New Frontiers in Law and Economics

When should contract obligations be relieved under changed circumstances? A lecture held by Prof. Dr. Henrik Lando, Professor of economics, Department of Business Humanities and Law, Copenhagen Business School

A contract can be subject to a change of circumstance, which significantly affects the buyer’s benefit and/or the seller’s costs of performance. When should the contract then be reformed or discharged? The paper trades off risk allocation benefits of relief against dispute costs arising from the application of a vague standard of relief. For some contracts courts should never provide relief while for others, courts should provide relief when the inefficiency of their risk allocation is sufficiently large under the change.