22 Certainty or flexibility

A more general question is whether contractual security is better promoted by rigid rules or by rules which, by using open terms like ‘reasonable’ or by other means, leave room for flexibility. The answer probably turns on the nature of the contract. In contracts for the purchase of certain commodities or types of incorporeal assets where prices fluctuate rapidly and where one deal is likely to be followed rapidly by another which relies on the first and so on within a short space of time, certainty is all important. Nobody wants a link in a chain of transactions to be broken by an appeal to some vague criterion. Certainty means security. However, in long term contracts for the provision of services of various kinds (including construction services), where the contractual relationship may last for years and where the background situation may change dramatically in the course of it, the reverse is true. Here true security comes from the knowledge that there are fair mechanisms in place to deal with changes in circumstances. It is for this reason that the default rules in the part of the DCFR on service contracts have special provisions on the giving of warnings of impending changes known to one party, on co-operation, on directions by the client and on variation of the contract.1. The general rules on contractual and other obligations in Book III have to cater for all types of contract. So their provisions on changes of circumstances are much more restricted. However, even in the general rules it is arguable that it does more good than harm to build in a considerable measure of flexibility because open criteria will either be disapplied by highly specific standard terms devised for fields of commercial activity where certainty is particularly important or will disapply themselves automatically in cases where they are inappropriate. The effects of terms such as ‘reasonable’ and ‘fair dealing’ depend entirely on the circumstances. Rigid rules (e. g. ‘within 5 days’ instead of ‘within a reasonable time’) would be liable to increase insecurity by applying in circumstances where they were totally unexpected and unsuitable.