Legal issues concerning the scope of impossibility of performance of a contract: A study of cases where the circumstances underlying the contract have changed

Abstract

This research aims to analyze legal issues concerning the scope of "Impossibility of Performance" under Sections 218 and 219 of the Thai Civil and Commercial Code within the context of today’s highly volatile economic environment. Such volatility often leads to a fundamental change in circumstances where performance, while physically possible, becomes excessively onerous (Hardship) for the debtor.

The study finds that Thai law remains restricted to physical and legal impossibility, lacking explicit recognition of "Economic Impossibility" or the principle of Rebus Sic Stantibus. This creates a legal gap and unfairness when performance costs skyrocket or the value of performance collapses, disrupting the contractual equilibrium. Comparative analysis with German law, French law, and the UNIDROIT Principles reveals that modern legal systems provide a "Contract Adjustment" mechanism to preserve the sanctity of contracts while ensuring equity.

The research recommends amending the Civil and Commercial Code to include the "Change of Circumstances" principle. This would grant parties the right to renegotiate and empower courts to adjust contractual terms to redistribute risks and restore equilibrium. Such amendments would bridge current legal gaps and establish a new standard for protecting contracting parties under the overarching principle of good faith.