How Do Courts Decide Substantial Change Of Circumstances

This paper studies how the courts decide substantial change of circumstances through an analysis of 51 cases of finial judgment in Shanghai. The result shows that since the enforcement of substantial change of circumstances clause, the courts have scientifically decided whether it conforms with the requirement of the clause, and identified the difference from commercial risks. "Hard to define, hard to operate, time was not mature" is the opinion of legislator at the end of last century,which diametrically opposed from the result.Second,lots of disputes, which are the same or similar,occupy large amount of judicial resources,while the supported claims are less and less.Third,market participants cannot get the scientific standards hidden inside the court system,they are away from claiming the clause correctly without specific statutory rules.As the most important fair norm in contract law,substantial change of circumstances is aiming at settling unconscionability occurring after a contract.It is a legislative judicial interpretation in China,and is decided as a principle by the courts according to the data.It has become a rule-based principle because the courts can make clear standards from separate cases.I think,the legislative foundation of the clause is fundamentally changed based on the current requirements and full implementation of ruling by law.We can legislate the clause as a principle of contract law with the judicial practice in the past and enact relevant judicial interpretation & bulletin cases.These are lessons from Germany,but we should rethink French practices to prevent the standards from being objectified,because we courts tend to make decisions on subjective valuations without objectifying prices and losses.