Making Commercial Law: Essays in Honour of Roy Goode

By Royston Miles Goode; Ross Cranston | Go to book overview

6
Linked Contracts

JAN HELLNER

The expression 'linked contracts' is probably unfamiliar to most lawyers. As far as I know it is not common in any legal system, except possibly for certain branches.1 Nor does the expression refer to any special legal rule or concept. The object of this study is to draw attention to a number of factual situations that have distinct features in common but are treated by different legal rules. The situations are often well-known, although their similarities are rarely analyzed. In English law, such situations create problems under traditional principles of privity of contract and of consideration, which become apparent when 'contracts for the benefit of third parties' are contemplated. There is a Green Paper of the Law Commission that deals with this subject and raises some of the problems that are discussed here, although they are there seen from another angle.2

What is meant can be illustrated by some examples, which could be multiplied. If a sales contract requires the buyer to open a documentary credit in a bank in favour of the seller, at least two contracts are linked in the fulfilment of the buyer's obligation. One is the contract between the seller and the buyer, and the other a contract between the buyer and a bank for the opening of the credit in favour of the seller. When the bank opens the credit the buyer discharges his duty to the seller, and when the seller presents the documents to the bank and they are duly honoured, the bank discharges its duties to the seller and the buyer. If a seller has sold goods f.o.b. a certain port, the buyer engages a ship to receive the goods at that port, and the carrier undertakes to receive the goods at the port from the

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1
The expression 'linked contracts' can be seen as a translation of the German expression 'verflechtete Verträge'. See H.-L. Weyers (ed.), Die Verflechtung von Verträgen -- Planung und Riskoverteilung bei Grossprojekten ( Baden-Baden: Nomos, 1991). This publication contains a number of reports for a symposium. The subject was construction contracts in which a main contractor cooperates with a number of subcontractors. The expression 'linked contracts' is used in the American contribution by Professor Justin Sweet (see p. 9et seq.). In the preface to the book the editor points to the generality of the problems raised. For German law see further W. Fikentscher, "Der Werkverschaffungsvertrag", ( 1990) 190 Archiv. für die civilistische Praxis, p. 34et seq.I have used the concept linked contracts (Swedish: 'sammanflätade avtal') in Speciell avtalsrätt. II. Kontraktsratt. 2. Allmänna ämnen ( Stockholm: Juristförlaget, 1993), Ch. 22.
2
See The Law Commission, Consultation Paper No. 121. Privity of Contract: Contracts for the Benefit of Third Parties ( London: HMSO, 1991). This paper will be cited here as "Law Commission Paper".

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