Change Of Circumstances. Of The Contract Law In The System

Principle of changed circumstance ( clausula rebus sic stantibus) is an important principle in contract law. In this article, through studies of principle in two major legal systems and analysis of the current status and application environment for the principle in China, the author expresses the necessity of establishing the principle in China's contract law.The article is divided into 5 parts:First part states the meaning, originality of the principle of changed circumstance and the raising of the question of establishing the principle in China. The so-called principle of changed circumstance refers to that after the contract takes effect and before the effect terminates, changes, unpredictable and unpredicted at the time of contract formation, take place which lead to the loss of contract basis. It will be grossly unfair if to maintain the effect of the original contract, hi that case, the party may claim for contract modification or recession. The principle is originated in clausula rebus sic stantibus in the middle century and matured at the time of early this century when the World War I and II and economic crisis in capital world led to social turbulence. Now, most countries have legal provisions concerning the principle. However, laws related to contract in China have no explicit provisions concerning the principle and the newly adopted Contract Law fails to establish such a system due to various reasons. At the time that the legislation of such a principle has become a trend in civil law, China's Contract Law shall stipulate the principle. Part II makes research in major civil law countries (France, Germany, Japan and Taiwan province of China) on the legal status, theoretical basis, legal requirement and effect of the principle. All major advanced civil law countries, except France, recognize the principle in legislation or cases. There are 2 theoretical basis for the principle of changed circumstance in civil law, one is the theory of unpredictability in France and the other is basis of legal act in Germany. The former does not prevail while the latter prevails in Germany. The so-called "basis of the legal act" refers to a certain circumstance at the time of contract formation which constitutes the basis for the transaction between the parties. In consideration of the uncertainty of the circumstance, the parties must, in accordance with principle of good faith and contract purpose, take the continuous existence of the circumstance as the precondition for the contract to be effective.The application of the principle of changed circumstance generally must meet the following requirements: 1) Circumstance must be changed. 2) The change happens after the contract takes effect and before the effect terminates. 3) The change is not predicted by the parlies and has an unpredictable nature. 4) The change happens without the party's fault. 5) Due to the change, it will be grossly unfair if the original contract to be performed. When the circumstance changes, the disadvantageous party may claim for the modification or recession of the contract.Part III states the originality and development, theoretical basis, legal requirement and effect of the principle of contract frustration in common law countries and compares the principle of changed circumstance in civil law countries with the principle of contract frustration in common law countries.The principle of changed circumstance (clausula rebus sic stantibus) is a term used by civil law, while contract frustration is the relevance in common law. Contract frustration in its wide sense includes impossibility (or impracticality) of performance and frustration of purpose. The former refers to that after the contract conclusion, when supervening events happens which lead to the impossibility or impracticality of performance, the contract shall be discharged. Thelatter refers to that after the contract conclusion, certain circumstance is changed without the parties' fault which makes the purpose pursued at contract formation impossible to realize, o...