Managing trade barriers - What the new US tariffs mean for international supply contracts

A statutory right to price adjustment between contracting parties generally only exists in the event of a gross disproportion between the contractually agreed service and the other party's interest in the service. In the event of unexpected performance difficulties that lead to a mere disruption of the equivalence ratio between performance and consideration, which is likely to be the case with a short-term increase in customs duties, the affected party cannot refuse performance due to any impossibility of performance in accordance with Section 275 (2) BGB. The increase in customs duties does not constitute gross disproportionality for the affected party.

For the assertion of a right to contract adjustment in accordance with Section 313 (1) BGB, increased customs duties do not constitute a serious, significant change in which an unforeseen development occurs that may have existentially significant consequences for one party. Furthermore, foreseeable changes do not generally justify a right to contract adjustment in accordance with Section 313 (1) BGB, as the disruptions that are part of the normal contractual risk are borne by the affected party. Supply contracts always contain a certain risk with regard to price fluctuations or increased transport costs, for example if the contracting parties agree fixed prices.

Increased customs duties also do not constitute a case of force majeure. Force majeure is defined as an external event that has no operational connection and cannot be averted even with the utmost care that could reasonably be expected. However, higher customs duties do not generally prevent a contracting party from performing its obligations, provided that the duties merely cause higher costs.

Agreed hardship clauses in contracts allow the contractual conditions to be adjusted in the event of changed circumstances. The difficulty here, however, lies in the need for a clear definition of what is meant by a hardship case in order to avoid the undesirable effects of changes to customs duties. The categorisation of increased customs duties as a case of hardship depends on the individual design and interpretation of the clause, as there are no fixed limits.

Finally, it is common practice to agree price adjustment clauses in order to ensure flexibility in long-term contractual relationships. The exact wording of the clause is crucial, as case law places strict requirements on the effectiveness of the clause, particularly in the case of general terms and conditions (GTC) in accordance with Section 307 of the German Civil Code (BGB) and the provisions of the Price Clause Act (PreisklG). An effective price adjustment clause must be transparent and must not unreasonably disadvantage the contracting parties, for example by unilaterally increasing prices in the event of cost increases without a corresponding reduction in the event of cost reductions or if only one party can demand the adjustment. Precise wording and detailed drafting of the price adjustment clause are therefore essential.

Overall, it is crucial that companies affected by the new US tariffs act proactively and take appropriate measures to protect their international business models. Fair arrangements for price adjustment, delivery time extension and limitation of liability can help the contracting parties to react more flexibly to the changed trade conditions and maintain their long-term supply relationship and competitiveness.