In my French class yesterday:
Me (reading aloud): "La resolution de contrat, lorsque celui-ci est syn... synal... synallagmatique?"
Teacher (in French): "It's the same word as in German."
Me: [sigh]
Actually, the word exists in English too: "synallagmatic." But it's not a word I've ever encountered before, not even in law school. Although interestingly, Dictionary.com says it means "bilateral" in Louisiana civil law. I suspect, however, that it may mean "bilateral" in a distinctively civil law sense. In the common law system of contracts, when we mean bilateral we say "bilateral," but then our whole perception of the directional dynamics of a contractual agreement may be significantly different from those in civil law systems.
Take German law, for instance. German contractual law includes the concept of separation. This means that in any transaction involving the transfer of ownership of some good, there are at least three separate agreements bound up in the transaction:
- A contract for the sale of the good
- A contract to transfer the ownership of the good, and
- A contract to transfer ownership of the money used to pay for the good
These agreements may be thought of as three strands twirled into one rope. And, by analogous extension, as we all understand, cutting one strand will not necessarily cut the whole rope. (This is known as the principle of abstraction.)
To a common law American, this situation may seem strange. If one of those strands gets broken, how can the rest remain? For instance, if the ownership has been transferred, but the money has not been paid, how can the party who received the good still keep it?
The answer normally is that normally he can't. German law allows for such injustices to be resolved. But it does so much differently than in the common law. In Germany, a first possibility for recourse is to have structured the larger transaction so that the (sub)contracts contain conditions precedent. In other words, the contract could be constructed so that the agreement for the transfer of ownership in the good wouldn't become valid until the money was paid. This kind of arrangement can work to both parties' benefit: the payer can make payment conditional on possession of the good, and then the seller can make the transfer of ownership (which is not the same as possession of the good - ownership refers more to the possession of the title of the good) contingent on receipt of the money.
The second possibility for recourse arises when the contingent conditions seem to have been met, but something else still invalidates one of the agreement strands. German law, as a codified civil law system, has lots of specific rules governing contracts' validity. For instance, it has a rule prohibiting exploitive pricing. If such exploitive pricing existed within the agreement, any parts of the agreement incorporating it would become invalid. In a contract like the one described above, this rule would invalidate the contract on the transfer of the money, and also the contract addressing the general agreement to transfer the good. But the rest of the transaction would still be in force, which means that the payer would get his money back, yet he would still have the good since the transfer of ownership contract would still be valid. But then Germany has more still more rules that can address this inequitable situation. For example, under German law a party cannot retain a good that he has no legal right to. Looking back at the contract as a whole we see that the part addressing the agreement to sell the good has become invalidated. Thus there is no longer any legal basis for the buyer to retain the good, and so he will have to give it back.
In US common law the same result would be reached, but the rules governing it are a bit more fluid. Even in a bilateral agreement, where both parties promise to do something, the agreement is still much more unified. If one party fails to perform, then the whole contract fails for breach and the injured party gets to sue for damages to "be made whole again." However, it should be noted that American contracts are not necessarily any more fragile than those in Germany, where the other contractual threads can still hold a fractured agreement together. Common law allows for the notion of "partial breach," where the courts will try to keep the contract from failing completely by simply requiring the breaching party to pay damages to the injured one to compensate it for the breach it caused. So if, for example, one party had agreed to pay an amount for a good, and the good that the seller delivered was not sufficiently the same as the one bargained for, rather than forcing the entire transaction to be voided, with the good to be returned to the seller and the money to the buyer, the court could instead maintain the transaction by simply ordering the seller to compensate the buyer for the difference in value of the goods.
Also, even in a case of exploitative pricing, American courts can achieve a similar just result as the German courts could in invalidating a contract by invoking the doctrine of unconscionability. In such case the courts could declare the contract void, and the transaction would be reset, with the money returned to the buyer and the good to the seller - the same result that German courts would also be able to achieve through the aid of their many statutes.
It may be true that a German statute addressing exploitative pricing, for instance, is much more precise than the fuzzy common law doctrines on unconscionability. In theory, this might mean that German contractual disputes would have more predictable results. But on the other hand, by not being beholden to strictly articulated rules, American courts may have more flexibility in achieving just results.
Still, neither system is so completely foreign to the other. Though each jurisdiction may structure its system in its own way, with its own internal balance, in the end the underlying ability to contract exists equally in both places. While there surely remain differences between how German and American contract disputes might be resolved, I would suspect they would be found mostly along the edges - the fringe cases. In terms of the basic results, however, they are likely much the same.