Summaries

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Motor Works to obtain steel for its own needs, and to demand more would be a violation of good faith. A court would enforce the contract in Cases 8(a) and 8(c).

Italy: In Case 8(b), a court would probably give relief on the grounds that a contract must be performed in good faith, or on the grounds that the quantity is indeterminable unless it is to be determined by Motor Works’ normal requirements. A court would enforce the contract in Cases 8(a) and 8(c).

Austria: In Case 8(b), the contract would be interpreted to require that Motor Works buy steel only for its own production provided there were indications that the contract was based on this assumption. A court would enforce the contract as written in Case 8(a), and in Case 8(c) unless there were indications outside the contract that Motor Works was obligated to order a certain amount of steel.

Germany: In Case 8(b), a court might interpret the contract to require Motor Works to buy only for its own needs, or it might well hold that its failure to do so is a violation of good faith. The court would enforce the contract as written in Case 8(a), and in Case 8(c) unless there were indications outside the contract that Motor Works was obligated to order a certain amount of steel.

Greece: In Case 8(b), a court would give relief under a specific provision of the Civil Code that says that if the determination of the performance has been entrusted to one of the parties, that determination must be made under ‘equitable criteria’. Relief could also be given on the grounds that circumstances have changed in a way that creates a disproportion between performance and counter-performance. The contract would be enforced in Cases 8(a) and 8(c).

Scotland: None of the promises are gratuitous, and therefore they are binding even absent the formality of a writing. Even if they were gratuitous, a writing would still not be necessary because the promises were made in the course of business. Nevertheless, the contract in Case 8(b) would probably be interpreted to allow Motor Works to buy no more steel than it usually does. Alternatively, a court would likely construe the contract as good faith requires even if it would otherwise be interpreted differently. The contract would be enforced as written in Cases 8(a) and 8(c). England: Alloy’s promise lacks consideration, and so it is not binding until Motor Works commits itself to purchasing a certain amount of steel. Consequently, Cases 8(a) and 8(b) would be unlikely to arise in practice since Alloy would simply withdraw its promise if the market rose. If it did

not, then it would be bound in Case 8(a). It might not be bound in Case 8(b) if the promise were interpreted to limit Motor Works’ purchases to its own needs, as the court might apply the principle that a contract must be interpreted ‘to give the transaction such business efficacy as the parties must have intended’. But it is hard to tell how the contract would be interpreted. A court would enforce the contract in Case 8(c) unless, which is much less likely, it interpreted the contract to require Motor Works to buy some steel.

Ireland: Alloy’s promise lacks consideration and so it is not binding. If it is viewed as an offer, it will be binding when Motor Works accepts by ordering steel. It would then be enforced in Case 8(a). In Case 8(b), if Alloy did not revoke its offer when the market price rose, which would be in its interests, then a court might interpret the promise to limit Motor Works’ purchases to its own needs, but it would be more likely to enforce the contract as written. In Case 8(c), the court would find that Motor Works has rejected Alloy’s offer.

Preliminary comparisons

The reporters from civil law countries thought that the promises in Cases 8(a) and 8(c) would be enforced, but the one in Case 8(b) would not be, or might well not be. The reasons for not enforcing that promise were extraordinarily diverse: abuse of right (France and Belgium), interpretation (the Netherlands, Austria, Germany, and Scotland), the rule of interpretation in accordance with good faith (Scotland), the requirement of negotiation or performance in accordance with good faith (the Netherlands, Portugal, Italy, and Germany), uncertainty (Italy and France at one time), changed circumstances (the Netherlands and Greece), and a specific code provision requiring a party who has discretion over the content of a contract to use it in accordance with ‘equitable criteria’ (Greece).

The reporters from common law countries (England and Ireland) said that in all three cases, the initial promise was not binding because it lacked consideration. It could constitute, at most, a revocable offer. Cases 8(a) and 8(b) could not arise unless Alloy did not revoke its offer when the market rose, which the English reporter noted was unlikely in practice, and the Irish reporters noted would be against its interest. If Alloy did not revoke its offer in these cases, it would be bound if Motor Works accepted, although, in Case 8(b), a court might interpret the contract to limit Motor

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Works to buying for its own needs. Whether it would do so is uncertain (England) or even unlikely (Ireland). In Case 8(c), Motor Works would not be bound because Alloy’s offer was never accepted unless, as the English reporter noted, a court interpreted the initial promise to require it to buy a minimum amount, which, he said, is quite unlikely.