Duty to renegotiate in international commercial law and uncontemplated behavioural effects
| Author | Mitja Kovač |
| Date | 01 August 2020 |
| Published date | 01 August 2020 |
| DOI | 10.1177/1023263X20937212 |
| Subject Matter | Articles |
Article
Duty to renegotiate
in international commercial
law and uncontemplated
behavioural effects
Mitja Kovaˇ
c*
Abstract
This paper explores possible uncontemplated effects and behavioural implications created by duty-
to-negotiate provisions in international instruments. More precisely, the paper considers how five
different international instruments approach the subject, namely the Convention on Contracts for
the International Sale of Goods (CISG), UNIDROIT Principles of International Commercial
Contracts (PICC), Principles of European Contract Law (PECL), Draft Common Frame of Ref-
erence (DCFR) and Common European Sales Law (CESL). The extent to which these international
and European legal instruments correspond to recent economic and behavioural findings is
examined. Moreover, an economically inspired analysis is conducted of the uncontemplated
consequences of the duty to renegotiate that well-intended international lawmakers never
anticipated. Further, it is suggested that game theoretical and behavioural reasons might exist for
adopting a cautious approach to the duty to renegotiate in instances of unforeseen contingencies
as found in the CISG as well as the English, German, US and Scottish law of contracts.
JEL classification: C23, C26, C51, K42, O43
Keywords
Duty to renegotiate, game theory, behavioural economics, change of circumstances, international
instruments
* University of Ljubljana, School of Economics and Business, Ljubljana, Slovenia
Corresponding author:
Mitja Kovaˇ
c, University of Ljubljana, School of Economics and Business, 1000 Ljubljana, Slovenia.
E-mail: mitja.kovac@ef.uni-lj.si
Maastricht Journal of European and
Comparative Law
2020, Vol. 27(4) 445–464
ªThe Author(s) 2020
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/1023263X20937212
maastrichtjournal.sagepub.com
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1. Introduction
It is hard to overstate the controversies and doctrinal importance of contractual excuses that are
given when circumstances change. This is often introduced as a conflict between principles (pacta
sunt servanda and rebus sic stantibus) or values (justice and certainty). With respect to civil and
common law, a vast amount of scholarly literature can be found while various judicial decisions
have attracted the attention of scholars around the world. However, somewhat mysteriously, legal
scholars/practitioners have overlooked the provisions imposing a duty to renegotiate a contract that
are found in several international and European legal instruments as an express requirement for the
application of excuse doctrines in the event of changed circumstances.
This article examines the international commercial law of contractual excuse in instances of
changed circumstances and the related duty to renegotiate as espoused in several international
commercial law instruments. Namely, unlike the Vienna Convention on Contracts for the Inter-
national Sale of Goods (hereinafter CISG)
1
and the Draft Common Frame of Reference (herein-
after DCFR),
2
all other international instruments including the UNIDROIT Principles of
International Commercial Contracts (hereinafter PICC),
3
the Principles of European Contract Law
(hereinafter PECL)
4
and the Common European Sales Law (hereinafter CESL)
5
in various for-
mulations include the implicit duty to renegotiate. Thus, in European and international contract law
the general trend supports the duty-to-renegotiate requirement when circumstances change,
whereas the English law of contracts and CISG seem to reject such a duty to renegotiate.
Still, it should be pointed out that the current legal literature, especially in Europe, emphasizes
the benefits of a duty to renegotiate as it should have positive economic effects and reduce
transaction costs by minimizing parties’ need to rely on hardship clauses.
6
Uribe, for example,
argues that both the law and courts should encourage parties to settle their conflict by way of
renegotiation.
7
Moreover, DiMatteo stresses that such a duty is important for preventing waste and
the disruption of contractual relationships in long-distance sales and long-term supply contracts.
8
Moreover, scholars contend that the rejection of a general duty of good faith by those drafting the
CISG could explain its omission of a provision on an express change in circumstances and the
related duty to renegotiate.
9
Yet other scholars are very critical of any duty to renegotiate, arguing
that it is hardly useful, for instance, in consumer sales given the consumer’s extremely limited
ability to negotiate with suppliers or go to court.
10
MacQueen adds that a more general concern is
2. Draft Common Frame of Reference, 2009.
3. UNIDROIT Principles of International Commercial Contracts, 2004.
4. Principles of European Contract Law, 1999.
5. European Commission proposal for a Common European Sales Law, 2011.
6. See e.g. T. Lutzi, ‘Introducing Imprevision into French Contract Law – A Paradigm Shift in Comparative Perspective’,
in S. Stijns and S. Jansen (eds), The French Contract Law Reform: A Source of Inspiration? (Intersentia, 2016), p. 111.
7. R.M. Uribe, The Effect of a Change of Circumstances on the Binding Force of Contracts – Comparative Perspectives
(Intersentia, 2011), p. 213.
8. L. DiMatteo, ‘Contractual Excuse under the CISG: Impediment, Hardship and the Excuse Doctrines’, 27 Pace
International Law Review (2015), p. 258–305.
9. L. DiMatteo, 27 Pace International Law Review (2015), p. 273.
10. See e.g. H. MacQueen, ‘Change of Circumstances: CISG, CESL and a Case from Scotland’, 11 Journal of Interna-
tional Trade Law and Policy (2012), p. 303.
446 Maastricht Journal of European and Comparative Law 27(4)
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