Frustration of purpose and the French Contract Law reform: the challenge to the international commercial attractiveness of English law?

Frustration of purpose remains one of the most ill-defined concepts in the English law of contracts. The same problem has recently attracted also the attention of the French legislature in its modernization of the Code Civil. The French reform entitles courts with broad powers to adjust the contract when unforeseen contingencies have made the bargain unduly costly. This article argues that the introduction of an economically inspired adjustment rule in English contract law should be re-considered in order to maintain its current superior commercial position. If implemented than the “ex ante division of surplus” should be the governing principle in adjusting contract price, since such a remedy will not affect the agreed-upon division of the surplus. Moreover, paper suggests that the recent French reform is indeed a long-awaited step towards a more effective regulation of the notorious “unforeseen contingencies” phenomena, but also suggests that further improvements might be needed. Furthermore, it offers a set of arguments suggesting that the English law in its current form might still be the preferred option in the world of international business transactions. The international commercial attractiveness of English contract law, while being challenged by the new French Civil Code, remains undisputed. JEL classification: C23, C26, C51, K42, O43