Preamble
Book I General provisions
Book II Contracts and other Juridical Acts
Chapter 1 General provisions on contracts
Chapter 2 Formation of a contract
Chapter 3 Authority of agents in relation to contracts
Chapter 4 Validity of contracts (including illegality)
Chapter 5 Interpretation of contracts
Chapter 6 Contents and effects of contracts
Chapter 7 Application of above rules to other juridical acts
Book III Contractual and non-contractual [rights and] obligations
Chapter 1 Performance of contractual obligations
Chapter 2 Non-performance of contractual obligations
Chapter 3 Particular remedies for non-performance of contractual obligations
Chapter 4 Application of above rules to non-contractual obligations
Chapter 5 Conditional rights and obligations (Provisional heading and placing,
pending further discussion)
Chapter 6 Plurality of debtors and creditors
Chapter 7 Change of parties
Assignment of right to performance
Substitution of new debtor
Transfer of one party’s entire legal position (rights and obligations)
Chapter 8 Set-off
Chapter 9 Prescription
Book IV Specific contracts
Book V Benevolent intervention
Book VI Non-contractual liability for damage
Book VII Unjustified enrichment
Book VIII Transfer of movables
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Book IX Security rights in movables
Book X Trusts
Appendix I Definitions of terms
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PREAMBLE
(To be drafted later)
BOOK I
GENERAL PROVISIONS
Book I Article 1:101: Scope
(1) These Principles are intended to apply generally in relation to contracts and other
juridical acts, contractual and non-contractual obligations and corresponding rights,
the transfer of movable property, security rights over movable property, and trusts.
(2) However, the Principles are not intended to apply to:
(a) matters involving the status or legal capacity of natural persons;
(b) matters relating to wills and succession;
(c) rights in property arising out of a matrimonial relationship;
(d) rights and obligations, including maintenance obligations, arising out of a
family relationship, parentage, marriage or affinity;
(e) rights and obligations arising under bills of exchange, cheques and
promissory notes and other negotiable instruments to the extent that the
rights and obligations under such negotiable instruments arise out of their
negotiable character;
(f) matters relating to employment law;
(g) matters relating to land law;
(h) arbitration agreements and agreements on the choice of court,
(i) matters governed by the law of companies and other bodies corporate or
unincorporated, such as the creation, by registration or otherwise, legal
capacity internal organisation or winding up of companies and other
bodies corporate or unincorporated and the personal liability of officers
and members as such for the obligations of the company or body.
(3) The scope of particular Books may be further restricted.
Book I Article 1:102: Interpretation
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(1) These Principles are to be interpreted in such a way as to promote:
(a) respect for human rights and fundamental freedoms;
(b) good faith and fair dealing; and
(c) legal certainty and uniformity of application.
(2) In the interpretation of these Principles the definitions in Appendix 1 apply.
Book I Article 1:103: Notice
(1) The rules in this Article apply in relation to the giving of notice for any purpose under
these Principles.
Book I Article 1:104: Computation of time
(1) The rules in this Article apply in relation to the computation of time for any purpose
under these Principles.
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BOOK II
CONTRACTS AND OTHER JURIDICAL ACTS
CHAPTER 1 : GENERAL PROVISIONS ON CONTRACTS
Book II Article 1:101: Freedom of Contract
(1) Parties are free to enter into a contract and to determine its contents, subject to the
requirements of good faith and fair dealing, and any applicable mandatory rules.
(2) The parties may exclude the application of any of the Principles or derogate from or
vary their effects, except as otherwise provided by these Principles.
Book II Article 1:102: Usages and Practices
(1) The parties are bound by any usage to which they have agreed and by any practice
they have established between themselves.
(2) The parties are bound by a usage which would be considered generally applicable by
persons in the same situation as the parties, except where the application of such usage would
be unreasonable.
Book II Article 1:103: Good Faith and Fair Dealing
(1) Each party must act in accordance with good faith and fair dealing.
(2) The parties may not exclude or limit this duty.
Book II Article 1:104: Duty to Co-operate
Each party owes to the other a duty to co-operate in order to give full effect to the contract.
Book II Article 1:105: Reasonableness
For the purposes of this Book reasonableness is to be judged by what persons acting in good
faith and in the same situation as the parties would consider to be reasonable. In particular, in
assessing what is reasonable the nature and purpose of the contract, the circumstances of the
case and the usages and practices of the trades or professions involved should be taken into
account.
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Book II Article 1:106: Imputed Knowledge and Intention
If any person who with a party’s assent was involved in making a contract, or who was
entrusted with performance by a party or performed with a party’s assent:
(a) knew or foresaw a fact, or ought to have known or foreseen it; or
(b) acted intentionally or with gross negligence, or not in accordance with good
faith and fair dealing,
this knowledge, foresight or behaviour is imputed to the party.
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CHAPTER 2 : FORMATION OF CONTRACTS
[This would be PECL Chapter 2, with minor adjustments.]
CHAPTER 3 : AUTHORITY OF AGENTS IN RELATION TO CONTRACTS
[This would be PECL Chapter 3, with minor adjustments.]
CHAPTER 4 VALIDITY OF CONTRACTS (INCLUDING ILLEGALITY)
[This would be PECL Chapter 4, with minor adjustments, plus illegality, which is
currently in PECL Chapter 15.]
CHAPTER 5 INTERPRETATION OF CONTRACTS
[This would be PECL Chapter 5, with minor adjustments.]
CHAPTER 6 CONTENTS AND EFFECTS OF CONTRACTS
[This would be the earlier part of PECL Chapter 6, with minor adjustments, plus
something on conditions, which are currently in PECL Chapter 16. Some of the later
articles in PECL Chapter 6 relate to contractual obligations, rather than to the contract
as a juridical act and would be better in Book III. The precise distribution is still for
discussion. ]
CHAPTER 7 APPLICATION OF CONTRACT RULES TO OTHER
JURIDICAL ACTS
Book II Article 7:101: Scope of Chapter
(1) This Chapter applies to juridical acts other than contracts.
(2) In particular, it applies to:
(a) unilateral promises intended to be binding without acceptance;
(b) offers and acceptances;
(c) unilateral grants of authority to act as a representative;
(d) unilateral grants of consent to something or permission to do something;
(e) unilateral acts of ratification, approval, cancellation, withdrawal,
revocation, avoidance or termination; and
(f) unilateral acts granting, transferring or waiving rights.
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Book II Article 7:102: General application of contract rules
The rules in Chapters 1 to 6 of this Book apply, with the adaptations made in this Chapter and
any other appropriate adaptations, to other juridical acts.
Book II Article 7:103: General provisions
(1) In relation to the making of a unilateral juridical act the rules in this Article apply in
place of the rules in Chapter 1, on general provisions relating to contracts.
(2) A person is free to make a unilateral juridical act and to determine its contents, subject
to the requirements of good faith and fair dealing, and any applicable mandatory rules.
(3) A person making a unilateral juridical act may exclude the application of any of the
Principles or derogate from or vary their effects, except as otherwise provided by these
Principles.
(4) A person making, or giving effect to, a unilateral juridical act must act in accordance
with good faith and fair dealing. The person may not exclude or limit this duty.
(5) In relation to a unilateral juridical act reasonableness, for the purposes of this Book, is
to be assessed objectively. In particular, in assessing what is reasonable the nature and
purpose of the act, the circumstances of the case and the usages and practices of any trades or
professions involved are to be taken into account.
(6) If any person who with the assent of the maker of a unilateral juridical act was
involved in making the act, or who was entrusted with performance of an obligation under the
act by the maker or performed with the maker’s assent:
(a) knew or foresaw a fact, or ought to have known or foreseen it; or
(b) acted intentionally or with gross negligence, or not in accordance with good
faith and fair dealing,
this knowledge, foresight or behaviour is imputed to the maker of the act.
Book II Article 7:104: Formation
(1) In relation to the making of a unilateral juridical act the rules in this Article apply in
place of the rules in Book II, Chapter 2, on the formation of contracts.
(2) A unilateral juridical act is made if:
(a) the party making the act intends to be legally bound or to achieve the relevant
legal effect;
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(b) the act is sufficiently certain; and
(c) the act reaches the person to whom it is addressed or, if it is addressed to the
public, is made public by advertisement, public notice or otherwise.
(3) Unless otherwise provided in relation to a particular type of juridical act, a unilateral
juridical act need not be made or evidenced in writing nor is it subject to any other
requirement as to form. The act may be proved by any means, including witnesses.
(4) The intention of a person to be legally bound to another person by a unilateral juridical
act is to be determined from the maker’s statements or conduct as they could reasonably be
expected to be understood by the other person.
(5) There is sufficient certainty for the purposes of paragraph (2) if the terms of the act:
(a) have been sufficiently defined by the party making it so that the act can be given
effect, or
(b) can be determined under these Principles.
Book II Article 7:105: Authority of Agents
The rules of Chapter 3 on the authority of agents apply to the authority of an agent or other
intermediary to make a non-contractual juridical act on behalf of the principal as they apply
to the authority to bind the principal in relation to a contract with a third party, any reference
to a third party being read as a reference to a party to whom the juridical act is addressed.
Book II Article 7:106: Invalidity
(1) The rules of Chapter 4 on the invalidity of contracts apply to the invalidity of noncontractual
juridical acts, any reference to the party entitled to avoid the contract being read
as a reference to the party making the juridical act and entitled to avoid it, and any reference
to the other contracting party being read as a reference to the person to whom the juridical act
is addressed.
(2) However:
(a) the Article on Unfair Terms not Individually Negotiated does not apply to
unilateral juridical acts; and
(b) a party who has made a gratuitous unilateral juridical act may avoid it for mistake
if the party would not have made the act knowing the true situation.
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Book II Article 7:107: Interpretation
(1) In relation to the interpretation of a unilateral juridical act the rules in this Article
apply in place of the rules in Chapter 5, on the interpretation of contracts.
(2) A unilateral juridical act is to be interpreted according to the intention of the party
making it, in so far as this intention can reasonably be gathered from its terms read in the
light of the relevant circumstances.
(3) If it is established that the party making the juridical act intended the act to have a
particular meaning, and at the time of the conclusion of the act the person to whom it was
addressed was, or could reasonably be expected to have been, aware of the first party’s
intention, the act is to be interpreted in the way intended by the first party.
(4) If an intention cannot be established according to (2) or (3), the act is to be interpreted
according to the meaning that a reasonable person relying on the act would give to it in the
circumstances.
(5) In interpreting the act, regard is to be had, in particular, to:
(a) the circumstances in which the act was made, including any preliminary
discussions;
(b) the conduct of the party making the act, even subsequent to the making of the
act;
(c) the nature and purpose of the act;
(d) the interpretation which has already been given to similar clauses by the party
making the act and any practices established by that party;
(e) the meaning commonly given to terms and expressions in the branch of
activity concerned and the interpretation similar clauses may already have received ;
(f) usages; and
(g) good faith and fair dealing.
(6) Where there is doubt about the meaning of a term in a gratuitous unilateral act, a
restrictive interpretation of the term is to be preferred.
(7) Terms are to be interpreted in the light of the whole act in which they appear.
(8) An interpretation which renders the terms of the act lawful, or effective, is to be
preferred to one which would not.
(9) Where an act is drawn up in two or more language versions none of which is stated to
be authoritative, there is, in case of discrepancy between the versions, a preference for the
interpretation according to the version in which the act was originally drawn up.
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Book II Article 7:108: Contents and effects
(1) In relation to the contents and effects of a unilateral juridical act the rules in this
Article apply in place of the rules in Chapter 6, on the contents and effects of contracts.
(2) In addition to the express terms, a unilateral juridical act may contain implied terms
which stem from:
(a) the intention of the party making the act,
(b) the nature and purpose of the act, and
(c) good faith and fair dealing.
(3) Where any term of a unilateral juridical act is to be determined by a third person, and
that person cannot or will not do so, the party making the juridical act is presumed to have
empowered the court to appoint another person to determine it. If a term fixed by a third
person is grossly unreasonable, a reasonable price or term is substituted.
(4) Where any term of a unilateral juridical act is to be determined by reference to a
factor which does not exist or has ceased to exist or to be accessible, the nearest equivalent
factor is substituted.
(5) If a unilateral juridical act obliges the party making it to render a performance but
does not specify the quality, the party must tender performance of at least average quality.
(6) If a unilateral juridical act gives rise to an obligation, permission or authority for an
indefinite period the party making the act may end the obligation, permission or authority by
giving notice of reasonable length.
(7) A party who has assumed an obligation by a unilateral juridical act is bound to fulfil
the obligation even if performance becomes more onerous. If, however, performance of the
obligation becomes excessively onerous because of an unforeseen change of circumstances, a
court may:
(a) terminate the obligation at a date and on terms to be determined by the court;
or
(b) adapt the obligation in order to make it just and equitable in the new
circumstances.
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BOOK III
CONTRACTUAL AND NON-CONTRACTUAL [RIGHTS AND] OBLIGATIONS
CHAPTER 1 PERFORMANCE OF CONTRACTUAL OBLIGATIONS
[This would be PECL Chapter 7, with minor adjustments.]
CHAPTER 2 NON-PERFORMANCE OF CONTRACTUAL OBLIGATIONS
[This would be PECL Chapter 8, with minor adjustments.]
CHAPTER 3 PARTICULAR REMEDIES FOR NON-PERFORMANCE OF
CONTRACTUAL OBLIGATIONS
[This would be PECL Chapter 9, with minor adjustments, and with the addition of
what is currently in PECL Chapter 17, on the capitalisation of interest.]
CHAPTER 4 APPLICATION OF ABOVE RULES TO NON-CONTRACTUAL
OBLIGATIONS
Section 1: Scope
Book III Article 4:101: Scope of Chapter
(1) This Chapter applies, unless otherwise provided in particular articles, only to:
(a) obligations arising under non-contractual juridical acts;
(b) obligations under Book V arising out of benevolent intervention in another’s
affairs;
(c) obligations under Book VI to make reparation for damage caused to another;
(d) obligations under Book VII to reverse an unjustified enrichment;
(e) obligations of a trustee under Book X.
(2) Legislation creating any other obligation may adopt the rules in this Chapter, with
or without adaptations, for the purposes of the obligation so created.
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Section 2: Performance
Book III Article 4:201: Place of performance
(1) If the place of performance of a non-contractual obligation is not fixed by or
determinable from the juridical act or rule creating the obligation it is:
(a) in the case of an obligation to pay money, the creditor’s place of business
at the time when the obligation falls to be performed;
(b) in the case of an obligation other than to pay money, the place which is
most reasonable having regard to the nature and purpose of the obligation.
(2) If a creditor has more than one place of business, the place of business for the
purpose of the preceding paragraph is that which has the closest relationship to the
obligation.
(3) If a creditor does not have a place of business, or if the obligation arises in a nonbusiness
context, the creditor’s habitual residence is substituted.
Book III Article 4:202: Time of Performance
A non-contractual obligation is to be performed:
(a) if a time is fixed by or determinable from the juridical act or rule creating
the obligation, at that time;
(b) if a period of time is fixed by or determinable from the juridical act or rule
creating the obligation, at any time within that period;
(c) in any other case, within such time after the obligation arises as is
reasonable having regard to the nature and purpose of the obligation.
Book III Article 4:203: Early Performance
(1) A person may decline a tender of performance of a non-contractual obligation
made before it is due except where acceptance of the tender would not unreasonably
prejudice that person’s interests.
(2) A person’s acceptance of early performance does not affect the time fixed for the
performance by that person of any reciprocal obligation.
Book III Article 4:204: Order of Performance
(1) Where two persons owe each other reciprocal obligations, performance of both
being due, then to the extent that the performances can be rendered simultaneously, the
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persons are bound to render them simultaneously unless the circumstances indicate
otherwise.
(2) This article applies to situations where both obligations are non-contractual and to
situations where the obligations are respectively contractual and non-contractual.
Book III Article 4:205: Alternative Performance
Where a non-contractual obligation may be discharged by one of alternative
performances, the choice belongs to the debtor, unless the juridical act or rule creating the
obligation provides otherwise.
Book III Article 4:206: Other rules on performance
The rules in [PECL Articles 7:106 (Performance by a Third Person), 7:107 (Form of
Payment), 7:108 (Currency of Payment), 7:109 (Appropriation of Performance), 7:110
(Property not Accepted), 7:111 (Money not Accepted) and 7:112 (Costs of Performance)]
apply with any appropriate adaptations to the non-contractual obligations specified in
Article 4:101, any reference to the contract being read as a reference to the juridical act or
rule creating the obligation.
Section 3: Non-Performance and Remedies In General
Book III Article 4:301: Remedies Available
(1) Whenever a person does not perform a non-contractual obligation within the
scope of this Chapter and the non-performance is not excused under Article 4:305, the
creditor may resort to any of the remedies set out in Section 4 of this Chapter.
(2) Where the non-performance is excused under Article 4:305, the creditor may
resort to any of the remedies set out in Section 4 except claiming performance and
damages.
(3) A creditor may not resort to any of the remedies set out in Section 4 to the extent
that the creditor’s own act caused the non-performance.
Book III Article 4:302: Cumulation of Remedies
Remedies which are not incompatible may be cumulated. In particular, a creditor is not
deprived of a right to damages by exercising a right to any other remedy.
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Book III Article 4:303: Cure by Non-Performing Debtor
A debtor whose tender of performance is not accepted by the creditor because it does not
conform to what is due may make a new and conforming tender where the time for
performance has not yet arrived.
Book III Article 4:304 Performance Entrusted to Another
A debtor who entrusts performance of the obligation to another person remains
responsible for performance.
Book III Article 4:305: Excuse Due to an Impediment
(1) A debtor’s non-performance is excused if it is due to an impediment beyond the
debtor’s control and the debtor could not reasonably have been expected to have avoided
or overcome the impediment or its consequences.
(2) Where the impediment is only temporary the excuse provided by this article has
effect for the period during which the impediment exists.
(3) The non-performing debtor must ensure that notice of the impediment and of its
effect on the ability to perform is received by the creditor within a reasonable time after
the debtor knew or ought to have known of these circumstances. The creditor is entitled
to damages for any loss resulting from the non-receipt of such notice.
Section 4: Particular Remedies for Non-Performance
Book III Article 4:401: Monetary Obligations
The creditor is entitled to recover money which is due.
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Book III Article 4:402: Non-monetary Obligations: Specific Performance
(1) The creditor is entitled to specific performance of an obligation other than one to
pay money, including the remedying of a defective performance.
(2) Specific performance cannot, however, be obtained where:
(a) performance would be unlawful or impossible; or
(b) performance would cause the debtor unreasonable effort or expense; or
(c) the performance consists in the provision of services or work of a personal
character or depends upon a personal relationship, or
(d) the creditor may reasonably obtain performance from another source.
(3) The creditor will lose the right to specific performance if the creditor fails to seek
it within a reasonable time after the creditor has or ought to have become aware of the
non-performance.
Book III Article 4:403: Damages Not Precluded
The fact that a right to performance is excluded under this Section does not preclude a
claim for damages.
Book III Article 4:404: Right to Damages
(1) The creditor is entitled to damages for loss caused by the other party’s nonperformance
which is not excused under Article 4:305.
(2) The loss for which damages are recoverable includes:
(a) non-pecuniary loss ; and
(b) future loss which is reasonably likely to occur.
(3) This Article does not apply to non-performance of any obligation under Book VI
to make reparation for damage caused to another.
Book III Article 4:405: General Measure of Damages
(1) The general measure of damages is such sum as will put the creditor as nearly as
possible into the position in which it would have been if the obligation had been duly
performed. Such damages cover the loss which the creditor has suffered and the gain of
which the creditor has been deprived.
(2) This Article does not apply to non-performance of any obligation under Book VI
to make reparation for damage caused to another.
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Book III Article 4:406: Foreseeability
(1) The debtor is liable only for loss which the debtor foresaw or could reasonably
have foreseen at the time when the obligation arose as a likely result of the nonperformance,
unless the non-performance was intentional or grossly negligent.
(2) This Article does not apply to non-performance of any obligation under Book VI
to make reparation for damage caused to another.
Book III Article 4:407: Loss Attributable to Creditor
(1) The debtor is not liable for loss suffered by the creditor to the extent that the
creditor contributed to the non-performance or its effects.
(2) This Article does not apply to non-performance of any obligation under Book VI
to make reparation for damage caused to another.
Book III Article 4:408: Reduction of Loss
(1) The debtor is not liable for loss suffered by the creditor to the extent that the
creditor could have reduced the loss by taking reasonable steps.
(2) The creditor is entitled to recover any expenses reasonably incurred in attempting
to reduce the loss.
(3) This Article does not apply to non-performance of any obligation under Book VI
to make reparation for damage caused to another.
Book III Article 4:409: Delay in Payment of Money
(1) If payment of a sum of money is delayed, the creditor is entitled to interest on that
sum from the time when payment is due to the time of payment at the average
commercial bank short-term lending rate to prime borrowers prevailing for the currency
of payment at the place where payment is due.
(2) The creditor may in addition recover damages for any further loss so far as these
are recoverable under this Section.
Book III Article 4:410: When Interest to be Added to Capital
(1) Interest payable according to the preceding Article is added to the outstanding
capital every 12 months.
(2) Paragraph (1) of this Article does not apply if the parties have provided for
interest upon delay in payment.

Book III Article 4:411: Specified Payment for Non-performance
(1) Where the juridical act or rule creating the obligation provides that the debtor, on
failing to perform, is to pay a specified sum to the creditor for such non-performance, the
creditor is be awarded that sum irrespective of actual loss.
(2) However, the specified sum may be reduced to a reasonable amount where it is
grossly excessive in relation to the loss resulting from the non-performance and the other
circumstances.
Book III Article 4:412: Currency by which Damages to be Measured
Damages are to be measured by the currency which most appropriately reflects the
aggrieved party’s loss.

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