1. Good Faith in Long-Term Relational Supply Contracts in the Context of Hardship: A Comparative Perspective with a focus on the UNIDROIT Principles
- Author
-
Guo, Peng
- Subjects
- UNIDROIT Principles, Good Faith, Hardship, Relational Contracts
- Abstract
Hardship is of commercial and legal interest for the businesses engaging in international trade. In international contract practice, hardship frequently occurs in long-term relational supply contracts. Since it is almost impossible for the parties to such contracts to anticipate all contingencies and regulate all future possibilities and is extremely difficult for them to entirely specify in advance and detail all their rights and duties at the time of the conclusion of their contracts, it would be necessary and useful if there could be a set of rules that could assist international businesses in achieving a satisfactory and equitable result in dealing with hardship issues. Firstly, this thesis by adopting the UNIDROIT Principles as a framework examines what the parties, the courts or the arbitral tribunals should do in a case relating to a long-term relational supply contract in the context of hardship. Secondly, the thesis argues that the many faces and various levels of good faith play an important role in tackling hardship problems. It proposes that in a long-term relational supply contract in the context of hardship, the parties are under a duty to renegotiate the contract and the judges or the arbitrators have the power to adapt the contract to restore the equilibrium of the contract and to maintain the long-term ongoing relationship between the parties or to terminate the contract as the last remedy on the basis of good faith, the relational nature and characteristics of such a contract and the mutual trust and confidence between the parties. Finally, the thesis predicts that good faith may assist in restriking a balance between the need of certainty and the need of flexibility required by long-term relational supply contracts in the context of hardship in the future. It believes that a new principle of pacta sunt servanda bona fide is emerging in international commercial law.
- Published
- 2018