The real debate and griping on this thread seems actually to center on the "lawful" part rather than the "contracts" part. People are noting that the parties originally thought it would work one way, and then by subsequent events (GLBSE closure) and revelations (legal advice) it turns that executing the contracts lawfully will require more from both sides. They seem to be saying that that Giga should, for the sake of honor or something, execute the original vision rather than the revised "actually legal" vision, sacrificing compliance on the altar of the original contract's purity and integrity. That strikes me as a bit silly -- but not nearly as silly as trying to claim that there are no "contracts" at all.
That's one take.
The other take is that you can both be legal, and continue, and not screw anyone by closing down the original contract. (execute buyback) Then re-open a new contract.
There are two problems with closing down the original that I see.
*) The contract was 105% of the traded price on GLBSE in the last XX days. Obviously this cannot be used directly, GLBSE is gone. You'd have to go with the last 15 days of trades before GLBSE went offline or something. (easy to grab btw from the twitter feed.)
*) Giga may not have the liquidity to do a buyback. I know on LTC-MINING it'd be pretty hard for me to do a buyback on all of them at once. All the proceeds of the sales went into hardware. That hardware resale value is probably not more than 60% of what I paid for it new.
I think the middle ground would be to offer up an option of buyback or new contract. But there'd have to be a pretty good incentive to go new contract or too many people would go buyback and we're back into liquidity problems.
Giga's definitely in a lose-lose situation, I do not envy his position. At least he hasn't cut and run as many issuers seem to be doing.