The Application of the Principle of Rebus Sic Stantibus in Thai Law To Alleviate the Debt Burden of Contracting Parties During Unforeseen Crises

Abstract

This study explores the principle of Rebus Sic Stantibus (When circumstances change, a contract is no longer binding), a doctrine aimed at protecting contractual parties in the event of unforeseen circumstances that significantly impact the fulfillment of contractual obligations. While the debt under a contract may remain payable, the resulting burden could become excessively onerous, surpassing what the parties could have expected.

In the normal course of contract formation, the intentions of both the offeror and the offeree must align, along with careful consideration of legal correctness and prevailing circumstances, both present and future. If all conditions are expected to proceed as planned, the parties agree to the contractual obligations. However, should unforeseen events or drastic changes occur, such as an economic crisis or unanticipated circumstances, fulfilling the contract might impose an undue burden on the party obligated to perform.

Examples of severe events impacting contractual parties include economic crises as declared by the World Health Organization (WHO) or Public Health Emergency of International Concern (PHEIC), the Asian financial crisis of 1997 (commonly known as the Tom Yum Goong crisis), and the COVID-19 pandemic. These events not only caused economic damage but also disrupted the ability of contractual parties to fulfill their obligations.

Such situations underscore the necessity of applying the Rebus Sic Stantibus principle to adapt contracts to future circumstances that might arise.

Therefore, this principle should be incorporated into Thailand's legal framework, whether by explicitly codifying it in the Civil and Commercial Code or by adjusting contracting practices to ensure fairness for the parties involved. This can be guided by international examples, such as those from Germany, France, or the United Kingdom.