The Application Of The System Of Changed Circumstances In Construction Contracts

As an exception of "contract strictly", the change of circumstance principle is the exemplification in the performance of the contract of the emperor terms "good faith" principle. Apply the principle of the change of circumstance principle is out of the consideration of the contract parties suffer the loss of the apparent injustice when a contract cannot be foreseen and overcome the situation, and require both the parties to take the risk of accidental damage. In essence, it is an active intervention of the contract by using judicial means, which is to maintain a balance_between the interests of the parties and the substance of social justice.Construction industry is a low-profit industry in which building materials and labor costs account for a large percentage. In the turbulent market conditions, because of the sharp rise in prices of construction materials, the foundation of many construction contracts have been shaken, and the purpose of the contract been defeated, which is in line with contract law "changed circumstances", and result in serious imbalance between the parties rights and obligations with continue performance. Based on previous judicial practice, the Notice of the Supreme People's Court on Applying the Interpretationâ…¡of Several Issues concerning the Contract Law of the People's Republic of China which is promulgated on February 9,2009 and come into force on May 13, 2009, timely provided principle of changed circumstances in the article 26, provide a legal basis for the courts at all levels to deal with construction contracts which due to rising prices of construction materials, and bring the healthy and orderly development for the building construction industry.This article is divided into four parts:The first chapter introduces the development, theoretical basis, and the legislative situation in China of the system of changed circumstances. This paper separately describes three theories on the civil law and common law systems, and outlines the development of the change of circumstance system in China from legislation and practice. The second chapter introduces the concept of the change of circumstance system; apply elements and effect, and the distinction between the situation changes and force majeure, commercial risks, the boundaries of obvious unjust and other related concepts.The third chapter through analyzes the status quo of the change of circumstance system in cases of construction contract disputes, discusses the particularity and necessity of using the changed circumstance system in the construction contract.The fourth chapter describes the four determining method of the construction contract price:fixed sum price, fixed unit price, cost plus fee and adjustable price, and discussed the application of the system under the four construction determining method. As the core provisions of the contract price calculation and payment method, embodied particularly important role in the construction contract. In the end, we obtain the conclusions that the changed circumstance system can apply under fixed price.