Helge Dedek, ‘Not Merely Facts: Trade Usages in German Contract Law’

How do trade usages – as factual practices – transition from is to ought, from fact to norm? In the hierarchy of governing rules in contract law, the position occupied by trade usages is ambiguous: they can theoretically be regarded as deriving authority from incorporation into a contract or, conversely, as freestanding legal norms. In the context of transnational arbitration, this issue is particularly salient: the parties are free to agree upon the ‘rules of law’ of their choosing; usages, however, will most often trump provisions of the governing law if they are seen as (in most cases, tacitly!) implied contract terms.

The treatment of usage as either fact or norm varies across jurisdictions, as the comparatist Ernst Rabel mapped out as early as 1936. Today, the differences he identified still reverberate in the wording of article 9(2) CISG. Notably, while legislative records indicate that most delegations struggled with this article’s wording for predominantly ideological reasons, Germany’s concerns were rooted in theory. This is because, as Rabel had earlier diagnosed, German law took a dual approach to trade usages, treating them neither as an independent source of objective law nor as merely contractual content. Nowadays, German jurists commonly agree that usages generate binding force only via the normativity of contract, yet remnants of the ambivalence described by Rabel can still be observed.

This paper traces the history and continuing effects of this tension, at the heart of which lies the interpretation of ‘Verkehrssitte’, a word that is usually translated as ‘customary practice’ (i.e. fact), but that has strongly normative overtones in German. Informed by recent comparative law scholarship on contract interpretation in the common and civil law, I explore the interplay between the notion of ‘Verkehrssitte’ (of which trade usages are a subset), ‘subjective’ will theory, and the ‘objective’ theory of contract, also deriving insight from the position occupied by ‘good faith’ in German law.

Dedek, Helge, Not Merely Facts: Trade Usages in German Contract Law (August 20, 2013). Fabien Gélinas (ed), Trade Usages and Implied Terms in the Age of Arbitration (Oxford University Press) 2013, Forthcoming.

First posted 2013-08-23 06:37:53

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