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This article covers in analysis of the doctrine of frustration(hereinafter as ¡°the doctrine¡±) from the critical perspective. I refer to the frustration doctrine available in the common law...
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This article covers in analysis of the doctrine of frustration(hereinafter as ¡°the doctrine¡±) from the critical perspective. I refer to the frustration doctrine available in the common law countries like U.S. or U.K. for compare and contrast purpose, and here are my findings as follows:
first, the applicability of the doctrine is limited the circumstance where the doctrine of pacta sunt servanda should not be applied, I.e., where it is more reasonable to say that the content of the contract is no more applicable to the parties because there are some changes in circumstance happened after the contract was formed and the interests of the parties could not be controlled properly under the contract.
second, the doctrine was introduced and in force to meet the highly ethical request for the just solution of the cases raised in legal order, and thus it is inevitable for the doctrine to be implemented in conflict with the doctrine of the securing of the contractual order. it came into existence in the form of uncontrollable limitation with respect to the clear understanding of the elements of the doctrine. Nontheless, we can get a couple of indicia such as the nature of each contract, the market practice, parties¡¯ status in negotiation, foreseeability of the change in circumstances, and the degrees of disadvantage and its avoidability from the fact that the doctrine play some roles to settle the disadvantages arising from the unforeseeable circumstances.
third, the doctrine, as is explicitly stated in article 544-4 of the proposed revision, intends, more than anything else, to make the contract void by exercising the right of cancellation. Nontheless, it seems more reasonable and in conformity with the practical function of the doctrine under the existing civil code for the court to have the discretion to change the content of the contract, contrary to the proposed revision, where the court comes to the conclusion that the parties¡¯ interests cannot be resolved in an appropriate way relying on the exercise of the cancellation right.
fourth, relating to the scope of applicability the above fact that granting the right of changing the contract as a legal effect of the doctrine implies, contrary to the proposed revision, that the doctrine needs to be extended where the parties has wrong understanding about the content of contract at the time the contract was formed as well as where the circumstances have been changed after the contract was formed.
fifth, the function of the doctrine, just adjustment of the parties¡¯ interests following the change in circumstance after the contract, should be implemented even in the case of cancellation of the contract based upon the change in circumstance in a way to ensure the flexible formation of the contract relating to restitution.
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