1. Options for regulating the construction of contracts

This article deals with filling in contract gaps. Integration presupposes that the contract has been validly concluded. Therefore, the provisions of chapter 2 of these Principles must be particularly considered with respect to the minimum requirements for determining the object of the contract required to establish the conclusion of the contract. In many cases, a contract that initially incomplete or insufficiently determined may be deemed to be concluded simply because the parties have performed it. In other cases, regardless of this fact, the contract will be considered as concluded even though there are gaps concerning aspects with no impact on its conclusion. In all these cases, judges and arbitrators are faced with the need to make up for omissions by filling in gaps left by the negotiation of the parties.

As is the case for contract interpretation, there are two opposing approaches in comparative law for filling contract gaps and achieving contract integration. Civil law systems usually adopt a flexible criterion for contract integration, which provides in principle a latitude freedom to implement gap filling. This criterion is commonly stated in an “open texture rule” that incorporates a so-called “general clause” or principle. The most widespread principle in Caribbean civil codes states that contracts are binding not only in relation with contract terms expressly agreed by the parties but also by virtue of requirements derived from “good faith”, “equity” or from the “nature of the contract” itself [Articles 1.023 of the Costa Rican Civil Code; 1603 of the Colombian : 1.135 of the Dominican and French Civil Code; 1.546 of the Honduran Civil Code; 1.159 of the Guatemalan Civil Code; 925 and 926 of the Haitian Civil Code; 6:2 (6.1.1.2) and 6:248 (6.5.3.1) of the Dutch and Suriname Civil Code; 1.796 of the Mexican Civil Code; 2.480 of the Nicaraguan Civil Code; 1.109 of the Panamanian Civil Code; 1.210 of the Puerto Rican Civil Code; 956 of the Saint Lucian Civil Code; 1.160 of the Venezuelan Civil Code]. A similar rule is maintained in Articles 3, 11 and 103 of the Proposals for Reform of the French law on obligations of 2013. The same principle is known in the USA (Sections 1-203 UCC and 205 of the Second Restatement). Articles 1.621.II Colombian Civil Code and Article 1.160 of the Dominican and French Civil Code follow the same criterion by presuming that clauses that are commonly used in a contract shall be filled even if they have not been expressed.

Conversely, English law uses the “implied-in-law terms” doctrine to fill contract gaps. To some extent, this common law doctrine seems rather similar to the civil law approach: the “implied-in-law” terms that are contract obligations imposed by law, custom or case law coincide with the general requirement of civil law systems of subjecting the contract beyond contract terms to any legal mandatory obligation. However, the question is controversial as far as the method used in filling gaps in the broader sphere of obligations subject to the free will of parties is concerned. In this respect, English courts have recourse to “implied-in-fact terms”, that are contractual terms not expressed by the parties but reasonable and above all necessary for the contract to work and to make business sense. Caribbean common law systems follow the traditional criteria of English case law (“officious bystander test” and “business efficacy test”), as demonstrated for instance in decisions of the High Court of Trinidad and Tobago in Costa v Murray and Murray (Carilaw TT 1977 HC 82) and Pierre v Port Authority of Trinidad and Tobago (Carilaw TT 1969 HC 23), the latter being a decision referring to the obligation of transporting goods safely and appropriately as an implied term that does not need to be expressed.

The difference between general clauses in civil law and implied terms in common law lies in the specific criteria for the inference of non-express obligations. Whereas civil law points preferably to fairness criteria such as good faith or equity, English law is rather based on mere contract efficiency, validating implied obligations that are indispensable for the contract to work or to have business sense (reasonability) regardless of whether or not they are fair and of their axiological basis. Such a trend is obvious, for instance, in the decision of the Privy Council (Saint Lucia) in Marcus v Lawaetz (Carilaw LC 1986 PC 2). However, as it has been pointed out in the commentary to Article 4.1.2, although there is a recent trend in English law to consider good faith as a canon for contract interpretation or integration, such an approach remains controversial.

The two approaches mentioned above seem to work together, but only apparently. In some cases, they are both found in the most recent international texts on contract law, but in a confusing manner. Thus, UNIDROIT Principles opt for a special rule (Article 4.8) providing an appropriate solution through the intent of the parties, the aim and nature of the contract, general criteria as good faith and fairness, and even the most pure “common sense”. However, it must be stressed that the same indications are used in Article 5.2 UP to define “implied terms”. If both articles and their commentaries are compared, there is no appreciable distinction between a gap filled under Article 4.8 UP and an implied obligation determined with similar criteria under Article 5.2 UP. But in fact if there is an implied term there is no room for gaps, so that Article 4.8 UP would never be actually applied.

In this sense, the proposed regulation in Article 6:102 PECL is more consistent. Under the section “implied terms”, PECL state a unique principle for contract integration. To some extent, the terminology is closer to English law, but an essential difference about the sources of implied terms remains: intent of the parties, nature and object of the contract, and good faith. With minimal variations, the PECL model of regulation is followed in Articles II-9:101 DCFR and 68 CESL, which introduce the notable feature of excluding such integration if the parties have deliberately left a gap risk, thus accepting the risk of so doing. In this case, the literality of contract will prevail.

2. Minimum rule

Drafting of a convergent rule on integration of contract between Caribbean civil and common law systems is today considered unfeasible.

The rule proposed is consciously vague and open, to enable the incorporation of the two prevailing cultures, insofar as it does not prevent or require the necessary incorporation of non-agreed obligations inspired by good faith or equitable principles to determine the reasonableness of a term in the light of contract aims. It must be noted, on the one hand, that many civil law systems are characterised by case law actually reluctant to modify parties' agreement on the ground of justice arguments, especially in sophisticated trade spheres. On the other hand, it must be stressed that Article 4.1.1 prevents the modification of the contract when the terms are clear. Strictly speaking, the proposed rule does not force English law's reluctance to accept good faith and also it does not prevent its consideration. It can therefore be accepted by all the legal systems involved without significantly increasing the risk of divergence of solutions, given the actual diversity of criteria derived from the integration criteria within domestic courts themselves.

Otherwise, if the contract parties are interested in incorporating expressly a rule for equitable integration of the contract inspired by the good faith principle, they may opt to introduce a specific clause in the contract, whose enforceability will be recognised by courts and arbitrators from legal systems inspired by English law.

GOOD FAITH CLAUSE

“This contract will be interpreted in accordance with the requirements of good faith. Each party shall observe good faith towards the other party and hereby warrants that in its dealings with the other it shall not perform any act or omission, which may prejudice or detract from the rights, potential assets or interests of the other party. Each party shall co-operate with the other party to the fullest extent in assisting each other to the benefit of both parties.”