CRITICAL STUDIES IN PRIV ATE LAW

CRITICAL STUDIES IN PRIV ATE LAW

Law and Philosophy Library VOLUME 16 Managing Editors ALAN MABE, Department of Philosophy, Florida State University, Tallahassee, Florida 32306, U.sA. AULIS AARNIO, Department of Civil Law, University of Helsinki, Vuorikatu 5c, SF-OOlDO Helsinki, Finland CONRAD D. JOHNSON, Department of Philosophy, University of Maryland, College Park, Maryland 20742-7615, U.S.A. Editorial Advisory Board ROBERT ALEXY, Lehrstuhlfur Offentliches Recht und Rechtsphilosophie, Christian Albrechts-Universitiit, Kiel GEORGE P. FLETCHER, School of Law, Columbia University ERNESTO GARZON VALDES, Institutfur Politikwissenscha/t, Johannes Gutenberg Universitiit Mainz JOHN KLEINIG, Department of Law, Police Science and Criminal Justice Administration, John Jay College of Criminal Justice, City University of New York NICOLA LACEY, New College, Oxford University NEIL MacCORMICK, Centre for Criminology and the Social and Philosophical Study of Law, Faculty of Law, University of Edinburgh ALEKSANDER PECZENIK, Juridiska Institutionen, University of Lund NIGEL SIMMONDS, Corpus Christi College, Cambridge University ROBERT S. SUMMERS, School of Law, Cornell University ALICE ERH-SOON T A Y, Faculty of Law, University of Sydney ERNEST J. WEINRm, Faculty of Law, University of Toronto CARL WELLMAN, Department of Philosophy, Washington University The titles published in this series are listed at the end of this volume.

THOMAS Wll...HELMSSON Department of Private Law, University of Helsinki CRITICAL STUDIES IN PRIVATE LAW A Treatise on Need-Rational Principles in Modern Law SPRINGER-SCIENCE+BUSINESS MEDIA, B.V.

Library of Congress Cataloging-in-Publication Data Wilhelmsson. Thomas. 1949- [Social civilrătt. Englishl Crltical studies in private law a Treatise an need-rational principles in modern law / Thomas Wilhelmsson. p. cm. -- (Law and philosophy library ; v. 16> Rev. translation of: Social civilrătt. 1987. Includes bibliographical references and index. ISBN 978-90-481-4142-5 ISBN 978-94-015-8028-1 (ebook) DOI 10.1007/978-94-015-8028-1 1. Contracts--Social aspects--finland. 2. Civi 1 law--social aspects--finland. 3. Critical legal studies. 4. Sociological jurisprudence. 1. Title. II. Series. KJT858.W5513 1992 340'. 115'094897--dc20 92-3911 ISBN 978-90-481-4142-5 Printed an acid-free paper AII Rights Reserved 1992 Springer Science+Business Media Dordrecht Originally published by Kluwer Academic Publishers in 1992 Softcover reprint of the hardcover 1 st edition 1992 No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means, electronic or mechanical, inciuding photocopying, recording or by any information storage and retrieval system, without written permission from the copyright owner.

TABLE OF CONTENTS Preface Xl Chapter I. Introduction 1 1. Background: the Nordic discussion of alternative legal dogmatics 1 2. What is "alternative" legal dogmatics? 4 3. The problem 11 3.1. The model 11 3.2. The concepts of contract law 12 3.3. Towards a "social private law" 14 3.4. Perspective 15 4. On Nordic law 16 Chapter II. "General principles" as the primary object of alternative studies 21 1. Remarks on the terminology 21 2. The significance of the general principles 25 2.1. General principles as juridical arguments 25 2.2. The significance of the conceptual apparatus 27 2.3. The de lege ferenda significance of systematization 29 3. The coherence and changeability of the general principles 30 3.1. Contradictions within the law 30 3.2. Causes of contradictions: an example 34 3.3. Consequences for the systematization of the law 36 4. The "legal quality" of the new general principles 41 5. The relationship of the general principles to legal change 45 6. Criticism and legitimation 49

vi Chapter III. Goals: new elements in a contract law of the welfare state 51 1. The ideology of the welfare state and private law 51 2. Towards a substantive or a "reflexive" justice? 56 2.1. The welfare state as an obsolete ideology? 56 2.2. On material rationality 60 2.3. On reflexive rationality 62 2.4. Material development as a precondition of reflexive justice 64 3. Need-orientation as a goal 68 3.1. Eriksson's need-rational argumentation 68 3.2. Need-orientation and reflexive law 70 3.3. Need-orientation and person-related norms 72 4. Need-orientation and formal legal security 75 Chapter IV. On the juridical roles of contract law 80 1. On juridical roles 80 2. The materialization and role specialization of contract law 83 3. Formal protective roles despite material rationality 88 4. Function-related roles 89 5. Person-related roles and their classification 93 6. Ability-oriented person roles 93 7. Need-oriented person roles: definitions 97 Chapter V. The concrete legal material - a Finnish example 101 1. Introduction 101 2. Need-orientation in family law and the law of succession 103 3. Need-oriented person roles in contract and tort law. Systematics 105 4. Need of housing, etc., in tenancy law 107 5. Liability in damages and the needs of the parties 109 5.1. Introduction. Need for maintenance 109 5.2. Adjustment of damages, etc. 111

5.2.1. Introduction 111 5.2.2. The general adjustment rule in the Act on Torts 113 5.2.3. The employer's liability 118 5.2.4. The employee's liability 120 5.2.5. The liability of children and others 121 5.2.6. The needs of the injured party 123 5.2.7. Summary 125 5.2.8. Adjustment within contractual relationships 126 6. Adjustment of repayment of unjust enrichment 127 7. Consequences of delays in payment 130 7.1. Introduction 130 7.2. The development of the legislation 131 7.2.1. Hire-purchase and consumer credit 131 7.2.2. Interest on delayed payments 132 7.2.3. Registration of delayed payments 133 7.2.4. Payment of insurance premiums 133 7.2.5. Current proposed legislation 134 7.3. Summary 135 8. General clauses on the fairness of contracts 137 8.1. The legislation 137 8.1.1. Adjustment of unfair contract terms 137 8.1.2. Regulation of unfair contract terms 139 8.2. Need-oriented assessment of fairness in practice 140 8.3. Summary. General principles of interpretation, etc. 143 Chapter VI. Towards need-oriented general principles 146 1. Introduction 146 2. Need-oriented principles as aids and as independent norms 147 3. Relevant needs 151 3.1. Needs of parties 151 3.2. The needs of the work force 153 4. "Financers" of social protection in the law of obligations 154 4.1. Introduction 154 vii

viii 4.2. Enterprises', etc., social responsibility 155 4.3. The owner's social responsibility 157 4.4. Solidarity in the case of accidents 158 4.5. Social community 158 4.6. Need-orientation in different types of relationships 159 5. Need-oriented law and the market 160 5.1. The problem 160 5.2. "Subsequent" needs 163 5.3. Degree and guideline concepts 164 5.4. Side issues 168 6. Development of the new principles using constructed examples 168 6.1. Introduction 168 6.2. Need-oriented protection of creditors 169 6.2.1. General 169 6.2.2. Satisfaction of need of compensation 170 6.2.3. Satisfaction of housing needs 172 6.3. Need-oriented protection of debtors 173 6.3.1. Introduction 173 6.3.2. Private law/execution 174 6.3.3. Legal consequences 176 Chapter VII. Social force majeure 180 1. Introduction 180 2. The causes of payment delay 181 3. Solutions and proposals outside the Nordic countries 184 3.1. Introduction 184 3.2. Re-interpretation of traditional principles 185 3.3. Statutes and draft bills 188 4. A general principle of social force majeure 190 4.1. Arguments for a "switching of principles" 190 4.2. Terminology 191 4.3. The scope of the doctrine 192 4.4. Mandatory law? 194 5. The prerequisites of social force majeure 197

5.1. Introduction 197 5.2. Relevant occurrences 197 5.3. The requirement on causal connection 201 5.4. The requirement on unforeseeability 204 5.5. The requirement on absence of fault 204 6. Legal consequences of social force majeure 206 6.1. General 206 6.1.1. Possible legal consequences 206 6.1.2. Consideration for the counter-party 207 6.2. Mitigation of sanctions 208 6.3. Dissolution of the contractual relationship by the debtor 213 Chapter VIII. Effects of an alternative doctrine 217 1. Introduction 217 1.1. The Problem 217 1.2. An example: the case of social force majeure 219 2. Prerequisites of an alternative practice 221 2.1. Introduction 221 2.2. Personal prerequisites 222 2.3. Institutional prerequisites 224 2.4. Legal-technical prerequisites 226 3. Concluding remark 228 Bibliography 230 Finnish statutes 248 Abbreviations 250 Index 251 ix

PREFACE In discussions of legal theory in the Nordic countries in the early 1980s, one of the foreground questions concerned the possibilities of, and the limits to, a reorganizing, "critical", "alternative" legal dogmatics. The discussion tended to remain at a theoreticallevel, however, and concrete examples of this kind of dogmatics were few. The position was just such a one as described by the East German legal philosopher Hermann Klenner in criticizing the attempts in his own country to make methodological legal research independent of legal scholarship: he objects to "such a division of labour that some people know how to research (but cannot) and others can indeed do research (but do not know how)... " (Staat und Recht 111986 p. 57). I myself had in various contributions to the discussion stated the view that private-law research ought to be developed, among other ways, by placing greater weight upon the general principles. Such statements incur obligations: sooner or later one is in a position where one has to do something oneself, not merely tell others how. The Swedish-language original of this work (Social civilrtltt, 1987) represented an attempt to fulfil this moral obligation. The English version is not a direct translation of the Swedish original. Large parts have been rewritten: the theoretical parts have been expanded while parts of the concrete dogmatics have been cut out.

xii PREFACE The two works contain an attempt to adopt a new perspective upon certain topics of general importance within contract law. What is essential in them is their pervading theme: the possibility of developing the need-oriented elements in the general principles of contract law. Much of the detail could naturally be deepened and altered: it has nonetheless been my hope that the works are sufficiently well developed to permit scrutiny of the central ideas by the learned community and the legal audience. Ultimately, it is not worth improving the strain too much before one can see whether the seeds will grow at all. The law develops in small steps: too large a single step, and the legal scholar easily falls outside the field of what is legally possible. I wrote parts of the original Social civilrl1tt during a fairly long stay, in 1986, funded by the Deutsche Forschungsgemeinschaft and the Academy of Finland, at the Zentrum filr Europaische Rechtspolitik, University of Bremen. I wish to repeat here my thanks to the collaborators and staff of the department, and particularly to its Director, Professor Norbert Reich, for their support. In Finland I am indebted for the ideas developed in the book chiefly to the now defunct discussion circle for critical private law, with, among others, Nildas Bruun and Juha POyhOnen as members. The English-language version of the work has come about through the initiative of Professor Aulis Aarnio and with the help of his unfailing international contacts. This is but a small example of his tireless work for the benefit of Finnish legal theory. The translation has been carried out expertly and rapidly by Tim Crosfield, Stockholm. It has been funded by the Academy of Finland, the University of Helsinki and Oskar Oflunds stiftelse. The finishing work is performed within the large research project "Social Contract Law in Europe", also funded by the Academy of Finland. Helsinki, August 1990 Thomas Wilhelmsson