Change of Circumstances and the Frustration of Contracts As the COVID-19 crisis starkly illustrates, there is no guarantee that the circumstances under which a contract has been concluded will persist into the future. One potential way to deal with subsequent challenges is through variation of contracts between the parties, which was the topic of the previous AKT blog post https://www.akt.rs/en/publication/variation-of-contracts—the-problems-of-consideration. But in situations where renegotiation is not possible, or performance becomes impossible, English contract law needs to provide default answers. This blog post thus addresses the change of circumstances and the doctrine of frustration that might come into play in some situations. To start with the general rule – the mere fact that performance of the contract has become more onerous for one or both of the parties either physically or financially (sometimes referred to as ‘hardship’) does not by itself produce any legal consequences. Unlike in…

No matter how detailed the initial contract, there is always a solid chance that a subsequent change in circumstances might require its variation (amendment). As shown by the COVID-19 crisis, if some form of performance is still possible and desired by the parties, a change of obligations might be necessary. Leaving aside other potentially relevant doctrines in English contract law for (drastically) changed circumstances – such as frustration – this AKT blog post examines the situation where parties desire to amend the contract. Following the previous post https://www.akt.rs/en/publication/formation-of-contracts—the-doctrine-of-consideration, it also largely focuses on the re-occurring challenges posed by the doctrine of consideration. Formally, every variation needs to fulfil the same conditions for validity as the original contract, including the existence of fresh consideration. If both parties change their performance, there are generally no issues provided that consideration is as initially required – e.g. not in the past,…

The last AKT blog post discussed the general framework for contract conclusion and three out of four conditions for a contract to exist https://www.akt.rs/en/publication/formation-of-contracts-in-english-law—the-general-framework. This one will address the remaining condition – the peculiar doctrine of consideration that can be problematic to understand from a continental perspective. What is so peculiar or problematic about this doctrine? Simply put, even if the parties fully agree on the contractual content, have clear intention to create legal relations, and comply with all formalities, this still might not be enough in the eyes of English law. For a start, what is consideration? A well-known definition by the then supreme court of UK, House of Lords (Dunlop v. Selfridge [1915] AC 847, speech by Lord Dunedin) supported a view that consideration is ‘[a]n act or forbearance of one party, or the promise thereof, is the price for which the promise of the…

Formation of Contracts in English Law – The General Framework The next AKT post adresses one of the key peculiarities of English contract law – the requirement of consideration in formation and variation of contracts. After the initial discussion of the importance of English contract law for international commercial transactions https://www.akt.rs/en/publication/english-contract-law-and-its-importance-for-international-commercial-transactions this AKT post starts from the beginning – the formation of contracts. The aim is to provide a general framework of key requirements and discuss briefly three of them – agreement, intention and compliance with formal requirements. The next AKT post adresses one of the key peculiarities of English contract law – the requirement of consideration in formation and variation of contracts. The rules on formation of contracts in English law are of general nature, and in principle apply across business to business/business to consumer/private party to private party contracts. These have been primarily…

The importance of English contract law (technically the law of England and Wales, but usually abbreviated to just ‘English’) goes far beyond the legal system of the United Kingdom, and can be of importance to Serbian business entities. In light of this, a series of AKT blog posts will elucidate the main aspects of English contract law so to raise awareness of the most important potential issues when contracting under this law. Of course, for specific issues and further expertise, AKT remains at disposal to all its current and prospective clients. This first post in the series examines some of the very basic features of the English contract law as a system that make it important for international commercial transactions, often between parties that have no other connection to the United Kingdom apart from their choice of governing law. English law is chosen as applicable in a vast number of…

Public interest and foreign investment protection – recent trends In a last few years at international investment law scene there has been a sort of a clash between the protection of fair and equitable treatment guaranteed through BITs, usage and enjoyment of investments, intellectual property rights protection etc. on one side and new governmental legislation aimed to protect some of the public interests such as environment and public health. In one of the latest AKT blog-post (https://www.akt.rs/en/publication/changes-of-incentive-measures-for-renewable-energy-production-and-protection-of-foreign-investors—possible-problems), we took a glance at what kind of a trend some of the ICSID tribunals are following in the field of protecting foreign investments and environmental protection, for example the case Eiser v. Spain, where tribunal found that Spain breached Article 10(1) of the Energy Charter Treaty, whereas in a similar case Charanne v. Spain, there was no breach on behalf of Spain. In a similar way, in the field…