Contractual equilibrium clause

What is a contractual equilibrium clause?

A contractual equilibrium clause is a provision included in a contract that aims to maintain a balance between the parties involved in the agreement.

Thus, its purpose is to protect the interests of both parties and guarantee that none of them is unfairly harmed in a contract.

It establishes a fair and equitable treatment between the parties, especially in situations where unforeseen or changing circumstances arise that may affect the performance of the contract.

A contractual balance clause is useful in a variety of circumstances where unexpected events or unforeseeable changes may upset the financial balance of the contract. These clauses allow the parties to adjust the terms of the agreement to accommodate changing situations. They may be applicable in cases of cost or price fluctuations, changes in laws or regulations, variations in demand, currency uncertainty, technological changes, impossibility of compliance, changes in financing conditions or shortages of crucial resources. By providing the flexibility to renegotiate the contract in response to unforeseen circumstances, contractual balancing clauses ensure a fairer and more realistic agreement in changing situations.

In this way, it avoids the application of the rebus sic stantibus clause, which are exceptional and restrictive remedies.

An example of this type of clause would be the review clause:

«The parties agree that the agreed price may be revised annually, based on the consumer price index published by the National Institute of Statistics, applying the following formula: Revised price = Initial price x (final CPI / initial CPI)».

Related concepts

• Rebus Sic Stantibus Clause
• Excessive hardship
• Excessive hardship clause
• Default Clause
• Oral No Amendment Clause