The principle of contractual sustainability and privity of contract: challenges and solutions in transnational commercial law

Abstract

Contractual sustainability meets the requirement to be a general principle of law and, in particular, of transnational commercial law, as it protects an urgent and basic shared ethical value and expresses the duties that we all owe to present and future generations. Contractual sustainability refers to achieving or promoting sustainable development through contractual mechanisms in order to fulfil a requirement of justice towards our own generation and future generations. In so far as the principle of contractual sustainability can lead to the existence of reciprocal duties between the contracting parties, contractual mechanisms (generally recognized at a transnational but also at a domestic level) are able to accommodate and enforce these duties. However, if the existence of these duties in some way affects third parties (typically, stakeholders), then contractual sustainability poses difficult challenges for the doctrine of privity of contract. In our analysis, we review different legal mechanisms that can protect third party beneficiaries. These are mostly focused on express and implied beneficiaries—that is, third parties that benefit from the contract because the contracting parties have included them in it, expressly or implicitly. However, incidental third parties—that is, people outside the contract but who have a sustainable interest in it—can usually gain protection only via express legislation or under tort. We promote the further development of the expansive effect of contracts to give rise to some contractual rights for incidental third parties and thus offer a solution that strikes an adequate balance between privity and contractual sustainability as a matter of contractual justice.