A supplier in northern Portugal receives an order from a Dutch logistics company. Six months into performance, a sudden regulatory ban closes the relevant transport corridor entirely. The contract is silent on what happens next. Does the supplier walk away without liability? Can the Dutch company demand performance or damages? In Portugal, the answer depends on a doctrinal distinction that many international clients encounter for the first time only when a dispute has already begun.
Force majeure and hardship in Portugal are governed by civil legislation rooted in the Portuguese Civil Code, which recognises both the extinction of obligations through supervening impossibility and the modification of contracts through altered circumstances. Supervening impossibility – where performance becomes objectively impossible – can extinguish the obligation entirely and discharge the debtor from liability. Hardship – where performance remains technically possible but has become excessively burdensome – triggers a separate judicial remedy of contract modification or termination. Portuguese courts, including the Supremo Tribunal de Justiça (Supreme Court of Portugal) and the Tribunal da Relação (Courts of Appeal). Have developed a substantial body of case law distinguishing between these two doctrines and defining the conditions for each.
This analysis examines the doctrinal foundations of both doctrines, the gap between statutory text and court practice, common pitfalls for international parties. The cross-border dimension for European counterparties. Additionally, the strategic options available when disruption strikes a Portuguese-law contract.
Doctrinal foundations: impossibility, hardship, and the civil law tradition
Portugal's approach to contractual disruption sits firmly within the civil law tradition. Unlike common law systems – where frustration of purpose and force majeure often depend on express contractual language – Portuguese civil legislation establishes default rules that operate even in the absence of any force majeure clause.
The first doctrine is impossibilidade superveniente (supervening impossibility). Under Portuguese civil legislation, an obligation is extinguished when performance becomes impossible after the contract is formed, provided the impossibility is not attributable to the debtor. The impossibility must be objective – not merely personal difficulty – and must be definitive rather than temporary. A temporary obstacle does not extinguish the obligation; it suspends it. Where the debtor contributed to the impossibility, even partially, the extinction defence fails. Courts in Portugal have applied this rule strictly. A party who could foresee the risk but failed to contractually allocate it will face difficulty invoking the doctrine retroactively.
The second doctrine is alteração das circunstâncias (changed circumstances), broadly equivalent to hardship in international commercial practice. Under Portuguese civil legislation, a party may seek judicial modification or termination of a contract when the underlying circumstances that induced the parties to contract change abnormally, provided strict conditions are met. Performance must remain technically possible – if it has become impossible, the supervening impossibility rules apply instead. The change must be abnormal, not merely inconvenient. The affected party must not have assumed the risk of that change. Finally, strict maintenance of the contract must be contrary to good faith. This last condition is not cosmetic: courts in Portugal treat the good faith requirement as a genuine filter, not a formality.
A client accustomed to common law systems will find that the civil law approach gives courts significant discretionary power. Rather than simply declaring a contract void, a Portuguese court exercising its jurisdiction under changed-circumstances doctrine can rewrite the bargain – adjusting prices, extending timelines, or apportioning losses between parties. This judicial modification power has no direct equivalent in English contract law and regularly surprises common law practitioners encountering it for the first time.
Portuguese corporate legislation (CSC) is largely silent on force majeure as a general commercial doctrine. The relevant rules derive from civil legislation and are applied uniformly across commercial contracts, including those governed by parties subject to the CSC. Tax disputes involving contract modification payments or damages from disrupted performance may fall within the jurisdiction of the Centro de Arbitragem Administrativa e Tributária known as CAAD. Portugal's specialist tax arbitration tribunal, though the primary forum for force majeure and hardship claims remains the civil courts.
Court interpretations: where doctrine meets the disputes
The Supremo Tribunal de Justiça has addressed force majeure and hardship in a series of decisions that collectively define the operational boundary between the two doctrines. Several patterns emerge from that body of case law.
First, courts apply a high threshold for objective impossibility. Economic difficulty, even severe and unforeseen economic difficulty, does not constitute impossibility. A construction company facing tripled material costs cannot invoke supervening impossibility merely because performance has become commercially unattractive. The obligation survives. The affected party's remedy, if any, lies in the changed-circumstances doctrine – not in the extinction of the obligation.
Second, the Tribunal da Relação courts – Portugal's intermediate appellate courts – have applied the changed-circumstances doctrine cautiously. The requirement that the change be "abnormal" has been interpreted to exclude ordinary market fluctuations, even substantial ones. Price increases within a range that a prudent commercial party should anticipate will not qualify. The disruption must be structurally different from foreseeable commercial risk.
Third, courts have distinguished between risk allocation through contract and risk allocation through law. Where a contract expressly addresses the risk – through a force majeure clause, a price-adjustment mechanism, or a hardship clause – courts will give effect to the contractual allocation first. The statutory default rules operate in the gap left by the contract, not in preference to it. This means that poorly drafted force majeure clauses can inadvertently narrow the protections that the civil legislation would otherwise provide.
Fourth, the Supremo Tribunal de Justiça has clarified that the party invoking changed circumstances bears the burden of proof. That party must establish all four elements: abnormal change, non-assumption of risk, technical possibility of performance, and conflict with good faith. Failing to document the contractual baseline – the circumstances that induced the parties to contract – is one of the most common procedural errors made by parties filing claims under this doctrine.
Fifth, courts have addressed the temporal dimension. A party who continues to perform under a changed contract for an extended period without protest risks being found to have waived the hardship defence. Silence in the face of changed conditions can be interpreted as acceptance of the new commercial reality. Acting promptly – and documenting that action – is therefore both a legal and a strategic requirement.
Practitioners involved in commercial disputes in Portugal consistently report that courts scrutinise the sequence of events carefully. A party who knew about the disruptive event, continued to perform, and only raised force majeure or hardship when it became commercially convenient to do so will face a sceptical bench.
The gap between statute and practice: what the text does not tell you
Portuguese civil legislation, read in isolation, appears to offer significant protection to parties facing supervening disruption. In practice, the gap between the statutory text and the outcome in court is substantial. Several features of that gap are worth examining in detail.
The foreseeability question is treated more rigorously in practice than the statute suggests. Civil legislation formally requires only that the change be "abnormal" – but courts have consistently interpreted this to mean that a commercially experienced party should not have anticipated the event and allocated the risk contractually. International supply chains, commodity prices, and currency fluctuations have all been found to carry inherent commercial risk. Where the affected party operates professionally in a sector where such risks are known, courts are reluctant to find that the statutory threshold is met.
The good faith requirement operates as a substantive brake. Courts in Portugal treat good faith not as a background principle but as an active element of the analysis. A party who behaved opportunistically before the disruption – extracting favourable terms, delaying performance, or failing to mitigate – will find the good faith requirement used against it. The doctrine rewards parties who acted transparently and cooperatively throughout the contractual relationship.
The procedural mechanics of invoking hardship under Portuguese civil procedure are often overlooked. A party seeking modification or termination must file a petição inicial (statement of claim) that specifically pleads the changed-circumstances doctrine and sets out all four elements. Courts will not apply the doctrine of their own motion. A poorly pleaded claim – one that focuses on the commercial hardship without establishing the legal elements – will fail on procedural grounds regardless of the underlying merits. This is a recurring problem with claims prepared by non-specialist counsel unfamiliar with Portuguese civil procedure.
Where urgency requires preserving the status quo during litigation. Portuguese civil procedure allows a party to seek an procedimento cautelar (interim injunction) to prevent the other party from treating the contract as discharged or from calling security instruments. The threshold for obtaining interim relief in Portugal is lower than in many common law systems: the applicant must show a credible prima facie claim and that denial of the injunction would cause harm difficult to remedy. In force majeure and hardship disputes, interim injunctions are most commonly sought by creditors who wish to prevent a debtor from relying on the doctrine to escape payment obligations while the main proceedings are pending.
Judgment enforcement following a successful hardship or force majeure claim in Portugal follows the standard civil procedure pathway. A judgment modifying contract terms is directly enforceable. A judgment terminating the contract and ordering restitution is subject to ordinary enforcement proceedings. Where the counterparty is established in another EU member state. The judgment is enforceable across the EU under the Brussels Ibis Regulation without any intermediate recognition procedure. an important practical advantage for European parties dealing with Portuguese debtors.
One non-obvious procedural point: Portuguese civil litigation, including commercial disputes heard by specialist commercial courts in Lisbon and Porto, involves mandatory pre-trial conciliation in many categories of case. In hardship disputes, this conciliation phase can be genuinely productive. Courts often encourage parties to negotiate a modified contract at the conciliation stage rather than proceed to a judgment that one party will appeal. Parties who arrive at that stage without a realistic negotiating position – or who dismiss it as a procedural formality – often forego a commercially valuable settlement opportunity.
For international parties, the escritura pública (notarised public deed in Portuguese law) plays a specific role in contractual relationships involving real property or certain corporate structures. Where a force majeure event affects a contract that was constituted by escritura pública. Any consensual modification to that contract. whether reached through negotiation or ordered by a court. may itself require notarisation to be enforceable against third parties. This is an area where the formal requirements of Portuguese civil law create a gap that international parties routinely overlook when drafting settlement agreements.
For detailed guidance on the procedural architecture of commercial litigation in Portugal, including interim measures and enforcement pathways, see our analysis of litigation and arbitration in Portugal.
Cross-border implications for European counterparties
Force majeure and hardship questions rarely arise in purely domestic contracts. The vast majority of commercially significant disruption disputes in Portugal involve at least one non-Portuguese party. Several cross-border dimensions require specific attention.
Choice of law is the threshold question. Under the Rome I Regulation, parties to commercial contracts are free to choose the governing law. Where Portuguese law governs, the doctrines of supervening impossibility and changed circumstances apply as default rules and cannot be entirely excluded by the parties. Even a contract with a comprehensive force majeure clause will be interpreted against the background of Portuguese civil legislation if that law governs. Courts in Portugal have consistently held that the statutory protections. particularly the good faith requirement. form part of the mandatory fabric of contract law and are not displaced by a contractual force majeure regime that attempts to exclude them entirely.
Where the contract contains no choice of law clause, the Rome I Regulation allocates governing law based on the characteristic performance rule. In a Portuguese supply contract, Portuguese law will typically govern. In a services contract where the service provider is Portuguese, the same result follows. International parties who assume that their home-country law governs a contract with a Portuguese counterparty. simply because that law is stated in a standard terms document. may discover that the Portuguese courts apply a different analysis.
The interaction between Portuguese hardship doctrine and EU law creates a specific dimension for contracts in regulated sectors. Where a disruptive event results from EU regulatory action. a trade restriction, a product prohibition. Alternatively. A sector-wide measure. the question of whether the affected party "assumed the risk" of that measure may involve analysis of EU law and its implementation in Portugal. Courts in Portugal have addressed cases where EU regulatory changes qualified as abnormal events for the purposes of the changed-circumstances doctrine, though the threshold remains demanding.
For European clients whose counterparty is a Portuguese company subject to the CSC, an additional consideration arises. The disruption may affect not only the contractual relationship but also the financial position of the Portuguese company itself. Where a Portuguese company is insolvent or near-insolvency, the force majeure or hardship analysis intersects with insolvency legislation. A court that would otherwise order contract modification may instead find that the debtor's entire financial situation is governed by insolvency law – triggering a different set of creditor rights and a different procedural pathway.
International arbitration is a realistic alternative to Portuguese court proceedings for cross-border disputes involving force majeure or hardship. Portuguese arbitration legislation aligns with UNCITRAL Model Law principles. An arbitral tribunal seated in Portugal applying Portuguese law will apply the same civil legislation doctrines that a Portuguese court would apply, but with greater flexibility in procedure and, typically, shorter timelines. Parties who anticipate potential disruption disputes – particularly in long-term infrastructure, energy, or supply contracts – should consider including a Portuguese-seated arbitration clause with express reference to the changed-circumstances rules.
Comparative context is useful for European parties accustomed to other civil law systems. French contract law introduced an express hardship regime through its recent civil code reform, creating a mechanism broadly similar to Portuguese changed-circumstances doctrine but with procedural differences. German contract law addresses hardship through its doctrine of disruption of the basis of the transaction. Spanish contract law – which shares Iberian roots with Portuguese law – applies its own version of changed circumstances, though court practice in Spain diverges from Portugal in certain respects. A detailed comparison of the Spanish and Portuguese approaches is available in our analysis of force majeure and hardship in Spain.
For European parties managing multi-jurisdictional supply chains, the practical implication is clear. A disruption event affecting contracts in multiple EU jurisdictions cannot be addressed by a single legal strategy. The Portuguese analysis must be conducted separately, against the backdrop of Portuguese civil legislation and court practice, even where an identical event is being assessed under French, German, or Spanish law in parallel proceedings.
Strategic recommendations and self-assessment
The doctrinal and procedural landscape described above generates a set of practical strategic recommendations. These apply both to parties drafting new contracts and to parties already facing a disruption event.
At the drafting stage: the most effective risk management tool is a well-designed force majeure and hardship clause that works with Portuguese civil legislation rather than attempting to exclude it. A clause that defines covered events exhaustively, specifies notice obligations with precise timelines, allocates the risk of partial impossibility. Additionally. Establishes a renegotiation mechanism will give both parties a workable contractual path before litigation becomes necessary. A clause that simply lists "acts of God" and "government action" without more will leave the parties dependent on the statutory default rules – and on a court's assessment of what constitutes an "abnormal" change.
When disruption first occurs: the immediate priority is documentation. The party affected by the disruption should record the event, its cause, its date of onset, and its effect on performance. Notice should be given to the counterparty in writing as soon as the disruption is known. A failure to give prompt notice. even where the contract does not expressly require it. can be treated by Portuguese courts as evidence of non-reliance on the doctrine, or as a failure of good faith. The notice itself should be precise: it should state the nature of the obstacle, its anticipated duration, and the affected party's position on continued performance.
When negotiations are underway: parties seeking a negotiated modification to a Portuguese-law contract should document the negotiating history carefully. Any offers, counter-offers, or partial agreements should be recorded in writing. Portuguese civil procedure gives courts discretion to take account of pre-litigation conduct when assessing whether a party acted in good faith. A party that engaged constructively in renegotiation is better positioned before the court than one that refused to engage and immediately commenced proceedings.
Before filing a hardship claim: assess each element of the statutory test with care. Is the change actually abnormal by the standards of the relevant sector? Has the affected party assumed this risk through the contract, through course of dealing, or through the nature of its business? Is performance still technically possible? Can the maintenance of the contract be characterised as contrary to good faith? Where any of these elements is doubtful, a hardship claim carries significant litigation risk. An alternative strategy – contract renegotiation supported by expert assessment of the changed circumstances – may produce a faster and more commercially satisfactory result.
The self-assessment checkpoint is this. A changed-circumstances claim under Portuguese civil legislation is strong where: (1) the disruptive event is genuinely unprecedented in the relevant sector. (2) the contract does not allocate the relevant risk. (3) the affected party gave prompt notice and engaged in good faith renegotiation. (4) performance remains possible but its cost has moved far outside the range of any reasonable contractual expectation. and (5) the affected party has documented every step of its response to the disruption. Where one or more of these conditions is absent, the claim becomes significantly weaker – and a negotiated outcome is almost always preferable to litigation.
For parties where the disruption triggers not only contractual liability but also regulatory exposure – particularly in sectors regulated under Portuguese administrative law or EU law – the analysis becomes considerably more complex. Regulatory obligations may require continued performance regardless of hardship. Where those obligations conflict with civil law rights, a specialist assessment is essential before any formal position is taken.
To discuss how the changed-circumstances doctrine applies to a specific contract or disruption scenario in Portugal, contact us at info@ferrazwhitmore.com.
Outlook: regulatory trajectory and what to monitor
Portuguese civil legislation has not been substantially amended in the area of supervening impossibility and changed circumstances for several decades. The doctrinal foundations described in this analysis are stable. However, three developments in the legal environment deserve attention from international parties with Portuguese contractual exposure.
First, the post-pandemic period generated a significant volume of hardship litigation in Portugal. That litigation is now producing a body of appellate case law at the Tribunal da Relação level and, in the most significant cases, at the Supremo Tribunal de Justiça level. The emerging case law is refining the threshold for "abnormality" in commercially sophisticated contracts and developing the court's approach to quantifying the judicial price adjustment where modification is ordered rather than termination. Practitioners should monitor these developments closely, as the case law produced in pandemic-era litigation will define the doctrinal landscape for the next generation of disruption disputes.
Second, the EU regulatory environment creates ongoing exposure for Portuguese contracts in regulated sectors. Supply chain legislation, product regulation, and trade policy changes at the EU level will continue to generate events that parties will seek to characterise as force majeure or as abnormal circumstances under Portuguese law. The interaction between EU law and the Portuguese changed-circumstances doctrine is an evolving area. Courts have not yet developed a fully settled approach to EU-origin regulatory changes, and the outcome of individual cases may turn on how the relevant EU measure is characterised under both EU and Portuguese law.
Third, the increasing use of long-term contracts in the energy, infrastructure, and technology sectors creates structural demand for hardship provisions. These sectors are characterised by long performance horizons, significant capital commitment, and exposure to regulatory, environmental, and technological change. Contracts drafted without express hardship mechanisms will increasingly face the changed-circumstances doctrine as those changes materialise. Parties entering long-term Portuguese-law contracts in these sectors should treat hardship architecture as a first-order drafting priority, not an optional addition.
Parties managing disputes across multiple European jurisdictions will benefit from an integrated approach. The Portuguese analysis described in this article shares conceptual ground with the hardship regimes in France, Spain, and the broader civil law tradition, but diverges in procedural requirements and court practice. Building a litigation or negotiation strategy that accounts for all relevant jurisdictions simultaneously – rather than addressing each separately – reduces both cost and the risk of conflicting positions in parallel proceedings.
For a tailored strategy on managing force majeure and hardship exposure across Portuguese and European contracts, reach out to info@ferrazwhitmore.com.
Frequently asked questions
Q: How long does a hardship (changed circumstances) case typically take to resolve in the Portuguese courts?
A: A first-instance decision in a commercial court in Lisbon or Porto typically takes between one and two years from the date of filing the statement of claim, depending on court workload and procedural complexity. If either party appeals to the Tribunal da Relação, a further period of approximately one year should be anticipated. Cases that reach the Supremo Tribunal de Justiça take an additional year or more. Negotiated settlements – often reached at the mandatory conciliation stage or during proceedings – significantly reduce the timeline and are frequently the commercially preferable outcome.
Q: Can parties entirely exclude the changed-circumstances doctrine by contract under Portuguese law?
A: This is a common misconception. Under Portuguese civil legislation, the changed-circumstances doctrine incorporates a mandatory good faith requirement that cannot be entirely excluded by contractual agreement. A contract may validly allocate specific commercial risks. and courts will respect that allocation. but a clause that purports to exclude the doctrine in all circumstances may be found unenforceable to the extent it conflicts with the mandatory fabric of civil legislation. The more effective approach is to draft a tailored hardship mechanism that provides the parties with a contractual pathway, reducing reliance on the statutory default while remaining consistent with the good faith requirement.
Q: If I engage a lawyer in Portugal to pursue a force majeure claim, what evidence will be most critical?
A: The most critical evidence is contemporaneous documentation of the disruptive event, its onset, and its effect on performance. Courts assess whether the party acted promptly and in good faith from the moment the disruption was known. Evidence of the contractual baseline. communications, expert assessments. Alternatively, market data showing the conditions that induced the parties to contract. is equally important for establishing that the subsequent change was "abnormal." Written records of renegotiation attempts. Notice letters. Additionally, any partial performance after the event are also significant. Engaging a law firm in Portugal with experience in civil litigation at an early stage – before the evidentiary record is fixed – materially improves the prospects of a successful claim.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our commercial litigation and disputes practice regularly advises international clients on force majeure, hardship, and contract disruption matters under Portuguese civil legislation, including cases before the Supremo Tribunal de Justiça and the Tribunal da Relação. Our team combines Portuguese civil law expertise with English common law tradition – a duality that is directly relevant when a disruption event affects contracts governed by multiple legal systems simultaneously. As an international law firm in Portugal, we advise European and global clients on the full spectrum of contractual disputes, from interim injunction applications to contested litigation and arbitration. The firm's litigation practice covers 15 practice areas across both civil law and common law systems, with direct access to Portuguese and EU regulatory rules and enforcement mechanisms in English-speaking jurisdictions. To discuss your contractual situation and the options available under Portuguese law, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.