What differences are there between the concept of force majeure and that of excessive burden?
Differences between the concept of force majeure and that of excessive burden
- Force majeure refers to that prevents the fulfillment (total or partial) of the contract. On the other hand, excessive burden is a change that considerably alters its economic balance.
- Force majeure releases the affected party from its obligation to perform and from its responsibility for the damages caused to the other party, while excessive hardship does not release the affected party but does allow it to modify or terminate the contract.
- In force majeure, the affected party must prove that the event was beyond their control. On the other hand, in excessive onerousness, what must be proven is that the change that alters the economic balance was subsequent to the contract and not attributable to any of the parties.
- An example of force majeure might be a pandemic or earthquake, and an example of excessive hardship might be a shortage of raw materials.
In summary, force majeure implies an impossibility (whether physical or legal) to comply, and excessive burden supposes an extreme or disproportionate economic difficulty to comply.
An example of force majeure would be the following: In a supply contract between a manufacturing company and a supplier of raw materials, a force majeure event could be an unexpected flood at the supplier’s location. Due to the flood, the supplier cannot supply the raw materials agreed in the contract. The force majeure clause in the contract could temporarily release the supplier from its obligation due to circumstances beyond its control. This protects the provider from legal action for non-compliance and allows the parties to adjust their obligations until the situation is resolved.
By contrast, an example of excessive hardship would be: In a commercial lease, the tenant has agreed to a fixed rent for five years. However, due to an economic crisis, his income has dropped dramatically, making the rental financially unsustainable. The excessive hardship clause in the lease allows the tenant to request rent adjustments due to unforeseen circumstances that make it disproportionately burdensome. This helps to avoid an unsustainable financial burden and to renegotiate the terms based on the new economic situation.
The most essential notions of these concepts can be found in article 1105 of the Civil Code.