Legal and economic analysis of the effect of pandemic diseases on the performance of contractual obligations

Document Type : Scientific research

Authors

• Seyyed Hossin Tahami ¹
• Sayyed Mohammad Mahdi Qabuli Dorafshan ²
• Saeed Mohseni ²
• azam ansari ³

¹ Ph.D. Student in Private Law, Faculty of Law and Political Science, Ferdowsi University of Mashhad

² Associate Professor of Private Law, Faculty of Law and Political Science, Ferdowsi University of Mashhad

³ Assistant Professor of Private Law, Faculty of Law and Political Science, Ferdowsi University of Mashhad

https://doi.org/10.22067/economlaw.2022.75835.1162

Abstract

This paper, from the point of Economic Analysis of Law and by the descriptive-analytical method, has studied the effect of the prevalence of pandemic diseases such as Covid-19 on the performance of contractual obligations. Since many different contracts may be affected by pandemic outbreak, the effect of pandemic outbreak cannot be assessed under one subject and with a specific sanction. Therefore, the legal status of contracts affected by this disease has been examined under the "impossibility to performance the obligation", "hardship" and "frustration". Considering to the possibility of a new purpose for contract law in the contemporary world, entitled "economic efficiency", some principles related to economic analysis of law, such as "efficient allocation of risk" and "efficiency criteria", especially the Pareto efficiency and Caldor-Hicks efficiency, have been considered in order to select a proper and efficient sanction. Also, some applicable sanctions including "legal deferral", "fair deadline", "Suspension of contract", "modify the contract", "Revoke" and "dissolved", has been reviewed separately; so that while observing the legal principles, the most economically efficient sanctions has been considered for each specific situation. The possibility of sharing damages, under the title of "efficient allocation of risk" between the parties, is also one of the issues under consideration in some special sanctions.

Keywords

• "Efficient sanction"
• "covid-19"
• "modify the contract"
• "frustration"
• "hardship"

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