Institutional Competition between Optional Codes in European Contract Law: A Theoretical and Empirical Analysis

326 Pages·2014·1.722 MB·English

by  Alexander J. Wulf (auth.)

Ökonomische Analyse des Rechts
Herausgegeben von
P. Behrens, Hamburg, Deutschland
T. Eger, Hamburg, Deutschland
M. Holler, Hamburg, Deutschland
C. Ott, Hamburg, Deutschland
H.-B. Schäfer, Hamburg, Deutschland
S. Voigt (schrift führend), Hamburg, Deutschland
Die ökonomische Analyse des Rechts untersucht Rechtsnormen auf ihre gesell-
schaft lichen Folgewirkungen und bedient sich dabei des methodischen Instrumen-
tariums der Wirtschaft swissenschaft en. Sie ist ein interdisziplinäres Forschungsge-
biet, in dem sowohl Rechtswissenschaft ler als auch Wirtschaft swissenschaft ler tätig
sind und das zu wesentlichen neuen Erkenntnissen über Funktion und Wirkungen
von Rechtsnormen geführt hat. Die Schrift enreihe enthält Monographien zu ver-
schiedenen Rechtsgebieten und Rechtsentwicklungen.
Herausgegeben von
Professor Dr. Peter Behrens
Professor Dr. Th omas Eger
Professor Dr. Manfred Holler
Professor Dr. Claus Ott
Professor Dr. Hans-Bernd Schäfer
Professor Dr. Stefan Voigt
Universität Hamburg, Fakultät für
Rechtswissenschaft und Fakultät für
Wirtschaft s- und Sozialwissenschaft
Alexander J. Wulf
Institutional
Competition between
Optional Codes in
European Contract Law
A Theoretical and Empirical Analysis
Alexander J. Wulf
Berlin, Germany
Doctoral thesis Bucerius Law School, Hamburg, 2013 (revised version). Supported by
a grant from the Friedrich Naumann Foundation.
ISBN 978-3-658-05800-5 ISBN 978-3-658-05801-2 (eBook)
DOI 10.1007/978-3-658-05801-2
Th e Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografi e;
detailed bibliographic data are available in the Internet at http://dnb.d-nb.de.
Library of Congress Control Number: 2014939219
Springer Gabler
© Springer Fachmedien Wiesbaden 2014
Th is work is subject to copyright. All rights are reserved by the Publisher, whether the whole
or part of the material is concerned, specifi cally the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfi lms or in any other physical
way, and transmission or information storage and retrieval, electronic adaptation, compu-
ter soft ware, or by similar or dissimilar methodology now known or hereaft er developed.
Exempted from this legal reservation are brief excerpts in connection with reviews or schol-
arly analysis or material supplied specifi cally for the purpose of being entered and executed
on a computer system, for exclusive use by the purchaser of the work. Duplication of this
publication or parts thereof is permitted only under the provisions of the Copyright Law of
the Publisher’s location, in its current version, and permission for use must always be obtained
from Springer. Permissions for use may be obtained through RightsLink at the Copyright
Clearance Center. Violations are liable to prosecution under the respective Copyright Law.
Th e use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specifi c statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
While the advice and information in this book are believed to be true and accurate at the date
of publication, neither the authors nor the editors nor the publisher can accept any legal re-
sponsibility for any errors or omissions that may be made. Th e publisher makes no warranty,
express or implied, with respect to the material contained herein.
Printed on acid-free paper
Springer Gabler is a brand of Springer DE.
Springer DE is part of Springer Science+Business Media.
www.springer-gabler.de
Acknowledgements

The first version of this text was accepted as a doctoral thesis by the
Bucerius Law School Hamburg. In the study presented in this book my aim
is to further develop and test a theory on which I had begun to work some
years previously in the course of my studies at the Bucerius Law School
and during a research visit to the International Institute for the Unification
of Private Law in Rome. I then continued to pursue my investigations
while I was studying at the London School of Economics.

I would especially like to thank Prof. Dr. Hans-Bernd Schäfer of Bucerius
Law School for supervising this project and tutoring me throughout my re-
search. He encouraged me to develop a personal research interest in the
field of empirical law and economics that I have decided to continue pursu-
ing in the future. I would also very much like to thank Prof. Dr. Florian
Faust of Bucerius Law School. When I asked him for advice during a chal-
lenging phase of my research project he took the time to advise me imme-
diately despite his busy research agenda. I am furthermore very grateful to
Prof. Dr. Stefan Vogenauer of the Institute of European and Comparative
Law at the University of Oxford for enabling me to support his research.
The statistical analysis presented in this book is based on data collected
during my work as a research assistant for his project “Civil Justice and
Choice of Contract Law: A Business Survey”.1 I very much appreciate the
valuable academic experience I gained at his institute. I would also like to
express my gratitude to Prof. Dr. Stefan Voigt of the Institute of Law and
Economics at the University of Hamburg for publishing this book in his se-
ries and being generous with his support. I would like to thank Prof.

1 The descriptive results of this survey are published in: Vogenauer and Hodges, 2014.
VI
Clifford Larsen of the Bucerius Law School for stimulating my interest in
legal research and Prof. Dr. Ewoud Hondius of Utrecht University for
wakening my interest in European contract law. I am also grateful to Pro-
fessor Shoko Suzuki of Kyoto University for supporting my international
research endeavors. With her kind support I was able to broaden my re-
search expertise to include qualitative approaches.

I would like to thank the Friedrich Naumann Foundation for funding my
entire doctoral research and the presentation of a paper at the Western Em-
pirical Legal Studies Conference at University of California, Los Angeles
(UCLA) School of Law. And finally I would like to thank the Bucerius
Law School for funding a visit to the Agora of the Association of Transna-
tional Law Schools at New York University (NYU) School of Law to pre-
sent my work in 2010.
Table of Contents

Abstract ............................................................................................... XV
List of Formulas .................................................................................. XVII
List of Illustrations .............................................................................. XVII
List of Tables ....................................................................................... XVII
List of Abbreviations ........................................................................... XIX

Introduction ....................................................................................... 1

Part One: Theoretical Framework

1. The Debate on an Optional European Contract Law ............... 11

1.1 Political Developments in European Contract Law ....................... 11
1.2 The Competence of the European Union to Adopt
an Optional European Contract Law .............................................. 22
1.2.1 Article 81 TFEU ................................................................. 24
1.2.2 Article 114 TFEU ............................................................... 25
1.2.3 Article 352 TFEU ............................................................... 30
1.2.4 Article 114 TFEU as the Legal Basis for the CESL ........... 31
1.2.5 The German Bundestag’s Subsidiarity Objection ............... 37
1.2.6 Need for an Economic and Empirical Justification to
Establish the EU’s Competence to Adopt an
Optional European Contract Law ....................................... 41
VIII
1.3 Empirical Research on European Contract Law ............................ 43
1.3.1 Requests for Empirical Research ........................................ 44
1.3.2 Previous Empirical Research .............................................. 48
1.3.2.1 Academic Research ............................................. 48
1.3.2.2 Research Conducted by the Commission
of the European Union ......................................... 53
1.4 The European Commission’s Impact Assessment
Accompanying the Proposal for a Regulation on a
Common European Sales Law ....................................................... 68
1.4.1 Opportunity Costs for Intra-EU Trade ................................ 70
1.4.2 Transaction Costs at Company Level and Cumulative
Transaction Costs ............................................................... 73
1.4.3 Economic Impact of the Policy Option “Regulation
setting up an Optional Common European Sales Law” ...... 77
1.4.4 Assessment of the IA .......................................................... 79
1.5 The Lack of Formal Statistical Analysis on European Contract
Law ................................................................................................ 80

2. The Theory of Institutional Competition in
European Contract Law .............................................................. 85

2.1 Definition of Institutional Competition .......................................... 86
2.2 The Law Market and the Legal Framework
for Institutional Competition .......................................................... 89
2.3 Limitations to the Theory of Institutional Competition ................. 92
2.4 The Impact of Institutional Competition on
Member States and the EU ............................................................ 98
2.5 The Effect of Harmonization on Institutional Competition ........... 101
IX
2.6 Relevant Insights from the Theory of Institutional
Competition for an Optional European Contract Law ................... 105

3. An Optional European Contract Code in the Institutional
Competition between European Contract Laws ....................... 107

3.1 The Economics of a European Contract Law ................................. 108
3.2 The European Market for Contract Laws ....................................... 111
3.2.1 Creeping Codification ......................................................... 114
3.2.2 The Theory of Transaction Costs for the Choice of Law .... 116
3.2.2.1 Information Costs ................................................ 118
3.2.2.2 Suboptimal Choice of Law Costs ........................ 119
3.2.3 The Relationship between Information Costs and
Suboptimal Choice of Law Costs ....................................... 121
3.3 The Theory of Legal Order ............................................................. 123
3.3.1 Centralized Order ............................................................... 124
3.3.2 Decentralized Order ............................................................ 125
3.3.3 Knowledge and Order ......................................................... 126
3.3.4 The Relationship between Centralized
and Decentralized Order ..................................................... 128
3.4 Competition for Innovation ............................................................ 129
3.4.1 The Supply Side .................................................................. 130
3.4.2 The Demand Side ............................................................... 133
3.4.3 The Relationship between the Supply Side
and the Demand Side .......................................................... 134
3.5 The European Contract Law .......................................................... 136
3.5.1 Centralized Order – A Single Contract Law ....................... 137
3.5.2 Decentralized Order – The European Market
for Contract Laws ............................................................... 138