With increasing frequency, due to changes in economic conditions the parties to commercial transactions encounter difficulties in fulfilling their assumed obligations. For those parties whose obligations remain enforceable (i.e., have not become objectively impossible to enforce, as in, e.g., the event of a force majeure), there is the legal option of filing for termination or modification of their contract on grounds of hardship.
Hardship as a legal term is defined in article 307 of the Commerce Act. Not every variation of economic conditions, however, is a cause for hardship; this applies solely to changes of an objective nature that the contracting parties could not have foreseen, as well as such a change as could result in the continuing performance under a business contract coming in conflict with the principles of fairness and good faith. The fulfilment of a contract would qualify as unfair when it would objectively impair the equivalence of considerations of the parties, i.e. the fulfilment of the contract would result in bankruptcy or excessive burden for one of the parties. The fulfilment of a contract would qualify as bad faith where it runs counter to the universally accepted criteria of fairness and decency, and would jeopardize the very existence as a going concern of one of the parties to the contract.
Hardship can be invoked through a legal procedure by filing a claim with a court of law seeking a modification or the termination of the existing contract or individual clauses therein; the legal change in the contractual relationship becomes effective from the moment of entry into force of the court ruling and does not retroactively affect the rights and obligations of the parties in force prior to that. In the course of proceedings, the claimant seeking termination or modification of the contract must provide evidence that all conditions serving as grounds for invoking hardship are in place: i.e., there is such an objective, unforeseeable change in economic conditions as renders the continuing fulfilment of the contract unfair and counter to good faith.