Obligations & Contract law II
lecture notes.
(2022-2023)
Part I of the Course
1
, Lecture 1 OCL II Contract &
Regulation
Course overview
Contract & regulation (introductory meeting)
Contracts in Global Value Chains (4 meetings)
o Commercial contracts
o Consumer law
o Tort law
Labour law (5 meetings)
o Prof. Mijke Houwerzijl
o Employment relationships in transnational perspective
EXAM
Written exams: weighted average
Midterm is about meetings 1-5 21 March 2023
Endterm is about meetings 6-10
Mandatory materials: the mandatory readings, recordings and the things discussed in class.
MUST REGISTER for each EXAM
Course management: Ms Natalia Hol-Hernandez, LLM.
Read syllabus for details!
Agenda for today
Regulation
Interface with contract
o Contract law as regulation
o Contracts as regulatory tools
o Contract law being regulated
Outlook
What is regulation?
Public actors are not the only rulemakers. Due to globalisation, there are more and more private actors that
are regulating, for example in a specific branch through codes of conduct. NGOs may also be involved in the
development of standards.
3 steps in regulation
1. Rule-making
2. Monitoring rules
3. Enforcement
Perspective on law: process-based and goal-oriented.
Invites questions on effectiveness: when does the regulatory process lead to the attainment of the
goal?
Many approaches (theories) exist.
2
,Regulatory regime
Regulatory regime: what about contract law?
What are the goals of a contract?
Contract law provides for legal certainty: if you know when a contract is enforceable, you can start to
make plans. Through legal certainty, you are allowing for market transactions to happen
Conventional view: libertarian
Regulatory view: distributive justice or social welfare.
Both Collins and Sunstein & Thaler take the libertarian approach.
Always keep this in mind when thinking about a regulatory regime (or
contracts)
Contract (law) and regulation
Collins (2004) states that “Contract law cannot be seen as facilitative only”
o Instead, there is distributive justice (optimize social welfare)
E.g. implied terms, unfair terms.
Understanding contract law as regulatory mechanisms invites new questions for research and price.
3
, 3 views on interplay between contract & regulation
1. Contract law as regulation
o Contract law rules regulating the relationship between parties to the contract.
2. Contracts as regulatory tools
o Set a contract in order to achieve an aim.
o Do the stipulations – the terms and conditions in your contract – are they specific enough
etc. in order to obtain the goals you have within that specific contract?
3. Contract law being regulated.
o Contract law itself can be subject of regulation.
o E.g. rules that stem from the EU have an impact on national law and have an impact on
national private law. Thus national jurisprudence is shaped/regulated by EU law.
1. Contract law as regulation
How is contract law regulatory? it defines rules on:
o When does legally enforceable contract come into being?
Carlill v Carbolic Smoke Ball Co. [1983] 1 QB 256, CA
o Who may contract? (legal capacity, agency)
o What is contracted for? (interpretation, gap-filling)
o What happens in case of non-compliance? (remedies for breach)
2. Contracts as regulation
Contracts as a means of regulation.
Contracts regulate the obligations between the parties.
o Self-regulation at the micro-level / private ordering
Private ordering = ordering the relations between the parties of the contract.
Bilateral / multilateral
E.g. seller and buyer, lessor and lessee, the business and the consumer.
These are all bilateral relationships.
But the contracts can also be multilateral.
Contracts as statutes.
The contract can be seen as the statute for the particular relationship.
o Freedom of contract / pacta sunt servanda
Parties are free to decide with whom and on what to contract. But if you decide to
contract, then pacta sunt servanda: you need to keep your promise.
Certain type of contracts / terms
o Type: commercial relationships, long-term (relational)
The longer the relationship the contracting parties intend to have, the bigger the
risks, because you cannot predict the future. There thus is a need to regulate those
risks and to put them into the contract.
o Terms: ‘boilerplates’, ‘general terms & conditions”
Example: Bangladesh Accord on Fire & Building Safety (2021)
3. Contract law being regulated
Contract law as an object of regulation
How can it better deliver on goals of fairness and justice?
State intervention
4
lecture notes.
(2022-2023)
Part I of the Course
1
, Lecture 1 OCL II Contract &
Regulation
Course overview
Contract & regulation (introductory meeting)
Contracts in Global Value Chains (4 meetings)
o Commercial contracts
o Consumer law
o Tort law
Labour law (5 meetings)
o Prof. Mijke Houwerzijl
o Employment relationships in transnational perspective
EXAM
Written exams: weighted average
Midterm is about meetings 1-5 21 March 2023
Endterm is about meetings 6-10
Mandatory materials: the mandatory readings, recordings and the things discussed in class.
MUST REGISTER for each EXAM
Course management: Ms Natalia Hol-Hernandez, LLM.
Read syllabus for details!
Agenda for today
Regulation
Interface with contract
o Contract law as regulation
o Contracts as regulatory tools
o Contract law being regulated
Outlook
What is regulation?
Public actors are not the only rulemakers. Due to globalisation, there are more and more private actors that
are regulating, for example in a specific branch through codes of conduct. NGOs may also be involved in the
development of standards.
3 steps in regulation
1. Rule-making
2. Monitoring rules
3. Enforcement
Perspective on law: process-based and goal-oriented.
Invites questions on effectiveness: when does the regulatory process lead to the attainment of the
goal?
Many approaches (theories) exist.
2
,Regulatory regime
Regulatory regime: what about contract law?
What are the goals of a contract?
Contract law provides for legal certainty: if you know when a contract is enforceable, you can start to
make plans. Through legal certainty, you are allowing for market transactions to happen
Conventional view: libertarian
Regulatory view: distributive justice or social welfare.
Both Collins and Sunstein & Thaler take the libertarian approach.
Always keep this in mind when thinking about a regulatory regime (or
contracts)
Contract (law) and regulation
Collins (2004) states that “Contract law cannot be seen as facilitative only”
o Instead, there is distributive justice (optimize social welfare)
E.g. implied terms, unfair terms.
Understanding contract law as regulatory mechanisms invites new questions for research and price.
3
, 3 views on interplay between contract & regulation
1. Contract law as regulation
o Contract law rules regulating the relationship between parties to the contract.
2. Contracts as regulatory tools
o Set a contract in order to achieve an aim.
o Do the stipulations – the terms and conditions in your contract – are they specific enough
etc. in order to obtain the goals you have within that specific contract?
3. Contract law being regulated.
o Contract law itself can be subject of regulation.
o E.g. rules that stem from the EU have an impact on national law and have an impact on
national private law. Thus national jurisprudence is shaped/regulated by EU law.
1. Contract law as regulation
How is contract law regulatory? it defines rules on:
o When does legally enforceable contract come into being?
Carlill v Carbolic Smoke Ball Co. [1983] 1 QB 256, CA
o Who may contract? (legal capacity, agency)
o What is contracted for? (interpretation, gap-filling)
o What happens in case of non-compliance? (remedies for breach)
2. Contracts as regulation
Contracts as a means of regulation.
Contracts regulate the obligations between the parties.
o Self-regulation at the micro-level / private ordering
Private ordering = ordering the relations between the parties of the contract.
Bilateral / multilateral
E.g. seller and buyer, lessor and lessee, the business and the consumer.
These are all bilateral relationships.
But the contracts can also be multilateral.
Contracts as statutes.
The contract can be seen as the statute for the particular relationship.
o Freedom of contract / pacta sunt servanda
Parties are free to decide with whom and on what to contract. But if you decide to
contract, then pacta sunt servanda: you need to keep your promise.
Certain type of contracts / terms
o Type: commercial relationships, long-term (relational)
The longer the relationship the contracting parties intend to have, the bigger the
risks, because you cannot predict the future. There thus is a need to regulate those
risks and to put them into the contract.
o Terms: ‘boilerplates’, ‘general terms & conditions”
Example: Bangladesh Accord on Fire & Building Safety (2021)
3. Contract law being regulated
Contract law as an object of regulation
How can it better deliver on goals of fairness and justice?
State intervention
4
