In Romanian law, the institution of hardship (impreviziunea) represents a true bridge between the principle of the binding force of contracts (pacta sunt servanda) and the principle of contractual fairness. The Romanian Civil Code (“RCC”) expressly regulates this mechanism for the first time under Art. 1271, acknowledging that, in certain exceptional circumstances, a contract may be adapted or even terminated to avoid manifest injustice.
According to Art. 1271 (1) of the RCC: “The parties are bound to perform their obligations even if performance has become more burdensome, either due to an increase in the cost of fulfilling one’s own obligation or due to a decrease in the value of the counter-performance.”
This rule clearly reflects the primacy of the binding force of contracts.
However, Art.1271 (2) RCC introduces an exception, allowing court intervention when performance becomes excessively burdensome due to an exceptional change in circumstances that would make it manifestly unfair to maintain the obligation in its original form. The judicial remedy may take two forms: either adapting the contract or terminating it, depending on the specific circumstances of the case.
The purpose of hardship regulation is to temper the rigidity of the binding force of contracts when confronted with events that drastically alter the contractual balance. Hardship does not involve an impossibility of performance, but rather an excessive burden that borders on injustice.
Thus, not every difficulty in performance justifies applying Art.1271 RCC, but only those situations that cause a profound disruption of contractual balance, through no fault of the affected party.
According to Art. 1271 (2) RCC, court intervention is only subsidiary — it applies when the parties have failed to renegotiate the contract. This respects party autonomy while also providing an equitable remedy to prevent abuse or the financial ruin of one party.
The court’s choice between adaptation and termination must consider the proportionality of the remedy and the original intent of the parties, as derived from the nature of the contract and their prior conduct.
What are the conditions for invoking hardship?
Court intervention is permitted only if all the cumulative conditions under Art.1271 (3) RCC are met:
• the change in circumstances occurred after the contract was concluded (letter a);
• these circumstances were not and could not reasonably have been foreseen (letter b). For instance, in case law, it was held that the future increase of the minimum gross wage is reasonably foreseeable (Civil Decision No. 4604 dated November 7, 2017, Bucharest Court of Appeal, Administrative and Fiscal Litigation Section VIII);
• the debtor did not assume the risk of the change (letter c). In practice, parties may expressly waive the applicability of hardship, in which case hardship can no longer be successfully invoked in court;
• a renegotiation attempt was made in good faith and within a reasonable time (letter d). The party invoking hardship must prove that negotiations were initiated (e.g., through letters, emails, etc.).
The Effects of Hardship
Once the court establishes that the conditions for hardship are met, the parties may request — as a first step — the adaptation of the contract by equitably redistributing the losses and benefits resulting from the changed circumstances.
This adaptation reflects the concrete application of the principle of equity. For example, the court may order a reduction in the payment obligation to restore the contractual balance. When assessing the adaptation, the court must analyse the value ratio of the performances at the time of contracting and the risks inherently associated with the contract’s nature.
If adaptation is not possible or does not lead to an equitable outcome, the court may order termination of the contract, determining both the moment and conditions under which the termination will take effect.
Hardship Clause
Given the suppletive nature of hardship regulation in the RCC, the parties — by virtue of contractual freedom — may agree on how to manage the risk of unforeseen events that could affect the contractual balance. In this regard, a hardship clause may be included, setting out the specific conditions and mechanisms for adapting the contract in the event of significant imbalance.
Conclusion
Article 1271 RCC provides a balanced compromise between the stability of contracts and the need for adaptability in the face of the unforeseen. The regulation adds a welcome nuance to contract law, granting courts the power to deliver justice when reality significantly overtakes the original intent of the parties.
It is essential that parties understand, both at the time of contract conclusion and during performance, the conditions under which hardship may apply, as well as the consequences of expressly waiving it.
This article does not constitute legal advice and does not engage the liability of the author for the opinions expressed. We do not assume responsibility for any legislative changes made after the publication of this article. If you have any questions regarding the topic covered, please contact us.
