Hardship clause

Hardship clause is a clause in a contract that is intended to cover cases in which unforeseen events occur that fundamentally alter the equilibrium of a contract resulting in an excessive burden being placed on one of the parties involved.

Hardship clauses typically recognize that parties must perform their contractual obligations even if events have rendered performance more onerous than would reasonably have been anticipated at the time of the conclusion of the contract. However, where continued performance has become excessively burdensome due to an event beyond a party’s reasonable control which it could not reasonably have been expected to have taken into account, the clause can obligate the parties to negotiate alternative contractual terms which reasonably allow for the consequences of the event.

Relation to force majeure

The hardship clause is sometimes used in relation to force majeure, particularly because they share similar features and they both cater to situations of changed circumstances. The difference between the two concepts is that hardship is where the performance of the disadvantaged party has become much more burdensome, but not impossible, while force majeure refers to a party's contractual requirements have become impossible, at least temporarily. Hardship constitutes a reason for a change in the contractual program of the parties. The aim of the parties remains to implement the contract. Force majeure, however, is situated in the context of non-performance, and deals with the suspension or termination of the contract.

See also

• Hell or high water clause
• Impossibility