Rebus sic stantibus is a doctrine that allows parties to change the terms of a contract if conditions change dramatically. See: Lopez Morales v. Hospital Hermanos Melendez, Inc.
Rebus sic stantibus reflects the principle that agreements are made with the implied condition that they are binding only as long as there are no significant changes in the circumstances. Literally, rebus sic stantibus means “matters so standing,” or “for as long as the relevant facts and circumstances remain basically the same.” See: William L. Bonnell Company, Inc. v. Gándara
The doctrine of rebus sic stantibus generally applies in both contract and treaty contexts. The doctrine allows a party to excuse or modify their obligations under an agreement, or to terminate an agreement entirely, in exceptional circumstances.
For the doctrine of rebus sic stantibus to apply to contracts, courts generally require the contract to be executory (meaning the contract has not yet been fully performed). Further, the change of circumstances must:
- Arise after the parties enter into the agreement
- Have been unforeseeable and of indefinite duration, and
- Make it significantly more costly for the debtor to comply with his obligation.
The doctrine may also apply to treaties. Because treaties are essentially contracts between nations, the Supreme Court has indicated that a nation bound by a treaty may invoke rebus sic stantibus, citing changed circumstances, in order to terminate its obligations under the treaty. A variant of this doctrine is codified in Article 62 of the Vienna Convention on the Law of Treaties.
[Last updated in February of 2024 by the Wex Definitions Team]
- Keywords