Clear Rules Still Produce Fuzzy Results: Impossibility in Indian Contract Law
Robert Scott and others have forcefully argued that the justification for commercial statute-drafting is efficiency. Since commercial parties can draft their own contracts, legislatures should draft default rules, he argues, only when it will save commercial parties time and money. Greater efficiency is achieved when the costs of the gains produced by commercial transactions are reduced. Thus, with few exceptions, the rules of commercial law should be clear, precise, and what most parties would want most of the time. Statutory precision emulates a well-drafted agreement and reduces the risk of moral hazard. The excuse of contractual impossibility (including the liberalized version of commercial impracticability as well as the reciprocal doctrine of frustration of purpose, collectively, impracticability) stands in some tension with the goal of efficiency. Two responses to this uncertainty seem plausible. First, the law could provide a more precise impracticability rule, one that complies with the precision corollary. Alternatively, we can simply give up on the impracticability project, leaving risks to fall where they may and any excuses to the contract parties and their drafting efforts. This article will address the feasibility of the first alternative, that we can build a better impracticability mousetrap. Instead of speculating about what forms a more precise version of impracticability might take, we will examine a currently subsisting example, section 56 of the Indian Contract Act, 1872. I conclude that the Indian Supreme Court has missed an opportunity to apply section 56 as originally understood and that those who stress the goal of efficiency should not count on judicial application of even precise rules.
Changing Contract Lenses: Unexpected Supervening Events in English, New Zealand, U.S., Japanese, and International Sales Law and Practice
This article compares differences in the reasoning underlying contractual relationships between English and New Zealand law and U.S. and Japanese law. It then builds upon an existing framework by adding the notion of didactic formality to identify another important contrast between the laws of these countries. It also discusses how CISG and UPICC fit in to this spectrum. The article concludes by questioning "strong convergence" theory in commercial law worldwide.
Planning and Renegotiating Long-Term Contracts in New Zealand and Japan: An Interim Report on an Empirical Research Project
This article examines what norms and practices drive planning and dispute resolution of exchange relationships among firms, and what this signifies for contract law theory and jurisprudence more generally. Part B.1 compares results from a survey of students in New Zealand and Japan (further discussed in: Economic Dislocation and Contract Renegotiation in New Zealand and Japan: A Preliminary Empirical Study, 27 Victoria University of Wellington Law Review (1997) 59-97) with a smaller-scale survey of firms in both countries. It appears that law and business students are reasonable proxies for, respectively, legally-trained and non-legally-trained company personnel. Overall, the New Zealand firms may be slightly less lenient in their attitudes towards long-term contract renegotiation compared to the respondents in Japanese companies, and firms in both countries may exhibit somewhat more country bias than students; but firms in both countries remain much closer than asserted by some commentators on Japanese attitudes towards contracts. Closer analysis of survey results and follow-up interviews confirm these conclusions. Part B.2 adds a comparison of results from the firms in New Zealand and Japan to a question testing attitudes towards a different renegotiation hypothetical, initially put in a survey to US firms. A striking result is the preparedness of New Zealand firms also to countenance court adjustment of contractual relationships in the event of extreme changes in circumstances, despite this being completely impossible under Anglo-New Zealand law. Part B.3, discussing responses from New Zealand and Japanese firms to questions from the US survey inquiring more into contracting practices, identifies further gaps particularly between practices or expectations and the law in New Zealand. These results provide further evidence for the need to reform the strict law of frustration of contract in New Zealand law (Part B.4). They also suggest that New Zealand law remains more wedded to formal reasoning than both US and Japanese law, in the sense that if a gap emerges between the law in books and the law in action, New Zealand law tries to close it more by trying to get the latter to converge on the former. Finally, the article points out that the results raise difficulties particularly for certain strands of the economic analysis of contract law (Part C).