Hardship Clause template clause

    Updated: 26 March 2026

    Please note: these example clauses are intended as a starting point, not as legal advice. Always adapt the text to your specific situation and have important contracts reviewed by a legal professional.

    Clause text

    Article [X] - Hardship

    1. If, after the conclusion of this Agreement, circumstances arise that were not foreseeable at the time of conclusion and that are of such a nature that unmodified continuation of this Agreement cannot reasonably be expected of either Party ("Hardship"), the affected Party shall be entitled to request renegotiation.

    2. The affected Party shall submit its request in writing, substantiated with:
    (a) the nature of the changed circumstances;
    (b) the date on which the circumstances arose;
    (c) the impact on the performance of the Agreement;
    (d) a proposal for adjustment of the Agreement.

    3. The submission of a hardship request shall not relieve the affected Party of its obligation to perform the remaining provisions of this Agreement, insofar as performance is reasonably possible.

    4. The Parties shall enter into consultations within [number, e.g. 14] days of receipt of the request. The consultations shall be aimed at reaching an adjustment of the Agreement that is acceptable to both Parties. The Parties shall act in good faith.

    5. If the Parties fail to reach agreement within [number, e.g. 60] days of the hardship request, either Party shall be entitled to:
    (a) terminate the Agreement by registered letter, with due observance of a notice period of [number] days, without being liable for damages;
    (b) submit the dispute to the competent court or the dispute resolution body designated in this Agreement, requesting an adjustment of the Agreement on the grounds of unforeseen circumstances.

    What does this clause mean?

    A hardship clause entitles either party to request renegotiation when circumstances change fundamentally after the contract was signed. Think of major economic shocks, raw material shortages, regulatory changes, or geopolitical shifts that upset the balance of the agreement.

    The distinction from force majeure is essential: force majeure makes performance impossible, whereas hardship makes performance possible but unreasonably burdensome. Without a hardship clause, the affected party must rely on the court doctrine of unforeseen circumstances, which courts apply restrictively. A contractual hardship provision offers faster and more predictable outcomes. According to World Commerce & Contracting, 9.2% of annual revenue is lost due to poor contract management. Contracts that fail to adapt to changed circumstances contribute directly to that figure.

    Paragraph 3 prevents abuse: a hardship request cannot be used as a pretext to suspend obligations. The affected party must continue performing insofar as that is reasonable, while the parties negotiate an adjustment.

    When should you use this clause?

    Include a hardship clause in long-term contracts (longer than two years), agreements with significant financial commitments, and contracts sensitive to market fluctuations or regulatory changes. Particularly relevant for international agreements, construction contracts, energy supply contracts, and multi-year procurement arrangements.

    The clause is most valuable in combination with a price indexation clause: the indexation absorbs normal fluctuations, while the hardship clause addresses exceptional shifts. According to Weshare (2025), 95% of organisations lack full visibility into their contractual obligations. Contracts that run for years without adjustment while market conditions change fundamentally represent a significant risk.

    Customize these elements

    • 1Define concretely what qualifies as hardship: a price increase exceeding [X]%, a currency fluctuation exceeding [X]%, or new legislation increasing costs by more than [X]%
    • 2Adjust the consultation period to the complexity of the contract: 30 days for simple agreements, 90 days for complex partnerships
    • 3Consider including a mediation step before parties resort to court proceedings
    • 4Explicitly exclude what does not constitute hardship: normal market fluctuations, foreseeable seasonal effects, risks that the affected party could have insured against

    Sources

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