The Objective Nature of the Hardship Criterion and Its Judicial Applications in Iraq (An Analytical Study in Light of the Doctrine of Unforeseen Circumstances)

Abstract

 The criterion of hardship, as one of the conditions for the application of  the doctrine of unforeseen circumstances, is considered a flexible objective criterion. It focuses on the circumstances of the transaction or contract in which the unforeseen event occurred rather than on the personal circumstances of the debtor. Accordingly, hardship is assessed based on whether the performance of the obligation has become exceptionally burdensome, exposing the debtor to a severe loss that exceeds ordinary contractual risks as a result of a general, exceptional, and unforeseeable event occurring after the conclusion of the contract. In light of the requirements of justice and good faith, the doctrine of unforeseen circumstances should be applied whenever these conditions are satisfied, even if the debtor is assisted by other factors such as personal wealth or the possession of sufficient stock of the goods required to fulfill the obligation. The relevant consideration is not the debtor’s personal financial capacity but rather the disruption of the economic equilibrium of the contract itself. Furthermore, taking the debtor’s personal circumstances into account would lead to inconsistent legal outcomes among contracting parties facing identical contractual conditions, which would conflict with the principles of equality and contractual justice. Therefore, the primary purpose of the doctrine is to restore the economic balance of the contract and preserve its continuation by granting the court the authority to reduce the burdensome obligation to a reasonable level. However, Iraqi courts have adopted a different approach, holding that if the debtor has performed the obligation, the doctrine of unforeseen circumstances cannot be invoked, as performance is considered evidence that hardship does not exist. This judicial approach has been criticized by legal scholars, who argue that performance may be motivated by the desire to avoid legal liability or to maintain commercial reputation and should not be regarded as conclusive proof that hardship is absent.