Marija AMPOVSKA

GENERAL OVERVIEW ON THE CONTRACTUAL RESPONSIBILITY IN THE LAW OF THE EU

1. Introduction

n most modern legal systems of today, the notion of contractual responsibility/ liability is used as a single term to refer to civil legal relationship that arises in violation of obligations under existing obligations, other than contract (which term refers to signify responsibility) can be and obligations of any other kind, i.e. acquisition on no ground, work management without a warrant or a unilateral declaration of will. Within the international legal sources, chronologically speaking, we first encounter with international legal acts, principles and models that govern civil - legal liability of the contracting parties in international contracts for the sale of goods, and even more recently with certain international legal models approach defining basic principles of civil liability for damage caused to the international level. Observing the chronological order of events, at an international level we can speak of three in-

The author holds Master of Law and is assistant at the Faculty of Law Goce Delchev Stip

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ternational instruments which within its subject to edit or less to a greater extent contain provisions governing contractual liability in international agreements, or civil - legal liability of the parties in case of causing damage. These are the following international instruments: - Vienna Convention on the International Sale of Goods 1980 (United Nations Convention on Contracts for the International Sale of Goods) are marked with the acronym CISG - The UNIDROIT Principles of International trade agreements since 1994 (The UNIDROIT Principles of International Commercial Contracts) that are marked with the acronym and UPICC 1 and - Principles of European Contract Law which was published in 1994 and already in 1999 followed by their first amendment. They are marked with the acronym PECL. In 2005 the Principles of European damages law were published prepared by the European Group for damage rights. Although they represent a model of general principles for the majority of questions damage rights and aim to serve as a basis for advancement and harmonization of damage law in Europe. UNIDROIT Principles of International trade agreements (hereinafter UPICC), and the Principles of European Contract Law (hereinafter PECL) are both set of principles (the latter of which are only a model and not a legal act and still known as Lando policies) which incurred as a result of a need - unification of contract law, and their field of application is essentially identical, i.e. both documents tend to become general principles of contract law, or a new redaction of lex mercatoria. These two instruments relate to contracts in general, not just the sales contract. They are time followers of CISG and although the content is inspired by its principles, it is also an attempt to overcome shortcomings that make them visible time and effort to supplement the regulations for those questions that appeared void or legal issues with the legal theory. There is no doubt that between these two instruments is essential, substantive and temporal connection with the CISG which is reflected by the fact that the CISG is an inspiration for both his followers and they represent its replenishment and on the interpretation of its provisions before their adoption

1 In 2004, the principles were filled with several new provisions, but given the content, ie the fact that none of the amendments does not apply to the issue of civil legal liability, there for to us1994 version is relevant.

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is considered questionable. The latter refers and Art. 7 (2) CISG, according to which: Those questions relate to the subject of the regulation of the Convention, which are not expressly stipulated therein, shall be regulated by the general principles on which it is based, or if such there will be regulated in accordance with law to be applied according to the legal principles of private international law. Starting from such a point of view, it can be concluded that under the contractual responsibility on international level there are three categories of questions:2 matters expressly governed by CISG, and solutions are validated (reaffirmed) in UPICC and PECL issues that are regulated by CISG, but not explicitly and completely. For these questions the legal theory that finds ways UPICC PECL and provide support in the interpretation of the provisions of the CISG and matters which are not regulated in the CISG, but should be addressed in order to complete the determination of the amount of the obligation for compensation. and that applies one of two. 2. Content of PECL related to contractual liability Within PECL, the basic provision for establishing civil-legal liability provision can be found in Article 9:501. This provision provides for the right of the aggrieved party to seek compensation for the damage that had been caused by the failure of the contract counterparty. Liability exists only in cases where it is not exempt under Article 8:108, and the damages are recovered under this instrument including the non-pecuniary damage and future damage for which there is a reasonable probability of happening. PECL explicitly sets the request to a fault of the party who did not fulfil contractual obligations resulting into civil-legal liability. This characteristic doe not imply that the responsibility is not ground for contractual liability. On contrary, the analysis of legal provisions on this legal source suggests that the responsibility of the party that failed to fulfil the contract is assumed. This conclusion stems from the burden of proving no fault (i.e. the cause was a fair circumstance) that is provided on the side that would not fulfil the contract. According to PECL, such cases are when the contracting party will prove that the failure of the agreement is a result of an obstacle that is beyond its control and that at the time of concluding the
2 Blas F., Httler P.: Remarks on damages provisions in the CISG, PECL and UPICC, December, 2004

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contract it was neither possible to predict the occurrence of such obstacle, nor to avoid its consequences. In such cases, according to Art. 8:108 PECL, the contracting party is excused for not fulfilling the obligation i.e. the law does not hold it accountable for compensation of the damage occurred. Other way of exemption from contractual liability under this instrument, is a consent of wills, i.e. predicting the contractual clause that limits or excludes the liability of contracting parties. Such clauses are enforceable only if they are bona fide principles and with the principles of fair bargaining, or if invoking the clause would be a harsh injustice given the purpose for which the contract was concluded.3 As a basic principle for the scope of compensation that is binding to the responsible person, is the principle of compensation for all damages incurred or full compensation of damages.4 Thus, in Art 9:502 of PECL (General Measure of Damages), stipulates the basic principle for determining compensation, according to which: ...the general measure of damages is such sum as will put the aggrieved party as nearly as possible into the position in which it would have been if the contract had been duly performed. Such damages cover the loss which the aggrieved party has suffered and the gain of which it has been deprived, in terms of the type of damage to be compensated, a commonly accepted rule is compensation for foreseeable damage and according to Art. 9: 503 PECL the damage has to be probable consequence of failing to meet the obligation. In terms of reducing the amount of compensation for the amount of gained benefits of the creditor as a result of contract violation, PECL offers official response via a comment on Art. 9: 502 according to which the aggrieved party has to report on any profit that it gained as the result of violation of the obligation, in order to reduce the compensation for the amount od such gains.5 When the occasion arises: how the contribution of the aggrieved party in causing all the damage impact on liability for damages to the other party, the decision in PECL (Art. 9: 504), determines liability for compensation to be distributed proportionally between the contracting pages, depending on the contribution they had in causing all the damage. With regard to the issue of non-pecuniary damage, under this instrument the general principle of full compensation is applicable, including
3 See Article 8:109 from PECL 4 See Art. 9: 502 PECL and Art. 7. 4. 2 (1) UPICC. 5 The official comment is available at <http://cisgw3.law.pace.edu/cisg/text/peclcomp74. html#cnpc>

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compensation of this type of damage. Non-pecuniary damage, in the international law, often consists of loss of reputation or loss of goodwill of the aggrieved party. While it is clear that this instrument provides for liability for such damage, the problem occurs before courts and arbitration tribunals, that have difficulties with demands for compensation for non-pecuniary damage, especially related to determining the relationship between reputation or goodwill of the aggrieved party and the economic losses because such relationship cannot be easily quantified. The rules of PECL, in particular Art. 9: 501(2), hold the answer to the question on the compensation for future damages. Under this provision, the responsible person is obliged to reimburse only the future damage that is likely to occur. The court or the arbitrator is left with the task to assess the probability of occurrence of damage, on one, and its probable amount on the other side. One of the issues that arise in connection with civil liability in international treaty law, and for which PECL does not provide solution is the issue of civil liability for violation of the personal goods. In this particular case, the aggravation of the personal goods, is seen in terms of damage resulting in death, injury or damage to ones health, caused by the goods which were the subject of the contract. The PECL is no legal basis for setting up such a claim for compensation. Nevertheless, it is worth mentioning that such request for compensation is outside of the CISG scope; UPICC and PECL as well do not contain rules governing civil liability in such cases, although they regulate specific requirements for compensation that in some legislations are qualified as requests under the offense law. 3. New trends within EU law and their impact on the contractual liability In the area of private law, EU has established a Study group on European civil code, and the Research group on EC Private Law (Acquis Group). As a result of their joint efforts, in 2009 they have presented the Draft Common Frame of Reference (DCFR). DCFR contains principles, definitions and model rules of European private law, in part based on the revised rules of PECL. The aim of the members of the working group was for DCFR to go beyond academic circles and in a form of text that will serve as an inspiration for solving issues of private law. Immediately after the publication of the DCFR, which in its second and third volume includes partially revised PECL rules, PECL has attracted the attention of many high courts in Europe and a number of official bodies, responsible for the modernization of national contractual and legal sys-

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tems. The main objective of DCFR was to develop a clear and consistent concept and terminology. Thus, one of many reasons why developers of DCFR rules propose the development of rules different from PECL is the clear distinction between the agreement (understood as agreement or legal deed6) and the relationship in which such agreement is developed into, consisting of mutual rights and obligations. Underlining this difference refers to the overall content of contractual law. For example, according to DCFR, contract is signed, and obligations are fulfilled, or the contract is not fulfilled. DCFR consists of 10 books. Relevant to the issue of contractual liability are the second and third book. The second book titled Contracts and other juridical acts, the third chapter Obligations and corresponding rights. Book II predominantly contains stipulations related to liability for pre-contract liability, but also rules that can be considered not directly relevant to contractual liability, but rather shall be considered under the precontract responsibility or even tort liability. An example is the Art. 7:204: Liability for loss caused by reliance upon incorrect information or responsibility for damage caused by relying on inaccurate data. According to this article: (1) A party who has concluded a contract in reasonable reliance on incorrect information given by the other party in the course of negotiations has a right to damages for loss suffered as a result if the provider of the information: (a) believed the information to be incorrect or had no reasonable grounds for believing it to be correct; and (b) knew or could reasonably be expected to have known that the recipient would rely on the information in deciding whether or not to conclude the contract on the agreed terms. (2) This Article applies even if there is no right to avoid the contract. This article can be considered a concretization of the principle of good faith and fair bargaining. This rule has its place within the book of noncontractual liability for damage caused to another person, but as there is a tight relationship with the conduct of the party during the negotiations, it seems appropriate, particularly for parties that would use these rules, for it to be placed under the contract law. While, given the fact that the rule is about the agreement, it is without a doubt a contractual responsibility,
6 According to the definition of legal deed (juridical act according to the terminology used in DCFR) in the draft this term refers to statements or agreements that aim to provoke legal action. As an examples, the authors of the DCFR have listed: offer, acceptance, notices, authorizations, guarantees.

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on the other hand, it represents a relationship between the parties arising from the pre-agreement level and the discussion thereof - whether it is to be considered within a offense responsibility or within the pre-contractual liability i.e. culpa in contrahendo or it still represents a contractual responsibility.7 The third book lays down the legal rules concerning the duties and the corresponding rights, both contractual and non-contractual. It is concerned with general provisions relating to breach of obligations also arising from other contractual relations. The advantage of this approach is that the rules laid out in Book III can be used readily rules, or with minor modifications where appropriate, in the later books dealing with non-contractual issues. The alternative to this approach, according to the publishers DCFR, would be an unnecessary repetition of rules through books that are its constituting part. On the other hand, this approach actually fits the notion of contractual liability is accepted in modern legal systems, and in our country. Such structural division has been implicitly applied in PECL, while in DCFR it is made in a more explicit way. According to some authors, the PECL structure is simpler and recommended for the structure of DCFR as well, i.e. they propose that the structure relating to the contracts and contractual obligations should follow a natural chronological order. According to the authors of DCFR, it actually follows the natural order of arrangement of the contractual law, starting with the pre-contractual level, followed by formation of the contract, the right of withdrawal, the representing and signing a contract, causes of invalidity, interpretation of contracts, content and effects of contracts, performance and remedies in case of default on contracts, plural of debtors and creditors, change of parties. In essence, this is the same structure found in PECL. Provisions applicable to contractual liability understood in this sense are found in Chapter 3: Remedies for non-performance, Part 7: Damages and interest. According to Article 3:701: Right to damages (right to compensation): (1) The creditor is entitled to compensation for damages caused by the failure of the debtor, unless the failure is justified. (2) According to the damage that these rules shall be subject to compensation includes future harm for which there is a reasonable probability
7 More about the differences between theorists and within individual European legal systems: Study Group on a European Civil Code and the Research Group on EC Private Law (Acquis Group), Principles, definitions and model rules of European private law Draft common frame of reference (DCFR), .513-517, available at: http://ec.europa. eu/justice/contract/files/european-private-law_en.pdf

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that it will occur. (3) Under the harm means pecuniary and non-pecuniary damage. Damage includes loss of revenue or profit, burdens and reduce property value. Pecuniary damages covers pain and suffering and damages the quality of life. The next article contains a legal rule that defines the general criteria for determining the remuneration, stipulating that the amount of compensation should enable the creditor to get as close as possible to the position in which it would be if a proper fulfilment of obligations have been made by the debtor, and that the compensation should also compensate the suffered damage and loss of profits (Article 3:702). In case of contract or other legal deed, under Article 3:703, the debtors liability is limited to foreseeable damage, or damages that the debtor foresaw or a reasonable probability that the debtor had the ability to predict the occurrence of liability as probable result of the failure, unless failure was intentional or due to gross negligence. Debtor is not responsible for that part of the damage caused by the creditors contribution to the failure of the obligation or the effects thereof (Article 3-705). Also, the debtor does not match any occurrence of the damage, which the creditor could have prevented by taking reasonable measures. Based on the content of the DCFR provisions concerning contractual liability it can be concluded that, regardless of any differences of certain aspects mentioned above, there is a content overlap between the DCFR rules and PECL. From the above said, it is noteworthy to emphasize the difference regarding the issue of non-pecuniary damage in case of contractual liability. Thus, an injury or damage on personal goods is considering in terms of the damage caused by death, injury or damage to the health of the contractual party, caused by goods that were subject of the contract, within PECL there is no legal basis for establishing a claim for such compensation. On the other hand, DCFR clearly states in Article 3:701 that the term damages means the material and non-material damage. This means expanding the scope of the term recoverable damages for contractual liability, which is found in PECL at the expense of the non-pecuniary damage, which is recoverable under DCFR. 4. Relationship of the Macedonian legislation to the provisions of European legal models In the Macedonian law, as in most contemporary legal systems in the world, the notion of contractual liability is used as a single term to refer to civil-legal relationship that arises in violation of obligations under exist-

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ing obligations, that except for contractual (which makes term to signify responsibility), can also be obligational of any other kind, i.e. enrichment without a ground, work management without a warrant or a unilateral declaration of will. The specificities of the contractual liability for damage are found in the sense of the parties in the case of contractual liability, i.e. contractual parties can only be persons who have the capacity of a party in the contractual relationship, whereas the damage in the contractual liability can only be considered in cases of default, delay of fulfilment or failure to notify of such delay. Under the Macedonian law in cases of contractual liability arising from the failure or delay in fulfilling the contractual obligation, the pecuniary is obliged to compensate the foreseeable damage that consists of ordinary damage and loss of benefits. Contractual liability for foreseeable damage stipulated in Art. 255 of The Law for Obligational Relations (LOR), can be found in Art. 9:503 of the Principles of European Contract Law (PECL). Given the fact that contractual liability is always a liability based on fault, the type of fault by the pecuniary affects the scope of compensation as described further below. If it is proven on the side of the pecuniary that there is an existence of a intentional fault or major negligence or if the pecuniary has made attempt to do intentional fraud, the pecuniary is obliged to compensate the overall damage, that besides the foreseeable damage includes the future damages as well.8 This provision corresponds to one of the legal rules within DCFR, specifically Art. 3:703 of the Book III, in which the debtor in obligatory relationship arising from a contract or other legal deed is responsible for the damage that the debtor foresaw or has reasonably expected to have foreseen at the time of occurrence of the obligation as a likely result of the failure, unless the failure was intentional, reckless or extremely negligent. Relatively new alternatives for addressing the contractual liability in this institute are brought by the Novel of 2008. These solutions governing some of the basic issues of contractual liability, i.e. are regulating the possibility of exemption from liability and the extent of the damages. Foreseeing the possibility to exempt the debtor from liability if the debtor proves that it had not fulfilled the obligation or had fulfilled the obligation with delay due to extraordinary event or circumstance that had occurred after the conclusion of the contract, and could not have been prevented, avoided or
8 Art. 255, par. 2 of LOR

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removed (force majeure),9 the Macedonian law in the part of the civil-legal responsibility aligns with the appropriate stipulations in the international law. Alignment is achieved with anticipating the right of the creditor to ... the benefits of ordinary damages, loss of benefits, as well as the applicable monetary compensation for non-pecuniary damage which the debtor ...10, by which the notion of non-pecuniary damage it brought into relation with the contractual liability, as it is the case with the Principles of European Contract Law (PECL). Bearing in mind the provisions for contractual liability, upon making a comparative analysis of the provisions of PECL with national legislation in Macedonia, it can be concluded that the national legislation is harmonized with the EU law. According to PECL, the assumption of existence of a fault is overturned in cases where the contracting party can prove that the failure to fulfil the obligations of the agreement was a result of an impediment beyond contracting partys control and that at the time of conclusion of the contract the impediment could not have been predicted or the consequences of such impediment could not be avoided. In such cases, as per Art 8:108 of the PECL, the Contracting Party ... is excused for failing to meet the obligation, i.e. the law does not hold the party accountable for compensation of such damage. Expanding further on the comparative analysis in the remaining provisions of the contractual law in Macedonia with those of the European law, besides the similarities, it is noteworthy to mention the difference concerning the legal possibility of contractual exclusion or limitation of liability. Unlike the Macedonian law which in Art. 254 of LOR explicitly determines the cases in which it is not allowed in advance of the agreement conclusion to exclude or limit the liability of the debtor for the damage it had caused (i.e. in cases when the party has intentionally or by negligence caused the damage), in Art. 8:109 of PECL, such situations are handled through bona fide and principles of fair bargaining, serving the purpose of determining the applicability of such contractual clauses. In general, with exception to the minor differences between the provisions in the Macedonian and the European law, it can be concluded that there is a high level of harmonization of Macedonian legislation in the field of contractual responsibility with the corresponding applicable European law.
9 See Art. 252 of LOR 10 See Art. 255 of LOR

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bstract This paper explores and elaborates contractual liability in EU legal models and rules, elaborating the content of the Principles of European Contract Law (PECL) that were published in 1994 and supplemented in 1999. In the paper, PECL is seen as a model of rules closely related to the United Nations Convention on Contracts for the International Sale of Goods, 1980 and The UNIDROIT Principles of International Commercial Contracts, 1994. The newest tendency of European private law are expressed in the academic draft containing principles, definitions and model rules of European Private Law, also known as DCFR, which originated in 2009 as a result of the work of two groups within the EU Working Group on European Civil Code: Study group on European civil code and Research group on EC Private Law (Acquis Group). In conclusions, this paper shows the basic rules governing the issue of contractual liability in Macedonian legal system and gives comparative analysis on the compliance with the European rules and legal models.

, 1994 , 1999 . , 2009 - - . .

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