The theory of imprevision in the context of the economic crisis and the new romanian civil code (NCC)

• Author: Bazil Oglinda
• Pages: 230-255

THE THEORY OF IMPREVISION IN THE CONTEXT OF THE ECONOMIC CRISIS

AND THE NEW ROMANIAN CIVIL CODE (NCC)

Lecturer Bazil OGLIND

1

Abstract

This paper a ddresses one of the most pressing issues of private law, namely, the theory of unpredictability.

The theory of imprevision is a question of la w under the effects of the curr ent economic crisis has r esulted in

contract law. Also, updating lega l issues r aised by the theory of unpredicta bility occurs in the context of regula tion

for the first time a t its pr inciple in art. 1271 NCC. This paper deal s with the concept, scope, conditions applying

theory in the context of imprevision in terms of la w doctrine and the relevant ca se law. It also presents elements of

comparative law.

Keywords: theory of imprevision, economic crisis, NCC (New Civil Code), the conditions for invocation, practical

issues, comparative law.

JEL Classification: K12

§1. The Notion, Grounds and Scope of Imprevision

1. Notion. Brief History. Origin of the Subject

A. Preliminary Remarks

Sometimes, during their execution, contracts are exposed to certain events related to the

economic conjuncture. Most often, they are related to currency fluctuations.

2

Imprevision poses the legal question of the excessively onerous nature of the fulfilment of

obligations of a contract, putting one of the parties in a very difficult economic position. Most of

the times, the debtor of an obligation is put in a delicate situation in the sense that the costs of the

fulfilment of its obligations are increased. However, imprevision also applies to the hypothesis

where the value of performance owed to the creditor has been drastically reduced. In both

situations, a contractual economic imbalance will arise, evidently having as consequence the loss

of interest of one of the parties in maintaining the contract as it was initially drafted by them

3

.

The modification of consequences is relevant only in exceptional cases. The principle

according to which agreements lawfully concluded between the parties are legally binding is not

absolute, sacrosanct. When occurred events have the capacity to fundamentally alter the balance

of the contract, there results the exceptional situation which the theory of imprevision refers to.

This phenomenon has been regulated by several law systems, developed into concepts such as:

“hardship”, “frustration o f purpose”, “geschaftsgrundlage”, “imprévision”, “exccessiva onersità

sopravvenuta” etc.

In the context of the global economic crisis triggered by the collapse of the banking

system, the theory of imprevision becomes a particularly important institution.

The economic crisis started in August 2007 when BNP Paris ceased its activity in the

USA with regard to hedge funds specializing in mortgage debt. The second stage, deemed in the

1

Bazil Oglind, Bucharest University of Economic Studies, Law Department, office@onvlaw.ro

2

See Gh. Bistriceanu, Gh. I. Ana, Finane (Finance), Didactic and Pedagogical Publishing House, Bucharest, 1993, pp. 68-76.

3

For this purpose, it was decided in case law that “The theory of imprevision applies to the extent to which the contractual

obligation is no longer mandatory to be fulfilled since the circumstances in which it should have been fulfilled render it radically

different from the one undertaken in the contract” – C.S.J. (Supreme Court of J ustice), sec.com. (Commercial Section), dec. no.

1122 of 21 February 2003, www.scj.ro.

Perspectives of Business Law Journal Volume 1, Issue 1, November 2012 231

international economic press

4

a confirmation of the economic decline, materialized in the

nationalization of the Northern Rock bank by the British government in September 2008.

However, the peak is reached in September 2008 when the Lehman Brothers bank in the USA

enters into bankruptcy. Under the condition of rise in oil price, the banks maintained a high

interest rate in order to fight against inflation. This measure led to a liquidity deficit that

drastically affected trading activities. Another important factor was the social-political one. The

dissatisfactions of citizens were expressed through riots and strikes that paralyzed for a long time

certain economic sectors. On the background of this instability, right-wing political parties

5

came

into the spotlight, promoting economic policies based on austerity and increased taxation

6

.

These circumstances affected the execution of trading contracts. Major discrepancies

appeared between the value of performance on the conclusion of the contract and the value of

performance on the date of fulfilment of obligations. It became either excessively onerous (in the

case of the debtor) or insignificant (in the case of the creditor) and the objective intended by the

conclusion of the contract could no longer be reached.

Thus, from our point of view, such a subject is required by virtue of the situation, as well

as the care of the Romanian legislator in the context where NCC entered into force on 1 Oct.

2011 and highlighted the “theory of imprevision” by regulating it in art. 1.271 of NCC.

As we have shown, the theory of imprevision arouses interest in the periods of political-

economic transition

7

. Since these periods are imminent in the evolution of a state, the theory of

imprevision disseminated in time and was adopted by increasingly numerous national law

systems, and in the states where the regulation of imprevision was refused, the national doctrine

contested this “overlook” by the legislator

8

.

Under these conditions, to which adds the economic crisis that we are experiencing, we

may state that the theory of imprevision has become a global notion more important than ever.

B. Brief History

Imprevision originates in the Roman law and is derived from the clause rebus sic

stantibus conceptualized by Cicero and Seneca

9

. The value of the contract depended on

maintaining the circumstances existing at the moment of its formation

10

. Even if it did not appear

in the contract, this clause was considered implicit in the case of fixed contracts and successive

performance contracts (call-off contracts).

The theory of imprevision entered the 14th century secular law from the canon law, where

it had been theorized by Saint Thomas Aquinas, without, however, exercising a powerful

influence on the legal environment.

4

Global financial crisis: F ive Key Stages 2007-2011, The Guardian, 7 August 2011.

5

The European People’s Party easily won the voting of 2009.

6

In Romania, on 1 July 2010, the VAT rose from 19% to 24%.

7

See section §1.2 – Grounds for Imprevision.

8

For example: the Civil Code of the Pr ovince of Québec, that represents the main source of inspiration for the Romanian Civil

Code, does not regulate the theory of i mprevision. See Stefan Martin, Pour une r éception de la théorie de l 'imprévision en droit

positif québécois, Les Cahiers de Droit, vol. 34, no. 2, 1993, pp. 599-633.

9

“Contractus qui habent tractum succesivum et d ependientiam de futurum, rebus sic standibus intelliguntur (Fixed or call-off

contracts are maintained as long as the situation remains unchanged).” See J. Oviedo Albán, El incumplimiento del contra to

internacional, in Revista de Derecho Mercantil, no. 14/2007, p. 252; I. Schwenzer, Force Majeure and hardship in International

Sales Contracts in Victoria U. Wellington Law Review, no. 709 (2008-2009).

10

L. Flah, and M. Smayevsky, Teoría de la Imprevisión: Aplicación y alcances. Doctrina y Jurispr udencia . 2nd ed., Buenos Aires:

Lexis Nexis. Ediciones De Palma, 2003, p. 12;