Application Of The Principle Of Change Of Circumstances

Once China began to work out a uniform contract law in the 90s of last century, the principle of change of circumstances was drawn some attention. There were regulations about the principle of change of circumstances in the third draft, the fourth draft and the fifth draft, but they all were not adopted by the contract law at last. China still has no basic legal integrated regulations about the principle of change of circumstances, which makes criminal justice non-liquet. With continuous development of social market, governmental financial policy, monetary policy and so on will often have significant effect to economic activities. Not only for many domestic things, with globalization of technology development and economic integration, especially after the entrance of WTO, international business and policy are changing, and will have effect on domestic economic activities inevitably. It can't avoid that some contracts have executing blocks because of circumstances change. It is the real and objective requirements for the principle of change of circumstances to be lawful, and it is also the requirements of world economy integration.This article tries to use the method of compare identification, and make the research about the principle of change of circumstances and force majeure and so on to clear the nature of the principle of change of circumstances and dive into to the detailed applicable issues in the principle of change of circumstances, on the basis of the definition of the principle of change of circumstances, and its history and analysis theory. At last by the combination of detailed China situation, we discuss the structure establishments in the principle of change of circumstances. This article is divided into four parts:Part 1: Application base of the principle of change of circumstances. Details include: 1. Definition identification and history evolution of the principle of change of circumstances. The principle of change of circumstances means that contract existing base and environment are changed or gone for some reasons that are not due to the parties after the legal contract establishment and before its execution. If keeping the original legal effect of the contract, the execution will be difficult or unnecessary. One party can require the other party to re-negotiate. If the re-negotiation can't be done, they can ask the Peoples Court or arbitration agencies to change or cancel the contract. If the negotiation can't be done because of one party's fault, the party should be responsible for the loss. The principle of change of circumstances was originated from the 12th and the 13th century, and experienced medieval frustration, but after two world wars, it developed again. The principle of change of circumstances is the result of social development. Its survival time doesn't limit in force majeure. It is also necessary in stable period. 2.The theory base of the principle of change of circumstances. The main theories of the principle of change of circumstances in continental legal system includes: the theory of no change in circumstances, non-predictive theory, basic theory of legal activities, and the theory of honesty and credit. The main theories of the principle of change of circumstances in Anglo-American legal system includes: the theory of indicating clauses, the theory of fair solutions, the theory of contract base loss and the theory of radical change in the responsibilities. 3. Basic position of the theory base of the principle of change of circumstances. Combine the change of circumstances and the fair principle and dive into it, and make it clear that the theory base of the principle of change of circumstances should be the fair principle.Part 2: Compare the principle of change of circumstances with related regulations. This part focuses on the differences among the analysis of the principle of change of circumstances, force majeure, fair loss, business risk, exception clause and so on. It indicates that the principle of change of circumstances is a independent law definition and has its own characteristics. It sets up a unique legal principle for the serious unbalance caused by the change of circumstances between the parties in the contract execution. The adjusted legal facts can't all be adjusted by other similar regulations and principles. There are still deficiencies in the law system about the principle of change of circumstances. It can't meet the complex social production and living needs, so it is necessary to establish such principle.Part 3: Detailed application of the principle of change of circumstances. Detailed discussion includes: 1. Applicable conditions. The legislation purpose of the principle of change of circumstances is to coordinate the parties' interest in serious benefit unbalance caused by the change of circumstances. In any cases, the application of the principle of change of circumstances should connect with the legislation purpose, and it must comply with two conditions: virtual condition and process condition. 2. Application effect. The application effect of the principle of change of circumstances means the its law effect. Anglo-American law is based on its applicable field, and ultimately cancel the contract. Continental law add regulations on the change and cancel of the contract. Concretely the application effect of the principle of change of circumstances includes re-negotiation - obliegenheit, one-time right - contract change, and two-time right - contract cancel.Part 4: Status quo recognition of the principle of change of circumstances and the consideration of future legislation in China. Status quo recognition of the principle of change of circumstances can explain the necessary to establish such principle further in China. Therefore consider how to establish the principle of change of circumstances in China, which includes: 1. Establishing ways for the principle of change of circumstances. There are three ways for the establishment of the principle of change of circumstances around the world, namely established by court jurisdiction, established by special civil law, and considering the principle of change of circumstances as a basic principle in the general civil law, and expressing it in general clauses. There is no good or bad in these three establishing ways, only applicable or non-applicable. According to China situation, it should use the third way for the establishment. 2. Trial of the categories in the change of circumstances. With related regulations in China "Contract Law", there are six categories in the change of circumstances. 3. On the basis of the analysis in our above discussion, and by the trial of classification of the change of circumstances, we come up with the related legislation suggestions.