The Anti-Theoretical Nature of civil Law Contract Scholarship and the need for an Economic Theory Aristides n. hatzis* The absence of theories developed for Roman law and the absence of grand heories in Civil contract law scholarship were outcomes of a particularistic ap. proach to the problems created by the deficiencies of markets and driven by the need for the construction of a legal framework conducive to economic progress The generation of efficient results by Civil law through the selection of efficient rules and standards was completed over the course of several centuries and stabi- lized after the great codifications. Common law had for centuries attempted to develop a similar construct that would be stable enough to facilitate economic relations. Borrowing ideas and solutions from Civil law was the easy way out Despite the numerous legal transplants, the Common law fought hard to preserve a false independence and a parallel dilapidated coherence by building unified conclusive, but dogmatic theories. The mimicking of Civil law has led to some efficient solutions, but with many islands of" inefficiency"trapped in the sea of rigid theories(bargain theory, privity, etc. ) On the other hand, Civil law scholar hip and practice has found it increasingly difficult to respond to the fast- changing economic circumstances. For the first time in history, economic rela tions have become so complicated that it is impossible for a judge endowed only with common sense to solve problems created by the dysfunctions of markets Economic expertise is not only helpful, but also required. A responsive eco- nomic theory of contract law is almost imperative if Civil law is to continue playing the role that it has successfully performed for centuries: providing the legal framework that helps the economy function Lecturer of Philosophy of Law Theory of Institutions, University of Athens (LL. B. 1989, LL. M. 1993, Aristotle University of Thessaloniki, Faculty of Law, LL. M. 1994, J.S.D. 1999, University of Chicago Law School). An earlier draft of this paper was presented at the 14 Annual Conference of the European Asso- ciation of Law Economics held at Barcelona, September 4-6, 1997. I wish to thank the participants for their helpful suggestions, as well as Prof. Katharina Pistor and Dr. Aspasia Tsaoussis. Thanks are also due to the many members of the legal studies Network(SSRN-LSN) who sent me their comments and re- lated work. Email: ahatzis @phs uoa. gr. Copyright o 2003 by Aristides N. Hat-
The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory Aristides N. Hatzis∗ Abstract The absence of theories developed for Roman law and the absence of grand theories in Civil contract law scholarship were outcomes of a particularistic approach to the problems created by the deficiencies of markets and driven by the need for the construction of a legal framework conducive to economic progress. The generation of efficient results by Civil law through the selection of efficient rules and standards was completed over the course of several centuries and stabilized after the great codifications. Common law had for centuries attempted to develop a similar construct that would be stable enough to facilitate economic relations. Borrowing ideas and solutions from Civil law was the easy way out. Despite the numerous legal transplants, the Common law fought hard to preserve a false independence and a parallel dilapidated coherence by building unified, conclusive, but dogmatic theories. The mimicking of Civil law has led to some efficient solutions, but with many islands of “inefficiency” trapped in the sea of rigid theories (bargain theory, privity, etc.). On the other hand, Civil law scholarship and practice has found it increasingly difficult to respond to the fastchanging economic circumstances. For the first time in history, economic relations have become so complicated that it is impossible for a judge endowed only with common sense to solve problems created by the dysfunctions of markets. Economic expertise is not only helpful, but also required. A responsive economic theory of contract law is almost imperative if Civil law is to continue playing the role that it has successfully performed for centuries: providing the legal framework that helps the economy function. ∗ Lecturer of Philosophy of Law & Theory of Institutions, University of Athens (LL.B. 1989, LL.M. 1993, Aristotle University of Thessaloniki, Faculty of Law; LL.M. 1994, J.S.D. 1999, University of Chicago Law School). An earlier draft of this paper was presented at the 14th Annual Conference of the European Association of Law & Economics held at Barcelona, September 4-6, 1997. I wish to thank the participants for their helpful suggestions, as well as Prof. Katharina Pistor and Dr. Aspasia Tsaoussis. Thanks are also due to the many members of the Legal Studies Network (SSRN-LSN) who sent me their comments and related work. Email: ahatzis@phs.uoa.gr. Copyright © 2003 by Aristides N. Hatzis
Hatis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory Table of Contents 1. The Absence of Theory: Civil vs Common Contract Law 1. 1. Too Much Theory or Too Little Certainty? 12.The“ fficiency” of roman Law and of Contempo rary civil Contract Law 2. Economic Analysis for a" Contract Law 2. 1. From the Absence of Theory to the Neoclassical Consensus 2. 2. The Application of Economic Analysis to Greek Contract Law: Problems and Considerations 23. Contract Law and Distributive Justice 3. Conclusion 4. Bibliography
Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory 2 Table of Contents 1. The Absence of Theory: Civil vs. Common Contract Law 1.1. Too Much Theory or Too Little Certainty? 1.2. The “Efficiency” of Roman Law and of Contemporary Civil Contract Law 2. Economic Analysis for a “Civil” Contract Law 2.1. From the Absence of Theory to the Neoclassical Consensus 2.2. The Application of Economic Analysis to Greek Contract Law: Problems and Considerations 2.3. Contract Law and Distributive Justice 3. Conclusion 4. Bibliography
Commentaries on Law& Economics, Vol. 2(2002) What the romans did not have were treatises on the law of contracts in general. We have them to superfluity. But then our day is much given to Total Theories Which Ex plain Everything(Except What Doesn't Fit Tony Weir(1992: 1646) I. The absence of Theory: Civil vs Common Contract Law L.l. Too Much Theory or Too Little Certainty? L. A monograph was published in 1997 under the title The Richness of Contract Law by the well-known American contract law scholar and Professor at cornell law school robert hillman The subtitle of the book, " An Analysis and Critique of Contempo- rary Theories of Contract Law"refers to a number of theories de- veloped in the Common law world (and especially in the United States)on contract law, a field of law ironically declared dead three decades ago(Gilmore 1974). However, in this paper, we will be discussing neither the thesis of the said book nor the problem of the life or death of contract We will rather be dealing with a question that is qui turbing for European scholars who comparatively approach can Common law, and that arises often as they browse through the voluminous literature on the theory of Common contract law of the past one hundred years(see mainly Hillman 1997, but also Barnett 1984 and 1989, Rakoff 1996 and esp. Cheffins 1999). This ques- tion is the following: Why isn't there a similarly rich literature or a 1"TO]n the whole, contract law suitably promotes the formation and enforce ment of private arrangements and ensures some degree of fairness in the ex- change process. Moreover, contract law largely succeeds because it is the prod uct of the legal systems reasonable and practical compromises over conflicting alues and interests. (Hillman 1997: 2 2 But see Farnsworth(1992) and also the symposium on The Death of Contract n90Nn.U.L.Rev.1(1995)
Commentaries on Law & Economics, Vol. 2 ( 2002) 3 What the Romans did not have were treatises on the law of contracts in general. We have them to superfluity. But then our day is much given to Total Theories Which Explain Everything (Except What Doesn't Fit). Tony Weir (1992: 1646) 1. The Absence of Theory: Civil vs. Common Contract Law 1.1. Too Much Theory or Too Little Certainty? I. A monograph was published in 1997 under the title The Richness of Contract Law by the well-known American contract law scholar and Professor at Cornell Law School Robert Hillman. The subtitle of the book, “An Analysis and Critique of Contemporary Theories of Contract Law” refers to a number of theories developed in the Common law world (and especially in the United States) on contract law, a field of law ironically declared dead three decades ago (Gilmore 1974). However, in this paper, we will be discussing neither the thesis of the said book1 nor the problem of the life or death of contract.2 We will rather be dealing with a question that is quite disturbing for European scholars who comparatively approach American Common law, and that arises often as they browse through the voluminous literature on the theory of Common contract law of the past one hundred years (see mainly Hillman 1997, but also Barnett 1984 and 1989, Rakoff 1996 and esp. Cheffins 1999). This question is the following: Why isn't there a similarly rich literature or a 1 “[O]n the whole, contract law suitably promotes the formation and enforcement of private arrangements and ensures some degree of fairness in the exchange process. Moreover, contract law largely succeeds because it is the product of the legal system's reasonable and practical compromises over conflicting values and interests.” (Hillman 1997: 2). 2 But see Farnsworth (1992) and also the symposium on The Death of Contract in 90 Nw. U. L. Rev. 1 (1995)
Hatis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory similar number of theories developed for civil contract law? What this question calls attention to is the absence of contemporary grand theories(cf. Gazes 1995: 36 n59; 1997), that is, theories which purport to describe, interpret and even modify contract law in congruence with major philosophical, sociological, historical political or economic theories and which claim universality. By undermining the formalistic mentality that permeates law as a sup posedly autonomous discipline, grand theorizing has the potential of transforming legal theory from an anti-theoretical, parochial of social control If we look over the impressive literature published on con- tract law over the last two decades in the numerous Common law (especially American) journals and law reviews, we will discover lat the purely doctrinal studies have been confined to the loy ranking journals and universities, to the developments and sur veys of the law sections and to the comments and notes of student law review editors. Nearly all the well-known American contract scholars(and there are many) can be easily categorized according to their adherence to a specific theory, most of them being either “ neoclassical”or"“ economists" All of them discuss broadly theo 3 According to Gazes( 1995: 20, n. 20 and 26, n 32), codification symbolizes the end of laws development(or at least of its flourishing). For the problems related to codification in the field of contracts, see generally Hellner(1990)and lontai (1990). See also Kotz (1983) 4 Before World War Il, and especially in the era of the major codifications, a significant but dated discussion had taken place in continental Europe(esp Friedninly). The work of Friedrich Carl von Savignys historical school and Georg liberal and with no essential differences thought of Thibaut and Welcker)are examples of theoretical discussions that are absent today in continental Europe See mainly Reimann(1990) and Whitman(1990), and also Reimann(1991), lenner(1989), Ruckert(1989), Herget& Wallace(1987)and Joerges(1994) 5 When applied to contract law theory, the term"neoclassical"signifies some- thing quite different from "neoclassical economics", a term widely used to de- scribe mainstream economics. See Heijdra Lowenberg(1988), Lowenberg (1990), Medema Samuels(1996), and D Autume Cartelier(1997). How-
Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory 4 similar number of theories developed for civil contract law?3 What this question calls attention to is the absence of contemporary4 grand theories (cf. Gazes 1995: 36 n.59; 1997), that is, theories which purport to describe, interpret and even modify contract law in congruence with major philosophical, sociological, historical, political or economic theories and which claim universality. By undermining the formalistic mentality that permeates law as a supposedly autonomous discipline, grand theorizing has the potential of transforming legal theory from an anti-theoretical, parochial, interpretative technique into a science of social control. If we look over the impressive literature published on contract law over the last two decades in the numerous Common law (especially American) journals and law reviews, we will discover that the purely doctrinal studies have been confined to the lowranking journals and universities, to the “developments and surveys of the law” sections and to the comments and notes of student law review editors. Nearly all the well-known American contract scholars (and there are many) can be easily categorized according to their adherence to a specific theory, most of them being either “neoclassical”5 or “economists”.6 All of them discuss broadly theo- 3 According to Gazes (1995: 20, n.20 and 26, n.32), codification symbolizes the end of law's development (or at least of its flourishing). For the problems related to codification in the field of contracts, see generally Hellner (1990) and Lontai (1990). See also Kötz (1983). 4 Before World War II, and especially in the era of the major codifications, a significant but dated discussion had taken place in continental Europe (esp. Germany). The work of Friedrich Carl von Savigny's historical school and Georg Friedrich Puchta's conceptual jurisprudence (and also the less influential, more liberal and with no essential differences thought of Thibaut and Welcker) are examples of theoretical discussions that are absent today in continental Europe. See mainly Reimann (1990) and Whitman (1990), and also Reimann (1991), Klenner (1989), Ruckert (1989), Herget & Wallace (1987) and Joerges (1994). 5 When applied to contract law theory, the term “neoclassical” signifies something quite different from “neoclassical economics”, a term widely used to describe mainstream economics. See Heijdra & Lowenberg (1988), Lowenberg (1990), Medema & Samuels (1996), and D'Autume & Cartelier (1997). How-
mentaries on Law Economics, Vol 2(2002) retical issues, even when they set out to solve particular doctrinal problems(cf Cheffins 1999: 199-200) ever, the similarities go beyond the mainstream status. I would characterize the neoclassical theory of contracts as a rather amateurish attempt on the part of con- tract scholars(in Common law under the legacy of equity"and in Roman Civil law of ius praetorium)to keep in touch with the developments of economic the ory after World War Il (i.e. economic neoclassicism) rather than to"socialize contract law. This is mostly true for the U.S.A, but also for Europe. See Hatzis (2000c) 6 From an ongoing citation study on American contract law which I am currently conducting, some preliminary findings are characteristic: In over 250 contract law articles, books or chapters most of which have been published after 1980 the scholars with more than fifty citations are [in alphabetical order, since the findings are preliminary and although there is a vast disparity of almost 140 cita- tions between the first scholar(190)and the last]: Patrick Atiyah(Neoclassical) Randy Barnett (Consent/Libertarianism), Ronald Coase (Economics/Neo- Institutionalism), Arthur Corbin(Neoclassical), Melvin Aron Eisenberg(Neo- classical), Richard Epstein (Libertarianism/Economics), Grant Gilmore(Neo- classical/ Death of Contract "theory), E. Allan Farnsworth(Neoclassical), Lon Fuller(Neoclassical), Duncan Kennedy(Cls), Friedrich Kessler(Neoclassical), Anthony Kronman(Economics-Neoclassical), Stewart Macaulay(Relational- Empirical-Sociological), lan Macneil(Relational), Oliver W. Holmes(Classi cal), Richard Posner(Economics), Alan Schwartz(Economics), Robert Scott (Economics), Michael Trebilcock (Economics), Samuel Williston(Classical) The authors who immediately follow have also been heavily influenced by the theory of others or have formulated theories of their own( Calabresi, Feinman, Fried, Friedman, Goetz, Horwitz, Leff, Llewellyn, Williamson, etc. ) Below them on this list. there are about 20 other scholars with more than 25 citations the"less theoretical"among them being robert Hillman, Robert Summers and Richard Speidel, who are of course not innocent of theory! The first three books cited are (in alphabetical order) Frieds Contract as Promise, Gilmore's The Death of Contract and Posner's Economic Analysis of Law. The treatises of Corbin and Williston follow. The first four articles are (in alphabetical order) Coase's"The Problem of Social Cost", Epstein,'s"Unconscionability" Fuller Perdue's"The Reliance Interest in Contract Damages"(cf. Barnett 1995: 3)and Macaulay's"Non-Contractual Relations in Business. Any comments are redun 7 In a broadly discussed and much-disputed essay, Judge Edwards accused con temporary American legal theory of being impractical and overly theoretical thus neglecting the two important functions of the law school: to teach students
Commentaries on Law & Economics, Vol. 2 ( 2002) 5 retical issues, even when they set out to solve particular doctrinal problems (cf. Cheffins 1999: 199-200).7 ever, the similarities go beyond the mainstream status. I would characterize the neoclassical theory of contracts as a rather amateurish attempt on the part of contract scholars (in Common law under the legacy of “equity” and in Roman Civil law of ius praetorium) to keep in touch with the developments of economic theory after World War II (i.e. economic neoclassicism) rather than to “socialize” contract law. This is mostly true for the U.S.A., but also for Europe. See Hatzis (2000c). 6 From an ongoing citation study on American contract law which I am currently conducting, some preliminary findings are characteristic: In over 250 contract law articles, books or chapters most of which have been published after 1980, the scholars with more than fifty citations are [in alphabetical order, since the findings are preliminary and although there is a vast disparity of almost 140 citations between the first scholar (190) and the last]: Patrick Atiyah (Neoclassical), Randy Barnett (Consent/Libertarianism), Ronald Coase (Economics/NeoInstitutionalism), Arthur Corbin (Neoclassical), Melvin Aron Eisenberg (Neoclassical), Richard Epstein (Libertarianism/Economics), Grant Gilmore (Neoclassical/“Death of Contract” theory), E. Allan Farnsworth (Neoclassical), Lon Fuller (Neoclassical), Duncan Kennedy (CLS), Friedrich Kessler (Neoclassical), Anthony Kronman (Economics→Neoclassical), Stewart Macaulay (RelationalEmpirical-Sociological), Ian Macneil (Relational), Oliver W. Holmes (Classical), Richard Posner (Economics), Alan Schwartz (Economics), Robert Scott (Economics), Michael Trebilcock (Economics), Samuel Williston (Classical). The authors who immediately follow have also been heavily influenced by the theory of others or have formulated theories of their own (Calabresi, Feinman, Fried, Friedman, Goetz, Horwitz, Leff, Llewellyn, Williamson, etc.). Below them on this list, there are about 20 other scholars with more than 25 citations, the “less theoretical” among them being Robert Hillman, Robert Summers and Richard Speidel, who are of course not innocent of theory! The first three books cited are (in alphabetical order): Fried's Contract as Promise, Gilmore's The Death of Contract and Posner's Economic Analysis of Law. The treatises of Corbin and Williston follow. The first four articles are (in alphabetical order): Coase's “The Problem of Social Cost”, Epstein's “Unconscionability”, Fuller & Perdue's “The Reliance Interest in Contract Damages” (cf. Barnett 1995: 3) and Macaulay's “Non-Contractual Relations in Business.” Any comments are redundant. 7 In a broadly discussed and much-disputed essay, Judge Edwards accused contemporary American legal theory of being impractical and overly theoretical, thus neglecting the two important functions of the law school: to teach students
Hatis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory The most typical example of this approach is American con- tract law where the battle of the theories is worse than the battle of the forms(cf. Gordley 1991: 230 and Cheffins 1999: 202-206) However. in other Common law countries. the situation is not much different. For example, in England, theories like classical bargain theory and doctrines like privity are often so rigidly applied that they defy even common sense itself(see generally Collins 1993;1999 On the other hand. contract scholars in Civil law countries adopt a very different approach(see generally Merryman 1990) The great majority of studies are purely doctrinal, there are few references to philosophical, economic or other theories(and when there are, they are largely outdated)and the topics are ex tremely restricted, since the discussion on many issues seems to have come to a conclusion and the interpretation of the statutes ap. pears to be exhausted. With the exception of certain"new"issues of some interest, like collective bargaining agreements, standard form contracts and electronic commerce. the rest of the law review articles are analogous to their counterparts in the low-ranking American law reviews and the specialized aba journals Why is there such a marked difference? What is the reason for this almost total absence of theoretical discussion on contract the black-letter law and to train ethical practitioners. See relatively the reactions to his essay in the Symposium(1993), esp. Posner(1993)(even though much of the scholarly output is trivial and ephemeral, this is the unavoidable price of body of creative scholarship that has more practical relevance and value as the- ory compared to the doctrinal formalistic: 8 In the major English and Canadian law journals, there is also an ongoing lively Law, the only specialized journal in the field. See particularly Cheffins(1999 9 This is also true of treatises. The new editions do not contain any significant changes. They usually have just more cases to report(supporting a particular interpretation) and new law review articles to cite, or a more detailed treatment of new developments to includ
Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory 6 The most typical example of this approach is American contract law, where the battle of the theories is worse than the battle of the forms (cf. Gordley 1991: 230 and Cheffins 1999: 202-206). However, in other Common law countries, the situation is not much different. For example, in England, theories like classical bargain theory and doctrines like privity are often so rigidly applied that they defy even common sense itself (see generally Collins 1993; 1999).8 On the other hand, contract scholars in Civil law countries adopt a very different approach (see generally Merryman 1990). The great majority of studies are purely doctrinal, there are very few references to philosophical, economic or other theories (and when there are, they are largely outdated) and the topics are extremely restricted, since the discussion on many issues seems to have come to a conclusion and the interpretation of the statutes appears to be exhausted.9 With the exception of certain “new” issues of some interest, like collective bargaining agreements, standard form contracts and electronic commerce, the rest of the law review articles are analogous to their counterparts in the low-ranking American law reviews and the specialized ABA journals. Why is there such a marked difference? What is the reason for this almost total absence of theoretical discussion on contract the black-letter law and to train ethical practitioners. See relatively the reactions to his essay in the Symposium (1993), esp. Posner (1993) (even though much of the scholarly output is trivial and ephemeral, this is the unavoidable price of a body of creative scholarship that has more practical relevance and value as theory compared to the doctrinal formalistic scholarship). 8 In the major English and Canadian law journals, there is also an ongoing lively theoretical debate. See also the contents of the Australian Journal of Contract Law, the only specialized journal in the field. See particularly Cheffins (1999: passim, esp. 200-202). 9 This is also true of treatises. The new editions do not contain any significant changes. They usually have just more cases to report (supporting a particular interpretation) and new law review articles to cite, or a more detailed treatment of new developments to include
Commentaries on Law& Economics, Vol. 2(2002) law in Civil law countries? How can we account for such stagna- tion when there is such intellectual orgasm in the Common law? Are theoretical problems considered resolved in continental Europe? Is there an indifference towards theory and a predilection towards results in the Civil law countries, or is it just technical conservatism? Or is civil contract law dead? Killed not by its two implacable enemies, torts and restitution, but by its own children (commercial law, labor law, corporate law, insurance law, antitrust law, consumer protection law, law of sales, etc. )that have grown immensely by eating the flesh of their father? I. All of the above are more or less true Contract law in Civil law countries is not what it used to be. However. it remains the core of any Civil code qus commune), the model of most legal relationships and of course the basis of the Law of obligations (and, in some jurisdictions, of the General Principles of Civil Law) In addition it seems that a renaissance of contract law has occurred O To be fair. there is some theoretical discussion on contract law. however it is rather occasional and restricted to the journals specializing in legal theory and philosophy of law and is usually undertaken by the scholars who have the rela- tive tenure(professors of philosophy or sociology of law). Their debate concerns mainly themselves, since the overwhelming majority of legal scholars do not take part in this dialogue, because they consider Justice or Fairness as separate from"positive law and they regard philosophy of law as distinct from the laws dogmatic elaboration. This is a result of the increasing specialization and gation within Civil law scholarship. Professors of philosophy of law cannot teach contracts(or vice versa) and they are usually supposed to occupy themselves with the great philosophical problems("what is law?")rather than with the ap. plication of legal theory towards solving particular doctrinal problems that are considered to lie within the territory of doctrinal scholars. In turn, doctrinalists occupied with the practical problems of interpretation, see the broader philoso- phical discussion as irrelevant, if not completely worthless(for similar observa- tions but different conclusions, see Gordley 1991). Thus, leafing through the various specialized and general Civil law reviews, one can find references, pres- entations, even critiques of particular theories developed in the United States or elsewhere. but there is little chance of seeing such discussions in the context of articular legal questions (of course, with a few exceptions). The situation has slowly started to change after the emergence of law Economics in Europe and the challenges it has posed to mainstream scholarship
Commentaries on Law & Economics, Vol. 2 ( 2002) 7 law10 in Civil law countries? How can we account for such stagnation when there is such intellectual orgasm in the Common law? Are theoretical problems considered resolved in continental Europe? Is there an indifference towards theory and a predilection towards results in the Civil law countries, or is it just technical conservatism? Or is civil contract law dead? Killed not by its two implacable enemies, torts and restitution, but by its own children (commercial law, labor law, corporate law, insurance law, antitrust law, consumer protection law, law of sales, etc.) that have grown immensely by eating the flesh of their father? II. All of the above are more or less true. Contract law in Civil law countries is not what it used to be. However, it remains the core of any Civil code (jus commune), the model of most legal relationships and of course the basis of the Law of Obligations (and, in some jurisdictions, of the General Principles of Civil Law). In addition, it seems that a renaissance of contract law has occurred 10 To be fair, there is some theoretical discussion on contract law; however, it is rather occasional and restricted to the journals specializing in legal theory and philosophy of law and is usually undertaken by the scholars who have the relative tenure (professors of philosophy or sociology of law). Their debate concerns mainly themselves, since the overwhelming majority of legal scholars do not take part in this dialogue, because they consider Justice or Fairness as separate from “positive law” and they regard philosophy of law as distinct from the law's dogmatic elaboration. This is a result of the increasing specialization and segregation within Civil law scholarship. Professors of philosophy of law cannot teach contracts (or vice versa) and they are usually supposed to occupy themselves with the great philosophical problems (“what is law?”) rather than with the application of legal theory towards solving particular doctrinal problems that are considered to lie within the territory of doctrinal scholars. In turn, doctrinalists, occupied with the practical problems of interpretation, see the broader philosophical discussion as irrelevant, if not completely worthless (for similar observations but different conclusions, see Gordley 1991). Thus, leafing through the various specialized and general Civil law reviews, one can find references, presentations, even critiques of particular theories developed in the United States or elsewhere, but there is little chance of seeing such discussions in the context of particular legal questions (of course, with a few exceptions). The situation has slowly started to change after the emergence of Law & Economics in Europe and the challenges it has posed to mainstream scholarship
Hatis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory in the last decade, for two reasons: (a) the triumph of the free mar ket and capitalism in Europe-at-large which led, in Eastern Europe to a drafting or revision of civil codes(esp. contract and property law) that are better-suited for free market economies and more conducive to economic development(Ostas 1992; Ostas Leete 1995 and Rubin 1994: 1997; cf. Atiyah 1995: 27-34), and(b) the growing concern of the European Union for the unification of European private law in general and contract law in particular, well as the trend toward the internationalization of contract law ( Farnsworth 1990: 227-230) Therefore, European contract law is not dead. It is wounded but alive and it seems that it has a good chance of recovery. Ho the continuing absence of general theories developed in Europe or influenced by the ones developed in Common law do- mains seems puzzling for Common law scholars, until they realize what the most plausible explanation of this phenomenon is: in Civil law there is no need for theories since the legislator, mainly through the codes, has proclaimed what the law should be and the judge is(supposedly) a mere interpreter, useful only for accommo- dating trivial twists of facts. In such a static universe, where is the need for theory? II See esp. Lando & Beale(1995), Hondius(1989 1994a; 1994b), Hartkamp et al. (1994), Hartkamp(1998), as well as the papers in the Symposium(1997). For international developments towards unification, see also Kozyris(1989),Vis- casillas(1996), Honka(1996)and the Symposium (1995)on"The UNIDROIT Principles of International Commercial Contracts"and Hartkamp(1994)for a comparison of the UNIDROIT and European law principles of contract law with CISG. See also Ruston Works(1980), Bennett(1980), Williams(1986)and Lando(1987)on the1980 European Community Convention on the Law Ap- plicable to Contractual Obligations. But see the pessimistic remarks by Horla- her(1994). More generally, on the problem of the unification of national laws, ee Gazes(1997: 41-67, esp. 59 n. 109). Sykes(1999)is also a skeptic concern- ing regulatory harmonization, preferring a legal system that tolerates regulatory differences subject to legal constraints, and that relies on mutual recognition
Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory 8 in the last decade, for two reasons: (a) the triumph of the free market and capitalism in Europe-at-large which led, in Eastern Europe, to a drafting or revision of civil codes (esp. contract and property law) that are better-suited for free market economies and more conducive to economic development (Ostas 1992; Ostas & Leete 1995 and Rubin 1994; 1997; cf. Atiyah 1995: 27-34), and (b) the growing concern of the European Union for the unification of European private law in general and contract law in particular, as well as the trend toward the internationalization of contract law (Farnsworth 1990: 227-230).11 Therefore, European contract law is not dead. It is wounded, but alive and it seems that it has a good chance of recovery. However, the continuing absence of general theories developed in Europe or influenced by the ones developed in Common law domains seems puzzling for Common law scholars, until they realize what the most plausible explanation of this phenomenon is: in Civil law there is no need for theories since the legislator, mainly through the codes, has proclaimed what the law should be and the judge is (supposedly) a mere interpreter, useful only for accommodating trivial twists of facts. In such a static universe, where is the need for theory? 11 See esp. Lando & Beale (1995), Hondius (1989; 1994a; 1994b), Hartkamp et al. (1994), Hartkamp (1998), as well as the papers in the Symposium (1997). For international developments towards unification, see also Kozyris (1989), Viscasillas (1996), Honka (1996) and the Symposium (1995) on “The UNIDROIT Principles of International Commercial Contracts” and Hartkamp (1994) for a comparison of the UNIDROIT and European law principles of contract law with CISG. See also Ruston & Works (1980), Bennett (1980), Williams (1986) and Lando (1987) on the “1980 European Community Convention on the Law Applicable to Contractual Obligations.” But see the pessimistic remarks by Horlacher (1994). More generally, on the problem of the unification of national laws, see Gazes (1997: 41-67, esp. 59 n.109). Sykes (1999) is also a skeptic concerning regulatory harmonization, preferring a legal system that tolerates regulatory differences subject to legal constraints, and that relies on mutual recognition where appropriate
Commentaries on Law Economics, Vol 2(2002) By contrast, in Common law, theory is necessary even since there are no Codes(capable of offering not only solutions to particular problems, but also -and most significantly-a unified ap proach). The need for theories has evolved in Common law(espat the end of the 19th century) in order to provide a sense of security to the contracting parties who did not place any trust in the caprices of individual judges and were looking for a more objective basis for their economic relationships(see generally Atiyah 1979) Common law has for centuries been(and today continues to be)in the process of its formation and Common lay tried to resolve issues by borrowing ideas, rules, and even theories from multiple sources(Roman law, Civil law, law merchant Canon law, etc ). With the advent of the industrial revolution and the pressure applied by novel commercial relations, and society in general, judges and scholars increasingly felt the need to inject the law with a theory that would provide a sense of stability and secu- rity to the contracting parties. The classical bargain theory that de veloped and flourished in the 19th century was then considered (given the socio-economic conditions and the prevalent ideology of the time)the perfect theory for a capitalist economy a typical characteristic of Common law theories, that is also a good illustration of our point, is the desperate attempt of Com mon law scholars to prove that their theories and their approaches 2 Despite the maxim(in Latin!)nolumus Angliae leges mutare. Above all,see he prodigious work by Gordley (1990 and 1991)and also, for England, Nicho- las(1974), Simpson(1975b), de Zullieta Stein(1990), Donahue(1992)and Seipp(1993). For the United States, see Helmholz(1992), Hoeflich(1992). Whitman(1987), Riesenfield(1989) and Joerges(1994). See also, more gener- ally, Helmholz(1990), Stein(1992)and Reimann(1993). The influence of Civil aw touches even upon Australian Common law(Ladbury Paterson 1997). In Greek bibliography, see Zepos(1937), but also Gazes(1997: 32-33, with cita 13 For this era, see generally(among others)Lindley(1993), esp on the impact of economic change on contract law(id. 13-25 and 281-295)(a capital-intensive economy inevitably pro large concentrations of economic power that
Commentaries on Law & Economics, Vol. 2 ( 2002) 9 By contrast, in Common law, theory is necessary even today, since there are no Codes (capable of offering not only solutions to particular problems, but also -and most significantly- a unified approach). The need for theories has evolved in Common law (esp. at the end of the 19th century) in order to provide a sense of security to the contracting parties who did not place any trust in the caprices of individual judges and were looking for a more objective basis for their economic relationships (see generally Atiyah 1979). Common law has for centuries been (and today continues to be) in the process of its formation and Common law judges have tried to resolve issues by borrowing ideas, rules, and even theories, from multiple sources (Roman law, Civil law, law merchant, Canon law, etc.).12 With the advent of the industrial revolution and the pressure applied by novel commercial relations, and society in general, judges and scholars increasingly felt the need to inject the law with a theory that would provide a sense of stability and security to the contracting parties. The classical bargain theory that developed and flourished in the 19th century was then considered (given the socio-economic conditions and the prevalent ideology of the time) the perfect theory for a capitalist economy.13 A typical characteristic of Common law theories, that is also a good illustration of our point, is the desperate attempt of Common law scholars to prove that their theories and their approaches 12 Despite the maxim (in Latin!) nolumus Angliae leges mutare. Above all, see the prodigious work by Gordley (1990 and 1991) and also, for England, Nicholas (1974), Simpson (1975b), de Zullieta & Stein (1990), Donahue (1992) and Seipp (1993). For the United States, see Helmholz (1992), Hoeflich (1992), Whitman (1987), Riesenfield (1989) and Joerges (1994). See also, more generally, Helmholz (1990), Stein (1992) and Reimann (1993). The influence of Civil law touches even upon Australian Common law (Ladbury & Paterson 1997). In Greek bibliography, see Zepos (1937), but also Gazes (1997: 32-33, with citations to opposing views). 13 For this era, see generally (among others) Lindley (1993), esp. on the impact of economic change on contract law (id. 13-25 and 281-295) (a capital-intensive economy inevitably produces large concentrations of economic power that threaten contract's social utility)
0 Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory are not only better normative theories, but also perfect positive ones(Ulen 1996: 793). As a result, a rather strange phenomenon occurs in Common contract law review articles: after the exposi tion of a theoretical framework, the rebuttal of opposite theorie and the discussion of several cases which are characteristic for their "compatibility"with the theory expounded, the author exam- ines a number of controversial cases with the purpose of demon strating that, deep down, these"irregular"cases are compatible with his theory, despite the opposite wording or even outcome Only in extreme cases is a decision characterized as forth right wrong or(at least) opposed to the theory developed, and consequently dismissed. Of course, another scholar may easily support a theory that is in diametric contradiction, and may inter- pret the decisions accordingly. This need for an"approval"by the already adjudicated cases( signifies the insecurity and the des- perate need for coherency in Common law and is telling of the de finitive power of precedent even today. This phenomenon of procrusteanism"in Common law theory leads, according to one of he leading legal historians and Common law scholars, A WB Simpson, to a sort of"doctrinal monism": TThere has al ways in he common law been a tendency towards a sort of doctrinal mo- nism-there must be one test for the formation of contract(offer For a typical example(in otherwise excellent studies), see Yorio Thel's (1991)general approach or Remington's(1999: 646) ambitious approach to the tort of interference: No hint of this approach is to be found in judicial opinions yet it does such a remarkable job of explaining the outcomes of cases that one can only suspect that it comes closer to describing the intuitions of judges than the judgesown explanations of what they are doing. "Ithe emphasis is ours See e.g. Hillman(1997: 60-74)and compare with Yorio Thel (1991).A characteristic historical example of this problem is the famous scene between Samuel Williston and Arthur Corbin in a session of the first restatement drafting committee, as described by Gilmore(1974: 62-63). See also the excellent obser vations in Weir(1992) 6 For recent critiques of the Common law process, see Ulen(1996: 805-806) and Hillman(1997: 164-166); see also Gazes(1997: 33-34) Monotheorism"for Weir(1992)
Hatzis: The Anti-Theoretical Nature of Civil Law Contract Scholarship and the Need for an Economic Theory 10 are not only better normative theories, but also perfect positive ones (Ulen 1996: 793). As a result, a rather strange phenomenon occurs in Common contract law review articles: after the exposition of a theoretical framework, the rebuttal of opposite theories and the discussion of several cases which are characteristic for their “compatibility” with the theory expounded, the author examines a number of controversial cases with the purpose of demonstrating that, deep down, these “irregular” cases are compatible with his theory, despite the opposite wording or even outcome.14 Only in extreme cases is a decision characterized as forthright wrong or (at least) opposed to the theory developed, and is consequently dismissed. Of course, another scholar may easily support a theory that is in diametric contradiction, and may interpret the decisions accordingly.15 This need for an “approval” by the already adjudicated cases (!) signifies the insecurity and the desperate need for coherency in Common law and is telling of the definitive power of precedent even today.16 This phenomenon of “procrusteanism” in Common law theory leads, according to one of the leading legal historians and Common law scholars, A.W.B. Simpson, to a sort of “doctrinal monism”:17 “[T]here has always in the common law been a tendency towards a sort of doctrinal monism -there must be one test for the formation of contract (offer 14 For a typical example (in otherwise excellent studies), see Yorio & Thel's (1991) general approach or Remington's (1999: 646) ambitious approach to the tort of interference: “No hint of this approach is to be found in judicial opinions; yet it does such a remarkable job of explaining the outcomes of cases that one can only suspect that it comes closer to describing the intuitions of judges than the judges' own explanations of what they are doing.” [the emphasis is ours]. 15 See e.g. Hillman (1997: 60-74) and compare with Yorio & Thel (1991). A characteristic historical example of this problem is the famous scene between Samuel Williston and Arthur Corbin in a session of the first Restatement drafting committee, as described by Gilmore (1974: 62-63). See also the excellent observations in Weir (1992). 16 For recent critiques of the Common law process, see Ulen (1996: 805-806) and Hillman (1997: 164-166); see also Gazes (1997: 33-34). 17 “Monotheorism” for Weir (1992)