Renegotiation
Reopening an existing contract to adjust price or terms in light of changed circumstances or performance.
Definition
Renegotiation revises the terms of a live contract (typically price, scope or duration) when market conditions, volumes or performance shift materially. It may be triggered by a benchmarking or hardship clause; absent a contractual trigger, it depends on the counterparty's willingness or the duty of reasonableness.
Example
After volumes double, the buyer renegotiates a lower per-unit price under the contract's benchmarking clause.
Why this is a business risk
Renegotiation carries risk on both sides. The requesting party may get nothing if the counterparty refuses and no contractual trigger exists. The party receiving the request may inadvertently concede more than necessary if it has not reviewed the existing terms carefully before agreeing to reopen. Mid-term renegotiations can also disrupt operations if the process is prolonged.
How to manage it
- Include benchmarking and hardship clauses at contracting time so renegotiation has a clear trigger rather than depending on goodwill.
- Review the full existing contract before agreeing to reopen it so you know what you are protecting, not just what you want to change.
- Prepare market data and a clear rationale before requesting a renegotiation so the other side can see the objective basis.
- Set a clear timeline for the renegotiation process to avoid prolonged uncertainty for both parties.
- Document every agreed change as a formal amendment so the revised terms are clear and enforceable.
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.