Browsing by Author "Suominen, Teemu Juhani"

The aim of this study is to analyze the theoretical implications of the marketing liability rule, section 9.1 in the Finnish Insurance Contract Act (543/1994), for general contract law. The analysis is applied to the situation where marketing or sales information gives a wrong impression about subsequent detailed contract terms. Specifically the questions are 1) how can indefinite marketing promises become the content of a contract and 2) what can be learned from the historical attempts to legislate this issue. The analysis draws from literature and historical primary sources, and legal praxis is mostly referred to through these sources. The chosen method can be characterized as a pronounced self-awareness of the power, actions, logic and preconditions of law. In Nordic contract law, unspecified or unaddressed marketing information is treated mainly as an invitation to buy, not an offer. In the sale of goods, defective marketing is sanctioned by non-conformity, when marketing information relates to the properties or use of a product. According to the trailer-principle, identified in Nordic consumer law, the impression given by marketing information concerning all kinds of contract terms or their performance can be legally protected. This can be the case for example when there are only a few of certain advertised items actually in stock, or when marketing implies that certain limitations do not apply. Good business practice is the benchmark of the trailer-principle, but the appropriate private law sanctions are an open questions in Nordic legal literature. The Finnish insurance rule mandates that if the insurer or its representative has failed to provide the necessary information or has given incorrect or misleading information to the policyholder when marketing the insurance, the insurance contract is considered to be in force to the effect understood by the policyholder on the basis of the information received. The rule thus sanctions violations through a binding effect, instead of merely administrative sanctions or negative interest. My study suggests that a historical and theoretical approach can be used to discover the points of tension between this rule and established contract law, and to present a critique of the dogma of contracts as enforceable agreements. The analysis taps into the legal and philosophical discussion on the interaction between legal rules, social norms and economic behavior. Contract law exists between societal powers far greater than that of the legislator. The history of the insurance rule exemplifies particularly well the technique of normalization, where the law and legal practice define and describes what is normal and expose deviance, while hiding their own power. In contract economics, an efficient contract has been the primary benchmark for legal rules, but this standard is imperfect, as complete contracts are also consistent with social norms. The conclusion is that a balanced content for contract law rules is needed. This kind of a balance can be seen in the Finnish insurance rule. In the past, there have been authoritative attempts to marketing liability into Finnish contract law (in 1990) and Nordic consumer law (in 2001), but the Finnish insurance rule is the only one that was enacted. This rule was crafted during an inter-Nordic reform of insurance contract law in the 1970’s and 80’s. The protocols of the Nordic insurance law committees show that the Finnish legislator attempted to persuade the other Nordic states to adopt a similar rule. Nordic insurance contract law diverged on this issue because of different needs. Finland wanted to protect policyholders from misleading statements by part-time insurance agents that lacked the authority to change policy terms. Sweden however opted for a limited rule whereby onerous contract terms could be made ineffective. This was because Sweden was concerned that insurers would be negatively affected by vexatious claims, if a general private law liability for marketing information was codified into law. The Nordic Contract Acts have proven quite resistant to reform. This study proposes, de lege ferenda, that the immutable insurance rule could be adapted as a general default rule, and that the Contracts Act is the right place for this rule. The Finnish experience shows that marketing liability works, when it is combined with balanced rules on proving a buyers wrong impression.