V. Legal Principles and Internationalization

Question 1

What are the Legal Principles in Private Law

Answer 1

• Pacta sunt servanda
• Clausula rebus sic stantibus
• Private autonomy
• Good faith

Question 2

Pacta sunt servanda

Answer 2

Principle of binding contracts
* E.g. §§ 861 ff ABGB, § 869 ABGB, Art 26 Vienna Convention of Treaties

Question 3

Clausula rebus sic stantibus:

Answer 3

• A contract is legally binding as long as the conditions governing its conclusion have not
  fundamentally changed
• In modern law in particular: impossibility, economic impossibility, disruption of the basis of
  the transaction

Question 4

Party Autonomy:

Answer 4

• Right to conclude private legal relationships according to one‘s own individual interests
• The individual is entitled to create, change or cancel rights and obligations
• Includes freedom of contract, freedom of ownership, freedom to marry, freedom of testation

Question 5

Good Faith:

Answer 5

General presumption that the parties to a contract will deal with each
other honestly and fairly
* E.g. Art 26 Vienna Convention of Treaties

Question 6

Why do we need private international law?

Answer 6

The modern legal world is characterized by the parallel existence of multiple, variously calibrated
legal systems
* Problem: which law is applicale on a cross-border contract and how are breaches handled?

Question 7

2. Private International Law
   Terminology:

Answer 7

No international consensus regarding the precise meaning of the term „private international law“
* For Austria/Germany: private international law comprises (only) those rules that determine, in cases
with connections to various countries, the applicable law

Question 8

Sources of Private International Law:

Answer 8

1. Important European Regulations:
   ◦ „ROME I Regulation“ – Regulation No 593/2008
   ◦ „ROME II Regulation“– Regulation No 864/2007
   ◦ „ROME III Regulation“– Regulation No 1259/2010
2. National Law
   ◦ E.g. for Austria: IPRG

Question 9

3. Introduction to Comparative Law
   The Plurality of Law:

Answer 9

Civil law
* Common law
* Mixed systems
* Religious laws
* Loi uniforme?

Question 10

civil law

Answer 10

-many codifications
-precedent not legally binding
-stron influence of scholars

Question 11

common law

Answer 11

judge made law
-few codifications
–binding precedent

Question 12

religious law

Answer 12

-law as will of god
-inspires state law
-role of clerics

Question 13

mixed systems

Answer 13

-combine features of several traditions

Question 14

4. Economic Analysis of Law

Answer 14

Homo Oeconomicus: A rational individual in economic theory, making decisions to maximize personal utility.
Information Asymmetries: Situations where one party has more or better information than another, leading to imbalanced decision-making.
Cheapest Cost Avoider: The party who can most efficiently prevent or minimize a potential cost or harm, often expected to take action to avoid risks.

Question 15

4. Economic Analysis of Law
   Cost-benefit analysis and cheapest cost avoider theories:

Answer 15

1. Pareto-optimum
   ◦ No individual can be better off without another individual being worse off at the same time
2. Kaldor-Hicks Theory
   ◦ The advantages to the beneficiaries exceed the losses of the disadvantaged, and the
   disadvantages can be compensated by the advantages

Question 16

Cost-benefit analysis and cheapest cost avoider theories:

Answer 16

3. Coase theory
   ◦ Resources will also be channelled through private transactions wherever they can be used most
   efficiently

Question 17

Who is the cheapest cost avoider? – Wildlife Fence Case:

Answer 17

Facts:
A motorcyclist collided with a fallow deer on a main road and sued the local authority for not having
put up a wildlife fence on the main road.

Question 18

Economic Analysis of Law – Cheapest Cost Avoider

Answer 18

The “cheapest cost avoider” is the party who can most efficiently prevent or minimize potential harm. In legal contexts, this concept is used to determine who should bear the cost of preventing damages.

Question 19

Wildlife Fence Case – Facts

Answer 19

A motorcyclist collided with a fallow deer on a main road and sued the local authority for failing to install a wildlife fence. The case discusses the balance between the cost of constructing the fence and the potential damages from animal collisions.

Question 20

Wildlife Fence Case – Legal Outcome

Answer 20

The complaint was dismissed because the deer was wild and not under the control of the state. The court ruled that the costs of installing wildlife fences on all possible routes were too high and that road users had been warned of the risk by a sign.

Question 21

conomic Analysis of Law – Cheapest Cost Avoider (Analysis)

Answer 21

The case involved a discussion on whether the state or the road user was the “cheapest cost avoider.” If the cost of building a fence was lower than the damage from animal collisions, the state would be required to install such protection.