The Road(s) to a Sustainable Contract Law

Contract law is often portrayed as structurally ill-suited to environmental protection because it is built around private autonomy, bilateral exchange, and the pursuit of mutual gain. For that very reason, it is not usually the first field that comes to mind when thinking about environmental sustainability. If contracts are primarily instruments through which parties allocate risks and maximise their own interests, it may seem odd to ask them to serve ecological goals that extend well beyond the parties themselves.

Yet this traditional picture is too narrow and increasingly unsatisfactory. Contracts structure production, distribution, consumption, and supply chains. They shape how goods are made, how services are delivered, and how businesses organise their commercial relationships. It is therefore difficult to deny that contract law can affect environmental outcomes. This is illustrated by the growing use of contracts as a vehicle for sustainability obligations in supply chains, including in the context of the Corporate Sustainability Due Diligence Directive (Directive (EU) 2024/1760). 

The real question is not whether contract law should have anything to do with sustainability, but how environmental concerns can be integrated into its existing doctrines and techniques.

In my recent article in the European Review of Private Law, I argue that a sustainable contract law is already emerging through three distinct legal strategies: mandatory rules, voluntary sustainability commitments, and eco-oriented default rules. 

Top-Down Approach

The first route is a top-down approach. On this model, the legal system imposes environmental limits or obligations on contracting parties regardless of their preferences. The most familiar example is mandatory rules that invalidate agreements contrary to public policy. If environmental protection is treated as a core public value, contracts that seriously undermine it may become unenforceable. But the top-down route may go even further. Contract law can also reshape contractual performance more directly, for instance by imposing non-waivable environmental duties or by calibrating remedies to favour more sustainable outcomes. In this respect, the ‘green principle’ enshrined in Article 9 of the Chinese Civil Code offers an interesting example for future debate. 

The attraction of this route is obvious: it is the most direct and potentially the most effective. But it is also the most controversial. Mandatory rules are difficult to design, politically contested, and rigid in their application. They require legal systems to decide not only that sustainability matters, but also how it should be balanced against freedom of contract, legal certainty, market efficiency, and other competing values. 

Bottom-Up Approach

The second route is a bottom-up approach. Here, sustainability enters contract law through the parties’ own choices. For example, businesses may voluntarily include environmental obligations in their contracts, thus incorporating green commitments into the bargain. The increasing availability of sustainability model clauses, including those drafted by The Chancery Lane Project and the European Model Clauses developed by The Responsible Contracting Project, shows the practical relevance of this strategy. Its appeal is equally clear: it builds on private autonomy rather than displacing it, and it can adapt more quickly to commercial practice than mandatory regulation.

But the challenge is twofold. The first problem is enforcement, as environmental obligations often protect interests that do not map neatly onto orthodox remedies such as damages. The second is uptake: absent legal or commercial incentives, parties may have little reason to assume such obligations voluntarily. In this area, the success of voluntary sustainable contracting depends both on parties’ willingness to make green commitments and on whether contract law can give those commitments meaningful legal force. 

Nudging

Finally, a third route lies in nudging. Between mandatory intervention and purely voluntary contracting, legal systems can steer parties toward greener outcomes while preserving their freedom to opt out. The clearest example is the use of default rules. Contract law already relies on suppletive rules to fill gaps and define parties’ obligations unless they agree otherwise. There is no reason in principle why these rules could not also reflect environmental concerns. Sales law, for instance, can imply standards relating to durability, reparability or compliance with environmental requirements, thereby encouraging more sustainable patterns of production and consumption, without making such standards entirely inescapable. This is reflected, for example, in Article 7 of Directive (EU) 2019/771 on the sale of goods to consumers. 

This route is less intrusive than command-and-control regulation, but more ambitious than leaving sustainability wholly to private initiative. Its promise lies precisely in combining public guidance with private choice. 

What Way Forward?

None of these three strategies is sufficient on its own and none is inherently superior in the abstract. Different legal systems and contractual contexts may call for different combinations. In some settings, mandatory intervention may be justified; in others, voluntary commitments supported by better remedies may be more realistic; elsewhere, green defaults may offer the most acceptable starting point. 

The broader point is that a sustainable contract law is not a contradiction in terms. Nor is it merely aspirational. Some of the relevant tools already exist, although they are often overlooked or underused. Others may require legislative reform or doctrinal development. But the road to a sustainable contract law is already taking shape. The task now is to decide which road, or combination of roads, legal systems should take and how far each should go. 

The author’s full paper is available here.

Riccardo Serafin is aPostdoctoral Researcher at the Institute for European Tort Law.