On The Legal Nature Of The Obstacles Caused By Policy Changes To Perform Contracts

At present,China's soaring and plummeting prices of real estate and active real estate investment speculation have exerted a great impact on market order as well as livelihood security.In order to guide the market for rational house purchases,solve the housing problems of urban residents and promote the healthy development of the real estate sector,China's administrative agencies at all levels have frequently promulgated policies to regulate and control the real estate sector since 2010,such as the “State Eleven” and “New State Ten” promulgated by the State Council.Such policy changes have also affected the performance of real estate business contracts while realizing the purpose of the country's macro-control of the real estate market.The most direct manifestation is that these real estate policies have caused obstacles to the performance of the contracts,thus giving rise to a large number of contractual disputes.Therefore,how to settle these disputes properly and achieve contractual justice has become one of the most pressing problems that China's legal community needs to solve.This paper will mainly explore and discuss the clarification of the legal nature of these policy-led obstacles to perform the contracts since it is the precondition for the proper settlement of such disputes.This paper includes four parts apart from the introduction.Part one: This part is about the opinions of the practice community regarding the clarification of the legal nature of those obstacles caused by policy changes to perform the contracts.Currently,China's practice community has already conducted some explorations concerning this problem due to urgent realistic needs.Through searching and studying Supreme People's Court's “Minutes of the National Civil Trial Work Meeting in 2015” and the guidance notes formulated by some local high courts including Beijing Higher People's Court and Anhui Higher People's Court,it is known that the Supreme People's Court and a considerable number of high-level people's courts have not expressed specific and explicit opinions regarding the legal nature of the policy-led obstacles to perform contracts.Even though some local higher people's courts have provided some guiding opinions concerning the problem as “causes that are not attributable to both parties”,this idea seems too general.In order to further clarify the viewpoints of the practice community,this paper adopts an empirical approach to examine cases.By studying the judicial gist of related cases,it is know that the opinions regarding the legal of nature of policy-led obstacles to perform contracts differ in practice as to whether it is rebus sic stantibus,force majeure,commercial risks or causes that are not attributable to both parties.Because of the differences in the judicial opinions,different decisions of the same case occur from time to time,greatly damaging the judicial authority and judicial credibility.Generally speaking,although the current exploration in the field of practice has made some contribution to the study of this issue,there are still many problems that need to be further studied.Part two: This part analyzes the controversy over the legal nature of the obstacles caused by policy changes to perform contracts in the academic community,which,just like the practice community,has yet to reach a consensus.The theories of “force majeure”,“rebus sic stantibus”,“commercial risks”,and “differentiating and defining” all have certain rationality,but their defects are also very obvious.Given that the findings of the first three theories have to be further discussed,the author agrees with the fourth one--“differentiating and defining” to approach the issue,that is to say,the legal nature of the obstacles caused by policy changes to fulfill the contract cannot be generalized.They should be differentiated and dealt with according to specific circumstances.However,the current theory of “differentiating and defining” has not yet reached a unified standard to define the legal nature of the policy-led obstacles to perform contracts,and there are also flaws in the opinions held by those scholars.Therefore,this paper will explore the legal nature of policy-led obstacles to fulfill contracts from the perspective of differentiating and defining.Part three: This part is the categorization of the obstacles caused by policy changes to perform contracts,and differentiation and definition of them.After systematically reviewing the real estate policy documents promulgated by China's administrative agencies,this paper summarizes four specific policy measures that cause obstacles to perform contracts,and categorizes those the obstacles caused by policy changes to perform contracts into four types,which are analyzed,discussed and defined respectively.Firstly,the situation where policy changes lead to an increase in the interest rate of housing mortgages should be defined as commercial risks.Secondly,the situation where policy changes require higher downpayment should be discussed according to the parties' agreement on the way of payment of the price in the contract.In the case where both parties agree on the other way of payment when a loan cannot be fully obtained,the dispute caused by policy changes should be handled in accordance with their agreement,which does not concern the issue of this paper.In the case where the contract does not specify the way of payment as a mortgage loan,the policy change that increases the loan for house purchase should be defined as commercial risks.In the case where the contract specifies the way of payment as a mortgage loan,and both parties do not agree on the way of payment when a loan cannot be fully obtained,the policy-led obstacles to perform the contracts usually cannot be defined as rebus sic stantibus.But if the purchaser of the house can prove that continuing to perform the contract would lead to his or her great economic loss or negative impact on his or her life so that the goal of the contract cannot be realized,then it can be defined as rebus sic stantibus.Thirdly,the legal nature of the obstacle to fulfill contracts caused by a prohibition on housing loans must still be discussed according to the agreement on payment of the housing price.In the case where the contract does not specify the way of payment as a mortgage loan,the obstacle to fulfill contracts caused by a prohibition on housing loans should be defined as commercial risks.In the case where the contract specifies the way of payment as a mortgage loan and no other ways of payment are specified,if the purchaser can prove his or her serious inability to pay the price of the house as agreed,thus leading to a failure to realize the goal of the contract,then it can be defined as rebus sic stantibus.Lastly,the restriction policy on purchasing house eligibility directly leads to a fundamental impact on the performance of the contract,the obstacle caused by this restriction policy that can be defined as either force majeure or rebus sic stantibus.Part four: This part is mainly about the judicial response to obstacles caused by policy changes to fulfill the contract.Judicial adjudication bodies must pay attention to take account of the policy when deal with these obstacles,taking into account goals of policy control,and measures and content of policy control,so as to achieve the unity of social effects and legal effects under the legal framework.And they should differentiate those contract disputes based on different situations caused by different policy changes.However,due to the complexity of real life circumstances,judicial adjudication bodies cannot simply apply the conclusion of type analysis in case judgment;instead,they have to consider and integrate the goals and content of policy control,the negotiation and payment capability of parties to the contract,and their balance of interest in order to properly cope with these obstacles caused by policy changes to fulfill the contract.In addition,relevant judicial bodies should also give full play to their judicial activism and issue unified guidance as soon as possible to tackle the disputes concerned.