Comparative Contract Law and Economics

Comparative Contract Law and Economics

New Horizons in Law and Economics series

Mitja Kovač

Comparative Contract Law and Economics provides a deeper understanding of the similarities and differences between the legal systems of France, England, the US and Germany in terms of contract law.

Chapter 3: Unforeseen Contingencies

Mitja Kovač

Subjects: economics and finance, law and economics, law - academic, commercial law, law and economics, law of obligations


This chapter addresses the issue of whether contractual obligation in the case of unforeseen contingencies rendering performance excessively onerous should be excused or enforced. It surveys the economic literature on unforeseen contingencies, and by providing an economically-inspired optimal model rule, which serves as a uniform term of comparison, challenges widely-accepted comparative premises, overcomes doctrinal inconsistencies, and critically examines significant laws in France, England, the USA and Germany. A comparative law and economics analysis shows that the proposed optimal model rule: (1) provides a workable explanatory framework for distinguishing cases in which the promisor is excused from those where he is not excused; (2) reveals that compared legal systems differ less than comparatists tend to believe; (3) suggests that (through economic analysis) several landmark decisions have been incorrectly interpreted; (4) suggests wealth maximization as the main driving force behind judicial decision-making; (5) again confirms a development pattern from less to more efficient rules and decisions; (6) the problem of unforeseen contingencies should be seen as an ex post efficiency-enhancing, welfare-maximizing, and risk-sharing mechanism; and finally (7) while also assessing general statutory provisions, offers a transaction costs perspective of those different legal systems, where a path for statutory reform is obvious. 3.1. INTRODUCTION The problem of excuse for non-performance of contracts caused by unforeseen contingencies, which is for many legal scholars and practitioners regarded as one of the vaguest, most difficult and controversial doctrinal concept areas of law and legal practice, presents extraordinary theoretical difficulty. It...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information