The impact of Tariffs on international contracts in Spain

Spanish law recognizes force majeure under Article 1105 of the Civil Code, protecting parties from liability for “events that could not have been foreseen, or that, if foreseen, were unavoidable.” However, successfully claiming force majeure for tariff increases requires meeting strict conditions.

The tariff must have been genuinely unforeseeable when you signed the contract. Courts examine the political climate, your industry’s history with trade measures, and your expertise. If you operate in a sector frequently subject to trade disputes, courts may find you should have anticipated potential changes.

The impact must be unavoidable - you must prove no reasonable alternatives existed. Courts expect businesses to explore options like alternative suppliers or restructured supply chains before claiming force majeure.

Most critically, the tariff must make performance either absolutely impossible or extraordinarily difficult beyond normal commercial risks. A tariff that merely reduces profit margins won’t suffice. Think scenarios where tariffs double costs overnight or make importing legally impossible, not situations where margins are squeezed by 10-15%.

While tariffs are clearly government acts beyond your control (“factum principis”), Spanish courts apply these requirements strictly. The increase must be of such magnitude that it fundamentally frustrates the contract’s purpose.

When tariffs make performance excessively burdensome but not impossible, Spanish law offers the doctrine of “rebus sic stantibus” - a hardship provision developed by courts. Unlike force majeure, which excuses performance entirely, this doctrine aims to rebalance or terminate contracts.

To invoke this doctrine, demonstrate an extraordinary alteration creating “exorbitant disproportion” between obligations - changes that “demolish the contract.” The unforeseeability requirement applies equally strictly, and the doctrine primarily helps with long-term contracts or successive performance obligations.

Consider three scenarios: If tariffs make performance absolutely impossible, force majeure applies. If tariffs make performance possible but ruinously expensive (perhaps increasing costs by 200%), rebus sic stantibus might allow modification. But manageable cost increases within normal parameters require you to absorb the impact.

Spanish courts view both doctrines as exceptional remedies that shouldn’t undermine contractual certainty.

Spanish law doesn’t automatically require price renegotiation when tariffs change your costs. There’s no inherent right to demand burden-sharing.

However, Spanish law requires good faith performance (Article 1258 Civil Code). When tariffs fundamentally alter economics, good faith might require considering renegotiation requests reasonably - but “considering” doesn’t mean “agreeing.”

Your rights primarily depend on contract terms. Without express renegotiation clauses, you’re relying on goodwill or exceptional remedies. If courts find rebus sic stantibus applies, they might order negotiations, modify terms directly, or allow termination.

Document all renegotiation attempts carefully. While you can’t force new terms unilaterally, showing reasonable, good faith efforts strengthens your position for invoking legal remedies.

Given Spanish law’s restrictive approach, your best protection is a well-drafted tariff adjustment clause. Here’s how to create enforceable provisions:

Start with clear triggers: “If any governmental authority imposes new tariffs or increases existing tariffs on [specific goods/services] by more than [X%] from contract date levels, either party may initiate price adjustment.”

Create structured processes:

• Require notice within xxxx days with documentation
• Set negotiation deadlines (xx days after notice)
• Define failure consequences (mediation, arbitration, termination)
• Clarify performance continues during negotiations

You may also address risk allocation explicitly:

• First 5% absorbed by affected party
• 5-15% shared equally
• Above 15% fully passed through
• Above 25% termination rights

Include flexible mechanisms beyond price adjustments - sometimes changing quantities or specifications makes more sense than repricing.

Coordinate with other provisions: “Tariff increases exceeding [xx%] shall constitute presumptive force majeure, without prejudice to demonstrating other required elements.”

Make clauses bilateral, protecting both parties. Define key concepts clearly and include calculation formulas where possible.

Spanish courts won’t easily excuse performance due to tariff changes. Force majeure and cause of Hardship (rebus sic stantibus Spanish doctrine) exist for truly exceptional situations, not routine disruptions.

Your best strategy is proactive: include robust tariff clauses in all international contracts. These should be clear, balanced, and practical, providing predetermined solutions rather than relying on uncertain legal doctrines.

When tariffs impact contracts, act quickly and document everything. Spanish law rewards diligent parties who communicate clearly and act in good faith. Balance asserting rights with maintaining productive relationships - often the best solutions come from commercial negotiations rather than legal proceedings.

Remember that Spanish law strongly respects contractual obligations while requiring good faith in all dealings. Prepare for tariff risks through careful contract drafting rather than hoping courts will provide relief when trade conditions change.