with an intention to do harm (for example, to get rid of a competitor) or for an illegitimate reason. It would then be able to obtain termination of the contract and/or damages for the breach. Characterizing such behaviour as illegitimate is tricky. It would be up to the judges of the lower courts to decide. Although trying to make a profit is not in itself illegitimate, it could be argued that if Motor Works ordered twice as much in order to resell the steel and thus be in competition with Alloy, it would be changing the purpose of their framework contract, which was intended as a supply contract and not a distribution contract.

In Case 8(c), however, where the market price has fallen, Motor Works would be under no obligation to buy any steel. The contract does not contain an exclusive dealing clause, and it imposes an obligation only on Alloy. Under French law, it would be a unilateral contract as opposed to one that is bilateral or synallagmatic (synallagmatique) where both parties are under an obligation. It follows that Motor Works need not buy any steel, and obviously will not if the market price is lower than the contract price.

We have already explained why the contract is less likely to be analysed as a unilateral offer to sell, on the part of Alloy, with an option for Motor Works to order as much steel as it wants. Even if this analysis were preferred, it is interesting that a court might then take the traditional approach and void the contract because its content is uncertain. It would probably be held to be uncertain, and therefore void under arts. 1129 and 1583 of the Civil Code, because the quantity to be delivered depends upon the sole discretion of Motor Works.13

belgium

The agreement in this case is a supply contract (contrat d’approvisionnement). This contract is perfectly valid. The fact that the quantity term is left open does not raise any difficulty under art. 1129 of the Belgian Civil Code (identical to art. 1129 of the French Civil Code) which requires that the object of the contract be certain. The controversy never arose in Belgium, as it did in France, as to the need for complete certainty in quantity (under art. 1129) and price (under art. 1591, also identical in the French and Belgian Civil Codes). Belgian law has always clearly distinguished between a contract that provides a framework for future transactions and the contracts

13Terré, Simler, and Lequette, Les obligations no. 279–3, p. 235; Collart-Dutilleul and Delebecque, Contrats no. 148, p. 131.

price, and Motor Works orders the amount of steel it usually needs. It is highly unlikely that a court would decide that Motor Works is committing an abuse of its contractual right since Motor Works is not taking advantage of the situation to order more steel.

In Case 8(b), the market price rises to 20 per cent more than the contract price, and Motor Works orders twice the steel it usually needs. Here, Alloy could contend that there was an abuse of right. It could argue that the right is exercised absent a legitimate or sufficient interest: Motor Works bought more steel than needed, and did so only to make a profit on its resale. Alloy could argue, moreover, that the value of the interest served is disproportionate to that of the interest harmed if, for example, Motor Works were Alloy’s largest client by far, and this operation caused extreme harm to Alloy. Finally, Alloy could argue that Motor Works refused to take its legitimate expectations into account if, for example, Motor Works had bought the same quantity of steel (half the amount) over many years.

In Case 8(c), the market price falls to 20 per cent below the contract price, and Motor Works buys no steel from Alloy, purchasing its requirements of steel on the market instead. A priori, Alloy itself would seem at fault since it did not provide for an exclusivity clause in the supply contract. Alloy could again claim that there was an abuse of right if Motor Works were a dominant contractual partner which imposed the contractual provisions on Alloy, and Alloy, a small producer, had to rely entirely on Motor Works. Under these circumstances, Alloy could show that there was a disproportion between the harm it suffered from and the advantage drawn from Motor Works, for whom Alloy would be only one supplier among many others. As a practical matter, Alloy would be unlikely to take this approach since it would prefer to maintain its relationship with a partner it relies upon economically, rather than run the risk that Motor Works will turn towards another, more obliging, producer when the contract is renegotiated.

Alloy will not be able to resort to the theory of imprévision which would allow a judge to modify a contract if a change in circumstances upsets the economic balance of the contract (bouleversement de l’économie contractuelle).20 Indeed, this theory has now been clearly rejected by two recent decisions of the Cour de cassation.21 These decisions came after much hesitation in the case law and a long line of articles hostile to this theory.

20See generally, D. M. Philippe, Changement de circonstances et bouleversement de l’économie contractuelle (1986).

21Cass., 7 Feb. 1994, Pas., I, 150; Cass., 14 April 1994, JLMB, 1995, 1591.

200 the enforceabilit y of promises

the netherlands

The first question is whether a valid contract has been concluded. A contract is invalid if the obligations that the parties are assuming cannot be determined (art. 6:227 of the Civil Code22). Generally, this requirement is easily met. It is not necessary that the precise content of their obligations be determinable at the moment the contract is concluded. It is sufficient if their content can be established afterwards.23 Therefore, the contract here is probably valid. Thus, if Motor Works orders the amount of steel it usually needs, Alloy is bound to deliver this amount for the set price.24

In Case 8(a), however, the market price rises to 20 per cent more than the contract price. The rise in the market price may constitute an ‘unforeseen circumstance which [is] of such a nature that the co-contracting party, according to criteria of reasonableness and equity, may not expect that the contract be maintained in an unmodified form’ (art. 6:258 of the Civil Code).25 In that event, Alloy may ask the court to modify the contract or set it aside. Whether the rise in price to 20 per cent more than the contract price constitutes such ‘unforeseen circumstances’ depends on the circumstances of the case. However, if no additional circumstances can be proven, a mere rise of 20 per cent will probably be insufficient for interference by the court.

In Case 8(b), the market price not only rises by 20 per cent, but Motor Works orders twice the steel it usually needs. The promise is not binding. Several different lines of analysis lead to that result.

First, it can be said that a reasonable interpretation of the contract limits the amount that Motor Works can order to the quantity it really

22 Article 6:227 of the Civil Code: ‘The obligations which parties assume must be

24The possibility that the courts will interfere on the grounds of good faith if the buyer orders an excessive amount is discussed below.

25Article 6:258 of the Civil Code: ‘(1) Upon the demand of one of the parties, the judge may modify the effects of a contract, or he may set it aside in whole or in part on the basis of unforeseen circumstances which are of such a nature that the contracting party, according to criteria of reasonableness and equity, may not expect that the contract be maintained in an unmodified form. The modification or the setting aside of the contract may be given retroactive force. (2) The modification or the setting aside of the contract is not pronounced to the extent that the person invoking the circumstances should be accountable for them according to the nature of the contract or common opinion. (3) For purposes of this article, a person to whom a contractual right or obligation has been transferred, is assimilated to a contracting party.’

needs (arts. 3:33 and 3:35 of the Civil Code).26 In a leading case, Haviltex,27 the Hoge Raad overturned a decision by a court of appeal which had held that no interpretation of the contract was needed because the meaning of a clause in it was clear. The Hoge Raad held that words are never clear. It established a test for interpretation which it has repeated ever since, and which is based on the same principles as those which govern the formation of contracts and other juristic acts, the ‘will-reliance doctrine’ (wilsvertrouwensleer). The Hoge Raad recognizes that whether the contract contains a gap cannot be established on the basis of a merely linguistic interpretation of the clauses of the contract. Therefore, in order to establish how the parties have organized their relationship through a written contract, by this test, the court must determine the meaning that each of the parties could reasonably give to those clauses in the given circumstances, and the meaning each could reasonably expect the other party to attribute to them.

Following a different line of reasoning, it would be contrary to good faith for Motor Works to ask for twice the steel now that the market price has risen so much (6:248(2) of the Civil Code28). The doctrine of good faith in its so-called limitative function (beperkende werking) has been applied very frequently by the courts.29

Finally, one can say that even if the contract were interpreted to allow Motor Works to order more steel when the price rises, and even if it were not contrary to good faith to do so, nevertheless Motor Works may still not be able to on the grounds that the contract was not meant to deal with such a large increase in price (art. 6:258 of the Civil Code).30 Article 6:258 allows the judge to modify the terms of a contract on the basis of ‘unforeseen circumstances’. Here, the term ‘unforeseen’ means ‘not provided for’. This article is generally regarded as a particular application of the general rule on good faith in contract law of art. 6:248.

Motor Works probably does not need to buy its steel from Alloy in Case

26I presume ‘Motor Works orders twice the steel it usually needs’ implies that Motor Works orders more steel than it needs this year. If, however, this year it needs twice as much as usual the promise may be binding.

27HR 13 March 1981, NJ 1981, note Brunner, 635, AA 1981, 355, note Van Schilfgaarde.

28Article 6:248(2) of the Civil Code: ‘A rule binding upon the parties as a result of the contract does not apply to the extent that, in the given circumstances, this would be unacceptable according to criteria of reasonableness and equity.’

29On the functions of good faith, see M. Hesselink, ‘Good Faith’, in A. Hartkamp et al. (eds.), Towards a European Civil Code, 2nd edn (1998), 285 at 291.

30It is not likely that a Dutch court would invalidate such an arrangement on the grounds of indeterminacy.