COMPARATIVE PRIVATE LAW INTERPRETATION OF CONTRACTS University of Oslo Prof. Giuditta Cordero Moss

Case I – Renewal of lease A mining company and a landlord enter into a long term lease of an area to be exploited as a mine The lease has the duration of 25 years and contains a renewal clause Within the contractual term the mining company sends a notice of renewal The landlord refuses to renew the lease

Renewal clause ”This agreement expires on the 25th anniversary of the date hereof, provided however that the mining company is entitled to a renewal of this lease at the same conditions for a period of ten years, if the mining company sends to the landlord a notice of renewal not later than one year prior to the expiry date hereof.”

Renewal of lease: interpretation of the contract Norwegian law: Renewal subject to renegotiation German law: Renewal at same conditions Italian law: Renewal at same conditions English law:Renewal at same conditions Unidroit, PECL: Renewal at same conditions

Case II – Assignement of Activity Two medical doctors with private practices in two different cities decide to switch cities and to take over each other’s firms They enter into an agreement regulating the mutual assignements of rights and obligations (i.a. the portfolio of patients) After a few months one doctor decides to return to his original city, and starts there a new firm in direct competition with his own former firm, now taken over by his colleague The colleague wishes to prevent this competition, as the majority of his new patients will probably prefer to go to their former doctor

Competition clause The contract does not contain any clause limiting the competition bewteen the two firms, or the possibility of one doctor to open a new firm in competition with the other one.

Assignment of activity: interpretation of the contract Norwegian law: Implied limitation of competition German law: Implied limitation of competition UNIDROIT, PECL: Implied limitation of competition Italian law: No limitation English law: No limitation

Aim of rules on interpretation Norwegian law: The common intention of the parties to prevail German law: The common intention of the parties to prevail Italian law: The common intention of the parties to prevail English law: The common intention of the parties to prevail UNIDROIT, PECL: The common intention of the parties to prevail CISG: The intention of one party to prevail, if known by the other

Rules of interpretation Norwegian law –Establish the intention of a reasonable person of the same kind –Appreciate all circumstances (previous negotiations, subsequent conduct,…) –Consider fair dealing and equity (”reell hensyn”) –Gap-filling –Construct to pursue contract’s purpose –…

Rules of interpretation German law § 133 BGB: establish the real intention of the parties, if common – otherwise, objective int. § 157 BGB: Contracts must be interpreted according to good faith and considering practices Gap-filling according to good faith (pursue balance of interests)

Rules of interpretation Italian law Articles 1362 to1371 cc Establish intention of the parties- objectively In claris non fit interpretatio Systematic interpretation Appreciate all circumstances No limitation by expressed cases Good faith (if doubts persist) Balance of interests as a last resort …

Rules of interpretation English law Literal interpretation (parol evidence rule) Gap-filling only if implied terms are necessary or obvious (not if conflicting interests) Expressio unius est exclusio alterius Judge does not substitute bargain with more reasonable solution …

Rules of interpretation CISG Art. 8: statements made by a party Establish party’s intent, if known to the other party Otherwise, understanding of reasonable person of the same kind Appreciate all circumstances Good faith was discussed but excluded

UNIDROIT Principles Articles 4.1 to 4.8 Establish common intention, failing which understanding of reasonable person of same kind Appreciate all circumstances Gap-filling with appropriate terms (based on parties’ intention, contract’s nature, good faith) …

PECL Articles 5:101 to 5:107 Establish common intention, failing which understanding of reasonable person of same kind Appreciate all circumstances Article 6:102: implied terms –Intention –Nature and purpose of contract –Good faith and fair dealing …

Common features Intent of the parties: objective interpretation Contra proferentem Favor validitatis Systematic interpretation

Judge’s powers to integrate or correct the contractual text