Using the UNIDROIT Principles to Preserve Long-Term Contracts in Times of Pandemic: The Case for a Covid-19 Model Clause

For the past year, hardship and related legal doctrines have been on the front burner as parties to international commercial contracts endeavored to find the most efficient solution where the outbreak of Covid-19 fundamentally altered the economic equilibrium originally envisaged in their contracts, without making contract performance impossible. Through an economic analysis of long-term international commercial contracts, this essay purports that the aggregate impact of the pandemic on contract performance has altered the ordinary cost-benefit analysis of contractual remedies to hardship, bringing about a shift of paradigm whereby the risk-sharing approach adopted by the Unidroit Principles on Hardship might have become the most efficient solution even in cases where the parties would usually privilege certainty over flexibility. Finally, the present essay lays down a proposed Covid-19 Model Clause, aiming at facilitating the incorporation of the contractual remedies offered by the Unidroit Principles into existing international commercial contracts.