Amending a contract in court due to a material change in circumstances: what international businesses need to know in the Ukrainian context

In today’s reality, economic instability, war, inflation, and constant changes in legislation create new challenges for business. Sometimes these circumstances change the situation so significantly that further performance of the contract becomes either excessively burdensome or impossible. A contract that was profitable yesterday may become a source of losses today or lose its meaning altogether. Termination of the contract is not always the best or only option. Is there a way out? Yes.

Ukrainian legislation provides for an instrument that gives business entities the right to apply to the court to amend or terminate a contract. One of the key legal mechanisms in such situations is Article 652 of the Civil Code of Ukraine (hereinafter referred to as the CC of Ukraine), which opens the way for entrepreneurs to amend or terminate a contract in court if the performance of an obligation has become excessively difficult due to a significant change in circumstances. By court decision, the contract may be adapted to the new realities — for example, the terms of performance may be extended, price formulas or other material terms may be changed — while maintaining cooperation between the parties.

In wartime, when business risks and operational challenges are changing extremely rapidly, knowledge and use of this mechanism can help protect investments and preserve key commercial relationships in Ukraine.

Below, we will take a closer look at the circumstances under which a court may change the terms of a contract, how to distinguish between a material change in circumstances and force majeure, and what commercial risks exclude the fact of a material change in circumstances. 

Material change in circumstances: legislative regulation

According to the Civil Code of Ukraine, a change in circumstances is considered material if they have changed to such an extent that, had the parties been able to foresee it, they would not have entered into the contract or would have entered into it on different terms.

In such a case, if there is agreement, the parties may amend or terminate the contract. However, in practice, such negotiations lead the parties to a dead end.  

It is at this point that one of the parties, which is the initiator of the amendment or termination of the contract, may apply to the court with a corresponding claim. 

Thus, when filing a lawsuit to amend (terminate) a contract due to a material change in circumstances, a number of conditions specified in the Civil Code of Ukraine must be taken into account. 

In particular, if the parties have not reached an agreement, the contract may be amended or terminated by a court decision if the following conditions are met simultaneously:

1) at the time of concluding the contract, the parties assumed that such a change in circumstances would not occur;

2) the change in circumstances is due to reasons that the interested party could not eliminate after they arose, despite all the care and prudence required of it;

3) the performance of the contract would violate the balance of property interests of the parties and deprive the interested party of what it expected when concluding the contract;

4) it does not follow from the essence of the contract or business customs that the risk of a change in circumstances is borne by the interested party.

It should be noted that a change in the contract due to a significant change in circumstances is permitted by a court decision in exceptional cases where termination of the contract is contrary to the public interest or would cause the parties damage that significantly exceeds the costs necessary to perform the contract on the terms changed by the court.

Let us consider the example of the decision of the Northern Commercial Court of Appeal in case No. 910/14369/24 dated 04.06.2025: in July 2021, Anturion LLC (the Lessee) entered into a land lease agreement with the Kyiv City Council (the Lessor). Under the terms of the agreement, the Lessee undertook to commence construction on the land plot no later than three years from the date of state registration of the lease right, i.e., by 12.07.2024.

However, due to the full-scale invasion by the Russian Federation, economic instability, and martial law, construction became virtually impossible. In addition, creditors terminated contracts, logistics were disrupted, and construction work was dangerous due to shelling and massive power outages.

Anturion LLC applied to the court to amend the contract, namely: to postpone the start of construction for a period of “no later than three years from the end of martial law” on the basis of a material change in circumstances.

Thus, we have the following situation:

1. At the time of concluding the agreement, the parties could not have foreseen that a full-scale invasion would begin in Ukraine, which would directly affect the possibility of starting construction.
2. The lessee took all possible measures, but encountered circumstances beyond its control and could not remedy them despite all its prudence and care: refusal to issue urban planning conditions and restrictions for the construction project (the lessee appealed against such refusals), termination of loan agreements due to the full-scale invasion, increased risks of danger to employees, etc.
3. Performance of the agreement under the initial terms would have violated the balance of property interests of the parties and, in particular, would have forced Anturion LLC to pay double rent.
4. The essence of the agreement or business practices did not imply that Anturion LLC bore the risk of changes in the circumstances described.

Therefore, in the example given, a significant change in circumstances is clearly evident, as all four mandatory conditions are present at the same time. Having considered the case, the courts of first and appellate instances decided to satisfy Anturion LLC’s claim in full and to make the appropriate changes to the land lease agreement.

At the same time, it should be noted that the court determines the presence or absence of grounds for amending the agreement based on its internal conviction, assessing the situation as a whole and the plaintiff’s compliance with all the conditions provided for in Article 652 of the Civil Code of Ukraine.

Therefore, in the event of a significant change in circumstances that could not have been foreseen by the parties at the time of concluding the agreement and that significantly disrupt the balance of their interests, the interested party may use such an instrument as a change to the agreement through the courts. 

Judicial practice: what the Supreme Court pays attention to

The Supreme Court has repeatedly emphasized that a significant change in the circumstances that guided the parties when concluding the contract must not be the result of the parties’ behavior, but must be external to the legal relationship between them. 

Amending a contract due to a significant change in circumstances by court decision, based on the principle of freedom of contract, is an exceptional measure. 

For the court to exercise this power, both the four conditions mentioned above must be met and it must be established that the termination of the contract is contrary to the public interest or will cause the parties damage that significantly exceeds the costs necessary to perform the contract on the terms changed by the court. In other words, such termination would be unjustified according to the principle of “least negative consequences” for the parties to the contract (paragraphs 88-90 of the resolution of the Grand Chamber of the Supreme Court of 13 July 2022 in case No. 363/1834/17).

Thus, amendment of a contract under Article 652 of the Civil Code of Ukraine is an exceptional measure, which requires, inter alia, proof that termination of the contract would cause disproportionate damage or be contrary to public interest. The Supreme Court emphasizes that such circumstances must be external to the will of the parties and not caused by their actions.

However, along with the established practice taken into account by the courts when resolving relevant disputes, certain legal conclusions of the Supreme Court that shape approaches to the application of the provisions of Article 652 of the Civil Code of Ukraine in specific legal relations, which we will consider below, also deserve attention. 

• Force majeure and a significant change in circumstances are different legal situations

The Civil Code of Ukraine does not contain a clear definition of the term “force majeure,” but it does use the concept of “circumstances of insurmountable force.” In judicial practice, these concepts are considered synonymous.

The courts define force majeure circumstances (circumstances of insurmountable force) as extraordinary and unavoidable circumstances, the existence of which objectively makes it impossible for a person to fulfill their obligations under the contract. In particular, rocket attacks, air raid alerts, Russia’s military actions, etc. may be recognized as force majeure circumstances. However, it should be noted that the parties must prove how the above actions affected the performance of the obligation. 

At the same time, a significant change in circumstances is an evaluative category. It consists in the fact that at a certain moment, the performance of the contract under the initial terms becomes more burdensome and complicated for one of the parties to the contract. For example, due to an increase in the cost of the obligation being performed for the party or a decrease in the value of the performance received by the party. In other words, a material change in circumstances significantly alters the balance of the contractual relationship, making it impossible to perform the obligation. In turn, force majeure circumstances (circumstances of insurmountable force) make it impossible to perform the obligation in principle.

Therefore, force majeure and a material change in circumstances are different legal situations. A material change in circumstances may be applied in the absence of force majeure. In this case, the person must prove the existence of all four conditions necessary for amending the contract by court decision (Resolutions of the Grand Chamber of the Supreme Court of 31.08.2022 in case No. 910/15264/21, of 16 August 2023 in case No. 910/17639/21, of 23 October 2024 in case No. 922/4801/23).

We emphasize that the existence of force majeure circumstances excludes the possibility of amending the contract due to a material change in circumstances. 

In particular, in the resolution of the Grand Chamber of the Supreme Court dated 10.10.2024 in case No. 910/332/24, the court came to the following conclusion: “The conclusions of the court of appeal regarding the existence of grounds for applying Article 652 of the Civil Code of Ukraine to the disputed legal relations and making changes to the contract on the basis of this provision, while simultaneously establishing grounds for satisfying the claim in view of the existence and circumstances of force majeure, indicate the incorrect application by the court of appeal of the specified provision of substantive law in this case, since in the event of force majeure, the provisions of Article 652 of the Civil Code of Ukraine do not apply.”

Thus, force majeure circumstances and a significant change in circumstances are different legal categories that cannot be applied simultaneously to the same circumstances. Therefore, when choosing a method of legal protection, the plaintiff must carefully examine all the circumstances and determine what exactly is happening in their situation: force majeure or a significant change in circumstances.

• Martial law is not a material change in circumstances 

In judicial practice, parties often try to justify the existence of a material change in circumstances by the fact of the introduction of martial law or active hostilities. However, courts are critical of such arguments. In particular, in the resolution of the Grand Chamber of the Supreme Court of 10 October 2024 in case No. 910/332/24, the court stated the following: “The plaintiff could and should have foreseen, with a certain degree of prudence, the difficulties in performing the contract associated with the introduction of martial law, given that at the time of the conclusion of the contract, martial law had already been introduced throughout Ukraine. Therefore, the occurrence of the events mentioned by him cannot be considered as a basis for amending certain clauses of the contract and its annex due to a significant change in circumstances, and the court of first instance did not establish the existence of force majeure circumstances.”

Thus, the fact of martial law itself is not a basis for amending the agreement. However, it should be remembered that each situation is unique, so if properly proven, martial law and its consequences may be considered a significant change in circumstances.

• Amendments to the contract after its performance are not permitted

Another important aspect highlighted by the Supreme Court concerns amendments to a contract that has already been performed. The court clearly distinguishes between circumstances where the parties can still file a lawsuit to amend the contract due to a material change in circumstances and circumstances where such a time has passed. 

Thus, in the ruling of the Commercial Court of Cassation dated 06.06.2023 in case No. 910/21100/21, the court states the following: “In addition, as correctly stated by the court of first instance, amendments to the procurement contract, in particular regarding the term of performance of the obligation, are possible only until the moment of performance of the obligation (ruling of the Supreme Court dated 05.09.2018 in case No. 910/21806/17), which is determined by the legal consequences of amending the contract by court decision, established by Article 653 of the Civil Code of Ukraine (if the contract is amended by court order, the obligation is amended from the moment the court decision on the amendment becomes legally binding). Therefore, by court decision, changing the term of performance of the obligation in the contract after its performance is not permitted.”

Thus, amendments to the contract, in particular regarding the term of performance of the obligation, by court decision are possible only until the moment of its actual and complete performance.

• Business entities must take into account that they carry out entrepreneurial activities at their own risk

In similar cases, the Supreme Court has also pointed out that when doing business, a person should be aware that they’re doing it at their own risk, the person must make their own commercial assessment of the consequences of the relevant actions, independently calculate the risks of adverse consequences resulting from certain actions, and independently decide whether to take (or refrain from) such actions (resolution of the Grand Chamber of the Supreme Court of 02.07.2019 in case No. 910/15484/17, resolution of the Supreme Court of 13.11.2018 in case No. 910/2376/18).

Thus, in its ruling of 14.06.2023 in case No. 910/8232/22, the Commercial Court of Cassation noted the following: “In view of the above, the Supreme Court, taking into account the essence of entrepreneurship and the principles of entrepreneurial activity, which is based, in particular, on the principles of own commercial risk, considers that the complainant’s reference to significant changes in the conduct of economic activity, inflationary processes, and other consequences of the introduction of martial law in Ukraine do not indicate the simultaneous existence of conditions under which, in accordance with Article 652 of the Civil Code of Ukraine, the agreement concluded between the parties may be amended by a court decision in the version of the supplementary agreement proposed by the plaintiff.”

An interesting example is that courts do not consider interference by state authorities in the activities of an enterprise to be a commercial risk for the latter. Thus, in its ruling of 14 May 2020 in case No. 910/15314/19, the court concluded that interference by state authorities in the plaintiff’s activities is a significant change in circumstances that neither the plaintiff nor the defendant could have foreseen in advance, or that the risk of such actions by state authorities is borne by the party to the contract, in particular, the court noted the following: “At the same time, the court of appeal draws attention to the fact that the opening of criminal proceedings and the conduct of a pre-trial investigation with the subsequent seizure of documents and raw materials necessary for the production of gasoline could not have been prevented by either the plaintiff, the defendant, or anythird party after these events occurred, even with all the care and prudence required of them, since pre-trial investigations in any criminal proceedings are conducted by competent authorities subject to mandatory, full, and unquestionable compliance with the requirements of criminal procedure law, including the requirements regarding the secrecy of the investigation. In addition, the court found that neither the contract nor business customs provide that the risk of sudden investigative actions taken in criminal proceedings is borne by the supplier under the contract. Thus, given the essential terms of the contract, without any changes to them, their performance at the time of the dispute violates the balance of property interests of the parties and deprives FIRST GROUP LLC of what it expected when concluding the contract.

Thus, it should be noted that business entities, when applying to the court with a request to amend the contract due to a material change in circumstances, must be prepared for higher standards of proof, since the line between commercial risk and a material change in circumstances is rather blurred and in each individual case is considered by the court according to its internal conviction.

Conclusions

In summary, it can be said that the institution of a material change in circumstances is not just an abstract legal norm, but a real chance to restore justice and balance the interests of the parties in complex contractual situations. However, taking advantage of such an opportunity is sometimes a daunting task.

Judicial practice shows that courts take a cautious approach to changing contracts in court, paying particular attention to the existence and compliance with the conditions set out in Article 652 of the Civil Code of Ukraine. Therefore, before going to court, it is necessary not only to clearly formulate your legal position, but also to gather convincing evidence, as this may be the decisive argument in the fight to restore the balance of interests between the parties.