Sezione IURA: Diritto Pubblico

Financial Services, Financial Crisis and General European Contract Law: Failure and Challenges of Contracting

Stefan Grundmann, Yeşim M. Atamer - Kluwer Law International, 2011 

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Speculation is rife on the origins of the worldwide financial crisis of 2008,with a preponderance focusing on alleged shortcomings in corporate governance.This book offers a distinct yet complementary perspective: that the mostuseful path to follow, if we want to understand what happened and forestallits happening again, is through an analysis of contract relationships specifically, banking contracts entered into in the financial services sector,considered under the rubric of contract law rather than company law.Because banking is the area of European contract law which is most thoroughlydeveloped, banking contracts can be seen as paradigmatic of typicalassumptions and shortcomings often examined in the more general debate oncontract law. And indeed, the very thoroughness of European banking contractlaw makes it a promising ground on which to build effective preventivemeasures.In this book thirteen noted scholars, recognizing that modern contract lawmust take into account global markets and risks, consider banking contractswithin networks and within mass transactions. Always attending to thelong-term relationships that characterize financial services contracts, theyfocus on such cross-sector issues as the following:rule-setting and the question of who should best regulate and at which level;networks of contracts as the backbone of a market economy;the complex interplay between market regulation and traditional contract law;avoiding erroneous assumptions about the future development of prices;the passing on of the risk via securitization;rating relationships affected by conflicts of interests;remuneration problems;core duties of information and advice in an agency relationship in services;duciary duties of loyalty and care; types of clients and level of protection; differentiation in information available on various markets; and the question of enforcement.The authors analyse the full body of second generation European BankingContract Law and show convincingly that the world financial crisis hasproceeded at least as much from contracting as from corporate governance. Thisvantage point promises to open new ways to approach this most crucial ofcontemporary problems, and will be of great interest to all professionalsexamining the role played by financial services in market crises.This book is based on the tenth annual conference of the Society of EuropeanContract Law (SECOLA) which took place in Istanbul in June 2010.