Contractual Perspective of Climate Change Issues

Abstract

This paper first seeks to provide a perspective of how contract law has fared when given the role of protecting rights relating to environmental issues through the case example of Tito v. Waddell (No. 2) [1977] 1 Ch. 106. This case highlights that often contract law cannot provide a remedy that is ideal in situations that do not concern purely commercial issues, because contract law is designed to allocate risks in markets, rather than ensure important concerns such as slowing climate change or protecting forests or flora are achieved.

With this background, the paper then considers the operation contract law may have when the Australian government introduces carbon trading. Some observations are also offered relating to the standard term contract that has been introduced earlier this year in Europe, the home of the largest carbon credit trading market. This analysis focuses on remedies, and provides some insights into issues that might be considered in Australia, should a similar standard form contract be adopted.

Keywords: environmental law, contract, carbon trading, carbon trading agreements, private law remedies, damages, restoration

JEL Classification: K10, K12, K30, K32