Contract Glossary
Hardship Clause
Definition
A contract provision that requires renegotiation when unforeseen circumstances fundamentally alter the balance of the agreement, making performance excessively burdensome for one party — but not impossible. Unlike force majeure (which excuses performance), a hardship clause keeps the contract alive but triggers a duty to renegotiate terms in good faith.
In Practice
You sign a 3-year contract to supply steel at $800/ton. One year later, tariffs and supply chain disruptions push your cost to $1,400/ton. Performance is still possible — you can still deliver steel — but at a devastating loss. A hardship clause triggers renegotiation: both parties must negotiate in good faith to adjust the price to reflect the new reality. Without a hardship clause, you're stuck performing at a loss or breaching the contract and facing damages.
Example Clause
If, after the execution of this Agreement, events occur that could not have been reasonably foreseen and that fundamentally alter the equilibrium of this Agreement, placing an excessive burden on one Party, that Party shall be entitled to request renegotiation of the affected terms. The Parties shall negotiate in good faith within thirty (30) days of such request. If the Parties fail to reach agreement within such period, either Party may submit the matter to [mediation/arbitration] for determination of revised terms.
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Frequently asked questions about hardship clause
Force majeure excuses performance when events make it impossible or impractical. Hardship clauses apply when performance is still possible but has become excessively burdensome — typically because the economic balance of the contract has shifted dramatically. Force majeure is a shield ('I can't perform'); hardship is a bridge ('I can perform, but only if we adjust the terms'). Many contracts include both.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.