CONTRACT LAW

Fall 2023

Instructor Instructor & Coordinator

Presentation

The objective of this course is to provide a general introduction to law, contracts, and contract law for non-law
students. It teaches the basic legal skills and some elementary doctrines and institutions of contract law that
help one understand the legal dynamics of contractual transactions, whether in business or the public sector.
The course is mostly structured around real cases and policy debates. We use ‘blackletter law’ provisions only
as the starting point for understanding legal principles, processes, and strategies. Rather than focusing on one
particular jurisdiction, we work with a selection of provisions from the UNIDROIT Principles of International
Commercial Contracts of 2016. This document, which is normally not legally binding, contains the general
principles of contract law as found in various legal systems around the world. Then, to see how legal rules are
interpreted and applied in practice, we also read cases from jurisdictions such as the US (federal and state law),
France, and the Netherlands.

Finally, we occasionally read supporting literature, which explains and provides background to some of the
doctrines, principles, and theories concerning the contractual and other legal issues explored in this course. Such
topics include the freedom of contract, contract formation, (non-)performance, mergers & acquisitions, labor
protections, applicable law, and dispute settlement. When examining the different contract law topics, we also
discuss how issues relevant to business and society, such as equality and non-discrimination, sustainability, and
environmental protection, relate to them.

Learning outcomes

At the end of the course, participants can successfully:

1) Formulate some of the major legal questions that arise in the lifecycle of a contract;
2) Identify and work with the sources of contract law;
3) Build basic legal arguments;
4) Read court decisions;
5) Analyze some elementary contractual aspects of business situations;
6) Examine some of the challenges of drafting key contract clauses;
7) Navigate legal actors and institutions;
8) Understand how certain ethical and political debates relate to contract law.

Duration
18 hours.

1
The course is composed of seven lectures, with 1 (one) introductory session of 3 hours and 6 (six) regular
sessions of 2h40min. Attendance is mandatory.

Your Instructors

Mike Videler is a PhD candidate at the European University Institute in Florence, Italy. In his doctorate,
he critically analyzes the discourse of international judicial fact-finding and its coupling to ‘objective
truth’. Last year, he was a visiting fellow at the University of Ferrara and was the rapporteur for the
American Studies Program at the Salzburg Global Seminar (Democracy on the Front Lines: Polarization,
Culture and Resilience in America and the World). Previously, Mike was the head of section for
international law at the European Journal of Legal Studies, and he has taught law courses at HEC Paris
since 2018. His research interests span international dispute settlement, critical approaches to
(international) law, evidence law, theories of adjudication, and science & technology studies. Prior to
academia, Mike was a Lantos Fellow at the United States Congress (2017) and a Diplomacy & Diversity
Fellow with Humanity in Action (2016).

Pablo Marcello Baquero is Assistant Professor at HEC Paris and a Fellow at the Hi! Paris Center on Data
Analytics and Artificial Intelligence for Science, Business and Society. He is a member of the Smart Law
Hub at HEC Paris, working on different projects involving artificial intelligence and blockchain. He was
previously a Max Weber Fellow at the European University Institute. He holds a PhD in Law from the
University of Cambridge (UK), an LL.M. from Harvard Law School and an LL.B. from the Federal University
of Rio Grande do Sul, Brazil (cum laude). His scholarly interests are in the fields of law and technology,
contract law and international business transactions. His first book, entitled “Networks of Collaborative
Contracts for Innovation”, has been published by Hart as part of the series International Studies on the
Theory of Private Law. He has published articles in law reviews and edited books across Europe, the
United States, Australia and Brazil.

Course Content
SESSION 1 INTRODUCTION TO THE COURSE MONDAY, AUGUST 21

During the first session, you get acquainted with your instructors, your fellow students, and the course plan.
We will have an introduction into some issues of contract law that typically arise in business situations,
through different exercises and simulations.

Class objectives:

1) To get familiar with the course content and schedule, teaching methods, and student assessment;
2) Examine a real-life contract to get a sense of the questions contract law is concerned with.
3) To get a feel for the issues that will be discussed in this course through a class exercise involving a
hypothetical case.
4) Discuss a major contractual dispute featured in the news to see how lawyers analyze and argue a
case.

Mandatory literature:
₼ 1A Videler & Baquero, Note on Law and Contract Law(3pp)

SESSION 2 LAW & CONTRACT LAW TUESDAY, AUGUST 22

The second session introduces you to the fundamentals of law, such as the characteristics of a legal system, the
world’s major legal traditions, the sources of law, and court systems. It also serves as an introduction to the field

2
of contract law. We will ask what contracts are, what types of contracts exist, and what functions they perform.
This session further addresses the role of lawyers in Western societies and business practice. It will help you
understand the different legal professions, how lawyers are disciplined, and the different roles they play in the
business environment. Lastly, this session teaches you the important skill of ‘briefing a case.’

Class objectives:
1) To define law, a legal system, the world’s legal traditions, and contracts;
2) To identify the sources of law generally and of contract law specifically;
1) To study the make-up of court systems;
2) To critically discuss the functions of contracts and contract law;
3) To know a variety of legal professions and the services they provide;
4) To reflect on the role of ethical standards and lawyers’ associations;
5) To understand the roles that lawyers play in the business environment.
6) To learn how to brief a case.

Mandatory literature:
₼ 2A Videler, How to Brief a Legal Case at HEC Paris (3pp)
₼ 2B Bostock v Clayton County, Georgia, only the syllabus! (first 4 pages!)
₼ 2C Videler, Note on Bostock v Clayton County Georgia (3pp)

Recommended literature:
₼ Friedman & Hayden, The Structure of American Law: The Courts (American Law: An Introduction) (30
pp)
₼ Smits, Chapter 2: Sources of Contract Law (Contract Law: A Comparative Introduction) (27 pp)
₼ Types of Contracts – Australian Government (6 pp)
₼ United States Courts, ‘Overview: Rule of Law’, available at https://www.uscourts.gov/educational-
resources/educational-activities/overview-rule-law

SESSION 3 FREEDOM OF CONTRACT & CONTRACT FORMATION WEDNESDAY, AUGUST 23

Freedom of contract is a fundamental principle of contract law. The law does, however, impose limits on this
freedom. Both the freedom and its limitations will be at the core of this session. We will further look at the
fundamentals of contract formation and how we can assess whether a valid contract has been created.

Class objectives:
1) To discuss the freedom of contract, its limitations, and the values underpinning this principle;
2) To learn about the doctrine of assent;
3) To identify validity issues with contracts.

Mandatory literature:
₼ UNIDROIT Principles 2016, Preamble and Arts. 1.1-1.11 (2pp); Arts. 2.1.1-2.1.14 (8pp)
₼ 3A Merryman & Perez-Perdomo, The Legal Professions (10 pp)
₼ 3B Baquero, Freedom of Contract: The Principle and the Exceptions (3pp)
₼ 3C Baquero, The Limits of Freedom of Contract in the Labor Context: A note on Mr. A. X. v Uber France
& Uber BV (3pp)

Recommended literature:
₼ https://www.theguardian.com/world/2019/jul/25/china-business-xi-jinping-communist-party-state-
private-enterprise-huawei?CMP=Share_iOSApp_Other

3
 ₼ Smits, The Law of Contract, Chapter 4 of Introduction to Law (Hage, Waltermann, Akkerman), except
sections 4.4 and 4.5 (14pp)
₼ Smits, Chapter 4: The Intention to Create Legal Relations (from Contract Law: A Comparative
Introduction) (26 pp)

SESSION 4 CONTRACT FORMATION II, PRE-CONTRACTUAL LIABILITY AND CONTRACT INTERPRETATION – THURSDAY,
AUGUST 24

But there is more to contract formation! This session continues where the previous one left off, delving into
measures aimed at protecting the parties’ expectations during negotiations. Sometimes, contract negotiations
do not go as planned. What happens legally when negotiations blow up before reaching an agreement? And
what happens when one of the parties has already made investments in anticipation of that agreement? Finally,
we will discuss how a party dispenses with its contractual obligations, i.e. perform its contractual promises.
This session exposes you to some of the principles used to determine liability in the pre-contractual phase and
the basics of contract interpretation.

Class objectives:
1) To understand the meaning of negotiating in good faith;
2) To detect legal issues in contract negotiation;
3) To identify the importance of precontractual documents, in particular letters of intent;
4) To familiarize you with the concept of pre-contractual liability, and the different approaches taken
by various jurisdictions.
5) To examine the basic principles of contract interpretation

Mandatory literature:
₼ UNIDROIT Principles 2016, Arts. 2.1.15, 2.1.16, 2.1.18 (so not 2.1.17); Arts. 2.1.19-2.1.22; Art. 3.1.2;
Arts. 3.2.1-3.2.6 and Arts. 3.2.14-3.2.16; Arts. 4.1-4.5 (Interpretation)
₼ 4A Exercise on X v. Tennor, including Tennor summary judgment by Netherlands Commercial Court
(17pp)
₼ 4B UBS Securities LLC v. Red Zone LLC (NY, Appellate Division, 28 October 2010) (6pp)
₼ 4C Videler, Interpreting Contracts: The Haviltex Criterion (3pp)

Recommended literature:
₼ Coll, The Taking of Getty Oil: Pennzoil, Texaco and the Takeover Battle that Made History (Open Road
Media 2017)
₼ Draetta, Precontractual Documents in Merger or Acquisition Negotiations: An Overview of the
International Practice (24 pp)
₼ Draetta & Lake, Letters of Intent and Precontractual Liability (34 pp)
₼ Klein & Bachechi, Precontractual Liability and the Duty of Good Faith Negotiation in International
Transactions (26 pp)
₼ Smits, Chapter 11: Performance (Contract Law: A Comparative Introduction)

SESSION 5 NON-PERFORMANCE & DEFENSES TO CONTRACTUAL OBLIGATIONS; SUSTAINABILITY

And what happens if a party does not perform, i.e. breaches the contract? What types of compensation can be
obtained and how they can be calculated? In this session, you will learn about the performance of contracts and
the content and availability of remedies in case of non-performance. In this session, you will further learn about
the arguments that parties can present to avoid contractual obligations or excuse their non-performance. They
concern both claims concerning defects to parties’ consent and circumstances interfering with the possibility
and ease of fulfilling contractual obligations. We will further take the time to discuss how sustainability issues
are involved in contract law, particularly through the incorporation of CSR (Corporate Social Responsibility)/ESG
4
(Environmental, Social and Governance) notions into contract clauses and through the rights provided for non-
contractual parties to interfere in contractual relationships in certain situations due to environmental and
sustainability issues.

Class objectives:
1) Understanding the essentials of the doctrines non-performance, remedies to non-performance;
damages, and termination.
2) To introduce you to defects to consent (i.e. contract validity) and impediments to performance:
fraud, threat, mistake, gross disparity, hardship, force majeure
3) To understand the complexity that climate change brings to the doctrine of force majeure.
4) To think creatively about how to limit collateral damage to third parties in the context of
indigenous rights and CSR more generally.

Mandatory literature:
₼ UNIDROIT Principles 2016, Arts. 3.1.4, 3.2.1-3.2.10, 3.2.14-3.2.16 (Grounds for Avoidance); Arts. 6.2.1-
6.2.3 (Hardship); Art. 7.1.7 (Force Majeure); Art. 5.1.4 (Specific result and best effort), Arts. 6.1.1, 6.1.3,
6.1.5 (Performance), Arts. 7.1.1-7.1.4, 7.1.6 (Non-performance), Arts. 7.2.1-7.2.5 (Right to
Performance), Arts. 7.3.1-7.3.5 (Termination), Arts. 7.4.1-7.4.14 (Damages)
₼ 5A Cunningham, Chapter 3, Madoff’s Ponzi Scheme (pp 59-63)
₼ 5B Baquero, A Note on Climate Risks and Contractual Obligation (4pp)

Recommended literature:
₼ Smits, Chapter 10: Prohibited contracts (Contract Law: A Comparative Perspective)
₼ Smits, Chapter 12: Damages for Non-Performance (Contract Law: A Comparative Introduction)
₼ Smits, Chapter 13: Termination of a Contract (Contract Law: A Comparative Introduction)

SESSION 6 DISPUTE SETTLEMENT AND ASSESSMENT OF DAMAGES MONDAY, AUGUST 28

In this session, will examine how to assess the risks of contract-related litigation by introducing the existing tools
for reducing uncertainties surrounding jurisdictional and dispute settlement mechanisms: litigation in state
courts and arbitration. Finally, we will look into how to assess the damages owed to an aggrieved party in a
particular contractual dispute.

Class objectives:
1) To familiarize students with different types of dispute settlement;
2) To learn about forum shopping and different arbitration institutions;
3) To discuss the advantages, pitfalls, and ethical concerns surrounding forum selection clauses.
4) Examine how different sustainability concerns are addressed by contract law, particularly through
clauses incorporating CSR concerns or through assigned to third parties.
5) Analyze basic principles about how damages can be assessed.

Mandatory literature:
₼ UNIDROIT PRINCIPLES 2016: Arts. 7.4.1-7.4.14 (Damages)
₼ 6A Videler, The Settlement of Legal Disputes (4pp)
₼ 6B American Express Company v Italian Colors Restaurant (only the syllabus: 3 pp)
₼ 6C Silver-Greenberg & Gebeloff, Arbitration Everywhere, Stacking the Deck of Justice (The New York
Times, 31 Oct. 2015) (11 pp)
₼ 6D Baquero, Note on Damages (3pp)

Recommended literature:

5
 ₼ Interview with Gary Born (Wolters Kluwer Thought Leadership):
https://www.youtube.com/watch?v=TNHVNGwe3fk&feature=youtu.be
₼ On the ICC: https://www.youtube.com/watch?v=nbS9p0_9m6E
₼ On the HKIAC: https://www.youtube.com/channel/UCkoJirV1o-85GgBvk8qoHNQ
₼ JT Molot, A Market in Litigation Risk (2009) (73 pp)
₼ M Keet, Litigation Risk Assessment: A Tool to Enhance Negotiation (26 pp)
₼ Townsend, Drafting Arbitration Clauses: Avoiding The 7 Deadly Sins (8 pp)

SESSION 7 FINAL SESSION TUESDAY, AUGUST 29

During the final session, the students will present their group presentations. Time permitting, there will also be
a collective discussion of your experiences in this course.

Course Materials

Two weeks prior to the beginning of the course, the students will be provided with a list of mandatory
readings for the course, including some cases and background legal literature. The students are strongly
advised to complete all the readings prior to the beginning of this intensive course, since there may not be
enough time to complete those once the classes have started.

Individual work

Students are required to come to class prepared to comment on the materials indicated in the syllabus.

Assessment

This is a Pass/Fail course. The course evaluation will be based on a final group presentation to take place in
the last session of the course. All group members are expected to participate in the presentation and to
provide the instructor with the handout that they have to prepare for the presentation.
In terms of presentation topics, students are expected to come up with a concrete legal question to answer in
relation to a business case, and a background article examining such case. Further detailed instructions on
what is expected can be found in the Annex.

6
 Annex: Instructions for Group Assignment
HEC Paris - Contract Law 2023

The group assignment consists of a group presentation. All students will be divided into groups of 5 or 6.

Each group will be provided with a transaction or dispute that has been recently covered in the news. Contracts
always play a role in these situations, although this role is not always conspicuous. It is for each group to select
and explore one salient contractual issue from that situation. In order to get more background (and possibly
some legally relevant facts), you can use press articles or more specialized business monitors. If very little
information is publicly available concerning your business situation, this will be taken into account during
evaluation.

Having identified your one (1!) contractual issue, you will then perform a legal analysis of this contractual issue.
This means turning the issue into a legal question using one of the contract law doctrines discussed in this course
(or another one if you’re feeling brave!) and working with the case analysis format provided in session 2.

It is of the utmost importance that the issue you choose concerns contract law. It may touch upon other fields
of law. However, the core of your analysis must remain contract law. As such, you cannot perform a legal analysis
that is centered around competition/antitrust, criminal, or tort law. Nor do we allow for business analyses that
focus on e.g. strategy, marketing, and finance.

Whereas the group assignment situations do not (necessarily) concern cases to be decided by a court, the case
analysis format can be applied mutatis mutandis. In a simplified way this means: 1) providing the facts, 2) stating
your legal question, 3) giving the answer to that legal question, and 4) justifying your answer. As you can see, it
is important that the presentation is not only descriptive, but also contain a legal analysis. Moreover, you are
free to add an evaluative element to the assignment: what do you think of the solution the law provides and
how do you go about evaluating the law? You are also free to provide recommendations or proposals for legal
reform. Also advisable is the insertion of a concise methodological statement, for instance concerning how you
selected and interpreted legal sources. You are free to create a presentation structure that works best for you,
as long as the four core elements mentioned above are clearly present.

For the legal analysis, it is essential that you have recourse to the UNIDROIT principles as the applicable law. In
addition, we strongly encourage all groups to use – to the extent it does not conflict with the content of the
UNIDROIT principles – case law from the jurisdiction whose laws would normally be applicable to the business
situation. Law review/journal articles and legal textbooks are excellent additional sources of information. The
HEC Library is an invaluable resource for information, accessible both physically and electronically: make proper
use of its databases (and do not hesitate to ask the librarians in case of doubt)!

Here are the instructions to follow for the presentation:

• Every group will give a presentation of max. 10 minutes. You are encouraged to present in non-
traditional ways, e.g. by using TED-Talk or interview formats, performing a short play, using
innovative technologies, or playing (within bounds) with the presentation instructions. Creativity is
welcomed, but you might want to check with the instructor if you have very bold ideas.
• If you like, you can use slides. In any case, you must prepare a handout of max. 1 page, share it
on Blackboard, and provide a hardcopy for the instructor.
• After your presentation, your classmates will have the opportunity to ask questions.

Please be aware that the group as a whole is responsible for the smooth unfolding of this group project.
We expect (and assume) that all group members will contribute in roughly equal measure. That is to say,
every group member must be involved in either (or both) the preparation and delivery of the
presentation. Free-riders and authoritarian behavior will not be tolerated. In first instance, groups must

7
themselves deal with such situations. In extreme cases and when informed sufficiently in advance, your
instructor can intervene.

We will evaluate your presentation on the basis of Pass/Fail using the following criteria:
• The identification and phrasing of a legal question;
• The understanding and use of the circumstances and context;
• The use of relevant legal sources;
• The accurate use and explanation of key concepts;
• The consistency and depth of interpretations and reasoning;
• The clarity of communication & referencing of appropriate sources (is it
understandable and where does the information come from?);
• The build-up and structure of the presentation (is there coherence and a logical
progression/flow?);
• The ability to engage the audience throughout the presentation (do we want to keep
listening?);
• The originality and creativity shown (what’s new and different?).