Study On The Principle Of Change Of Situation

The principle of change of circumstances is an important principle of contract law, for the purpose of eliminating the injustice arising from the unforeseeable change of circumstances. Due to its unique value, the principle of change of circumstances ought to become an indispensable legal method to adjust socioeconomic relation, share social risks, balance interests, realize substantive fairness and justice. Whereby, that our national contract law isn't provided for the principle of change of circumstances leads to much more disadvantage than advantage. This thesis will probe into the principle of change of circumstances from four aspects.The first part is about general analysis of the principle of change of circumstances, including the analysis of its meaning, theoretical foundation, applicable conditions, legal effect and the comparative analysis with the comparable legal regulations. In this thesis, the principle of change of circumstances refers to a legal principle that modification and rescission should be allowed to balance the mutual interests of the parties to a contract while the conditions or foundations a contract depends on has changed since the unforeseeable circumstance arising after the conclusion but prior to the performance of a contract. Under this condition, the interest balance of the parties to a contract would be severely ruined if the effectiveness of the contract had been maintained. Wherefore, one party might incur extensive damage while the other party earns great benefits. The theoretical foundation of the principle of change of circumstances involves principle of fairness and principle of honest and credibility, while substantive condition and procedural condition consist of its applicable conditions. Substantive condition refers to those objective frustrate facts that occurred after the conclusion but prior to the performance of a contract, which should be unforeseeable and make going through with the original contract unfair. Procedural condition refers that the adaptation of the principle of change of circumstances should be subject to the negotiation and claim of the parties to a contract, which means the people's court can't apply this doctrineitself. As to legal effect, the writer agrees to quadratic response theory put forward by Mr. Shi shangkuan from Taiwan, which proposes that the legal effect of the principle of change of circumstances is to modify or rescind the contract in order of priority the time they are chosen not applied. Moreover, the characteristic of the right is claim not right of formation. With Regard to comparative analysis between the principle of change of circumstances and comparable legal system, this thesis holds the view that the principle of change of circumstances and force majeure are in fact the collateral exceptional principles which can be carried out at the same time and fit in different situations. The principle of change of circumstances and obviously unfair regulation differ in the definition of unfair time, which the former belongs to afterwards unfairness and the later belongs to forwards unfairness. Commercial risks are regular and foreseeable, but change of circumstances is unforeseeable and abnormal. The main difference between them is whether the objective situation has changed or not.The second part of this thesis argues the principle of change of circumstances on comparative law. From the angle of comparative law, this thesis canvasses Geschaeftsgrundlage in Germany, Frustration in common law countries, Hardship in principles of International Commercial Contract and comparable system in Taiwan district as well. Geschaeftsgrundlage has its rationality concerned with the applied effect, which requires modify the original contract first to conform to the changed circumstances. The rescission is permitted only when the modification failed. Frustration considers that the modification might violate the autonomy of will of parties to a contract, so it has to be prohibited. Hardship gives priority to termination of the contract much more than modification which is irrational. The comparable system in Taiwan district is incomplete which merely stipulates the modification whereas the rescission of contract should include definitely. In addition, the obligation of renegotiation in Hardship system is supposed to be used in our legislation for reference which conforms the doctrine of autonomy in civil law.The third section concerns the legislative and judicial practice in our country. As to the legislative practice, our economic contract law has ever stipulated theprinciple of change of circumstances, so does united contract law in draft process, however, it's crossed out later. Among the judicial practice, the principle of change of circumstances is actually applied to deal with the relevant issues, which is rendered by the Supreme People's Court as well.The last part deals with the rational analysis of the principle of change of circumstances being stipulated in our national law, as well as the legislative proposition and assumption. This part segregates the rationality from both the theoretical and practical angles. Theoretically, the principle of change of circumstances reflects the requirement of principle of fair and the flexibility of the law. Practically, to establish the principle of change of circumstances will coincide the requirement of developing the market economy and the demand of judicial practice. It is stressed that we couldn't waive the principle of change of circumstances in legislation on account of the possibility that some judges might abuse it. To prevent the judge from abusing the principle, among the most basic tools, it is to prescribe it in legislation definitely so that the judge can abide by when they try a case. Besides, depending on the full consideration of practical situation of our country and drawing lessons from advanced overseas law fruits and legislative experiences, this thesis lodges specific and concrete legislative proposition and assumption on legislative form, applied mode and procedural law, in the hope of perfecting our theory of the principle of change of circumstances and bestead the legislation hereafter as well.