Article 26 After the conclusion of a contract, the objective circumstances have changed significantly, which is not a commercial risk and cannot be foreseen by the parties when concluding the contract. If the continuation of the performance of the contract is harmful to one party, obviously unfair, or the purpose of the contract cannot be achieved, and the party requests the people's court to modify or terminate the contract, the people's court shall decide whether to modify or terminate the contract according to the principle of fairness and the actual situation of the case.

gist of the article

This article is about the explanation of the situation change in the performance of the contract.

Understanding of the article

First of all, the meaning of the principle of changed circumstances

The principle of changed circumstances refers to the principle that the contract foundation is shaken or lost due to major changes that cannot be attributed to both parties after the contract is effectively established. If the contract is continued, it will be submitted to obviously unfair, and it is allowed to change the contents of the contract or terminate the contract. In other words, after the establishment of the contract, the social environment has changed abnormally due to reasons unrelated to both parties. In this case, one party suffered great damage. At this time, the two sides should renegotiate. If negotiation fails, the injured party may request the people's court to dissolve or modify the contract.

The so-called "situation" refers to the objective situation, specifically all objective facts related to the contract, such as war, economic crisis and policy adjustment. The focus of the concept is the restriction on "contract-related". The occurrence of objective facts has nothing to do with the contract or has little influence on the contract, so it is not a "situation". With regard to the types of situations, after years of judicial practice, German law has been completely summarized, and its typology can be used for reference. In German law, "circumstances" are mainly classified into the following categories:

First, currency depreciation. In long-term bilateral contracts with currency as the performance target, currency depreciation is a common type that affects the balance relationship. After World War I, the German Imperial Court (RG) and later the Federal Supreme Court (BGH) had many such judgments. There is such a case: after a director of a joint stock limited company retired, he claimed that his living expenses had increased by 40% compared with 20 years ago and asked the court to change the amount of pension. The court held that this situation constituted a change of circumstances and supported its claim.

Second, legal changes and administrative behavior. Legal changes are usually unforeseeable by the parties, which often leads to failure to perform or changes in circumstances. There are mainly the following situations: First, expropriation. Second, the change of tax law. The basic opinion of the German Supreme Court is that unless the parties clearly stipulate the tax results in the contract, the results of tax law changes shall be borne by the parties themselves. Third, the legal changes after the reunification of Germany and Germany. After the reunification of Germany and Germany, the process of currency merger and land privatization led to the loss of the original foundation of East German contracts and many contracts between East and West Germany. In this regard, in addition to special legislation to solve, there are many cases, the court used the principle of changed circumstances to make corresponding judgments. Fourth, changes in the laws governing economic management.

Third, disaster. Most natural and man-made disasters are unpredictable, inevitable and insurmountable. But whether it can become a "situation" depends on its relevance to the contract. In addition, after wars and other disasters, the state will formulate some special laws to deal with them. Therefore, in general, in Germany, the principle of changed circumstances is rarely applied based on disasters. As far as China is concerned, in case of disaster, the force majeure clause in Article 1 17 of the Contract Law can be directly applied to solve it.

Fourth, changes in other economic factors. The economic environment here includes various objective factors that affect the production and operation of civil subjects. First, the cost has increased. However, only under special circumstances, when the cost is abnormally increased due to external factors, there is room for changing the applicable situation. Second, technological development. The development of technology will also lead to the depreciation of the subject matter of the contract.

The above are examples of the types of situations in German law, and only some cases are incomplete for reference. The second and fourth items in the above typology deserve our attention and have certain reference significance for our judicial practice.

The so-called "change" refers to "abnormal changes in the environment or foundation on which the contract was established". This change of contract basis or objective basic environment may lead to the serious inequality of rights and obligations expected by the parties to the contract, thus making the original contract lose its original meaning.

Generally speaking, if the contract is fair when it is concluded, and after the contract comes into effect, one party suffers great damage due to major changes in the social environment, and both parties are in obviously unfair, in this case, the principle of changed circumstances should be applied. In fact, the principle of changed circumstances is to change the contents of the contract or terminate the contract with the help of the court to balance the imbalance of interests between the parties caused by abnormal social changes. In essence, it is to share the risks caused by abnormal damage of both parties under the legal framework, which is in line with the principle of fairness of the law.

In the concrete judicial practice, there are many types of situation change, and the attitude of concrete analysis should be adopted when confirming. Whether it constitutes a change of circumstances should be judged by whether it leads to the loss of the contract basis, whether it leads to the defeat of the purpose, and whether it leads to the obstacle of the consideration relationship. It should be considered that the change of this situation is remarkable, that is, the objective situation as the basis of the contract has not only changed, but also had a significant impact on the establishment and performance of the original contract. Such as major changes in international market demand, sharp fluctuations in prices, major adjustments in domestic policies and laws, etc. If it is only a general change that has no significant impact on the establishment and performance of the contract, it is not considered as a change of circumstances, such as normal price changes and relatively reduced supply. Whether the changes before and after the conclusion of the contract constitute a change of circumstances shall be determined in strict accordance with the conditions stipulated in Article 26 of this Interpretation, strictly distinguished from other situations, applied flexibly and prudently in the principle of fairness, honesty and credit, and achieved good results.

Second, the applicable conditions, effectiveness and scope of the principle of changed circumstances.

(A) the applicable conditions of the principle of changed circumstances

The application of the principle of changed circumstances has the following conditions: (1) There should be the fact of changed circumstances, that is, the objective conditions on which the contract depends have indeed changed. Here we should strictly understand the concepts of "situation" and "change", which have been explained above and will not be repeated here. (2) the change of the situation is unforeseeable by the parties. If the parties can foresee the relevant changes in circumstances when concluding the contract, it shows that they know the risks arising from the relevant changes in circumstances and are willing to bear them. In this case, the principle of changed circumstances does not apply. (3) The change of circumstances shall not be attributed to both parties, that is, it is caused by accidents other than force majeure. If it is attributable to the party concerned, it shall bear the risk or liability for breach of contract, and the principle of changed circumstances shall not apply. (4) Changes in factual circumstances after the establishment of the contract and before the completion of performance. This is an important time requirement. If the situation changes when the contract is concluded, it shows that the relevant parties have realized that the basis of the contract has changed and are willing to take risks for this change. (5) There is another very important condition. If the contract continues to be valid after the situation changes, it will be harmful to the parties. According to Article 72 of the Supreme People's Court's Opinions on Several Issues Concerning the Implementation of the General Principles of the Civil Law of People's Republic of China (PRC) (Trial), if one party takes advantage of the inexperience of the other party and the rights and obligations of both parties obviously violate the principle of fairness and equal remuneration, it can be considered as obviously unfair. As long as the rights and obligations of both parties to the contract obviously violate the principle of fairness and the principle of equal compensation because of the fact that the situation has changed, it can be considered obviously unfair. A letter from the Supreme People's Court 1992 is the best interpretation of obviously unfair. This letter is aimed at a contract dispute over the sale of gas meters. The Supreme People's Court believes in the letter that during the performance of the contract, due to unforeseen and preventable changes between the two parties, that is, the main raw materials for the production of gas meter spare parts were originally 4,400 yuan to 4,600 yuan per ton, and later the country increased it to 0/6,000 yuan per ton. In this case, it is required to perform according to the original contract. Disputes arising from the supplier and the other party in obviously unfair can be settled fairly and reasonably according to the provisions of Item 4 of Article 27 of the Economic Contract Law of the People's Republic of China and the actual situation of the case. This is to establish the principle of change of circumstances in the form of precedent. Some scholars believe that obviously unfair should be judged according to the viewpoint of rational people, including particularly difficult performance, serious lack of acceptance by creditors, and unfavorable performance to creditors. In German case law, the concept of "economic bankruptcy" or "survival and destruction" was also created just because the price fluctuated abnormally.