ICC Force Majeure and Hardship Clauses

What are the main features of this model?

An international business transaction requires a precise and detailed underlying legal foundation that helps the parties mitigate risks. However, it can be expensive and time-consuming to draft such a full contract oneself, especially as regards critical issues such as force majeure and hardship. The ICC Force Majeure and Hardship Clauses respond to the market’s need for a reliable and equitable template, providing a set of clear and concise standard provisions regarding excuse from or modification of contractual performance obligations in case of force majeure or hardship. The model clauses may be incorporated into commercial contracts, saving parties time and money in the negotiation process.

Force majeure and hardship are frequently invoked in international trade when unforeseen events which make performance impossible or impracticable (force majeure) or which substantially upset the economic balance of the contract (hardship) occur.

In the first case, the party successfully invoking force majeure will be relieved from performance, while in the second case the party subject to hardship will be entitled to renegotiate the contract and in certain cases to obtain its adaptation to the changed circumstances.

While in the past the events to be considered for this purpose were mainly “acts of god” (fire, flood, earthquake, etc.), at present the variety of unforeseen events which may prevent performance or which may substantially upset the equilibrium of the respective obligations of the parties, has substantially increased.

Most national legislators provide rules dealing with these issues, but the principles developed in domestic law such as frustration (English law), impossibility of performance (civil law systems) or impracticability (American law) may imply substantial differences. It may thus happen that the same circumstances exempt a party from responsibility in one legal system and not in another. In order to overcome the difficulty of dealing with the relevant provisions of differing legal systems, parties tend to agree on specific force majeure or hardship clauses which are intended to replace the rules provided in the applicable domestic law with uniform contractual provisions.

It has become a common practice to include in most international commercial agreements standard clauses on force majeure and/or hardship, which, however, do not always satisfy the actual needs of the parties (especially when copied from other contracts, or from the internet, without verifying their quality). The purpose of the ICC Force Majeure and Hardship Clauses is precisely to provide traders with balanced and effective standard clauses to be included in international commercial contracts or to be used as a basis for drafting tailor-made clauses.