Abstract
We compare how private contracting, and judicial systems have responded to the Brexit, Covid 19 and the war in Ukraine. The UK, the US, France and Germany are compared in terms of the legal doctrines which excuse performance due to some form of shock which impacts markets. We broadly look at how material change in circumstance, improvision, force majeure, frustration of purpose and impossibility have been viewed by courts in response to Brexit, Covid-19, and the war in Ukraine. These shocks to markets frustrated the performance of some types of contracts and have resulted in judicial intervention when a party claims an excuse from performance of a contract.
We consider the economic impact of the use of doctrines which excuse performance of contractual duties and look specifically at how risk preference is reflected in private contracting and judicial applications of these doctrines across borders. This shows how distinct risk preferences related to individuals and firms influence contract drafting and contract performance. This also shows how states can adopt a systemic risk preference which is reflected in the development and judicial applications of these doctrines.
When there is a systemwide shock to markets, private parties may face a significantly changed economic outlook related to the contracts they have entered. Systemic shocks such as political devolution, health pandemics, and war may make some types of contracts impossible to perform, economically wasteful to perform, or asymmetrically risky to perform. Private parties and states can adjust their approach to contracting and contract enforcement in order to limit the impacts of shock on markets. When looking at this decision to adopt a specific approach, ex ante and ex post responses must be weighed against each other. This analysis relates to ex ante risk evaluations by individuals, firms, and states, how much information asymmetry is present in the negotiation stage, transaction costs due to shocks and in anticipation of shocks, the ability of court systems to efficiently function, and the functioning of free markets, and ex post applications of these doctrines which excuse performance, which also reflects a type of risk preference.
By considering private and public responses to Brexit, Covid 19 and the war in Ukraine we identify how risk preferences my play a role in party’s decisions. We consider 1. A private parties ex ante decision to enter into and negotiate contracts and allocate potential future risks before they materialize, 2. How private parties make decisions ex post, after a shock representing a risk has occurred and created economic uncertainty and an associated increase of performance costs, 3. How states ex ante develop a doctrine related to the impact of these shocks on private contracting which can be expressed through the law which itself reflects a type of risk preference, and 4. How judicial interpretations of these doctrines when they are being asserted by private parties seeking an excuse from performance allocates risk between parties to a contract. This research addresses how shocks to markets impact private contracting. Through looking at relevant case law in France, Germany, the UK, the US, and other selected jurisdictions, we can better understand how courts have interpreted doctrines related to excuse of performance. Additionally, we can identify how these doctrines have been reinforced or refined through the courts and legislation when states are faced with pressure from shocks and the corresponding impact on private business.
We consider the economic impact of the use of doctrines which excuse performance of contractual duties and look specifically at how risk preference is reflected in private contracting and judicial applications of these doctrines across borders. This shows how distinct risk preferences related to individuals and firms influence contract drafting and contract performance. This also shows how states can adopt a systemic risk preference which is reflected in the development and judicial applications of these doctrines.
When there is a systemwide shock to markets, private parties may face a significantly changed economic outlook related to the contracts they have entered. Systemic shocks such as political devolution, health pandemics, and war may make some types of contracts impossible to perform, economically wasteful to perform, or asymmetrically risky to perform. Private parties and states can adjust their approach to contracting and contract enforcement in order to limit the impacts of shock on markets. When looking at this decision to adopt a specific approach, ex ante and ex post responses must be weighed against each other. This analysis relates to ex ante risk evaluations by individuals, firms, and states, how much information asymmetry is present in the negotiation stage, transaction costs due to shocks and in anticipation of shocks, the ability of court systems to efficiently function, and the functioning of free markets, and ex post applications of these doctrines which excuse performance, which also reflects a type of risk preference.
By considering private and public responses to Brexit, Covid 19 and the war in Ukraine we identify how risk preferences my play a role in party’s decisions. We consider 1. A private parties ex ante decision to enter into and negotiate contracts and allocate potential future risks before they materialize, 2. How private parties make decisions ex post, after a shock representing a risk has occurred and created economic uncertainty and an associated increase of performance costs, 3. How states ex ante develop a doctrine related to the impact of these shocks on private contracting which can be expressed through the law which itself reflects a type of risk preference, and 4. How judicial interpretations of these doctrines when they are being asserted by private parties seeking an excuse from performance allocates risk between parties to a contract. This research addresses how shocks to markets impact private contracting. Through looking at relevant case law in France, Germany, the UK, the US, and other selected jurisdictions, we can better understand how courts have interpreted doctrines related to excuse of performance. Additionally, we can identify how these doctrines have been reinforced or refined through the courts and legislation when states are faced with pressure from shocks and the corresponding impact on private business.