Search

When and why can parties escape from a contract on the ground that the price is unfair? This question is considered in a comparative and historical perspective in English and French law. The general rule in both systems is that the parties are free to determine the price and they are then bound by their contract. One well known exception in French law, which derives from Roman law, is Article 1674 of the Code civil which allows a vendor to rescind a contract for the sale of land if the price agreed in the contract is less than five-twelfths of the fair price. It is generally thought that there are no analogous rules in English law. However, the law on this subject is in fact considerably more complex and more colourful than this simple contrast would suggest. Numerous rules on unfair prices in contracts were created in French law by the legislature and the courts since the promulgation of the Code civil in 1804. In English law, courts intervened in contracts on the ground of an unfair price in a few instances in the nineteenth century. However, only the rule on unfair prices in salvage contracts has survived until today. In both systems, the policies of preserving family wealth, protecting weak parties and giving special treatment to certain parties for economic, political, social or cultural reasons underpin these rules. There are two principal conclusions. First, freedom of contract is much less extensive in French law than in English law. This is evident in the numerous rules on unfair prices in contracts in French law and in the primacy of the remedy of altering the price rather than rescission. Secondly, while in theory, French courts play a much less significant role than English courts in the development of law, the creation and abolition of certain rules on unfair prices in contracts by French courts shows that judicial creativity in French law can be much less constrained in practice than in English law.