What is Hardship clause?

Hardship clause is a clause in a contract that is intended to cover cases in which unforeseen events occur that fundamentally alter the equilibrium of a contract resulting in an excessive burden being placed on one of the parties involved.

Hardship clauses typically recognize that parties must perform their contractual obligations even if events have rendered performance more onerous than would reasonably have been anticipated at the time of the conclusion of the contract.

However, if continued performance has become excessively burdensome because of an event beyond a party's reasonable control that it could not reasonably have been expected to have taken into account, the clause can obligate the parties to negotiate alternative contractual terms to allow for the consequences of the event reasonably.