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forceable because it is a gift even if it is given in return for the employee’s past service. Nevertheless, the Italian reporter believes it would be enforced anyway because Italian courts favour employees.

There are, then, greater differences than before in the results reached and in the grounds for reaching them. That is as one might expect since it is far less clear in Case 10(b) that the money promised Vito on retirement represents a judgment by Company as to what his services were worth. In Case 10(a), Company is paying to induce him to render his services. Presumably, the services are worth it unless Company is really paying because, as in Case 9, it has changed its position and will suffer some harm if he leaves other than the loss of his services. In Case 10(b), however, the officers of the company may have been using its money to express their own gratitude or friendship to a retiring colleague, or to set a precedent that they hope will be followed in their own case, or to improve company morale generally. Or they may indeed have believed that his salary did not reflect the value of his past services, and they think it fair to make up the difference. Since it is less clear that they are revaluing his services as in Cases 10(a), 11, and 12, rather than making a gift intended to enrich him beyond what he has earned, as in Case 1, it is not surprising that different legal systems reach different results.

III. The absence of commitment

In the cases examined thus far, the question was whether a party who had decided to commit himself was legally committed. We will now turn to the question of whether a party can remain uncommitted. We will first examine cases in which the parties have agreed that one of them will not be committed. The question is whether that agreement will be honoured. We will then turn to cases in which the parties have not so agreed, and the question is whether, nevertheless, one party should have the option to withdraw.

A. Open terms and options

In Case 8, one party to a contract to buy steel is not committed to buy any particular quantity. In Case 13, one party has the option to buy land which the other party must sell to him if he chooses.

In both cases, the one-sided commitment could benefit both parties. In Case 8, it allows the promisee to adjust the quantity he orders to his own requirements. In Case 13, it allows the party who wants to buy land to

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conduct a study before committing himself. In either case, because the promisee benefits, he may be more willing to buy or to buy at a favourable price, and, if so, the promisor will benefit as well, which is most likely why he was willing to make the promise. On the other hand, in both cases, the promise may be unfair to the committed party since the party who is free may be able to speculate at his expense. He can buy steel or buy the land if the market price goes up and refuse to do so if the price falls.

Most of the legal systems under examination protect the committed party, at least in the cases in which he needs the protection most. In the common law jurisdictions, until the promisee commits himself, none of the promises in Cases 8, 13(a), and 13(b) are enforceable because they all lack consideration: the promisee was not committed and therefore gave up nothing in return for the promise. Possibly, however, the promise in Case 13(c) would be enforced. In that case, Realty was obligated to buy the land at a certain price at the conclusion of its study ‘unless, in its sole and absolute judgment, [it] thought the economic prospects were unsatisfactory’. The English and Irish reporters thought that a court might decide that this provision is not the same as one that allows Realty to withdraw from the contract if it chooses to do so since Realty is allowed to withdraw only on the basis of its view of the economic prospects.

If the underlying concern is that the promisee will speculate at the promisor’s expense, then this approach is in one way too broad and in another too narrow. It is too broad in that it will knock down promises even when there is little chance the promisee will be unfairly advantaged and in which the promise serves one of the useful purposes just described. Examples are Case 8(a) where Motor Works buys the amount of steel it ordinarily orders and Case 13(a) where Realty’s option is short term. It is too narrow in that even if the promisor could be exploited, the promise would be enforceable if the promisee made some commitment in return. For example, he could agree to buy a minimum amount of steel in Case 8 or to withdraw only if dissatisfied with the economic prospects, as in Case 13, which could be hard to verify.

The civil law approach is to take the parties’ need for protection into account more directly. Reporters from civil law systems had no difficulties with the enforceability of the promises in Cases 8(a), 8(c), 13(a), and 13(c) where the danger of unfairness is small (except that in Germany, Greece, and Scotland, the promises in Case 13 could not be made informally because they concerned interests in land). The reporters thought that there might be difficulties in Case 8(b) in which the market price of steel

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rises, and Motor Works buys twice its normal requirements of steel, and in Case 13, in which the market price of land rises and Realty buys, not to develop the land as originally planned, but to resell the property.

The doctrines applicable in these cases were quite diverse. The promise in Case 8(b) might not be enforceable because Motor Works committed an ‘abuse of right’ (France and Belgium), because the contract should be interpreted so that it cannot buy more than its normal requirements (the Netherlands, Austria, and Germany), because the contract should be interpreted to accord with good faith (Scotland), because parties to a contract must perform in good faith (the Netherlands, Portugal, Italy, and Germany), because the terms of a contract must be certain (Italy, and France at one time), because relief is given for changed and unforeseen circumstances (the Netherlands and Greece), and because a specific code provision requires a party with discretion over the content of a contract to act by ‘equitable criteria’ (Greece).

In Case 13(b), some reporters thought that if the term of the option were too long, a court would require that it be exercised in good faith (the Netherlands) or would reduce the term (Italy, and Germany if the term offends ‘common decency’). If the exercise of the option were seriously unfair, for example if there were an abrupt price rise and Realty bought the land for resale, relief might be given because Realty did not act in good faith (the Netherlands, Italy, and Germany), because the purpose of the original transaction is not achieved (Spain, the teoria de la base del negocio), or because circumstances have changed (Austria). In France and Belgium, relief might be given for lésion. Relief for lésion is given when the contract price is less than seven-twelfths of the market price of the land. A court will evaluate whether the discrepancy is sufficiently large, in a sale, at the time the land is sold, and in an option, at the time the option is exercised.

Thus the one precise rule encountered in civil law jurisdictions is this last one in France and Belgium: that relief will be given if the contract price of the land is less than seven-twelfths of the market price of the land at the time an option to buy land is exercised. Like the common law rule, however, it seems both too broad and too narrow. It takes no account of how much was paid for the option, of the length of its term, or of the volatility expected in market prices at the time the option was given. A party who paid a fair amount for the option might make a profit of more than five-twelfths. A party who paid less than this amount or nothing at all, as in Case 13(b), might make a profit of less than five-twelfths.

With this exception, however, the remedies in civil law systems in Case

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8(b) and in Case 13 if Realty buys in order to resell and make a profit have the opposite disadvantage. They are not underor over-inclusive. They are imprecise.

B. Locus poenitentiae

In the cases just examined, the parties agreed that one of them would not be committed, and the question was whether he should have that option. We will now turn to cases in which the promisor seems to have committed himself and the question is whether he should nevertheless have the option to withdraw. This question, of course, opens up a large subject. We will merely examine two cases in which many legal systems allow him to withdraw.

In Case 14, the promisor offered a reward for finding her necklace. In Case 15, the promisor listed his house with a real estate agent. In each case, both parties might benefit if the promise is enforceable. The promisees can try to find the necklace and sell the house knowing that they will be paid if they succeed. Without that assurance, they may be unwilling to make these efforts, and so the promisor may benefit as well. Moreover, there is no danger, as in the previous cases, that they will speculate at the promisor’s expense. But there is a problem. If the promisor cannot change his mind, he may be forced to pay for a service that he does not want and which has not yet been rendered.

Again, these concerns are reflected in the results that different legal systems reach in these cases although the doctrinal justifications for them are different. In Case 14(a), Simone promised a particular detective, Raymond, a reward for finding her necklace. In Case 14(b), she made this promise to the public in a newspaper advertisement. English and Irish law treat both promises as offers of unilateral contract in the common law sense of the term. They are offers which the offeree cannot accept by making a promise in return but only by performing the action requested. Neither the detective nor the members of the public can accept by promising to find the necklace; they must actually find it. Since, until they do, the offer is not yet accepted, in principle, it can be revoked on the grounds that an offer is not binding until its acceptance. According to the English and Irish reporters, the harshness of this principle will probably be mitigated by holding that the offerer cannot revoke after the offeree has begun to perform. It would not be enough for him to make preparations to perform. It is not at all clear what the offerees would have to do in this case to be held to have begun performance. The Irish reporter thinks it

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would be enough to incur expenses looking for the necklace. The English reporter thinks that would not be enough, at least in the case of the newspaper advertisement.

Many civil law jurisdictions would treat Case 14(a) differently from Case 14(b). The promise to the detective is revocable at will only in Germany, and even then, the revocation must be made in good faith. It is revocable in France and Portugal, but Simone would be liable for Raymond’s expenses. It is revocable in Belgium and Austria only if she pays his expenses and lost profit, and so, while the promise is revocable, she must pay the same amount as if it were not. It is irrevocable in the Netherlands, Spain, Greece, and Scotland, and in Italy it may be revoked only for just cause. In Italy, it may also be irrevocable after Raymond has ‘begun to perform’ as in the common law jurisdictions.

The promise in Case 14(b) is freely revocable in Austria, and in Spain, Portugal, Germany, and Greece as well provided that the revocation is given the same publicity as the original offer. It is revocable in France if Simone pays for the expenses anyone has incurred, and in the Netherlands provided she pays ‘equitable compensation’ to whoever has begun to perform. It is irrevocable in Belgium either because unilateral obligations (in the civil law sense) are binding, or because revocation would be an abuse of right. It is irrevocable in Scotland because it is not a gratuitous obligation. It is irrevocable except for just cause in Italy.

In short, we have a range of solutions stretching from the one extreme of protecting only the offeror to the other of protecting only the offeree. Either or both of the promises are freely revocable; revocable except in bad faith; revocable if the promisee’s expenses are paid; revocable if an equitable amount is paid; revocable if his expenses and lost profit are paid; irrevocable if the promisee has begun to perform; irrevocable except for just cause; or simply irrevocable. That is as we would expect if the underlying concerns are in tension. As noted, on the one hand, enforcing the promise serves the useful purpose of encouraging effort by the promisee. On the other, the promisor may be forced to pay for work he does not want and that has not yet been done.

Moreover, in civil law systems, when the promise is to a particular person (Case 14(a)), the promisee is protected more often: the promise is freely revocable only in Germany, and then only in good faith; irrevocable in at least four systems; and revocable only on payment of full damages including lost profit in one system. In contrast, the promise to the public (Case 14(b)) is freely revocable in four systems, and irrevocable (or revocable for just cause) in three. That is as one would expect since the detective is

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more likely to make extensive efforts than a member of the public who reads an advertisement. Indeed, the purpose of the promise to the detective is to induce him to make such efforts. That of the advertisement may not be to encourage people to look for the necklace but to come forward if they happen to know where it is.

In Case 15, Claude promised to list a house with a broker. Again, there are different approaches but they can be understood in terms of these same concerns. In Scotland, England, and Ireland, the effect of the agreement depends on its interpretation. The Scots reporter believes that if the agency were non-exclusive, he could withdraw before sale, but that if it were exclusive, he could not. The English and Irish reporters believe that he could withdraw before sale.

In Portugal, Claude is liable to Homes only if the listing is exclusive, in which case he is liable for the expenses that Homes incurred, and will be liable for the commission if Homes proves it would have sold the property.

In Belgium, Italy, and Spain, Claude could claim his commission if he finds a willing buyer, although in Belgium and Italy, if he withdraws before that time, he must pay the broker’s expenses. In France, if the agency is exclusive, the parties may agree to a penalty if Claude withdraws before the broker finds a willing buyer, although otherwise the broker can claim its commission only if there is a sale.

In the remaining jurisdictions, supposedly, the broker can claim his commission only if a sale is actually concluded, and before then, Claude can withdraw. In the Netherlands, this result may be reached as a matter of interpretation. But Claude’s ability to do so may be more restricted than this principle suggests. In Austria, if and only if the agency is exclusive, the parties can agree that the agent earns his commission if the principal changes his mind without an important reason. In Germany, they can change the rule provided they do so in writing. In Greece, if the agency is exclusive, the parties usually agree that the principal cannot revoke for a period of time. In France, the principal who revokes may be liable in tort. In the Netherlands, in practice, agencies use a standard form contract that would require Claude to pay a penalty of 10 per cent of their commission if he withdraws before sale.

In this case, then, Claude is more likely to be able to revoke his promise than Simone in Case 14. That is as one would expect. The importance of allowing the promisor to change his mind is greater here. Simone may have changed her mind about how much she values her necklace but presumably she would still like it back. Claude no longer wants to sell his house. Moreover, if the agency is exclusive, as a matter of practice if not of