Financial Services, Financial Crisis and General European Contract Law: Failure and Challenges of Contracting
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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 most
useful path to follow, if we want to
understand what happened and forestall
its 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 thoroughly
developed, banking contracts can be
seen as paradigmatic of typical
assumptions and shortcomings often examined
in the more general debate on
contract law. and indeed, the very thoroughness
of European banking contract
law makes it a promising ground on which to
build effective preventive
measures.
In this book thirteen noted scholars,
recognizing that modern contract law
must take into account global markets
and risks, consider banking contracts
within networks and within mass
transactions. Always attending to the
long-term relationships that
characterize financial services contracts, they
focus 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 Banking
Contract
Law and show convincingly that the world financial crisis has
proceeded at
least as much from contracting as from corporate governance. This
vantage
point promises to open new ways to approach this most crucial of
contemporary
problems, and will be of great interest to all professionals
examining the
role played by financial services in market crises.
This book is based on the
tenth annual conference of the Society of European
Contract Law (SECOLA)
which took place in Istanbul in June 2010.
