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Research on the impact of the COVID-19 pandemic on commercial and consumer contract law
For researchers across most disciplines, the COVID-19 pandemic has become an immediate and urgent focus. This is particularly so in the medical sciences, where the search for treatments and a possible vaccine are at the top of the list. Beyond the medical challenge, the pandemic has also brought about huge economic challenges, and these have a clear legal dimension. Professor Christian Twigg-Flesner has written a number of papers over recent months on the impact of the COVID-19 pandemic on commercial and consumer contracts, and how contract law might be affected beyond the current circumstances.
In a short contribution to an e-Book edited by Katharina Pistor of Columbia University (Law in the Time of Covid-19), published in April, Christian examined the relevant provisions of contract law regarding the impact of unforeseen circumstances from a comparative perspective (“A comparative Perspective on Commercial Contracts and the impact of Covid-19 - Change of Circumstances, Force Majeure, or what?”).
The impact on consumer contracts has been extensive, with many contracts paid-for in advance (such as holidays, flights, hotel bookings or event tickets) being cancelled due to the pandemic, and many consumers facing financial pressures as a result of not being able to work. The editors of the Journal of Consumer Policy (which include Christian) published an editorial in which they comment on “Consumer Policy in the Age of Covid-19”, highlighting the impact of the pandemic on consumers and the implications for consumer policy research.
Furthermore, Christian joined a group of 15 consumer law scholars from around the world to discuss some of the specific legal challenges for consumers from a comparative perspective, focusing on the vexed issues of refunds of prepayments and moratoria for loan and rental payments. The group’s paper on “Consumer Law and Policy Relating to Change of Circumstances due to the COVID-19 Pandemic” discusses how these issues have been handled around the globe, and argue that a new guiding principle in balancing the competing interests of consumers and businesses (both of which are facing huge financial pressures at this time) should be “societal force majeure”, which is developed in this paper.
Christian sketched the potential impact of the pandemic for Contract Law in a guest editorial for the Journal of European Consumer and Market Law (“The Covid-19 pandemic: a Stress Test for Contract Law?”). He summarised the challenges for established doctrines dealing with unexpected circumstances, relevant contract terms, some of the national responses, and the European Law Institute’s Principles for the Covid-19 crisis.
Together with Hugh Beale, Professor emeritus at Warwick Law School, Christian examined the limited scope of the doctrine of frustration to assist contracting parties whose contracts have been affected by the consequences of the pandemic and the specific actions taken in the UK in respect of certain types of contract, such as domestic and commercial leases and financial services contracts. They argue that there are some aspects of the doctrine of frustration which could require further development, such as the treatment of instances where performance has become temporarily impossible, without crossing the frustration threshold (“COVID-19 and English Contract Law”, in Ewoud Hondius, Marta Santos Silva, Andrea Nicolussi, Pablo Salvador Coderch, Christiane Wendehorst, and Fryderyk Zoll (eds.), "Coronavirus and the Law in Europe" [online]). In a separate paper for an edited collection published in South America (Sergio Garcia Long, Derecho de los Desastres: Covid-19), Hugh and Christian focus in more detail on “Covid-19 and frustration in English law”.
Looking beyond the immediate impact of the consequences of the COVID-19 pandemic for Contract Law, Christian discusses whether and when the adjustments made to commercial and consumer contract law could constitute an instance of “legal disruption”, a notion he develops by analogy with the concept of “disruptive innovation” put forward by the late Clayton Christensen (The Innovators Dilemma (Harvard University Business Press, 2000). In “The Potential of the COVID-19 Crisis to Cause Legal Disruption to Contracts and Contract Law” (also published in "Coronavirus and the Law in Europe"), Christian argues that legal disruption is a potential, but by no means inevitable, result of changes made to the law in order to address some of the issues created by the COVID-19 pandemic.
Christian commented: “The consequences of the COVID-19 pandemic for both commercial contracts and consumer contracts threw up many issues which highlighted the limitations of the legal tools currently available to deal with the impact on these contracts. This is true of the specific legal questions as much as the sheer number of contracts affected. English Contract Law, in particular, might need to develop a more nuanced set of rules than its current all-or-nothing approach under the doctrine of frustration, because current law puts the onus on the contracting party to spell out how unforeseen events affecting the performance of the contract should be managed”. He further said that “I had for some time been thinking about adapting the notion of ‘disruptive innovation’ in a legal context, and my paper on ‘legal disruption’ is my first attempt to put my thoughts into writing.”