Art. 77: Contracts of Indeterminate Duration: Article 77 CESL – A Comment from a German Perspective

Abstract

Unlike the Common Principles of European Contract Law or the Draft Common Frame of Reference in their respective provisions concerning contracts of indeterminate duration, Article 77 CESL read that such a contract could be terminated by default by either party upon giving a reasonable period of notice not exceeding 2 months. Article 77 (2) CESL furthermore made this provision mandatory for b2c contracts. Deviations to the detriment of the consumer were prohibited. When the CESL-proposal was withdrawn, the Commission announced a new instrument limited to online purchases of digital content and tangible goods that is currently being drafted. In this context, contracts of indeterminate duration remain of relevance and a provision is, hence, likely to be included again. This chapter assesses the CESL regime concerning contracts of indeterminate duration in the light of German law. Like German law, the CESL followed a system of special substantive control for the non-individually negotiated contract terms. Therefore, on the whole four different scenarios will be assessed: an individually negotiated clause in a b2c contract and likewise a non-individually negotiated one; and in the same way, an individually negotiated clause in a b2sme contract and likewise a non-individually negotiated one. The critical analysis leads to suggestions for improvement regarding the contracts of indeterminate duration under the new instrument.