On the Diverging Conceptions of Fairness in English and Bulgarian Contract Law: The Peculiar Transformation(s) of Roman Causa

by Radosveta Vassileva*

(2019) Oxford U Comparative L Forum 1 at ouclf.iuscomp.org | How to cite

This paper examines the distinct roles, which the Roman doctrine of ‘causa’ acquired in English and Bulgarian contract law, to challenge popular beliefs entertained by common law and comparative scholars and to demonstrate the peculiar mechanisms through which the conception of fairness in contract law evolves. While leading contemporary English scholars argue that the doctrine of consideration is a unique common law doctrine, an historical inquiry reveals that it is a direct descendant of Roman ‘causa’, which also made its way into continental systems. At the same time, many comparative scholars assert that, despite differences that may exist on the surface, the common law doctrine of consideration and the continental doctrine of ‘cause’ often reach the same results in similar circumstances. By using Bulgarian law as a case study, which has been subjected to the competing influences of Romanistic and Germanic legal traditions, this paper shows why this argument is misleading. Notably, in England, consideration remains primarily a question of form. In Bulgaria, however, turbulent political changes have created opportunities for scholarly and judicial activism. Thus ‘causa’ was moulded into a powerful tool against substantive unfairness in agreements which courts rely on even in modern times.

Introduction

Leading common law authorities have argued that the English doctrine of consideration, which is a key requirement for the formation of a contract along with offer, acceptance and the intention to create legal relations, is ‘[one] feature of English contract law that readily distinguishes it from the law of contract in civilian jurisdictions’.[1] Yet, an historical inquiry reveals that consideration is a descendant of the Roman doctrine of causa. In fact, it has been asserted that English courts used the terms ‘cause’ and ‘consideration’ interchangeably for a ‘considerable period of time’.[2] However, causa made its way into civilian jurisdictions, too. For instance, Article 1325 of the Italian Codice Civile, which stipulates the conditions of validity of contract, requires that every contract have a ‘causa’.[3] Prior to the reform of the French law of obligations implemented with Ordonnance n° 2016-131 of 10 February 2016,[4] Article 1131 of the French Code civil also stipulated that an obligation without ‘a cause’ may not have effect.[5] In Bulgaria, pursuant to Article 26, paragraph 2 of the Law on Obligations and Contracts (LOC), which was enacted in 1950 and is still in force following cosmetic changes in the early 1990s, an agreement is void in the absence of ‘cause’.

Does the requirement for consideration indeed represent a notable difference between the common law and continental jurisdictions? Comparative scholars and legal historians have tried to answer this question by examining the distinct role and scope that causa acquired in the Anglo-American and the civilian tradition for more than a century.[6] While they recognise differences in judicial reasoning, they also emphasise that the doctrine of consideration and the doctrine of ‘cause’ usually play a similar role. For instance, Markesinis has underlined that if one adopts a functional approach,[7] ‘…it [becomes] clear that the similarities in the results as well as in the reasoning are greater than they are often suspected to be’.[8] Henry has stressed: ‘I cannot of course say that no promises have ever been held legally invalid in Common Law jurisdictions for want of consideration which would have been upheld in Civil Law courts. There must be some. But they are very rare’.[9] Chen-Wishart has asserted: ‘While French and German law appear to enforce a much wider range of promises than English law, in practice they draw essentially the same line between gratuitous undertakings and reciprocal undertakings’.[10]

When one studies the role which Roman causa acquired in legal systems with distinct paths of historical development, such as England and Bulgaria, which are rarely compared, one can certainly see more differences than similarities.[11] As this paper demonstrates, while in England consideration primarily serves to distinguish ‘bargains’ from promises to make gifts, in Bulgaria, causa was gradually transformed into a powerful tool against substantive unfairness in agreements. We will see that Bulgarian courts rely on the doctrine to void unfair agreements, modify the price in certain contracts, address instances of supervening hardship, and even strike out agreed damages clauses.[12] In other words, by using Bulgarian law as a case study, which is relevant in light of the competing influences of Romanistic and Germanic legal traditions on Bulgarian contract law, this paper takes a stand in the debate about the similarities and differences between consideration and ‘cause’. It amply shows that while consideration and ‘cause’ can be traced back to the same Roman doctrine, there are important substantive differences between them, which have been ignored by comparative scholars because they have over-focused on West European jurisdictions.

Furthermore, the palpable difference between the English doctrine of consideration and the Bulgarian notion of ‘cause’ seems to have appeared primarily as a result of Bulgarian judicial activism encouraged by Bulgarian scholarship. This is striking in light of the traditional role of law-interpreter attributed to the continental judge,[13] as well as the fact that Bulgaria’s modern civil law was initially borrowed from France and the French legal system is known for the limitations it imposes on its judges.[14] In turn, examining the fascinating journey of Roman causa in England and Bulgaria may shed light on the peculiar mechanisms through which the conception of fairness in contract law evolves, and its fluid and malleable character.

Preliminary Remarks: Why Compare England and Bulgaria?

Before examining the distinct roles which the Roman doctrine of causa acquired in English and Bulgarian law as well as the reasons for them, which may shed light on these divergences, it is worth highlighting why it is interesting to engage in East-West European comparisons. Two of the fundamental questions in comparative law which contemporary scholars continue to ponder are: why should we compare legal systems? and how should we compare them?[15] It has been suggested that one can have diverse purposes when undertaking a comparative inquiry: from practical goals, such as unifying the law, to more academic aims, such as enhancing knowledge of the law.[16] The main objective of this paper is the latter. We will see that comparing legal systems which are rarely compared, such as England and Bulgaria, may be helpful in enriching our understanding of the law.

Comparisons between East and West European jurisdictions are scarce.[17] One can seek various explanations for this: language difficulties, historical factors, the personal interests of comparative lawyers, etc. Regrettably, one cannot help but notice the political stereotypes which haunt comparative law as a discipline and which, a priori, seem to taint East-West European comparisons.[18] During the Cold War, prominent comparativists recognised the existence of a ‘socialist’ legal family, but, after the fall of the Berlin Wall, there was a sharp divide between legal scholars regarding the classification of East European legal systems.[19] Some authors merely declared socialist law to be dead.[20] Others endeavoured to find a suitable label for these jurisdictions while still considering them to be part of the same group.[21]

Depending on the perspective that one adopts, one may draw polar conclusions about how worthwhile East-West European comparisons are and whether one should focus on looking for differences and/or similarities.[22] If one agrees that the so-called socialist legal family is dead and that East European jurisdictions have returned to the Western tradition, one may assume there is not much to learn from the present state of these legal systems because they allegedly copied contemporary Western models while reforming their laws.[23] Alternatively, one may prioritise similarities and show interest in the differences between East and West European jurisdictions only to the extent that the remnants of socialist law should be identified or even eventually eliminated in light of harmonisation initiatives.[24] By contrast, if one adopts the view that East European systems are part of a group with distinctive features, one may instinctively be drawn to identifying idiosyncrasies and to prioritising differences between the East and the West, if only to comply with the narrative that East European systems should be classified as a separate group.[25]

Bulgaria’s case can be used to challenge these perspectives. The extent to which the principles of Bulgaria’s contract law during communism were socialist seems debateable. It has been stressed by Ajani that ‘[d]uring the Socialist era, despite declamations on the “originality of socialist law,” Western models were borrowed, even if a careful scholarship disguised them, or judges were unaware of their origin’.[26] Bulgaria’s current LOC was enacted in 1950 when there were no communist ideological models to borrow per se.[27] Through archival and comparative research, scholars have shown not only that the LOC is a complex compilation of available models at the time, but also that the communist regime deliberately lied about the LOC’s sources of inspiration.[28] The radical change of political regime provided an occasion to part ways with the French model, from which Bulgaria had initially borrowed, and embrace more ideas from the Germanic legal tradition, albeit with a creative twist. This affected the journey of the Roman doctrine of causa in Bulgaria. Meanwhile, the fact that the LOC contained little by way of ideological language permitted a very quick, cosmetic reform in the early 1990s.[29] Some doctrines were simply renamed while inheriting the meaning and scope of principles developed during communism.[30] Unlike other former-communist states which embarked on drastic reforms, Bulgaria remained committed to its 1950 model.[31] Therefore, the extent to which it shares common distinctive features with other East European legal systems is, at this stage, questionable.

What is fascinating about Bulgarian contract law is that one can discern continuity despite drastic political changes—a feature, which has not been captured by mainstream comparative taxonomies. Meanwhile, these political changes—particularly communism—served as a catalyst for a noteworthy move towards substantive fairness in agreements. In that light, it has been argued that comparing legal systems which are very different from each other may render significant results.[32] It is thus interesting to engage in microcomparisons between Bulgaria and England. This is not just because one can study the contemporary similarities and differences between these countries. It is also because the continuity of Bulgaria’s legal system permits one to trace the evolution of law and to compare it with the legal developments in a jurisdiction in which paradigmatic shifts did not occur. This is an opportunity to appreciate the impact of context.[33]

As discussed below, the Roman doctrine of causa played a relatively similar role in England and Bulgaria when it was first embraced, but their paths seem to have diverged because of complex contextual factors. It may be the case that leading comparativists have concluded that ‘cause’, in the continental tradition, and ‘consideration’, in the common law tradition, do not differ significantly precisely because of the jurisdictions they selected for comparison. In France, for instance, it appears there were no conditions which could trigger a major move towards substantive fairness in contract, which is comparable to the paradigmatic shift one can observe in Bulgaria.[34]

The Distinct Roles of Causa in Modern English and Bulgarian Contract Law

A brief survey of modern English and Bulgarian contract law demonstrates significant differences between these jurisdictions’ attitude to substantive unfairness in non-consumer agreements.[35] Moreover, these differences seem to be related to the role which causa has acquired in the two legal systems.

Consideration v Equivalence of Performance

The main role of the doctrine of consideration identified in common law literature is to help distinguish bargains (or enforceable promises) from gifts.[36] English case law has defined consideration as ‘something of…some value in the eye of the law’.[37] Nonetheless, courts would examine the sufficiency but not the adequacy of consideration as it is up to the parties to ‘determine what they value and the price…they are prepared to pay for any item’.[38] A priori, this approach seems in line with the important policy of freedom of contract.[39] Indeed, there are cases in which judges identified something of negligible value to be good consideration. Classic textbook examples include Chappell v Nestlé, in which three chocolate wrappers were found to be good consideration for a record, and Pitt v PHH Asset Management, in which a promise to exchange contracts in two weeks was good consideration for a promise not to consider other bids for a property.[40]

In principle, English law seems to show concern about substantive unfairness in agreements only if it is related to procedural unfairness, such as vitiation of the agreement. For instance, in recent years, one could observe an enlargement of the scope of doctrines like undue influence[41] and economic duress,[42] which may target lopsided transactions.[43] In parallel, common law doctrinal writers have traditionally been hostile to the idea of enforcing pure substantive fairness. Smith emphasises that it is widely believed that ‘substantive fairness…is either meaningless, indistinguishable from procedural fairness…impossible to assess, not valuable, [and] beyond the competence of court to protect…’.[44] Saprai underscores that the theory of equality of exchange rests on unstable philosophical foundations and it is under- and over-inclusive, inefficient, and does not take into account the subjectivity of value.[45] Others contend that ‘…equality is central to the justice of voluntary exchanges, but it is the equality of the parties that matters, not the equality of what is exchanged’.[46]

At the same time, one should also note that English courts have not refrained from moulding the doctrine of consideration when circumstances or public policy reasons demand it. Williams v Roffey Bros is particularly interesting because it endorsed the idea of ‘practical benefit’—identifying consideration factually rather than as a matter of law in contract modifications.[47] In this case, Roffey Bros had entered into an agreement to refurbish 27 flats but subcontracted the carpentry work to Mr. Williams. Mr. Williams managed to finish 9 flats before running into financial problems, primarily because he had agreed to perform at a very low price and he had failed to adequately supervise his workmen.[48] Roffey Bros promised to pay him additionally for the timely completion of each of the remaining 19 flats. While Mr Williams completed 8 more flats, Roffey Bros did not pay the promised amount, and so he stopped working on the project.[49] The court found that a promise to pay more for the completion of carpentry works under an existing contract was supported by good consideration because the defendants obtained a benefit in practice.[50] As recognised by the defendants themselves, they benefited from continued performance, they did not have to seek alternative performance, and they did not accrue damages under a time penalty clause in their main contract.[51]

In addition, in Ward v Byham, the Court of Appeal held that a father’s promise to pay £1 per week to the mother of his child if she kept the child happy was supported by consideration.[52] However, in Lipkin Gorman v Karpnale, the House of Lords refused to recognise gambling chips as valuable consideration for money as the contract was void under the Gaming Act 1845.[53] Hence, it is not surprising that common law scholars have already attacked the doctrine for being inconsistent and vague and for covering the real motivation behind decisions.[54]

One could certainly make the above observation about the amorphous notion of causa in Bulgarian law. Yet, the creativity of English courts would appear rather tame when one compares it to Bulgarian judicial activism. Bulgarian courts have embraced the notion of ‘equivalence of performance’—the idea that what the promisor gives should be equivalent to what he/she receives. The next section of this paper discusses how this version of causa appeared in Bulgarian law and became one of the elements of the principles of ‘fairness’ and ‘good morals’. In that light, it is interesting that some Bulgarian doctrinal authors argue that equivalence of performance is a subjective concept which depends on the will of the parties.[55] As such, as long as an agreement is the expression of free will, obligations are equivalent.[56] Nevertheless, case law shows that Bulgarian courts can be tempted to interpret the requirement literally.

Occasionally, Bulgarian legal reasoning may lead to similar results to English law. For instance, it seems that one of the factors which influenced the Court of Appeal in Williams v Roffey Bros was that the price that Mr. Williams gave to complete the works was considered ‘unreasonable’ by the defendants’ surveyor.[57] A Bulgarian court could have relied on two main lines of reasoning which are underpinned by the notion of ‘cause’ had it been confronted with the case. On the one hand, it could have found the original contract null and void due to a violation of the principle of ‘good morals’, which comprises equivalence of performance, so that the defendants had to pay a reasonable price for the works.[58] Alternatively, a Bulgarian court could have modified the price in the agreement by applying Article 266, paragraph 2 of the LOC, which allows contractual modification in particular instances. This ability of the Bulgarian courts will be discussed further below. However, a common lawyer may find some examples of the application of Bulgarian causa striking, too.

Striking Contrasts

One of these examples is the Bulgarian approach to penalty clauses. This is particularly notable in light of the recent UK Supreme Court decision in Cavendish Square Holding BV v Talal El Makdessi; ParkingEye Limited v Beavis in which Lord Neuberger and Lord Sumption emphasised:

Leaving aside challenges going to the reality of consent, such as those based on fraud, duress or undue influence, the courts do not review the fairness of men’s bargains either at law or in equity. The penalty rule regulates only the remedies available for breach of a party’s primary obligations, not the primary obligations themselves.[59]

Under Bulgarian law, commercial transactions are governed by two pieces of legislation—the Law on Commerce (LC) and the LOC. [60] Article 309 of the LC, which was enacted in 1996, stipulates:

The liquidated damages due under a commercial transaction concluded between merchants may not be reduced on grounds of excessive amounts.[61]

This provision allows judges to scale up liquidated damages in commercial contracts when the promisee of the obligation has experienced greater loss due to non-performance by the promisor, but not to scale them down on the grounds that they significantly surpass the loss.

This approach in itself sits in stark contrast to English law as seen already in Dunlop Pneumatic Tyre Co Limited v New Garage and Motor Co.[62] Lord Dunedin underscored:

[the] question whether a sum stipulated is penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach.[63]

Bulgarian law is concerned about the substantive fairness of the clause at the time the innocent party seeks to enforce it. The ultimate question, therefore, is whether the compensation corresponds to the actual loss suffered by the aggrieved party. In its Decision on Interpretation 1/2010, the Bulgarian Supreme Court of Cassation (SCC) held that ‘the excessiveness of liquidated damages is established with regard to the moment of non-performance and considering the damages actually suffered’.[64]

What is more interesting is how Bulgarian courts moulded the notion of causa to circumvent the rule that they could not scale liquidated damages down. Following the enactment of Article 309 of the LC in 1996, many courts began striking out agreed damages clauses in contracts on the grounds that they violated the principle of ‘good morals’. This approach was commended by Bulgarian scholars who deemed the phenomenon a moral reaction to the excessively rigorous rule.[65] It was also encouraged by the Bulgarian SCC. For instance, in Decision 530/2008 on com. c. 242/2008, it asserted:

Some court practice suggests that agreed damages clauses can be declared void when they are against good morals due to the absence of imperative legal norms which limit contractual freedom in determining the amount of damages. Undermining good morals is present when there is a violation of a legal principle, which may not be explicitly defined by the law, but whose observance is guaranteed through the creation of other provisions part of the legislation in force. An agreed damages clause may be void as it violates the principle of fairness in cases when, after its enforcement, it leads to lack of equivalence of the reciprocal obligations in a contract…The legislator has in mind the violation of principles that are important to society…and not to the individual interest of a concrete subject of law…The question whether such a clause goes beyond what is ethically acceptable should be evaluated in the concrete case.

It is interesting to observe the judicial reasoning in overcoming the logical difficulty of refusing to apply an explicitly stated rule in the LC.[66] The court opposes the rule to the fundamental principles of law that are embedded in legislation to justify an exception to the principle. Nonetheless, it does not set forth criteria that judges should use to apply this exception and leaves the door open to interpretation and judicial discretion by emphasising that what is ethically acceptable should be evaluated in the concrete case. Judicial discretion was further encouraged by Decision on Interpretation 1/2010 mentioned above. Notably, while the Bulgarian SCC enumerates criteria that can be used to determine if liquidated damages are excessive, it also specifies that courts may use ‘other criteria based on the facts and concrete circumstances in every case’.[67]

A second example of the Bulgarian application of causa which is striking from an English point of view is provided by a recent decision of the District Court of Pleven in which the court struck out a compensation clause in a management contract because the compensation was ‘immorally high’.[68] The clause stated that a director should receive payment for 12 months if she is dismissed. The court deemed the compensation to be immorally high because the director had only worked for 5 months at the time of dismissal and there was no equivalence of obligations.[69] Clearly, the court was addressing a case of pure substantive unfairness, as one may either consider the director and the company as having equal bargaining power because she was a professional, or that she had less bargaining power compared to the company. However, the court still ruled in favour of the company due to a lack of (objective) equivalence of obligations in order to enforce substantive fairness.[70] It is certainly unlikely that an English court would show concern about the substantive fairness of such a clause if there were no vitiation of the agreement.

A third illustration is provided by Article 266, paragraph 2 of the LOC, applicable to manufacturing contracts,[71] which stipulates: ‘If in the course of the performance of the contract the duly determined prices of materials or labour change, the compensation shall be adjusted accordingly, even where it was agreed upon as a total sum’.[72] Clearly, the underlying intention of the legislator is to enforce equivalence of performance after contract formation. Yet while this provision appeared in the original 1950 version of the LOC when Bulgaria was building a socialist economy, courts continue to enforce it today. Examples include the SCC’s Decision 1/2013 on com. c. 921/2011, concerning a construction agreement between a company and a local municipality at a fixed price to be paid in tranches. The company in the case delayed performance because of increased costs. This prompted the municipality to withhold its last tranche in order to enforce a liquidated damages clause. While the lower courts had stipulated that the clause was enforceable, the SCC quashed their decision holding that it violated Article 266, paragraph 2 of the LOC. The Court held that the municipality itself had caused the delay since the price of materials and labour had increased and it had withheld an additional payment it owed to its contractor. Not only were the liquidated damages unenforceable, but the municipality was also ordered to pay the last tranche with interest.

Both the reasoning and the result here may seem remarkable from an English perspective in light of the leading decision on frustration, Davis Contractors Ltd v Fareham UDC, in which Lord Radcliffe formulated the test of ‘radically different circumstances’.[73] This case concerned a contract for the construction of 78 houses over 8 months at a fixed price of £94,424. Because of shortages of labour and material, as well as a long period of frost, performance became more burdensome for Davis Contractors and completion was delayed—the houses took 22 months to build. Davis Contractors submitted a claim arguing frustration and requesting payment on a quantum meruit basis. The actual cost of construction turned out to be £115,233—approximately 22% more costly for Davis Contractors.[74] Their claim failed. It was held:

In a contract of this kind the contractor undertakes to do the work for a definite sum and he takes the risk of the cost being greater or less than he expected. If delays occur through no one’s fault that may be in the contemplation of the contract, and there may be provision for extra time being given: to that extent the other party takes the risk of delay. But he does not take the risk of the cost being increased by such delay.[75]

Had Davis Contractors Ltd been heard by a Bulgarian court, the price in the agreement would have been adjusted to compensate for the increase in the price of labour pursuant to Article 266, paragraph 2 of the LOC. Moreover, as in SCC’s Decision 1/2013 on com. c. 921/2011 mentioned above, it may also have attributed part of the delay to the fault of Fareham UDC.

A further example is the application of the recently enacted Article 307 in the Bulgarian LC,[76] which addresses instances of supervening onerousness (hardship) in all types of contracts. The principle allows judges to modify or terminate agreements without the consent of both parties if performance becomes contrary to fairness and good faith. The SCC allowed the application of the Article in Decision 240/2013 on com. c. 259/2011. This case concerned a 10-year lease agreement for a store selling jeans and shoes which was entered into in 2007. Because the store faced low revenues and had to close down, the lessee tried to terminate the lease on the basis of Article 307 in 2008. The lease agreement contained a termination clause stipulating that the lessee does not have the right to terminate the contract unilaterally during the first 36 months, unless they pay the rent for all 36 months, after which they could terminate the agreement with a 6-month advance notice. The lessee also tried to renegotiate the contract and the lessor proposed to decrease the monthly rent by 20% (official statistics clearly show that the inflationary change between 2006 and 2007 was just 6%).[77]

From an English point of view, this clause might be interpreted as an explicit distribution of risk—notably the parties had provided concrete mechanisms for termination—and there was nothing radical about the change of obligation, which could hypothetically allow the application of the doctrine of frustration. However, the Bulgarian court allowed the application of Article 307. One of the key factors in the decision was the violation of the principle of fairness, which the Bulgarian SCC understood as a lack of equivalence of performance. Instead of examining the effect, which the external event (alleged economic crisis) had on the obligations in the agreement itself, the SCC examined external evidence: how the alleged economic crisis affected the revenues of the lessee. It examined the revenue in the actual store after the alleged change of circumstances and compared it both with the revenue prior to the supervening event and with the rent.

This approach could be contrasted with the result in Arnold v Britton in which the UK Supreme Court upheld a clause providing for the yearly indexation of service charges in lease agreements which could amount to £550,000 a year by 2072.[78] The substantial change of the inflationary rate between the 1970s, when most lease agreements were entered into, and 2012, when the claims were submitted,[79] was not a factor which influenced the decision.[80] Moreover, the UK Supreme Court did not show much concern for the historical income of the lessees either. For the majority, the main question of law was whether the contract had to be interpreted literally or contextually.

Causa’s Peculiar Transformation(s)

The ostensibly different roles which causa acquired in England and Bulgaria call for an examination of the factors which conditioned them. In that light, it is important to stress that Romans did not have a general theory of causa, and causa was not an essential condition for the validity of all types of contracts.[81] As discussed below, causa appeared on the English and Bulgarian legal stage rather suddenly, albeit in different historical periods, and initially played a relatively similar role. However, Bulgarian scholarly legal creativity and judicial activism gradually transformed causa into a powerful and charismatic actor against substantive unfairness.

Enter Causa

It has already been argued that causa made a somewhat sudden appearance in England and France. In England, the notion of ‘cause’ emerged in court decisions in the late 16th century, while in France it was embraced by jurists like Domat and Pothier in the 17th century, and subsequently enshrined in the Code civil in 1804.[82] There seems to be some debate about the reasons why the doctrine was embraced. It has been suggested that Domat and the English courts were influenced by the writings of the Italian Glossators from the 12th century—they were the first to advocate that ‘cause’ be a requirement of contract formation.[83] Because the Glossators played a role in the establishment of the School of Law at Oxford,

[it] was a matter that both bar and bench had been taught as students as being a rule of the Roman Law, and also of the law of England. But unfortunately the requirement of cause or consideration was, as a matter of fact, not a rule either of the Roman Law or of the law of England.[84]

Similarly, ‘cause’ did not exist in French customary law prior to codification. Domat could have either borrowed it from the common law, which is unlikely, or drawn from the works of the Glossators which were known in France.[85]

Other authors have underlined that the reasons why England and France introduced the ‘cause’ into their contract law were ‘analogous’, but the ‘process’ through which they emerged was ‘different’.[86] In France, the ‘cause’ appeared as a result of ‘prolonged moral and philosophical preoccupation’, while consideration was ‘devised by commercially-minded lawyers’.[87] Indeed, former Article 1131 of the Code civil ascribed a broader scope to the ‘cause’ compared to that ascribed to the doctrine of consideration: ‘An obligation without cause or with a false cause, or with an unlawful cause, may not have any effect’.[88] Moreover, Article 1133 of the Code civil declared that the ‘cause’ of the agreement is illicit when it is contrary to the law, public order and good morals. In other words, under French law, the mere existence of ‘cause’ was insufficient to make the agreement valid. Once identified, judges had to subject the ‘cause’ to legal and moral review. By contrast, as discussed above, English judges are concerned about the existence of consideration in the context of contract formation and modification. Traditionally, they control the agreement’s terms through the common law doctrines of illegality and public policy rather than through consideration, and, in modern times, through legislation such as the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015.

A second notable difference between England and France is that French law showed concern for the equivalence of performance (équilibre des prestations) in certain agreements[89] via the principle of loss (lésion).[90] According to classical French theory, ‘the cause of obligations created in non-gratuitous contracts is the contemplation of counter-performance’.[91] In bilateral contracts, the cause of each party is the counter-performance of the other party.[92] English law does not recognise such a vitiating factor. As noted in the previous section, it would not show concern about the adequacy of consideration unless a vitiating factor recognised by the common law comes into play.[93]

It is the French version of the ‘cause’ that appeared suddenly in Bulgaria at the end of the 19th century when Bulgaria was rebuilding its state and establishing its first modern legal system.[94] Bulgaria’s first LOC, which was enacted in 1892, was heavily based on the Italian Codice Civile of 1865, which in turn copied the French Code civil of 1804. Thus, Bulgaria borrowed the principle of causa indirectly from France through Italy: indeed Articles 24, 25, and 27 of the first LOC were replicas of Articles 1131, 1132, and 1133 of the Code civil. The LOC’s drafting committee justified their choice of inspiration by emphasising that the laws of Italy and France contain everything that theory and practice have deemed most just and rational in resolving personal and property disputes.[95] Nonetheless, it is unlikely that the committee paid much attention to the notion of causa. Rather it seems that the doctrine made its way to Bulgaria simply due to a fascination with the achievements of French codification which resulted in an ‘in bulk’ borrowing of legislation.

Unexpected Plot Twists

The Bulgarian fascination with French law was, however, rather short-lived. In the 1920s and 1930s, Bulgarian scholars became hostile to the Code civil. They called it ‘too old and outdated’, inadequate to society’s needs,[96] and its formulations ‘dry’ and based on ‘Latin texts gone yellow’.[97] The main reason for this attack was that French civil law at the time did not recognise the concept of hardship and could not relieve parties experiencing burdensome performance in the aftermath of World War I. [98] French judges abided by the leading decision in the Canal de Craponne case (1876), in which the Cour de cassation held that courts, no matter how equitable it might seem, could not consider the time and circumstances in order to modify agreements between parties and substitute freely negotiated clauses with new ones.[99] During the same period, English courts were also hostile to addressing issues of supervening onerous performance. For instance, in Tennants (Lancashire) v CS Wilson, Earl Loreburn refused to extend the doctrine of frustration to instances of supervening onerousness.[100] He underlined that:

The argument that a man can be excused from performance of his contract when it becomes “commercially impossible”…seems to me a dangerous contention which ought not to be admitted unless the parties have plainly contracted to that effect.[101]

Similarly, in Blackburn Bobbin v TW Allen, a case concerning the interruption of a supply of timber from Finland after the outbreak of World War I, McCardie J stressed the ‘utmost importance to a commercial nation that vendors should be held to their business contracts’.[102] The main underlying reason for the French and English approach to hardship at the time is their legal systems’ commitment to freedom of contract and sanctity of contract. As long as agreements were freely entered into and consideration or, respectively, ‘cause’ provided, they were enforceable. After all, parties could insert force majeure and/or hardship clauses and explicitly distribute the risk of such events in line with the principle of freedom of contract.

By contrast, Bulgarian doctrine promoted the idea of equivalence of performance as a legal solution to instances of supervening onerous performance (hardship) primarily on the basis of the work of the German scholar Krückmann.[103] It should be noted that German judges were the first ones to address instances of supervening onerous performance in modern times, in the aftermath of World War I, by relying on scholarly theories: for example, those of Krückmann and Oertmann.[104] One of the fundamental ideas in Krückmann’s in-depth study, ‘Clausula rebus sic stantibus, Kriegsklausel, Streikklausel’, was that performance and counter-performance had to be proportional in bilateral contracts.[105] In turn, Oertmann’s theory of the basis of the contractual foundation, which he primarily developed in his monograph Die Geschäftsgrundlage; Ein neuer Rechtsbegriff, was influential in the development of the German approach to changed circumstances.[106] One of the hypotheses in which the contractual foundation ceased to exist was the lack of equivalence of performance.[107] Shortly after these comprehensive studies were published, the idea of proportionality and/or equivalence of performance was put forward in a number of decisions by German courts to argue in favour of the modification of certain agreements affected by the severe currency depreciation at the time.[108] It has been contended, however, that the German approach was casuistic and that courts relied on scholarly theories to avoid being criticised for basing decisions purely on public policy.[109]

Bulgarian scholarship was aware of these developments in Germany and advocated for reform in Bulgaria.[110] Nevertheless, the occasion only presented itself in 1950 with the rise of communism and the enactment of a new LOC.[111] The 1950 reform affected key principles of Bulgarian contract law as well as the notion of causa.[112] The document itself does not contain an equivalent to the prior Article 1131 of the Code civil. Causa is mentioned in diverse provisions, but its meaning varies depending on the provision.[113] Also, it should be highlighted that while the LOC does not explicitly mention the idea of ‘equivalence of performance’, one can trace the notion in Article 266, paragraph 2, discussed in the previous section, which was designed to address certain supervening events: ‘If in the course of the performance of the contract the duly determined prices of materials or labour change, the compensation shall be adjusted accordingly, even where it was agreed upon as a total sum’.[114]

In parallel, but in stark contrast to French law, Bulgarian scholarship promoted the idea of reciprocity at formation in all contracts through a newly developed principle. Notably, the LOC’s drafters recognised new sources of nullity—one of them was terms violating the ‘rules of socialist co-existence’—a peculiar doctrine which appeared in the contract laws of some communist states.[115] Article 9 of the original 1950 LOC stated: ‘Parties may freely determine the content of their agreement as long as it does not contravene the law, the people’s economic plan, and the rules of socialist coexistence’. Leading Bulgarian authorities on contract law during communism, such as Vitali Tadjer, managed to tuck in the idea of equivalence of performance under the umbrella of ‘the rules of socialist coexistence’. Tadjer wrote:

[The rules of socialist coexistence] are moral principles which the law has determined as criteria for evaluation of transactions…Their violation equates to violating the law…Their specificity is that just like all moral principles, they are not written, they are not concretized, but exist as general principles or result from general principles.[116]

Tadjer clarified that lack of equivalence of obligations, taking advantage of parties without experience, receiving payment not to exercise a right, receiving a tip, etc. all violate the rules of socialist coexistence and voided agreements.[117]

On a conceptual level, then, Bulgarian law took a major turn from French law. As explained above, French law only rescinded agreements due to contractual imbalances in particular instances—for instance, contracts for the sale of immovable property.[118] French law also disposed of mechanisms to moralise the ‘cause’ of the agreement: as mentioned above, Article 1133 of the Code civil nullified agreements if their ‘cause’ was against good morals and public order. However, in practice, these principles were used to address issues of social indecency, protect workers’ rights, etc.[119] Furthermore, as clarified above, prior to the reform of 2016, French law did not show much concern for lack of equivalence of performance following supervening events which made performance burdensome for one of the parties.

Change of Costume, Similar Script

Following the end of communism in 1989, Bulgaria embarked on yet another law reform to transition into a market economy. The LOC was amended and an LC was enacted.[120] However, one could safely say that while its LOC changed ‘clothes’, its essence remained the same. Legislators simply removed ideological language: for example, the ‘rules of socialist coexistence’ were renamed ‘good morals’. Article 9 of the LOC therefore currently reads: ‘Parties are free to determine the content of the contract insofar as it does not contravene the mandatory provisions of both the law and good morals’. In parallel to this, leading Bulgarian authorities started arguing that ‘equivalence of performance’ was one of the elements of the principle of ‘fairness’ in contract.[121]

Bulgarian courts used this opportunity to create powerful tools against substantive unfairness by inducing more hazy notions. Particularly interesting is Decision on Interpretation 1/2010 in which the Bulgarian SCC defined ‘good morals’ as:

norms of morality to which the law has given a legal meaning because the legal consequences of their violation can be equated to a contract’s contravening the law. Good morals are not written, systematised or concrete rules. They exist as general principles or result from general principles…One of these principles is fairness, which demands the protection of any interest protected by the law…The assessment of voidability due to a violation of good morals is carried out in the concrete circumstances of entry into contract.

While the Bulgarian SCC did not explicitly reveal where it took this definition of ‘good morals’ from, it is obvious that the statement is heavily based on Tadjer’s interpretation of ‘socialist coexistence’ referred to above. What is more interesting is that the SCC seems to have self-extended its discretionary powers by moulding ‘good morals’ into a chapeau of open unsystematic norms, thus supplying courts with a variety of tools to interfere with an agreement’s terms for moral reasons.[122] This concept is not only unthinkable from an English perspective, because it compromises legal certainty, but also from a French perspective. As argued above, French ‘good morals’ had a significantly more limited scope.[123] Moreover, as discussed in the previous section, the Bulgarian SCC has emphasised that the principle of ‘fairness’ also comprises equivalence of performance. It seems to have further engaged in creativity regarding the evaluation of equivalence, as illustrated by Decision 240/2013 on com. c. 259/2011 concerning the termination of a 10-year lease, discussed in the previous section.

Distinct Audiences, Distinct ‘Playwrights’

It may be tempting to attribute the palpable differences between the roles which causa acquired in England and Bulgaria to communism. After all, Marxism-Leninism, communism’s underlying philosophy, promoted equality and condemned unfair wealth redistribution and this may shed light on the importance of equivalence of performance in Bulgarian contract law. Furthermore, during communism, contracts were regarded as mere tools facilitating the state’s economic plan—freedom of contract was not a fundamental principle of communist contract law.[124]

While communism undoubtedly left a mark on the values of Bulgarian law, there is also a parallel story: a fascinating tale of scholarly activism, of synergy between the scholar, the judge, and the legislator, which is striking from an English perspective considering the traditional stigma associated with academic writing.[125] It is interesting, for instance, that neither the Bulgarian LOC nor the LC explicitly mention the idea of ‘equivalence of performance’. As explained above, the notion was first promoted by Bulgarian scholarship in the aftermath of World War I with the purpose of alleviating instances of supervening onerous performance. However, as the discussion above demonstrates, the principle was gradually transformed into a powerful tool against substantive unfairness, both at the formation and performance stage, through a complex tripartite dialogue between the scholar, the judge, and the legislator. The principle underpins certain provisions in the law and has a prominent role in judicial discourse.

It is also interesting that English courts did not demonstrate the same sensitivity to supervening onerous performance in the aftermath of World War I. While Bulgarian scholarship was arguing in favour of more fairness in agreements, English judges reiterated the importance of freedom of contract. The same historical events therefore triggered different legal responses. This is rather striking given that Bulgaria and England borrowed the principle of freedom of contract from the same place (France) in the same historical period (19th century). Notably, the Traité des obligations of 1761 by the French jurist Pothier was translated into English in 1806 and served as inspiration for English judges. Pothier’s version of the will theory impacted the analysis of the nature of agreement, mistake, and assessment of damages in English law.[126] In Bulgaria, the will theory was indirectly borrowed from France through the 1865 Italian Codice Civile which inspired the 1892 Bulgarian LOC.

Ultimately, both causa and freedom of contract set foot on two different legal stages built for different audiences. The users of English and Bulgarian law traditionally had different needs and expectations. English contract law separated from property law at the end of the 18th and early 19th century. This period had seen the industrial revolution and the rise of capitalism.[127] Moreover, it has been emphasised that at the ‘embryonic stage’ of English contract law, ‘litigation remained the privilege of those who had financial means’.[128] This still seems true in modern times as litigation costs, including expenses for legal counsel and court fees, are very high and have been deemed to constitute an obstacle to accessing justice in England.[129] As English law develops inductively, key principles of English contract law were shaped vis-à-vis the expectations of powerful commercial actors who value legal certainty. By contrast, the first Bulgarian legislators considered the needs of ordinary people and the fragile Bulgarian businesses which had started to develop at the end of the 19th century. Until communism, Bulgaria was predominantly agriculture-oriented and family businesses were the norm. This sensitivity towards the expectations of ordinary people was certainly enhanced not only during communism, but also during the monstrous economic crisis which shook Bulgaria following its transition to democracy.[130]

The background of those who bring about legal change, the ‘playwrights’ who revise the script to appeal to their audience, seems also to be of relevance. In England and Bulgaria, the role of causa and freedom of contract was shaped by jurists with different upbringings. While in England the central figure in advancing the law is the judge, in Bulgaria, for historical reasons beyond the scope of this paper, the central figure is the legal scholar.[131] English judges are usually selected from within the legal profession and have solid practical legal experience. That is why English courts are known for their commercial sensibility. By contrast, Bulgarian scholars traditionally have a background in comparative law and seek political engagement.[132] Their interest in legal comparisons keeps them up-to-date regarding innovations in other legal systems. Their interest in politics and public policy motivates them to engage in legal creativity and propose new solutions to pressing matters, which can appeal to a larger audience.

In addition, one may dig deeper and consider the broader role of the scholar in England and Bulgaria. As the common law develops inductively, it seems from a continental perspective that common law scholars often assume the role of implicit ‘codifiers’. They seek to develop coherent theories, which explain the law, and challenge inconsistencies in judicial reasoning.[133] By contrast, although Bulgaria is a continental jurisdiction, both judges and scholars often seek to escape from legislation’s straightjacket. As a leading Bulgarian scholar underlined by referring to German doctrine: ‘[the] judge should not be the slave of legislation, but a sculptor of the law’.[134] Considering Bulgarian doctrine as a whole, one cannot discern a zeal for consistency, which often characterises common law writing. As this paper has shown, Bulgarian scholars are not afraid to mould and stretch principles if they are convinced it is necessary in order to address the circumstances they are confronted with. In turn, Bulgarian judges look up to scholarly writing when seeking constructs which may help them achieve an adequate result in the spirit of Bulgarian law.

Conclusion

Contrary to the popular belief amongst leading scholars that the requirement for consideration does not represent a notable difference between common law and continental jurisdictions, this paper has demonstrated that one may find remarkable contrasts between England and Bulgaria. The reason for this is that the Roman doctrine of causa acquired two distinct meanings within the English and the Bulgarian legal tradition. Occasionally, English courts do seem to mould the doctrine of consideration to address public policy concerns. However, consideration remains primarily a requirement of form. Although it may serve other functions, such as policing contract modifications, it remains a requirement which is relatively easy to satisfy. In Bulgaria, however, drastic political changes created opportunities for scholarly and judicial activism, which transformed causa into a powerful tool against substantive unfairness in agreements which contemporary judges do not shy away from using.

This paper examined a series of examples which amply show that Bulgarian and English law reach different results in similar circumstances. It revealed that prior generalisations about the supposedly similar roles played by the doctrines of consideration and ‘cause’ in common law and continental legal systems respectively are misleading. Moreover, the peculiar journeys and transformations of the Roman doctrine of causa shed light on the malleable character of the conception of fairness in contract law and the huge impact that context plays in redefining it.

More broadly, the findings of this study are also important for the ongoing debate about the purposes and methodologies of comparative law. When one compares jurisdictions with distinct paths of legal development, which are rarely compared, one may uncover differences between European systems which have been overlooked by scholarship and which challenge generalisations. In turn, this enriches our understanding of the law—one of the core purposes of comparative law. Of course, the extent to which Bulgaria is an isolated case or representative of a group with distinctive features remains to be seen through further research. Undoubtedly, this also requires open-mindedness and inclusivity and, in particular, going beyond the face value of labels usually put on East European legal systems.

Endnotes

* PhD in Law (University College London); Master en droit (Sciences Po Paris); Master en droit (Université de Paris I Panthéon-Sorbonne); Teaching Fellow at University College London; A version of this paper was presented at the ‘Fairness in Law-Making Conference’ organised by Queen’s University Belfast in May 2017. The author would like to thank Professor Gerhard Dannemann and the anonymous reviewers of the Oxford University Comparative Law Forum as well as Lucinda Miller, Prince Saprai, Catherine Mitchell, and Aleksander Grebieniow for their valuable and insightful comments on earlier drafts. All translations of Bulgarian legislation, case law and doctrine are my own, unless indicated otherwise.

  1. Ewan McKendrick, Contract Law: Text, Cases, and Materials (6th edn, OUP 2014) 144.
  2. Ernest Lorenzen, ‘Causa and Consideration in the Law of Contracts’ (1919) 7 YLJ 621, 636.
  3. The other elements are agreement, object, and form.
  4. For an overview of the reform, see Mustapha Mekki, ‘The General Principles of Contract Law in the “Ordonnance” on the Reform of Contract Law’ (2016) 76 La. L. Rev. 1193-1211.
  5. ‘An obligation without cause or with a false cause, or with an unlawful cause, may not have any effect’. Although the explicit references to the ‘cause’ were deleted, arguably the principle remains in the Code civil in spirit. For example, the new Article 1128 defines ‘licit content’ as a condition of validity of contract and the new Article 1169 avoids agreements in case counter-performance is ‘illusionary’ or ‘derisory’. Moreover, it is doubtful that this sudden change will be readily embraced by French scholars and judges.
  6. See, for instance, Francesco Delfini, ‘Instances of Civil Law in North American Common Law Tradition: Cause and Consideration in Quebec and Louisiana Civil Codes’ (2016) 2 The Italian Law Journal 87-104; Charles Calleros, ‘Cause, Consideration, Promissory Estoppel, and Promises under Deed: What Our Students Should Know about Enforcement of Promises in Historical and International Context’ (2013) 13 Chicago-Kent Journal of International and Comparative Law 83-120; James Gordley, The Philosophical Origins of Modern Contract Doctrine (OUP 1991) 65-67 and 137-139; Basil Markesinis, ‘Cause and Consideration: A Study in Parallel’ (1978) 37 CLJ 53-75; Robert Henry, ‘Cause in the Civil Law and Consideration in the Common: Much Ado About Nothing’ (1941) 29 KLJ 369-401; F P Walton, ‘Cause and Consideration in Contracts’ (1925) 41 LQR 306-328.
  7. The functional approach is a comparative methodology which seeks to establish if legal systems reach similar results in similar circumstances. On its merits, see Ralf Michaels, ‘The Functional Method of Comparative Law’ in Reinhard Zimmermann and Mathias Reimann (eds), The Oxford Handbook of Comparative Law (OUP 2006) 340-382.
  8. Markesinis (n 6) 75. One of the examples he mentions is Couturier v Hastie (1856) 5 HL Cas 673 in which the House of Lords declared that an agreement for the sale of corn was void for total failure of consideration because the corn had perished prior to entry into contract. French judges would have achieved the same result by applying the doctrine of ‘cause’. See Markesinis (n 6) 58.
  9. Henry (n 6) 400.
  10. Mindy Chen-Wishart, Contract Law (5th edn, OUP 2015) 110.
  11. While England is an established market economy, Bulgaria has experienced radical transformations of its political system in the past century and a half: until 1878 it was part of the Ottoman Empire; between 1878 and 1943 it saw a range of political regimes (constitutional monarchy, military dictatorship, dictatorial monarchy, etc.); between 1944 and 1989 it was a communist state; and from 1989 onwards it embarked on a road to rebuilding democracy and a market economy.
  12. Note that Bulgarian law does not have a homogenous doctrine of causa. As this paper demonstrates, by engaging in legal creativity, Bulgarian scholars and judges created diverse principles aimed at combatting substantive unfairness, whose origin can be traced back to causa.
  13. English judges are traditionally described as law-seekers, while continental judges as law appliers, (Patrick Glenn, Legal Traditions of the World (3rd edn, OUP 2007) 245).
  14. See further below. One of the main reasons why the Code civil was enacted was because of the excesses of judges during the ancien regime. Ascheri asserts that French codification finally freed citizens ‘from the despotic and unaccountable discretion exercised by judges under the old system’, (Mario Ascheri, ‘Turning Point in the Civil-Law Tradition: From lus Commune to Code Napoléon’ (1996) 70 Tul.L.Rev 1041, 1043).
  15. See for instance Roberto Sacco, ‘Legal Formants: A Dynamic Approach to Comparative Law. Installment I of II’ (1991) 39 AJCL 1-34, Mark van Hoecke, Epistemology and Methodology of Comparative Law (Hart Publishing 2004), Gerhard Dannemann, ‘Comparative Law: Study of Similarities or Differences?’ in Mathias Reimann and Reinhard Zimmermann (eds), The Oxford Handbook of Comparative Law (OUP 2006), Esin Örücü, ‘Developing Comparative Law’ in Esin Örücü and David Nelken (eds), Comparative Law: A Handbook (Hart Publishing 2007), Jaakko Husa, A New Introduction to Comparative Law (Hart Publishing 2015) 134-211.
  16. On the purposes of comparative enquiries, see Dannemann (n 15) 401-406.
  17. Even the Trento Project, which aims to identify the common core of European private law, usually ignores East European jurisdictions. An exception is their study on unexpected circumstances which examines the laws of Slovakia, Lithuania, and the Czech Republic. At the time it was published, however, the European Union already had eleven members from the former communist bloc, (see Ewoud Hondius and Christoph Grigoleit (eds), Unexpected Circumstances in European Contract Law (CUP 2014)).
  18. Ugo Mattei has raised awareness of the influence of politics on comparative law, (Ugo Mattei, ‘The Cold War and Comparative Law: A Reflection on the Politics of Intellectual Discipline’ (2017) 56 AJCL 567-608).
  19. The theory of legal families, which divides legal systems into families based on common features, is usually associated with the work of David as well as Zweigert and Kötz. See René David, Traité élémentaire de droit civile comparé (Paris 1950); and Konrad Zweigert and Hein Kötz, Einführung in die Rechtsvergleichung auf dem Gebiete des Privatrechts (Mohr 1969). Both comparative law treatises recognise the existence of a socialist legal family. Some scholars, by contrast, treated these systems as a sub-branch of the civil tradition. Quigley admitted that ‘socialist law contain[ed] features that distinguish[ed] it from the legal systems of other countries of the civil law family’, but those features ha[d] not removed it from the civil law tradition’, (John Quigley, ‘Socialist Law and the Civil Tradition’ (1989) 37 AJCL 781, 808).
  20. The preface to the 1998 edition of Zweigert and Kötz’s famous treatise states: ‘The socialist legal family is dead and buried, and although it will take a long time to erase the traces of more than forty years of total subjection to political ideology, it seemed right to discard the chapters on socialist law’, (Konrad Zweigert and Hein Kötz, Introduction to Comparative Law (Tony Weir tr, 3rd edn, Clarendon 1998) v); Smits has argued that the socialist legal family has disappeared (Jan Smits, The Making of Private Law: Towards a Ius Commune Europaeum as a Mixed Legal System (tr Nicole Kornet, Intersentia 2002) 74); and Graziano contends that the socialist legal family has ‘ceased to exist’, (Thomas Kadner Graziano, Comparative Contract Law: Cases, Materials, and Exercises (Palgrave Macmillan 2009) 14).
  21. For an analytical account of recent attempts to classify former-communist countries, see Katalin Kelemen and Balazs Fekete, ‘How Should the Legal Systems of Eastern Europe be Classified Today?’ (International Conference for the 10th Anniversary of the Institute of Comparative Law, Potsdam, 2014).
  22. While the theory of legal families has faced fervent criticism in recent years, it continues to inform both comparative research and the way comparative law is taught. For a critical overview of its strengths and limits, see Jaakko Husa, ‘Legal Families and Research in Comparative Law’ (2001)(1)(3) Global Jurist Advances 1-12; and Mariana Pargendler, ‘The Rise and Decline of Legal Families’ (2012) 60 AJCL 1043-1074. Historically, comparative scholars have been divided on whether one should focus on differences between legal systems and commence an inquiry with a presumption of dissimilarity, or concentrate on similarities and begin an inquiry with a presumption of similarity. Contemporary authorities such as Professor Dannemann argue in favour of a balanced approach which depends on the purposes of the comparison (Dannemann (n 15) 418). Other authors strongly reject the presumption of similarity, which is the starting point of functionalism, and contend that one should not be surprised to find both similarities and differences (Husa (n 15) 205-209).
  23. Örücü described the law reforms in Eastern Europe after the end of communism as ‘returning to the Western legal tradition’, (Esin Örücü, ‘Critical Comparative Law: Considering Paradoxes for Legal Systems in Transition’ (2000) 4 EJCL http://www.ejcl.org/41/art41-1.html). To a different degree, some former-communist countries borrowed contemporary Western models. See Péter Cserne, ‘Drafting Civil Codes in Central and Eastern Europe: A Case Study on the Role of Legal Scholarship in Law-Making’ [2011] Pro Publico Bono <http://www.propublicobono.hu/pdf/Cserne%20P%20Tamop%201.pdf>.
  24. On the evolution of the harmonisation project in the European Union, which aims at developing and implementing common legal rules in the member states of the European Union, see Lucinda Miller, The Emergence of EU Contract Law: Exploring Europeanization (OUP 2012).
  25. As pointed out by Professor Dannemann, relying on the theory of legal families ‘may…lead to the emphasizing of the differences between members of different legal families’ (Dannemann (n 15) 387).
  26. Gianmaria Ajani, ‘By Chance and Prestige: Legal Transplants in Russia and Eastern Europe’ (1998) 43 AJCL 93, 94.
  27. The first heavily ideologised Soviet Civil Code was enacted in 1964. On the ideologisation of Soviet law, see Asya Ostroukh, ‘Russian Society and its Civil Codes: A Long Way to Civilian Civil Law’ (2013) 6 J.Civ.L.Studies 373-400.
  28. The drafters of the LOC drew heavily on the Italian Codice Civile of 1942 and the first Soviet Civil Code of 1922, which was a compilation of German, French, and Swiss law with a relatively mild ideological flavour. See Chapter 2: “Economic Onerosity in Context: Particularities and Development of Bulgarian Law” in Radosveta Vassileva, Change of Economic Circumstances in Bulgarian and English Law. What Lessons for the Harmonization of Contract Law in the European Union? (Doctoral Thesis, University College London 2016).
  29. ibid.
  30. For instance, as we will see below, the doctrine of ‘socialist coexistence’ was simply renamed to ‘good morals’.
  31. This was the case of the Baltic states. See Cserne (n 23).
  32. Marc Ancel, Utilité et méthodes du droit comparé: Eléments d’introduction générale à l’étude comparative des droits (Neuchâtel: Editions Ides et Calendes 1971) 65.
  33. Husa asserts: ‘…each system leaves its own mark on the originally foreign influences and doctrines independent of whether they are inherited, forcefully introduced, borrowed or copied…The context is of utmost significance’, Husa (n 15) 207; Sacco, in turn, developed the concept of ‘legal formants’—various legal and non-legal factors which shape rules within a legal system and which differ across legal systems. See Sacco (n 15).
  34. The contractual solidarity advocated by scholars like François Gény and Léon Duguit in the early 20th century was not picked up by the courts. See Jean Cédras, ‘Le solidarisme contractuel en doctrine et devant la Cour de cassation’ in Rapport 2003 de la Cour de cassation (la Documentation française 2004) 186-204; We will see below that as early as the 1920s, Bulgarian scholars had started criticising the rigidity of the Code civil and called for reform.
  35. As members of the European Union, both the UK and Bulgaria have transposed Directive 93/13/EEC on unfair terms in consumer contracts.
  36. Chen-Wishart (n 10) 4.
  37. Thomas v Thomas (1842) 2 QB 851, 859.
  38. Hugh Collins, The Law of Contract (4th edn, LexisNexis UK 2003) 60.
  39. In Printing and Numerical Registering v Sampson, Sir Jessell MR famously explained: ‘…men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced…you have this paramount public policy to consider—that you are not lightly to interfere with this freedom of contract’ ((1874-75) LR 19 Eq 462, 465).
  40. [1960] AC 87; [1994] 1 WLR 327.
  41. See Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773.
  42. See Universe Tankships v International Transport Workers Federation (The Universe Sentinel) [1983] 1 AC 366, Atlas Express v Kafco [1989] QB 833, B&S Contracts and Design v Victor Green Publications [1984] ICR 419, etc.
  43. One of the factors which raises a presumption of undue influence is ‘a transaction which calls for explanation’, Royal Bank of Scotland v Etridge (No 2) [2001] 2 AC 773, 796. In Atlas Express v Kafco [1989] QB 833, the court found that a promise to pay more for the performance of a contractual duty under an existing agreement was not supported by consideration.
  44. Stephen Smith, ‘In Defence of Substantive Fairness’ (1996) 112 LQR 138, 138.
  45. Prince Saprai, ‘Against Equality in Exchange’ (2010) 21 KLJ 71, 94.
  46. James Bernard Murphy, ‘Equality in Exchange’ (2002) 47 Am.J.Juris 85, 98.
  47. [1991] 1 QB 1. The decision is usually contrasted with Stilk v Myrick (1809) 2 Camp 317 in which the court found that a promise to perform a pre-existing contractual duty was not supported by consideration.
  48. [1991] 1 QB 1, 6.
  49. ibid.
  50. ibid 15-16.
  51. ibid 10-11.
  52. [1956] 1 WLR 496. The reasoning may be contrasted with Balfour v Balfour, in which Lord Atkin asserted: ‘The common law does not regulate the form of agreements between spouses. Their promises are not sealed with seals and sealing wax. The consideration that really obtains for them is that natural love and affection which counts for so little in these cold Courts’, ([1919] 2 KB 571, 579).
  53. [1991] 2 AC 548. Lord Goff emphasised that the result would have been the same even if the Act had not been applicable: ‘But the question remains: when the customer hands over his cash at the cash desk, and receives his chips, does the store give valuable consideration for the money so received by it? In common sense terms, the answer is no. For, in substance and in reality, there is simply a gratuitous deposit of the money with the store, with liberty to the customer to draw upon that deposit to pay for any goods he buys at the store’, ([1991] 2 AC 548, 576).
  54. For an overview of the debate, see Jonathan Morgan, Great Debates in Contract Law (Palgrave Macmillan 2012) 29-41.
  55. Angel Kalaidjiev, The Law of Obligations: General Part (5th edn, Sibi 2010) 67
  56. ibid.
  57. [1991] 1 QB 1, 19.
  58. Based on Articles 9 and 26 of the Bulgarian LOC, agreements are void if they violate ‘good morals’. For example, in Decision 1444/1999 on civ.c. 735/99, Bulgaria’s SCC voided an agreement for the sale of an apartment at a price lower than its market value by applying this principle.
  59. [2015] UKSC 67 [13].
  60. Bulgaria divides private law into ‘civil’ and ‘commercial’—what is known as ‘dualism of private law’. In practice, however, the Law on Commerce and the Law on Obligations and Contracts are subsidiary as the Law on Commerce is underdeveloped. This dualism is not universally accepted in continental jurisdictions. It has been embraced in France and Germany. However, Italy and Switzerland do not have autonomous commercial law. See International Encyclopedia of Comparative Law (1981) vol VIII, ch 2, para 167-70.
  61. Translation by Apis.
  62. [1914-15] All ER Rep 739.
  63. ibid 741-742.
  64. Note that Decisions on Interpretation are a peculiarity of the Bulgarian legal system. They do not seem to have an equivalent in the German or the French legal system. They are special decisions handed down by the general assemblies of Bulgaria’s Supreme Court of Cassation when legal practice is divided on the interpretation of the law. They clarify how principles should be interpreted, but do not apply them to concrete cases. They may be requested by the judicial panels of the Supreme Court of Cassation or other state authorities, but not by the parties to a dispute. Arguably, they have the status of a primary source of law.
  65. See Christian Takoff, ‘On the Question of the Reduction of Liquidated Damages’ in Collection of Essays in Honour of Professor Zhivko Stalev (Sibi 2005) 391-446.
  66. Note, for instance, that the LOC allows courts to modify liquidated damages in civil contracts. Had legislators intended to provide judges with the same flexibility in commercial contracts, they would not have created two explicit rules. Article 92 of the LOC states:‘Liquidated damages shall secure the performance of the obligation and shall serve as compensation for damages caused by non-performance, which need not be proven. The promisee may claim compensation for greater losses as well. Where the liquidated damages are excessive as compared with the damage sustained or the obligation had been performed improperly or only in part, the court may decree to reduce the amount of such damages’, author’s translation based on Apis.
  67. Some of the criteria include examining whether performance has been secured through other means such as a mortgage, the correlation between expected loss and the agreed damages, etc.
  68. Decision 73/2010 by the Pleven District Court on c. 463/2009 affirmed by Decision 127/2010 of the Veliko Turnovo Appellate Court on civ. c. 247/2010.
  69. Because the person was a member of the board of directors, her contract is governed by the LC and not by Bulgarian employment law.
  70. It is also important that the court established the lack of equivalence without considering uneasily quantifiable factors such as the fact that the director might have given up other opportunities to work for this company, she was not dismissed because of professional negligence, etc.
  71. Note the definition of manufacturing contract in the LOC is rather broad, which permits the application of the rules on manufacturing contracts to different agreements. Article 258 stipulates:‘Under a manufacturing contract, the contractor shall be liable at his own risk to manufacture something in accordance with the other party’s order, and the latter—to pay a compensation’, translation by Apis.
  72. Translation by Apis.
  73. [1956] AC 696, 729.
  74. ibid.
  75. ibid 724.
  76. ‘A court may, upon request by one of the parties, modify or terminate the contract entirely or in part, in the event of the occurrence of such circumstances which the parties could not and were not obliged to foresee, and should the preservation of the contract be contrary to fairness and good faith’, (translation by Apis).
  77. The yearly inflation rate in Bulgaria was estimated at 12.5% in 2007 and 7.8% in 2008. By contrast, in 2006 it was 6.5%. See Press release by Bulgaria’s National Statistical Institute <http://www.nsi.bg/sites/default/files/files/pressreleases/Inflation_god2011.pdf > accessed 20 November 2016.
  78. [2015] UKSC 36.
  79. In the 1970s inflation was in the span of 16%-24% per year. Today, the Bank of England has a target of 2%. See Luca Benati, ‘Long Run Evidence on Money Growth and Inflation’ (Bank of England Quarterly Bulletin, Autumn 2005)<http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/qb050302.pdf> accessed 20 November 2016.
  80. Lord Neuberger specifically asserted that ‘…commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language’, ([2015] UKSC 36 [19]).
  81. Its meaning varied in context: it could refer to actionability, juridical reason, presupposition. See Lorenzen (n 2) 625-30. Berger argues that causa is ‘[one] of the vaguest terms of the Roman juristic language’, (Adolf Berger, Encyclopedic Dictionary of Roman Law (American Philosophical Society 1953) 382).
  82. Henry (n 6) 370; Walton (n 6) 306.
  83. Henry (n 6) 373 and 392; Gordley (n 6) 137-139.
  84. Henry (n 6) 394.
  85. ibid 372-373.
  86. Markesinis (n 6) 55.
  87. ibid.
  88. Translation by Georges Rouhette and Anne Rouhette-Berton.
  89. Notably, contracts with minors (former Articles 1304-1314 of the Code civil). For contracts between adults, the lésion could be applied only in relation to sale of property (Article 1674) and division of inheritance (Article 889).
  90. Former Article 1118 of the Code civil stated: ‘Loss vitiates agreements only in certain contracts and with regard to certain persons, as will be explained in the same Section’, (translation by Georges Rouhette and Anne Rouhette-Berton).
  91. Henri Léon et Jean Mazeaud, ‘La cause en droit français’ (1956-1957) 3 McGill LJ 1, 12.
  92. ibid 10-11 and 13-15.
  93. For instance, mistake, misrepresentation, undue influence, duress, etc.
  94. Until 1878, Bulgaria was part of the Ottoman Empire. However, the Bulgarian population had its own oral customary law, which governed civil matters between Bulgarians. Commercial disputes were resolved by the guilds of craftsmen based on usage. For a historical account of the development of Bulgarian law prior to the Liberation from the Ottoman Empire, see generally Galabina Petrova, History of the Bulgarian State and Law (680-1878) (Sibi 2009).
  95. Dimiter Tokushev, History of the New Bulgarian State and Law 1878-1944 (Sibi 2008) 177.
  96. Lyuben Dikov, Morality and Law (Imprimerie de la Cour 1934) 15-16.
  97. Nisim Mevorah, ‘Vis Major (Legal Archive)’ [2002] 5 Turgovsko pravo 559, 564.
  98. France introduced the concept of imprévision as Article 1195 in its Code civil as late as 2016 with the ordonnance mentioned above. Despite this development, it is questionable if Bulgarian and French courts can reach the same results in similar circumstances today. See Radosveta Vassileva, ‘Harmonisation Impossible? On the Evolution of the English, French, and Bulgarian Approach to Hardship in Commercial Contracts’ [2017] 112 Amicus Curiae: Journal of the Society for Advanced Legal Studies 34-42. See also Catherine Pédamon, ‘The Paradoxes of the Theory of Imprévision in the New French Law of Contract: A Judicial Deterrent?’ [2017] 112 Amicus Curiae: Journal of the Society for Advanced Legal Studies 10-17.
  99. See Yves Lequette, François Terré and Henri Capitant, Les grands arrêts de la jurisprudence civile (12th edn, Dalloz Bibliothèque 2008) 183-92. Because of civil judges’ refusal to apply the doctrine, in the period during and after World War I, the French government enacted a series of temporary statutes, the most known being the Loi Faillot of 21 January 1918, which allowed courts to suspend or terminate certain contracts entered into before 1 August 1914 in case of unforeseen onerousness. See Shirley Renner, Inflation and the Enforcement of Contracts (Edward Elgar Publishing 1999) 15-17.
  100. [1917] AC 495.
  101. ibid 510.
  102. [1918] 1 KB 540, 552.
  103. See Lyuben Dikov, Historical and Comparative Research on Mistake in the Law of Inheritance, Clausula Rebus Sic Stantibus in Private Law and the Essence of Adjudication (Sofia 1923); See also Ivan Apostolov, The Law of Obligations: General Part (first published 1947, 3rd edn, BAN 1990) 240-242.
  104. For an analytical overview of the evolution of the German jurisprudence on hardship after World War I, see Basil S Markesinis, Hannes Unberath and Angus Johnston, The German Law of Contract: A Comparative Treatise (2nd edn, Hart Publishing 2006) 326-342; See also John Dawson, ‘Effects of Inflation on Private Contracts: Germany, 1914-1924’ (1934) 33 Mich.L.Rev 171.
  105. [1918] Archiv für die civilistische Praxis 157, 198 and 357.
  106. (Leipzig 1921). Oertmann’s theory of disappearance of the contractual foundation played an important role in the development of the modern German approach to changed circumstances. The doctrine is now enshrined in Section 313 of the Bürgerliches Gesetzbuch (BGB) following the 2001 reform.
  107. Markesinis, Unberath and Johnston (n 104) 319.
  108. For instance, in RGZ 107, 78, case no 99 (28 November 1923), the German Supreme Court at the time (Reichsgericht) stated that the nature of loans ‘presupposes an equivalence between performance and counter-performance’. In RGZ 103, 328, case no 97 (3 February 1922), the Reichsgericht explicitly referred to Oertmann’s theory: ‘… to use the words of Oertmann’s Geschuftsgrundlage (1921) it is relevant whether the basis of the transaction, understood as the assumption at the time of the conclusion of the transaction by the parties, of the existence of certain determining circumstances, has ceased to exist. This may also happen if the balance of values is disturbed, provided that the continued equivalence of performance and counter performance was assumed’. English translations of these decisions are available in Markesinis, Unberath and Johnston (n 104) 801-803 and 797-799.
  109. Markesinis, Unberath and Johnston (n 104) 328 and 337.
  110. Lyuben Dikov, one of the proponents of reform cited above, had earned his PhD in Law at the University of Göttingen where Professor Oertmann taught at the time. Perhaps they knew each other personally.
  111. Bulgaria’s communist regime abrogated the laws of the former Kingdom of Bulgaria and introduced new ‘socialist’ legislation.
  112. For instance, while freedom of contract was a fundamental principle of Bulgarian contract law prior to communism, it was not a fundamental principle during communism. In a communist state, the economy is planned and private property is significantly limited.
  113. For example, pursuant to Article 26 (LOC), an agreement is void for absence of cause. Article 55 on unjust enrichment bestows a larger scope upon the term as it stipulates that something received without a cause should be returned, thus covering both contract and tort. Bulgarian law also distinguishes between causal and abstract transactions, the latter being valid even at the absence of cause. In that regard, Takoff argues that the Bulgarian concept of causa is amorphous and unclear and should be reconsidered, (Christian Takoff, ‘Abstract Transactions in Light of the Notions of Abstractness and Causality’ in Legal Research in Memory of Professor Ivan Apostolov (Ulpian 2001) 419-451).
  114. Translation based on Apis.
  115. For instance, Poland and Hungary. It was not part of Soviet contract law. See Vitali Tadjer, Civil Law of People’s Republic of Bulgaria: General Part. Section 2 (Sofia 1973) 252.
  116. ibid 252.
  117. ibid 254.
  118. Lack of equivalence of performance via the doctrine of loss (lésion).
  119. See Muriel Fabre-Magnan, Droit des obligations: contrat et engagement unilatéral (4th ed, PUF 2016) 77-80. Note also that the 2016 reform removed the notion of ‘good morals’ from the Code civil.
  120. During communism, Bulgaria did not have a Law on Commerce for ideological reasons—in communism the economy is planned and companies are owned by the state. Under communist law, the public/private law dichotomy does not exist either.
  121. See Angel Kalaidjiev, ‘On the Autonomy of Will, Freedom of Contract, and Fairness in Contract’ in Atanas Shopov (ed), Legal Research in Memory of Professor Ivan Apostolov (Ulpian 2001) 86.
  122. The two main general principles of Bulgarian law are fairness and good faith, but they have corollaries such as equivalence of performance, duties of care, etc.
  123. Note following the reform of the French law of obligations, the new Article 1162 subjects contractual content to control only for compliance with public order. It has been argued that the notion of ‘good morals’ was ‘emptied from content’ and ‘sunk’ in the notion of public order. See Fabre-Magnan, Droit des obligations: contrat et engagement unilatéral (n 119) 475.
  124. Article 8 of the original version of the 1950 LOC stipulated: ‘Contracts are concluded and performed on the basis of the socialist political framework, socialist ownership of the means of production, and the people’s economic plan. They serve the development of socialism, the fulfilment of the people’s economic plan, and the defence of the material and cultural interests of socialist organisations and citizens according to the principles of socialism’. State entities could be forced to enter into agreements to fulfil the economic plan. On this peculiarity of communist law, see Stephen Szaszy, ‘The Duty to Conclude a Contract in East European Law’ (1964) 13 ICLQ 1470.
  125. It has been asserted that the relationship between academic law and the legal profession in England is problematic, (David Sugarman, ‘A Special Relationship? American Influences on English Legal Education, c 1870-1965’ (2011) 18 IJLE 7, 14). Moreover, for many years, references to the writings of living authors were suppressed in English courts, (Paul Mitchell, ‘Patterns of Legal Change’ (2012) 65 CLP 177, 197).
  126. See David John Ibbetson, A Historical Introduction to the Law of Obligations (OUP 1999) 220-29.
  127. See Peter Gabel and Jay Feinman, ‘Contract Law as Ideology’ in David Kairys (ed), The Politics of Law (3rd edn, Basic Books 1998) 497-510.
  128. Lucinda Miller, ‘Specific Performance in the Common and Civil Law’ in Paula Giliker (ed), Re-examining Contract and Unjust Enrichment (Nijhoff 2007) 291.
  129. See, for instance, The Bach Commission on Access to Justice, ‘The Crisis in the Justice System in England & Wales’ (November 2016) <http://www.fabians.org.uk/wp-content/uploads/2016/11/Access-to-Justice_final_web.pdf> accessed 14 June 2017. Of course, the cost of legal advice usually outweighs court fees.
  130. Annual inflation was estimated at 338.5% in 1991, 91.3% in 1992, 72.9% in 1993, 96.1% in 1994, 62.1% in 1995, 121.6% in 1996, and 1058.4% in 1997, (Kiril Tochkov and Hiranya Nath, ‘Relative Inflation Dynamics in the EU Accession Countries of Central and Eastern Europe’ (Bulgarian National Bank, May 2011)<http://www.bnb.bg/bnbweb/groups/public/documents/bnb_publication/discussion_2011_84_en.pdf> accessed 20 November 2016).
  131. Following the Liberation from the Ottoman Empire in 1878, legal scholars played a key role in shaping and building the new Bulgarian state by engaging in politics, drafting legislation, and serving as judges. Bulgarian scholars not only actively participate in drafting legislation, but historically have advised judges in drafting decisions. Moreover, as already explained, Bulgarian courts often rely on academic writing even though they do not always overtly disclose their sources.
  132. As Bulgarians did not have a university in which they could study in Bulgarian in the Ottoman Empire, they earned their degrees in France, Italy, Germany, Austria-Hungary, Romania, Switzerland and Russia. As a result, the first Bulgarian jurists were comparatists. The interest in foreign laws and the tradition of earning degrees abroad has remained, albeit to a more limited extent. Since the 19th century, legal scholars often become Members of Parliament, ministers, and judges.
  133. For instance, Stevens asserts: ‘The first task of the academic lawyer is to explain the law so that it makes coherent sense and to account for it in the best possible light’, (Robert Stevens, ‘Damages and the Right to Performance: A Golden Victory or Not?’ in Jason Neyers and others (eds), Exploring Contract Law (Hart 2009) 198).
  134. Lyuben Dikov, ‘The Essence of Adjudication’ in The Modification of Contracts by the Judge (first published 1923, Feneya 2010) 99.

Leave a Reply

Your email address will not be published. Required fields are marked *