The UNIDROIT Principles of International Commercial Contracts1 have been published in May 1994 by the Rome-based International Institute for the Unification of Private Law (UNIDROIT), an intergovernmental organisation established in 1926. The Working Group on the UNIDROIT Principles was found in 1980 and consisted of independent legal scholars of all major legal systems of the world. The UNIDROIT Principles are not binding law. Most legal writers agree that they can be characterised as a restatement of the law of international commercial contracts2 and despite the controversial issue about the very existence, scope and content of a lex mercatoria - the possibility of applying supranational law to international legal relationships- most authors agree that it exists and that the UNIDROIT Principles are a significant part of it3.
The object of this paper is to examine the UNIDROIT Principles’ approach to hardship laid down in Chapter 6, Section 2 and to compare it with its equivalent provision in the German Civil Code (Bürgerliches Gesetzbuch, hereinafter BGB), § 3134. For this purpose it is firstly necessary to define the term “hardship”. Thereafter I will consider the respective provisions in detail and highlight differences and similarities.
Table of Contents
Introduction
I. The UNIDROIT Principles
A. The Hardship Approach in the UNIDROIT Principles
B. Relevance and Acceptance of Hardship in International Commercial Law
II. The Concept of Hardship in German Law: Interference with the Foundation of the Contract -Störung der Geschäftsgrundlage
A. History and Development of the Hardship Doctrine in Germany
B. The Hardship Doctrine in present German Civil Law -the BGB after the Reformation of the Law of Obligations in 2002
III. Conclusion
Objectives and Research Themes
This paper aims to analyze and compare the concept of hardship as defined in the UNIDROIT Principles of International Commercial Contracts with the equivalent German legal doctrine of "Störung der Geschäftsgrundlage" (§ 313 BGB) following the 2002 legal reforms.
- The theoretical and practical application of the hardship doctrine in international commercial transactions.
- A comparative analysis of how UNIDROIT and the German Civil Code address unforeseen changes in contractual circumstances.
- The role of good faith, renegotiation, and judicial intervention in contract adaptation.
- The influence of objective versus subjective criteria in defining "fundamental" changes in contractual equilibrium.
Excerpt from the Book
The Hardship Approach in the UNIDROIT Principles
The provisions on hardship in the UNIDROIT Principles can be found in Articles 6.2.1 to 6.2.3. From a systematic point of view the provisions about hardship are situated in Chapter 6 with the heading “Performance” which indicates that hardship is related to the fulfilment of the contract.
The section of hardship starts with Article 6.2.1 stressing that a party for whom performance becomes more onerous is nevertheless bound to perform his obligations. The binding character of the contract as the general rule is similarly mentioned in Article 1.3 and shows that the UNIDROIT Principles adopted the juridical principle pacta sunt servanda as an indispensable basis of their concern. But as comment No.2 of Article 6.2.1 states, the principle of sanctity of contract is not however considered to be an absolute one. It is accompanied by the counter-principle known as rebus sic santibus which comes into action when supervening circumstances create an exceptional situation so as to destroy the basic assumption which the parties had made when they entered into the contract, in other words when a “hardship” situation -as defined by Article 6.2.2- occurs.
The term “hardship” itself is defined in Article 6.2.2 of the UNIDROIT Principles basically as a situation where the occurrence of events -as specified in lit. (a) to (d)- fundamentally alters the equilibrium of the contract, either because the cost of a party’s performance has substantial increased or because the value of the performance a party receives has substantial diminished.
Summary of Chapters
Introduction: Provides an overview of the UNIDROIT Principles and outlines the research objective to compare them with German law regarding hardship.
I. The UNIDROIT Principles: Examines the specific articles and mechanisms for hardship within the UNIDROIT framework and its international acceptance.
II. The Concept of Hardship in German Law: Interference with the Foundation of the Contract -Störung der Geschäftsgrundlage: Details the historical evolution of the German doctrine and its current codification in § 313 BGB.
III. Conclusion: Summarizes the key findings, highlighting the similarities in requirements for hardship and the differences in procedural approach between the two legal systems.
Keywords
Hardship, UNIDROIT Principles, German Civil Code, BGB, Störung der Geschäftsgrundlage, Contract Law, Comparative Law, Pacta sunt servanda, Rebus sic stantibus, Renegotiation, Performance, Risk Allocation, Contractual Equilibrium.
Frequently Asked Questions
What is the fundamental purpose of this research paper?
The paper aims to evaluate how the UNIDROIT Principles and German contract law manage situations where unforeseen circumstances fundamentally disrupt the contractual balance, often referred to as "hardship."
What are the primary themes discussed in the work?
The core themes include the interpretation of hardship, the legal duty of good faith, the mechanisms for contract renegotiation, and the circumstances under which a contract may be adapted or terminated.
How does the author define the research objective?
The primary goal is to conduct a detailed comparative analysis between the UNIDROIT Principles (Chapter 6, Section 2) and the German § 313 BGB to highlight similarities and differences in their practical application.
Which scientific methodology is applied?
The study employs a comparative legal methodology, analyzing legislative texts, international principles, and relevant judicial precedents from both the UNIDROIT and German legal contexts.
What is covered in the main section of the paper?
The main body focuses on the specific definitions of hardship, the requirements for its invocation, the burden of proof, and the specific role of the courts in adapting contracts under both legal systems.
What defines the core concepts discussed?
The work characterizes hardship through keywords such as contract equilibrium, risk allocation, good faith, and the specific German doctrine of "Störung der Geschäftsgrundlage."
How does the UNIDROIT approach to hardship differ from the German BGB in terms of renegotiation?
The UNIDROIT Principles explicitly mandate a process of renegotiation between parties as a first step, whereas § 313 BGB grants an aggrieved party the right to claim contract adaptation directly without a formal prior duty to renegotiate.
What role does the judiciary play in these two frameworks?
Under UNIDROIT, courts have broader discretionary powers to adjust or terminate contracts. In contrast, the German system is bound by procedural law where courts are typically limited to granting the specific alteration requested by the party, provided it is justified.
- Quote paper
- Rechtsanwalt Karsten Keilhack (Author), 2003, The hardship approach in the UNIDROIT Principles of International Commercial Contracts and its equivalent in German Law of Obligations - A comparison, Munich, GRIN Verlag, https://www.grin.com/document/22901
