The effect of a change of circumstances on the binding force of contracts : comparative perspectives

Abstract

The aim of the research is the study of the situation on which unexpected circumstances render the performance of the contract much more difficult or onerous and those which frustrate the purpose of the transaction. The research includes the comparative analysis of European Civil Law Jurisdictions (France and Italy), English and American Common Law, and Latin American Civil Law Jurisdictions (Chile and Argentina). In addition to national jurisdictions, it is also examined how modern model codes or restatements of international contract law deal with the problem. Accordingly, the research includes the analysis of the United Nations Convention on Contracts for the International Sale of Goods (CISG), the UNIDROIT Principles of International Commercial Contracts (PICC), the Principles of European Contract Law (PECL) and the Draft Common Frame of Reference (DCFR). As a general conclusion of the study, the recognition of a change of circumstances as a remedy for the affected party may be considered as another aspect of the renovated importance of justice and fairness as a counterbalance to the general principle of freedom of contract. Thus, the contract is considered to be a union of balanced interests, an instrument of loyal cooperation and a result of the mutual confidence of the parties. The complexity of modern contractual relationships and, in general, of the social and economic environment, requires similar weight to be given to values other than the classical values of freedom, security and certainty, such as cooperation, solidarity and flexibility. In particular, the affected party is entitled to rely on a proper set of remedies directed at the restoration of the agreement until the limit of an adequate sacrifice for the debtor, which include the duty to renegotiate and in case of failure of the renegotiations, the revision of the contract by the court. Additionally, it is supported that the best approach of a legal system to the subject is through an express legal regulation by means of a flexible but exceptional rule that contains the scope, conditions and effects of changed circumstances affecting the parties’ obligations; as is generally the case with the issues of impossibility or force majeure in civil law systems.