Financial Services, Financial Crisis and General European Contract Law
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;
- fiduciary 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.
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List of Contributors.
List of Abbreviations.
Part I Overview
Chapter 1 European Contract Law and Banking Contracts after the Financial Crisis: Challenges for Contracting and Market Transactions
Part II Contract Law Issues of the Financial Crisis
Chapter 2 Policy Responses to Credit Crises: Does the Law of Contract Provide an Answer?
Chapter 3 A Need for Contract Governance?
Part III Types of Parties in European Contract Law
Chapter 4 Consumer Rights Directive or a General European Contract Law?
Chapter 5 A Differentiated Approach to Client Protection: The Example of MiFID
Part IV Some Core Duties and Remedies for Breach
Chapter 6 Investor Protection and Investment Firms' Duty of Care and Loyalty to Clients
Chapter 7 Duty of Responsible Lending: Should the European Union Take Action?
Chapter 8 The Lehman Brothers Financial Products and the Right to Compensation of European Investors
Part V Cross-Sector Issues and Enforcement
Chapter 9 Full Harmonization of Retail Financial Services Contract Law in Europe: A Success or a Failure?
Chapter 10 From Public Law to Private Law: Market Supervision and Contract Law Standards
Chapter 11 Disgruntled Customers and Bank Charges: Class Actions (Reform) Activity
Chapter 12 Enforcement and Class Actions in the Area of Financial Transactions? Comments from a European Perspective
Chapter 13 Contribution of the European Ombudsman to Limiting Late Payment by the European Commission.