Change of circumstances: CISG, CESL and a case from Scotland

• DOI: https://doi.org/10.1108/14770021211267397
• Pages: 300-305
• Published date: 07 September 2012
• Date: 07 September 2012
• Author: Hector L. MacQueen
• Subject Matter: Economics

Change of circumstances: CISG,

CESL and a case from Scotland

Hector L. MacQueen

University of Edinburgh, Edinburgh, UK

Abstract

Purpose – The purpose of this paper is to present a critical analysis of the concept of “change of

circumstances” as a justif‌ication for judicial revision of contracts.

Design/methodology/approach – The study analyses international legal texts on the subject in

the light of a decision of the Inner House of the Court of Session in Scotland, Lloyds TSB Foundation

for Scotland v. Lloyds Banking Group plc [2011] CSIH 87 (currently subject to appeal to the UK

Supreme Court).

Findings – Whatever the merits of a change of circumstances doctrine, the Lloyds case does not

provide a good example for its application.

Research limitations/implications – The scope of a change of circumstances doctrine should be

tested by further comparative study.

Originality/value – This is the f‌irst consideration of the Lloyds case in an international and

comparative context.

Keywords Contracts, CISG,DCFR, CESL, Change of circumstances,Judicial revision, Law courts,

Regulation, Scotland

Paper type Case study

Article 79 of the CISG exempts from liability in damages any party to a sales contra ct

unable to perform its obligations due to an impediment beyond its control which it could

not reasonably have been expected to have taken into account when the contract was

concluded, or to have avoided or overcome. Schlechtriem and Schwenzer (2010, p. 1064)

observe:

[I]n contrast to the CISG, many legal systems as well as projects for a uniform contract law

contain a separate provision for hardship, which applies not only to cases of mere increased

diff‌iculty for performance or the decrease in value of the performance, but also to cases of

frustration of purpose. In terms of legal consequences, these rules require the contract to be

adapted or at least require that new negotiations be entered into. They thus offer greater

f‌lexibility than the CISG and, to that extent, are preferable (footnotes omitted)[1].

To the uniform contract law projects cited by Schlechtriem and Schwenzer may now be

added the European Commission’s Proposal for a Common European Sales Law (CESL),

published in October 2011. Article 88 provides for the exemption from any liability

for non-performance of a contracting party unable to perform as the resul t of

an impediment beyond its control or ability to overcome (although the other party may

then terminate for fundamental non-performance). Article 89 adds a hardship provision

entitled “Change of Circumstances”. In general, an increased burden on performance

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1477-0024.htm

The views expressed in this note are not to be taken in any way as representing those of the

Scottish Law Commission, save where they summarise published documentation from the

Commission.

JITLP

11,3

300

Journal of International Trade Law

and Policy

Vol. 11 No. 3, 2012

pp. 300-305

qEmerald Group Publishing Limited

1477-0024

DOI 10.1108/14770021211267397