Hardship clause
A clause allowing renegotiation when unforeseen events fundamentally upset the contract's balance.
Definition
A hardship clause entitles the parties to renegotiate, adjust or terminate a contract when unforeseen circumstances make performance excessively onerous without making it impossible (which would be force majeure). It puts the statutory doctrine of unforeseen circumstances in article 6:258 BW into contractual form; that doctrine allows a court to modify or dissolve a contract where reasonableness and fairness require it. Such clauses are common in long-term supply, energy and construction contracts.
Example
When raw-material prices triple unexpectedly, a hardship clause obliges the parties to renegotiate the agreed price in good faith.
Why this is a business risk
Without a hardship clause, a business locked into a long-term contract at a fixed price has limited legal options if circumstances change drastically: the statutory doctrine of article 6:258 BW is available only in exceptional cases and its outcome is uncertain. Conversely, a poorly drafted hardship clause can be exploited by a party that simply wants a better deal, turning a commercially reasonable agreement into a source of persistent renegotiation pressure. The risk of not having one and the risk of having one that is too broad are both real.
How to manage it
- Define the trigger precisely: specify the threshold for "excessive onerousness" (for example a percentage cost increase) rather than leaving it to open-ended judgment.
- Set a clear procedure for invoking the clause: notice period, documentation required, and a fixed negotiation window before either party may escalate.
- Include a fallback: if renegotiation fails within the agreed period, specify whether the contract continues unchanged, terminates, or goes to a third-party adjudicator.
- Align the hardship clause with any force majeure and price-revision provisions to avoid overlap or contradictions.
Legal references
Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.
Frequently asked questions
Common questions about this term.