Material change of circumstances in a contract: why risks should be addressed before its conclusion (Article 652 of the Civil Code of Ukraine)

When entering into a contract, the parties should be aware that the stability of contractual legal relations may be disrupted by unforeseen circumstances that materially alter the balance of interests between the parties and affect the expected outcome of the performance of obligations. Given the objective impossibility of fully predicting such changes, Article 652 of the Civil Code of Ukraine provides for the possibility of amending or terminating a contract in the event of a material change in circumstances as a mechanism for protecting the parties’ interests.

At the same time, the practical implementation of this mechanism is complex, as it requires proving a set of legally significant circumstances: their unpredictability at the time of contract conclusion, the impossibility of overcoming them, a substantial disruption of the balance of the parties’ interests, as well as the absence of allocation of the relevant risk to the interested party. In addition, such circumstances must be external in nature and independent of the parties’ conduct.

Under such conditions, an effective instrument for minimizing legal risks is the prior regulation by the parties in the contract of the procedure for confirming a material change in circumstances through the results of an independent professional examination in the form of a conformity assessment (expert opinion). For this purpose, it is advisable to include a contractual provision establishing the requirement to obtain and use such an expert opinion as a means of objectively determining the existence of the relevant circumstances and their impact on the performance of obligations.

In this context, the key element of such a contractual provision is not the designation of a specific expert or institution to provide the expert opinion, but rather the establishment of clear requirements for the expert entity, in particular: the existence of statutory authority to provide such services within the expert institution; verified professional qualifications and competence of its experts; certification and accreditation in accordance with international standards (ISO 9001, ISO 37001, ISO/IEC 27001, ISO/IEC 17020); as well as the existence of a valid professional liability insurance contract.

This approach ensures the objectivity of the expert opinion, enhances the level of trust between the parties, and forms an appropriate evidentiary basis for making lawful decisions in the event of a dispute.

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