Commodity derivatives, contract law, and food security

Abstract

Speculation in commodity derivative markets has been linked to the causation of the 2007- 11 global food crisis. Derivatives have also been implicated in the causation of the global financial crisis. Much of the legal scholarship on derivatives is concerned with how best to regulate their use. Other work has pointed to the role of transnational actors, such as the International Swaps and Derivatives Association (ISDA), in facilitating the growth of the global derivatives market. What is missing in this scholarship is an account of how the norms of contract law have been altered, extended, and even distorted to create a new generation of financial assets linked to food prices. In this paper, I begin a project of examining how the trade in commodity derivatives has disrupted some of the established principles of contract law, and I reflect on the significance of my findings for the debate about derivatives regulation.