Long-term contracts—frequently defined as contracts requiring performance over a period of time longer than a year—are of particular value in international business transactions. When nationals of different countries enter into contracts they are often interested in establishing relationships of some durability, in contrast to domestic parties, who are more frequently in contact with one another in local business settings and have less of a need for definition and certainty in their business relationships.

Geographical distances, the consequent difficulties in communication, and differences in languages and business practices lead to the need for contractual specificity, whereas it might not be needed in a domestic setting. For example, an American manufacturer and an American distributor might be willing to deal with one another on the basis of a series of invoices and purchase orders. If one of those parties were a foreigner, on the other hand, one of the parties might become concerned about uncertainties of supply, delivery or payment. Thus, one finds international long-term contracts with respect to such matters as licensing of technology, sale and distribution of goods, foreign investment, leasing of vessels or equipment, construction projects, management of hotels or hospitals and purchase and sale of commodities.

Any contract that lasts for a long period of time will almost inevitably give rise to some sort of dispute. When revolutions, economic or political, alter the ability of one of the parties to perform, the disputes become significant and frequently lead to litigation. Over the past fifteen years there have been many events and developments which have had dramatic effects on the continuing performance under long-term contracts. The Arab oil embargo of 1973-74 caused oil prices to skyrocket and tanker rates to plummet. The prices of other commodities, coal, uranium and gold, for example, all rose rapidly in the 1970s. The price of oil increased again in 1979 following the Iranian revolution. The price of uranium fell dramatically in the 1980s. And, of course, the price of oil has recently fallen as well. Similar fluctuations can be seen in other commodities.

The result of these market changes is usually that one party suffers a hardship and the other party receives a benefit of corresponding proportions. The suffering party is often driven to seek relief, either through renegotiation or presentation of the dispute to a court or a panel of arbitrators. If negotiations fail, the question for the suffering party becomes: what legal remedies are available? An important preliminary question is, of course, what law applies? Frequently, the applicable law is not that of the United States, but of another country. This chapter examines the extent to which relief is afforded under the laws of certain civil law countries for excessive hardship and other ways in which drafting of contract provisions concerning hardship may or may not help to deal with situations in which one party believes it is excessively burdened as a result of changed circumstances.