Change of circumstances in Korean contract law

Abstract

Pacta sunt servanda is a fundamental principle in Korean contract law. Contracts should be kept. A breach of contract leads to liability for damages and can be grounds for the termination of the contract if the breach is material. If one party fails to perform its obligation, the other party can apply for compulsory performance thereof to the court. However, it is not always in line with good faith to require a contract to be fulfilled as it is. In particular, Korean courts have explicitly decided that the change of circumstance doctrine is an exception to the principle of pacta sunt servanda. This chapter will examine the operation of the change of circumstances doctrine as an exception to the principle of pacta sunt servanda from the perspective of Korean contract law. It will also be considered how this doctrine can function in rapidly changing social situations, such as the unprecedented situation due to COVID19.