When Is a Contract Considered Unreasonable according to Danish Law? The Application of Section 36 Through 45 Years of Case Law

Abstract

Most jurisdictions have different types of relief rules in the event that a contract is considered unreasonable. Danish law contains a general clause, section 36 of the Contracts Act, which makes it possible to either wholly or partially set aside a contract if the contract is considered unreasonable. It is even possible to amend the contract if the equilibrium of the contract is fundamentally affected. The wording of section 36 is quite similar to the provisions with the same scope in other Nordic countries. However, the section does not define when a contract is considered unreasonable. Thus, in order to understand the scope and range of the legal standard in section 36, it is a prerequisite to have an insight into the comprehensive case law applying it in Denmark. The section has been in force for 45 years and when we take the vast amount of case law into consideration, it is possible to deduce the additional considerations developed throughout the years by the Danish courts. This will help us decide – at least to some extent – when a contract might be considered unreasonable. Thus, the aim of the article is twofold. First, and most importantly, we address the additional considerations developed through case law to establish prevailing law. Second, we briefly discuss the application of other types of relief rules compared to the application of section 36.