Market contingencies, contractual risk and rebus sic stantibus doctrine

Abstract

This article aims at analyzing under which conditions market changes may be considered an unexpected change of circumstances that justify the adaptation or termination of existing contracts on the basis of the rebus sic stantibus doctrine. The paper examines the response given by Spanish courts to this question, focusing on cases decided after the economic and financial crisis of2008. Firstly, it examines the evolution of the Spanish Supreme Court case-law in relation to the rebus sic stantibus doctrine, which has been amended after the economic crisis. According to the new doctrine, the economic crisis can be considered an unforeseeable and extraordinary market change, capable of disrupting the basis of contracts. Secondly, the article examines the foreseeability of market changes and the relevance of risk allocation. Finally, a third section of the paper analyses specific groups of cases decided by Spanish courts. The market contingencies considered in the paper are: risk of market price variations on sales contracts, frustration of purpose ajfecting sales contracts, risk of not having access to credit of the debtor of monetary obligations, especially in real estate transactions; and risk of business profitability of the lessee in long-term lease agreements.