1. Causes of Action

3. RELEVANT DEFINITIONS AND ESSENTIAL ELEMENTS

A contract is a legally binding agreement (either written or oral) where one party promises to fulfil an obligation to another in exchange for consideration. A valid contract typically includes four essential elements: offer, acceptance, consideration, and intent to create legal relations.

The transition towards a low-carbon economy has necessitated the use of contracts to achieve carbon reduction goals and fulfil other climate obligations, such as carbon trading and emissions reduction contracts (referred to in this Section as "climate-related contracts"). Business arrangements, such as supply agreements, now often embed climate considerations to support climate mitigation goals, promote climate-friendly behaviour, and meet legislative or policy standards (referred to in this Section as "climate-related clauses"). This includes clauses for sustainability and net-zero requirements, "Green Modifications" in construction projects to enhance the environmental sustainability and climate resilience of infrastructures, provisions to boost energy efficiency, and 'green termination' clauses which permit contract termination due to unsustainable practices.

Climate-related contracts and clauses are crucial in facilitating the transition towards sustainability, yet they bring complex legal challenges. With the increasing reliance on these contracts in achieving climate change objectives, "contractual obligations" - obligations arising from climate-related contracts or clauses - are becoming more relevant in corporate climate litigation.

When using contractual obligations as the basis for corporate climate litigation, it is essential to consider the following key components and elements:

1) Existence of a Valid and Binding Contract

Ensure that the contract subject of the legal action is legally valid and binding on the parties, according to the definition of a 'contract' in the relevant jurisdiction.

2) Enforceable Rights and Obligations

Identify the plaintiff's rights and the defendant's obligations under the contract, which must be capable of being enforced by a court or tribunal. This requires interpreting the relevant clause's language to ascertain whether the obligations are mandatory or "soft". This may include the obligations to accurately represent environmental impacts, support climate mitigation goals, or comply with legislative and policy standards.

3) Breach of Contract

Substantiate the corporation's failure to fulfil its contractual obligations to establish a breach of contract, resulting in harm or damages[1]  to the plaintiff. The evidence (e.g., scientific proof of false advertisement claims) should compare the corporation's actions or omissions against clear legal definitions and standards (e.g., "sustainability"), which are applied to interpret the parties' rights and obligations.

4) Legal Consequences and Reliefs Sought

Identify the legal consequences if corporations fail to meet their contractual obligations and the reliefs sought by the plaintiffs. Potential remedies may include the annulment of contracts, specific performance, injunction to cease an action, and compensation for damages.

The foregoing components form the basis of a case against corporations based on contractual obligations. They serve as the foundational elements upon which claimants can construct arguments to assert the liability of corporations under their climate-related contracts or the climate-related clauses within their contracts.

[1] The resulting harm or damage can be either material or non-material, depending on the specific requirements under the applicable substantive or procedural law. For example, in Poland, there is a debate within legal scholarship about the scope of contractual liability as outlined in Article 471 of the Polish Civil Code. Some scholars argue it applies only to material damages, while others believe it also encompasses non-material interests.