Liability, Force Majeure, and Hardship Flashcards
(20 cards)
What does “liability” mean in contract law?
It’s when one party must compensate the other for a breach of contract or wrongful act.
Example: A seller fails to deliver — they may owe damages.
How is liability different in civil and common law?
Civil law often requires fault or causation; common law only needs breach.
Example: In France, delay must be the seller’s fault; in England, breach alone creates liability.
What are “direct damages”?
Losses that result naturally from a breach.
Example: The cost of late delivery.
What are “consequential damages”?
Losses that don’t directly result but are foreseeable. Often excluded.
Example: Lost profits from a missed resale opportunity.
What is a limitation of liability clause?
A clause that limits how much or what kind of damages can be claimed.
Example: “Liability is capped at €100,000.”
Are limitation of liability clauses always valid?
Not always. Civil law may reject them if unfair or against public policy. Common law is more flexible.
What is “force majeure”?
An unexpected event beyond a party’s control that makes it impossible to perform.
Example: War, natural disaster, pandemic.
What conditions must be met for force majeure to apply?
1) Event was unforeseeable, 2) Beyond control, 3) Made performance impossible.
What must a good force majeure clause include?
Definition of events, notice requirement, and effect on duties.
Example: “Either party may suspend obligations during a force majeure event.”
Is force majeure recognized automatically in all systems?
Civil law usually implies it. Common law requires it to be in the contract.
What is hardship in contract law?
A major change in circumstances that makes performance much harder or economically unbearable — but not impossible.
What’s the difference between hardship and force majeure?
Force majeure = performance is impossible. Hardship = still possible, but unfair or economically unbearable.
How does civil law handle hardship?
Some civil codes allow renegotiation or contract adaptation. Example: German BGB §313.
How does common law treat hardship?
It does not recognize hardship unless it’s written in the contract.
What should parties do if force majeure or hardship occurs?
Notify the other party, try to renegotiate, and follow the contract.
What is a typical hardship clause?
“If performance becomes excessively difficult due to unforeseeable events, parties shall renegotiate in good faith.”
What is the ICC model force majeure clause?
A model clause listing specific events (e.g. war, epidemic) and legal consequences like suspension or termination.
What is “foreseeability” in liability and risk clauses?
If a loss was foreseeable, the breaching party may be liable for it.
Why are these clauses important in international contracts?
Because unexpected events (e.g. war, inflation, pandemic) can make performance risky or impossible — these clauses protect the parties.
Compare how civil law and common law handle force majeure and hardship in international contracts.”
Civil law usually includes both — even if not written. Common law requires specific clauses.
Example: A French firm can invoke force majeure due to a flood. An English firm must have it in writing.
