The English courts will apply hardship clauses that have come into force by treaty, provided they are drafted with sufficient certainty to be enforceable. They need to understand the nature and impact of the challenges they wish to address. The definition of “hardship” in these clauses ranges from general references to hardship and “heavy or excessive burden” on the parties` ability to pay to more restrictive definitions that set certain financial thresholds that, if exceeded, would trigger the clause. The English courts have concluded that non-performance “cannot be invoked lightly to relieve the parties to the contract of the normal consequences of reckless commercial transactions”. 1 In Davis Contractors Ltd v Fareham Urban District Council,2 an unexpected labour shortage after the Second World War made contract performance more expensive by increasing the contractor`s costs. It was not a source of frustration. The House of Lords stated: “It is not distress, inconvenience or material loss per se that engages the principle of frustration.” A hardship clause is a provision of a contract that states that the contract will be amended if circumstances have changed and one becomes overloaded.3 min read If a party wishes to invoke the strict clause of the contract to modify its performance obligations, consult legal counsel to have the agreement reviewed in its entirety. In most cases, the lawyer will review the wording that defines what constitutes and is not harm and will ensure that such a hardship clause does not conflict with other formulations of the contract. In addition, the lawyer can advise the party burdened by cases of rigor on the respect of voice communication and the rules of procedure of the contract. Both in the event of hardship and force majeure, the triggering event must be beyond the control of one of the parties. A typical economic hardship clause in English law provides that parties affected by economic hardship resulting from unforeseen and drastic changes in market conditions may jointly consider adjusting the terms of the contract. If such an adjustment does not match, the affected party may either terminate the contract or refer the dispute to an independent third party for resolution. The HOHW clause does not excuse non-performance.

The HOHW clause makes it clear that contractual obligations (or payments) must continue regardless of hardship, force majeure or other abuse. A hardship clause in a contract allows the parties to modify or excuse their contractual obligations if one of the parties experiences difficulties. Such difficulties must be more than just an inconvenience. As a general rule, it must be an event that causes a party`s situation to change to such an extent that the party is unduly burdened and unable to fulfil contractual obligations. The main difference between a case of hardship and a case of force majeure is the effect on the ability of the accused parties to perform the contract. In a difficult situation, the parties may fulfill all or part of the contractual obligations with some modifications necessary to deal with a difficulty. This can be a price change or a change in the benefit plan. CCI`s force majeure and stringency clauses balance business people`s legitimate expectations of performance with the reality that circumstances change, making performance so difficult that contracts simply need to change. The new clauses for 2020 update the 2003 versions and reflect the need for a simpler presentation and expanded options to meet the needs of different businesses. Among the main innovations are a new abbreviated force majeure clause, limited to a few key provisions on the main force majeure issues and particularly suitable for SMEs, as well as extended options in the hardship clause on termination and adaptation of contracts. However, if continued performance has become excessively onerous as a result of an event beyond the reasonable control of a party that could not reasonably be expected to have been considered, the clause may require the parties to negotiate alternative contractual terms to adequately account for the consequences of the event. If COVID-19 and its impact have posed challenges for your business in fulfilling your contractual obligations, seek help from KPPB LAW`s contract lawyers.

They are adept at reviewing and analyzing contracts, negotiating new terms and representing them in various third-party courts to resolve disputes. Getting your help can be the most important step you can take to protect your business interests. Contact KPPB LAW today to discuss your situation.