Hardship clauses in international contracts are provisions that allow for renegotiation in the event of unforeseen circumstances that render the contract economically unbearable for one party. At Musch Legal, we regularly work on hardship claims following the 2022 energy price explosions, supply chain disruptions, and inflation. Unlike force majeure (impossibility): hardship concerns imbalance. Under Dutch law, Article 6:258 BW concerns imprevision; UNIDROIT Principles 6.2.1-6.2.3 are the standard for international contracts.
What is the legal problem? (When to invoke hardship?)
Hardship arises from unexpected events that render the contract fundamentally unbalanced — energy prices quadruple, commodity increases of 200 percent, currency imbalance, sanctions. For a party with a fixed-price contract: delivery becomes loss-making. Under a strict contract: performance is mandatory. Under the hardship doctrine: renegotiation or adjustment is possible. For long-term contracts (5+ years), a hardship clause is crucial — otherwise, the party is stuck with no escape route in the event of price shocks.
What does the law say? (What frameworks apply to hardship?)
Under Dutch law, Article 6:258 BW (imprevision): at the request of the party, the judge may modify the consequences of the contract or dissolve the contract in the event of unforeseen circumstances where, according to standards of reasonableness and fairness, unchanged performance cannot be expected. No automatic effect — a judicial decision is required. Under UNIDROIT Principles 6.2.2: hardship as a fundamental alteration of equilibrium with four conditions: (a) events occur after contract conclusion or revealed after, (b) not reasonably foreseeable, (c) beyond the control of the disadvantaged party, (d) risk not accepted by the disadvantaged party.
CISG does not contain an explicit hardship provision — case law is developing towards the application of Section 79 CISG for extreme hardship.
Aspect
Force majeure Art. 6:75 BW
Hardship Art. 6:258 BW
Impossibility
Complete
Not required — imbalance sufficient
Decision-maker
Party itself
Judge
Consequence
No damage
Adjustment or dissolution
Activation
Automatic
Judicial decision
Negotiation required
No
In practice first
Aspect
Force majeure Art. 6:75 BW
Hardship Art. 6:258 BW
Impossibility
Complete
Not required — imbalance sufficient
Decision-maker
Party itself
Judge
Consequence
No damages
Adjustment or dissolution
Activation
Automatic
Judicial decision
Negotiation required
No
In practice first
What risks do companies face? (What threatens without hardship protection?)
Without a hardship clause: party bound to fixed prices despite a 100-300 percent cost increase. For energy-intensive sectors (chemicals, metals, glass): existential losses in the event of gas/electricity price spikes. For long-term supply contracts: termination is sometimes the only salvation but can cause termination penalties. For a Dutch Article 6:258 BW appeal: legal proceedings required, uncertain outcome (high threshold: judge reluctant), 12-24 months. With clause: structured negotiation within weeks.
Practical example from our practice (How do we save a 6 million euro contract?)
Musch Legal represented a Dutch glass producer with a 5-year supply contract to a German car manufacturer at fixed pricing. After the 2022 gas price explosion (threefold increase), the contract turned out to result in an annual loss of 6 million euros. We pursued a hardship appeal under the ICC Hardship Clause 2020 (included in the contract): notification, 60 days of negotiation, followed by ICC arbitration with expert determination of the price adjustment. Result: price indexation to the gas price for future deliveries, 4.5 million euros in retroactive compensation. Without a hardship clause, the client would have had to bear the consequence of a 5-year loss or commit breach of contract.
What can you do? (Which hardship strategy are you building?)
In new long-term contracts: build a hardship clause (ICC Hardship Clause 2020 or UNIDROIT 6.2.2 template). Define triggers (percentage price increase, external events). Define the process (notification, negotiation period, expert determination, arbitration). Define remedies (price adjustment, termination, suspension). For existing contracts without a clause: negotiate renegotiation; in case of refusal, consider Article 6:258 of the Dutch Civil Code proceedings. Carefully document price increases and imbalances. Engage Musch Legal for hardship strategy.
Force majeure in international contracts