Change of circumstances (imprévision) and hardship clauses in B2B contracts (Article 1195 of the French Civil Code)

A legal department managing a multi-year supply contract, a long-term commercial lease or a fixed-price services contract will sooner or later ask the same question: what can be done when performance becomes ruinous following an event that no one anticipated at signing? A spike in energy prices, a supply disruption, a surge in the cost of raw materials, a regulatory upheaval: these situations can turn a balanced contract into a financial sinkhole for one of the parties. Since the 2016 reform of the law of obligations, French law has recognised an exit mechanism, change of circumstances (imprévision), codified in Article 1195 of the French Civil Code. This article analyses the exact conditions of this mechanism, its real scope for B2B contracts, and above all how to secure it in advance by means of a tailor-made hardship clause.

From the intangibility of the contract to the recognition of imprévision

French contract law rests on a cardinal principle: the binding force of the contract, expressed in Article 1103 of the French Civil Code (contracts lawfully formed take the place of law for those who have made them). For more than a century, this principle was applied with absolute rigour where an imbalance arose during performance. The leading decision of the Cour de cassation in the Canal de Craponne case (Cour de cassation, Civil Chamber, 6 March 1876) held that the court could not, under any pretext, modify the parties' agreements, even where the passage of time had made performance manifestly unbalanced. A fee fixed in the sixteenth century had to remain payable at the agreed rate, whatever the erosion of the currency.

This position contrasted with that of administrative law, which had long accepted the theory of imprévision in the interest of the continuity of public service (Conseil d'État, 30 March 1916, Compagnie générale d'éclairage de Bordeaux). The private contracting party, for its part, remained bound by its initial undertaking.

Ordinance No. 2016-131 of 10 February 2016 reforming contract law put an end to this asymmetry by introducing Article 1195 into the French Civil Code. This provision, ratified by Law No. 2018-287 of 20 April 2018, applies to contracts concluded or renewed on or after 1 October 2016. It marks a historic break: the judicial courts may now, on strict conditions, revise or terminate a private-law contract that has become excessively onerous.

The conditions of imprévision under Article 1195 of the French Civil Code

The provision sets out a precise sequence of cumulative conditions. A careful reading shows that this is not a right to renegotiation available at the slightest economic risk, but a framed mechanism reserved for genuine upheavals.

Article 1195 provides:

If a change of circumstances that was unforeseeable at the time of the conclusion of the contract renders performance excessively onerous for a party who had not agreed to assume the risk, that party may ask its co-contracting party to renegotiate the contract. It shall continue to perform its obligations during the renegotiation.

Three substantive conditions structure the opening of the imprévision mechanism.

An unforeseeable change of circumstances

The first criterion concerns the nature of the event. It must be a change of circumstances occurring after the conclusion of the contract, and that change must have been unforeseeable at the time the parties committed themselves. Unforeseeability is assessed in abstracto, by reference to what a normally diligent economic operator could reasonably have anticipated.

An ordinary price variation, a usual cyclical risk in the sector concerned, or a fluctuation that professionals traditionally build into their forecasts does not meet this criterion. By contrast, an event of exceptional scale, without recent precedent or of unprecedented intensity, may establish unforeseeability. The date on which the contract was concluded is decisive: a contract signed after the outbreak of an energy crisis cannot invoke that crisis as an unforeseeable change, since the event was already known.

Performance that has become excessively onerous

The second criterion is both quantitative and qualitative. The change of circumstances must render performance excessively onerous for the party invoking it. The threshold is high: it is not enough that the contract has become less profitable or that the margin has narrowed. The burden must be such that it upsets the very economics of the transaction.

The provision does not require that performance be impossible, which distinguishes imprévision from force majeure. The performance remains materially feasible, but its cost has reached a level that seriously unbalances the consideration. An energy supplier bound by a fixed-price contract that would have to sell on a lasting basis below its supply cost, or a catering company whose food costs have soared to the point of making each meal loss-making, comes close to this situation. The assessment remains within the sovereign discretion of the trial courts, which require a quantified and documented demonstration of the upheaval.

The absence of acceptance of the risk

The third criterion is often overlooked by drafters, although it conditions the whole mechanism. Imprévision may be invoked only by a party who had not agreed to assume the risk. In other words, if the contract contains a clause by which a party has taken on the risk of an adverse development, it can no longer rely on Article 1195 for that same risk.

This condition opens up a wide field of contractual stipulations. A firm and final price clause, a limited indexation clause, or a clause by which the buyer expressly agrees to bear variations in the cost of raw materials may amount to acceptance of the risk and neutralise imprévision. The drafting of the contract thus determines, in advance, access to the statutory mechanism.

The procedural mechanism: from renegotiation to the intervention of the court

Article 1195 provides for a progression in three stages, the logic of which is to favour agreement between the parties before any recourse to the court.

The first stage is the request for renegotiation. The party facing excessive onerousness may ask its co-contracting party to renegotiate the contract. A crucial point for legal departments: during this phase, the requesting party continues to perform its obligations. Imprévision in no case authorises unilateral suspension of performance. Ceasing to deliver or to pay on the ground of imprévision exposes a party to an action for breach of contract and, potentially, to termination at the fault of the party that suspends.

The second stage occurs where renegotiation is refused or fails. The parties then have two joint options: to agree together on termination of the contract, from the date and on the terms they determine, or to ask the court, by mutual agreement, to adapt the contract. Both routes require the agreement of both parties.

The third stage is unilateral recourse to the court, provided for by the last paragraph of Article 1195:

In the absence of agreement within a reasonable time, the court may, at the request of a party, revise the contract or put an end to it, from the date and on the terms it determines.

This power of judicial revision is the most commented innovation. It gives the court considerable power: to rewrite the financial terms of the contract, or to end it on terms that it determines at its sole discretion. For a legal department, this prospect represents both a lever and a risk. A lever, because it offers a way out where the counterparty takes refuge behind the letter of the contract. A risk, because judicial uncertainty is real: the court may adapt the contract in a direction that neither party would have chosen, at a time they do not control, and at the end of a long and costly procedure.

It is precisely this uncertainty that explains why most structured B2B contracts seek to exclude, or to frame by agreement, this judicial power.

The default nature of Article 1195: the key to the hardship clause

Article 1195 is not a matter of public policy. It is a default provision, which means that the parties may adjust its effects, or even exclude it entirely. This freedom is the legal basis of the hardship clause.

Two opposing approaches are open to drafters. The first is to exclude Article 1195 outright: the parties agree that each bears the risk of a change of circumstances and waives the benefit of imprévision. This exclusion, common in contracts where one operator has a favourable bargaining position, amounts to returning to the regime that applied before 2016, that of absolute intangibility. It secures the creditor of the price, but exposes the other party to bearing major upheavals alone.

The second approach, which is more balanced, is to replace the statutory mechanism with a tailor-made contractual renegotiation mechanism: the hardship clause in the strict sense. Rather than leaving it to the court to revise the contract, the parties themselves organise the renegotiation procedure, its triggers, its time limits and its outcomes. Article 1195 then serves as a safety net which the parties replace with a controlled contractual mechanism.

The choice between these two approaches depends on the position of each party and the nature of the contract. A supplier exposed to input volatility will have an interest in a detailed hardship clause; a buyer seeking budgetary stability may prefer to exclude imprévision, combined with a firm price. Negotiating this clause is a matter of risk allocation in its own right. This clause forms part of the set of stipulations that we examine in our article on the essential clauses of the B2B supplier-buyer contract.

Drafting an operational hardship clause

An effective hardship clause is not limited to referring to Article 1195 or reproducing its terms. It must define its scope and operation precisely, in order to avoid the uncertainties that make statutory imprévision so feared. Several elements deserve particular attention when drafting.

• The triggering event: define concretely the events that open the renegotiation. Rather than a vague formula, specify objective indicators (variation in a reference index beyond a determined threshold, movement in a raw material price, a regulatory change increasing costs).
• The trigger threshold: set the degree of upheaval from which the clause may be activated, by reference to a measurable variation in the burden or in the value of the performance, in order to avoid debate on whether performance is excessively onerous.
• The procedure and time limits: frame the notification, the content of the supporting file to be provided, the length of the negotiation phase and the obligation to negotiate in good faith.
• The continuation of performance: state expressly that the contract continues to be performed during the renegotiation, in line with the logic of Article 1195.
• The outcomes in the event of failure: provide for the fate of the contract if the parties do not agree, choosing between recourse to a third party (expert or mediator), adaptation according to a predetermined formula, or termination on terms fixed in advance.

A point of vigilance concerns the relationship between the hardship clause and indexation or price review clauses. A contract that already contains an indexation clause partly covers the risk of cost changes; the hardship clause is then intended to deal with the upheavals that indexation is not enough to absorb. Without coordination, a party could be met with the argument that it accepted the risk under the indexation clause, which would neutralise recourse to imprévision.

Another pitfall: the implicit referral to the court. If the hardship clause is silent on the outcome of a failed negotiation, Article 1195 regains its force and the court recovers its power of revision. A complete clause must therefore either provide an autonomous outcome or consciously accept the referral to the statutory mechanism.

Imprévision, force majeure and the defence of non-performance: distinguishing the regimes

Legal departments sometimes confuse imprévision with other mechanisms for managing performance difficulties. The distinction is nonetheless essential, because the regimes do not produce the same effects.

Force majeure, governed by Article 1218 of the French Civil Code, presupposes an event beyond the debtor's control, unforeseeable and whose effects cannot be avoided by appropriate measures, making performance impossible. Its effect is suspensive or releasing: the obligation is suspended or the contract terminated. Imprévision, by contrast, presupposes performance that remains possible but has become ruinous; its effect is adaptive, aiming to maintain the contract through renegotiation or revision. A surge in costs that does not prevent delivery falls under imprévision, not force majeure. The definition and conditions of force majeure are set out in our article devoted to that notion.

The defence of non-performance (exception d'inexécution), provided for in Articles 1219 and 1220 of the French Civil Code, allows a party to suspend its own performance in the face of the other party's non-performance. It cannot be used to react to a mere economic imbalance: invoking imprévision never relieves a party of the obligation to perform, as Article 1195 expressly recalls. Confusing these mechanisms leads to wrongful unilateral suspensions. On the use of the defence of non-performance by the tenant in response to the termination clause, see our analysis devoted to the commercial lease.

This map of the regimes should guide contract drafting: a well-designed long-term contract deals separately with force majeure (by a clause that defines the events and their effects) and imprévision (by a hardship clause), without mixing them.

Conclusion: anticipating rather than suffering judicial uncertainty

The answer to the question posed is nuanced. Yes, a B2B contract that has become ruinous can be renegotiated and, failing agreement, revised by the court, on the basis of Article 1195 of the French Civil Code. But this statutory route has two major limits for a legal department: strict conditions of access, the demonstration of which is demanding, and significant judicial uncertainty that places the rewriting of the contractual balance in the hands of the court.

The position of substance is clear: statutory imprévision should not be relied on as a fallback mechanism, but anticipated by contract. The default nature of Article 1195 offers a valuable freedom, that of defining oneself, in cold blood and outside any dispute, the allocation of risks and the renegotiation procedure. A precise hardship clause, coordinated with the indexation and force majeure clauses, is infinitely better than an uncertain application to the court several years after signing.

For any multi-year contract or one exposed to cost volatility, one recommendation applies before signing: have your contract templates audited to check, clause by clause, whether Article 1195 is excluded, adjusted or left applicable, and align that choice with your real negotiating position and with your tolerance for judicial uncertainty.

Frequently asked questions

Does Article 1195 of the French Civil Code apply to all existing contracts?

No. Article 1195, introduced by Ordinance No. 2016-131 of 10 February 2016, applies only to contracts concluded or renewed on or after 1 October 2016. Contracts signed before that date remain subject to the earlier regime, that of intangibility derived from the Canal de Craponne case law (Cour de cassation, Civil Chamber, 6 March 1876), unless renewed afterwards. The date of conclusion must therefore be checked before any action based on imprévision.

Can performance of the contract be suspended during the renegotiation on grounds of imprévision?

No, and this is a critical point. Article 1195 requires the party requesting renegotiation to continue to perform its obligations throughout the discussion phase. Unilaterally suspending performance on the ground of imprévision is a wrongful non-performance, liable to give rise to contractual liability and to lead to termination at the fault of the party that suspends. Renegotiation and performance coexist.

Can a hardship clause entirely exclude statutory imprévision?

Yes. Since Article 1195 is a default provision and not a matter of public policy, the parties may exclude it entirely. A clause by which each party declares that it assumes the risk of a change of circumstances and waives the benefit of imprévision is valid under French law. This exclusion amounts to a return to the regime of intangibility and must be negotiated in full awareness of its effects on the party exposed to cost increases.

What is the difference between imprévision and force majeure in a B2B contract?

Force majeure (Article 1218 of the French Civil Code) presupposes performance that has become impossible because of an irresistible and unforeseeable event; its effect is suspensive or releasing. Imprévision (Article 1195) presupposes performance that remains possible but has become excessively onerous; its effect is adaptive, through renegotiation or revision of the contract. A cost increase that does not prevent delivery falls under imprévision, never force majeure.

Can the court revise a contract against the will of a party?

Yes, under Article 1195. In the absence of agreement within a reasonable time after the failure of renegotiation, the court may, at the request of a single party, revise the contract or put an end to it, from the date and on the terms it determines. This power of revision, which a single party can invoke, explains why many B2B contracts adjust or exclude Article 1195 by agreement.

What evidence shows that performance has become excessively onerous?

The demonstration is a matter for the sovereign assessment of the trial courts and requires a quantified and documented file. The scale of the upheaval must be established by comparing the original economics of the contract with its current burden: changes in production costs, a margin that has turned negative, sector reference indices, the lasting nature of the situation. A mere drop in profitability is not enough; the imbalance must reach a threshold that upsets the balance of the transaction.

Does an indexation clause prevent a party from invoking imprévision?

It may do so, in whole or in part. If the contract contains an indexation or price review clause covering the risk of cost changes, it may be considered that the party concerned accepted that risk, which neutralises the third condition of Article 1195. The hardship clause is then intended to deal only with the upheavals that indexation is not enough to absorb. The relationship between these clauses must be expressly provided for in order to avoid any uncertainty.