The Application Of The Principle Of Changed Circumstances In The Construction Contract

In recent years, construction industry is developing at a rapid speed. But at the same time, there is more and more unstable factors in the economic market, which make the objective basis of the contract change significantly. If continue to perform the contract will make the interests of the parties imbalanced.In such a situation, the principle of changed circumstances was established in the form of judicial interpretation. The principle of the changed circumstances is abstract, so this article only chooses the construction contract to study. This article analyses the necessity and legitimacy of the application of the principle of changed circumstances in the construction contract. Listing the risk that may cause the change of circumstances. Focusing on the difficulties of the applications and the solutions, in order to put forward the suggestions. In addition to the introduction, the article consists of four parts:The first part analyses the necessity of the application in the construction contract. The principle of changed circumstances as a specific legal principles, is developed by the principle of good faith, and is a complement to the principle of adherence to contract. The period of performance of the construction contract is long, the contract is always influenced by external factors, building materials market is not stable and the ability to take the risk of the building enterprise is weak, so the circumstances are always changed and it is necessary to apply the principle of changed circumstances.The second part analyses the risk that causes the the basis of the construction contract change. There are similarities between the principle of changed circumstances, the act of God,commercial risk and the concept of unfair, then analyses of the differences between them. Different construction contracts often use different cost calculation methods, it also influences the application of the principle of changed circumstances. The construction contract’s risk types mainly include: the act of God, the price of raw materials and labor cost change, site abnormal condition and the change of policies, laws and regulations. The difference between the changed circumstances and the act of God is the result caused by the act of God. The unpredictable and unbearable risk and the predictable and bearable risk belong to the changed circumstances. The difference between the changed circumstances and the unfair mainly lies in the subjective attitude of the parties. The construction contracts with different calculation methods all can use the principle of changed circumstances,but the fixed price contract use it mainly.The third part analyses the principle of changed circumstances from six aspects, including: judicial practice shouldn’t adopt conservative attitude, the parties cannot exclude the application of the principle of changed circumstances, invalid construction contract can’t apply the principle of changed circumstances, because of the particularity of recruit and bidding, the time of the application of the principle of the changed circumstance when the contract content is confirmed, rather than the establishment of the contract, distributing losses of changed circumstances should consider both parties’ losses and gains, changed circumstances shall belong to the exemptions.The fourth part on the basis of analyzing the former part, clear the principle of changed circumstances applicable standards in construction contract: First, there is the changed circumstances, including the building materials price and labor cost rise and the policy changes. Second,because of the particularity of recruit and bidding, the time of the application of the principle of changed circumstance when the contract content is confirmed,rather than the establishment of the contract. Third,the changed circumstances can not attribute to any one of the parties. If the construction project delays because of one party, it is impossible to use the principle of changed circumstances.Forth,the changed circumstance is unpredictable when the contract is established. Fifth, if continue to perform the contract will cause significant imbalance.