A Comparative Analysis of the Role of the Hardship Clause in Reducing Transaction Risks, Enhancing Economic Sustainability, and Improving Contractual Efficiency

Document Type : Original Article

Authors

1 Assistant Professor, Department of Islamic Jurisprudence and Law, Faculty of Islamic Sciences and Research, Imam Khomeini International University, Qazvin, Iran.

2 Associate Professor, Department of Islamic Economics, Faculty of Economics and Management, University of Qom, Qom, Iran.

10.22126/tbih.2025.11977.1034

Abstract

In volatile and unpredictable economic conditions, maintaining the economic balance of contracts has become a fundamental challenge in international contract law. This study aims to provide a comparative analysis of the hardship clause as a legal mechanism to address fundamental changes in economic conditions. The central research question is how the hardship clause can reduce transactional risks, enhance economic stability, and improve contractual efficiency. To answer this, the study employs a descriptive-analytical method, combining economic analysis of law with a comparative approach across various legal systems and international contract principles. The findings indicate that the hardship clause, by enabling renegotiation and contract adjustment in response to drastic economic changes, serves as an effective tool for contractual flexibility. It helps reduce transaction costs, allows efficient risk distribution, and prevents opportunistic behaviors, thereby ensuring stable economic relations. However, setting precise thresholds for invoking hardship, preventing abuse, and establishing clear legal frameworks remain crucial challenges. Ultimately, the integration and expansion of the hardship clause—especially in long-term and international contracts—can play a transformative role in enhancing economic resilience and promoting sustainable development in global commerce.

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References

Behn, D. (2009). The Confusing Legal Development Of Impossibility And Changed Circumstances: Towards A Better Understanding Of Contractual Adaptation At Common Law. Centre for Energy, Petroleum, and Mineral Law and Policy (CEPMLP) Annual Review, The University of Dundee.
Tieben, B. (2012). The concept of equilibrium in different economic traditions: An historical investigation. In The Concept of Equilibrium in Different Economic Traditions. Edward Elgar Publishing.

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