Unforeseen Contingencies

Delegation and Information Disclosure with Unforeseen Contingencies

The B E Journal of Theoretical Economics ◽

10.1515/bejte-2018-0184 ◽

2021 ◽

Vol 0 (0) ◽

Author(s):

Haoran Lei ◽

Xiaojian Zhao

Keyword(s):

Information Disclosure ◽

Large Set ◽

The World ◽

Financial Expert ◽

Unforeseen Contingencies

Abstract We incorporate unawareness into the delegation problem between a financial expert and an investor, and study their pre-delegation communication. The expert has superior awareness of the possible states of the world, and decides whether to reveal some of them to the investor. We find that the expert reveals all the possible states to the investor if the investor is initially aware of a large set of possible states, but reveals partially or nothing otherwise. An investor with a higher degree of unawareness tends to delegate a larger set of projects to the expert, giving rise to a higher incentive for the expert to keep her unaware.

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Unforeseen Contingencies and Incomplete Contracts

The Review of Economic Studies ◽

10.1111/1467-937x.00079 ◽

1999 ◽

Vol 66 (1) ◽

pp. 83-114 ◽

Cited By ~ 370

Author(s):

Eric Maskin ◽

Jean Tirole

Keyword(s):

Incomplete Contracts ◽

Unforeseen Contingencies

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Frustration of purpose and the French Contract Law reform

Maastricht Journal of European and Comparative Law ◽

10.1177/1023263x18781190 ◽

2018 ◽

Vol 25 (3) ◽

pp. 288-309

Author(s):

Mitja Kovac

Keyword(s):

International Business ◽

Contract Law ◽

Law Reform ◽

Current Form ◽

Business Transactions ◽

The World ◽

Governing Principle ◽

English Law ◽

Unforeseen Contingencies ◽

Code Civil

Frustration of purpose remains one of the most ill-defined concepts in the English law of contracts. The same problem has also recently attracted the attention of the French legislature in its modernization of the Code Civil. The French reform entitles courts with broad powers to adjust the contract when unforeseen contingencies have made the bargain unduly costly. This article argues that the introduction of an economically inspired adjustment rule in English contract law should be re-considered to maintain its current superior commercial position. If implemented, then the ‘ex ante division of surplus’ should be the governing principle in adjusting contract price, because such a remedy will not affect the agreed-upon division of the surplus. Moreover, this paper suggests that the recent French reform is indeed a long-awaited step toward a more effective regulation of the notorious ‘unforeseen contingencies’ phenomena, but also suggests that further improvements might be needed. Furthermore, it offers a set of arguments suggesting that the English law in its current form might still be the preferred option in the world of international business transactions. The international commercial attractiveness of English contract law, although being challenged by the new French Civil Code, remains undisputed.

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Duty to renegotiate in international commercial law and uncontemplated behavioural effects

Maastricht Journal of European and Comparative Law ◽

10.1177/1023263x20937212 ◽

2020 ◽

Vol 27 (4) ◽

pp. 445-464

Author(s):

Mitja Kovač

Keyword(s):

Contract Law ◽

Jel Classification ◽

Commercial Law ◽

European Contract ◽

Behavioural Effects ◽

The Subject ◽

Unforeseen Contingencies ◽

Common European Sales Law ◽

International Instruments ◽

European Contract Law

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 Reference (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

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