May 12, 2010

Hardship

The mechanism of hardship varies from one country to another.

Attempts of harmonization have been made at European level with the PECL.

The French legal system does not admit “revision pour impévision” as said in the judgement of principle Canal de Craponne. But this doctrine is challenged by Terré’s Draft and the Government’s Draft which are following the recent evolution of the PECL. Only the Avant-projet Catala keep with the French tradition. It is maybe distancing his self from his initial aim: becoming the reference tool for companies which are mainly using common law.

The English legal system is alike the French system by not allowing the judges to intervene on the contract and by preferring the parties to include hardship clauses in their agreements. That is what Lord Radcliffe said in Davis Contractors. Its characteristic is the doctrine of Frustration which applies only in cases of impossibility, illegality or when the contract becomes radically different. This doctrine applies rarely but its consequences are drastic. Its application entails disappearance of the contract not only revision as in German law.

In case of inflation a contract would not bring to an end as in French Law.

The German legal system is forged around the “doctrine of disappearance of the basis of the transaction” (Wegfall der Geschäftgrundlage) created by Oertmann. In 1922, the Reichsgericht invoke for the first time the unwritten clausula rebus sic stantibus in order to adapt the price agreed by the parties. Then on the 27th June 1922 the Reichsgericht recognizes judicial revision to rescission on the basis of Oertmann Theory). In the Bundesgerichtshof decision of the 16th of January 1953, the court will seek to adapt the contract equitably. The German reunification case renew the theory of disappearance but in regard of good faith in § 242 BGB.


Pierre-Patrice TIFI MAMBI


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