local lawyer to understand; they make him feel insecure, and may keep him away from the European market. Thus, the existing variety of contract laws in Europe may be regarded as a non-tariff barrier to trade.
It is the aim of the European Community to do away with restrictions on trade within the Community, and therefore the differences of law which restrict trade should be abolished. Uniform 'choice of law' rules such as those of the planned Convention would, of course, give the businessman some security. He would have means to know when his contracts would be governed by his own law and when they would be subject to foreign laws. However, the latter contracts would still cause him problems; and he would have no assurance that in a foreign court his law would be applied, even if the rules of the Convention said that it should. In the courts of most countries his law would have to be pleaded and proved, and as most lawyers and judges do not like foreign laws and therefore try to avoid them, he would often find that his own law would not be applied.
Dr Hauschid and I agreed that the planned 'choice of law' rules of the Convention would be a poor tool of legal integration. They would not establish the legal uniformity necessary for an integrated market. Dr Hauschild then said: 'We need a European Code of Obligations. Somebody should start drafting such a Code'.