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Volume 109, Issue 3


Excuse 2.0 

Yehonatan Givati, Yotam Kaplan & Yair Listokin

Sylvan M. Cohen Professor at Hebrew University Law School, Professor at Hebrew University Law School, Deputy Dean and the Shibley Family Fund Professor of Law at Yale Law School. 

23 Apr 2024

Excuse doctrine presents one of the great enigmas of contract law. Excuse allows courts to release parties from their contractual obligations. It thus stands in sharp contrast to the basic principles of contract law and adds significant uncertainty to contract adjudication. This Article offers a crucial missing perspective on the doctrine of excuse: the view from a macroeconomic lens. Macroeconomics offers a new justification for the law of excuse and new ways of understanding the doctrine’s mysteries, creating Excuse 2.0.

We offer a simple macroeconomic model of excuse doctrine, highlighting the role the doctrine plays under conditions of economic crisis and potential recession. Our analysis illustrates a counterintuitive advantage of excuse doctrine, suggesting that the legal uncertainty surrounding the doctrine can induce loss-sharing between contractual parties, thus minimizing the costs of long-term economic instability. In the COVID crisis, for example, excuse doctrine facilitated an extraordinary wave of contractual renegotiation and loss sharing—without triggering excessive litigation. We discuss the interpretive and normative implications of our analysis and highlight its significance for contemporary policy debates in the wake of the COVID-19 pandemic.

To read this Article, please click here: Excuse 2.0.