Hardship The ICC hardship clause recognizes that parties must perform their contractual obligations even if. The previous versions of these Clauses were published jointly in Interpretation and Legal Effects of Hardship Clauses. Chapter 6. ICC Knowledge 2 Go provides a one-stop shop for all publications, events, and online training courses offered by the International Chamber of Commerce. This model contract covers the situation where a manufacturer licenses a package of information and industrial property rights to a licensee company.
Book a Consultation. Submit Search. In March ofand for the first time sincethe International Chamber of Commerce ICC presented us with a timely update to its model Force Majeure provision, which can either be adopted in its entirety by parties drafting.
Force Majeure and Hardship. Defines Force Majeure and Hardship situations and includes two sets of provisions designed to assist you in drawing up contracts. A model reference clause for Force Majeure is included and important drafting suggestions are offered for Hardship situations. Force majeure and Hardship clauses are download pdf of the most influencing clauses in commercial contracts. There have been various efforts at international level e. Yet, the interpretation and implementation.
Libyan Sun Oil Co. XVI, p. First, it is intended that the new clause should assist the largest possible number of users: those who draft neither of such two types of such clauses in their own contracts; those who draft only a general formula but would also like the predictability of an agreed list of events; and finally those who draft only a list of specified events but who wish to invoke an unlisted event as a force majeure event.
Thirdly and on the other hand, it was important not to afford a party invoking a listed event too much protection: it was definitely regarded as wrong for such a party simply to point towards the mere occurrence of a listed event, the effects of which it could reasonably have avoided or overcome, and to claim relief on that basis from its duty to perform.
The Clause seeks to attain these purposes first by providing a general force majeure formula placing the burden of proving the requirements for the application of the clause on the party invoking it. The Clause also provides a list of force majeure events, however, which is subject to the same conditions as established for the general force majeure formula but with evidential advantages for a party invoking the clause through this route.
It should be emphasised that even where a party invoking the clause does so by pointing towards a listed event, that party still needs to prove that it could not reasonably have avoided or overcome the effects of the listed event. Where this paragraph applies, the party invoking this Clause is under an obligation to notify the other party as soon as the impediment or listed event ceases to impede performance of its contractual duties.
As is the case with CISG, A here must establish the three conditions set out in the general formula in paragraph 1 both in its own regard and in regard to the sub-contractor C. The reason for maintaining this double threshold is that A would otherwise find it too easy in most cases of outsourcing to invoke force majeure simply by proving that C did not perform its sub-contract. Such a result was felt by the Task Force to be harsh on B, a contracting party with legitimate expectations of performance by A.
For the same reason, non-performance by a sub-contractor is not included among the events listed in paragraph 3. The Task Force decided against such a limitation on the ground that a party might wish to invoke the Clause in circumstances where it simply did not know — and could not have known — of the existence of the impediment at that time.
If the parties wish to apply the consequences of force majeure solely to events which occur after the contract is concluded, there is nothing in the Clause limiting their ability to do so by special term in their contract. A party invoking the Clause by invoking one or more of the events listed is presumed to have established that its failure to perform was caused by an impediment beyond its reasonable control which it could not reasonably have been expected to have taken into account when the contract was made.
It is essential to realise, however, that the mere occurrence of the event does not automatically grant relief to the party invoking the Clause. The main innovation is the inclusion of acts of terrorism in paragraph 3[c]. The events selected for inclusion are ones broadly accepted as being outside the control and anticipation of most contracting parties: a party invoking one or more of these events still needs to prove, however, that it could not reasonably have avoided the effects of the event upon its ability to perform its contractual duties.
It may be, of course, that parties in particular situations may wish to alter the list of events, for example by excluding one or more of the events, say event d , i. Thus, for example, where a party seeks relief because of a labour disturbance affecting only its own enterprise and therefore comes outside event g — general labour disturbance such a party can still invoke force majeure if it can establish the three requirements set out in paragraph 1. The condition laid down at paragraphs 1 a and c of the Clause dispense with the need for such an article: an event to which a party has contributed in whole or in part cannot be one outside the control of that party or one whose effects he might not reasonably have avoided or overcome.
A number of examples of such special clauses have already been given in these Explanatory Notes. Again, for example, the parties may have expressly agreed by special term that the supplier was under a contractual duty to obtain an export licence, in which case it would not be open to it to invoke a governmental order, listed at paragraph 3[d], unless the failure to obtain it was caused by another of the listed events.
The Clause adopts the latter approach because it was felt that it would be difficult to establish a single period, which would be appropriate for all sectors of industry and in all circumstances. It is felt that mention of notice in these paragraphs dispenses with the need of a general article on notification, setting out a duty of notice within a reasonable period and the consequences of a failure to notice. The scheme of the Clause makes the consequences of invoking the Clause contingent upon notification without delay, a sufficient incentive to a party wishing to invoke the Clause to give prompt notice to the other party of its intention so to invoke.
This has been done for two reasons. First, clauses providing for the consequences of force majeure events are more commonly used than hardship clauses: it was felt that making both clauses operate automatically by incorporation might discourage the use of the force majeure clause. Secondly, the two clauses operate in different circumstances and have different effects; they ought therefore to be kept separate.
Having said that, ICC puts forward both clauses as fair allocations of risk in circumstances of force majeure and hardship and both clauses can, of course, be incorporated into the same contract.
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