Comparative Contract Law and Economics
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Comparative Contract Law and Economics

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.
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Chapter 3: Unforeseen Contingencies

Mitja Kovač


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...

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