Duty to renegotiate in international commercial law and uncontemplated behavioural effects

Abstract

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