The Research On The Right Of Arbitrary Rescission On Commission Contracts

As a service contract,the commission contract is very abstract and general for the expression of “handling affairs”.Therefore,it is more openand inclusive compared with other service contracts and is widely used in civil and commercial matters.Article 410 of contract law stipulates the right of arbitrary rescission,but it does not make more detailed provisions which lead to frequent disputes in judicial trials.It is difficult to form a powerful unified interpretation within the theoretical circle.This paper is intended to analyze the stipulations regarding the arbitrary rescission of commission contracts combining with the actual disputes in judicial trials and to make detailed explanations within the contract law system of our country.Through the literature research,case analysis and research on foreign laws,this paper makes an analysis of the following questions making detailed explanations on the related articles which are expected to improve the actual application: the application scope of the arbitrary rescission right on the commission contract,especially whether there is a need to limit the application in civil,commercial,paid or unpaid contracts,and the application of the arbitrary rescission right of commission contracts on the contracts mixed by the commission contracts and the non-commission contracts.Whether the right of arbitrary rescission can be specifically excluded by precedingconsensus of the parties,whether the scope of compensation after arbitrary rescission is the fiduciary benefit or the compensation of performance.This article is composed of four parts,below are the detailed contents:The first part is about legitimacy of the right of arbitrary rescission.This part analyses the legal characteristics of the commission contract,the nature,origin and legitimacy of the right of arbitrary rescission,and make an analysis on the arbitrary rescission based on the category of the arbitrary rescission within our law system to understand the legitimacy of the right of arbitrary rescission.Commission contract is a typical behavioral debt focusing on the provision of the service or labor but not the results.Therefore the consignee is required to have a relatively higher reporting obligation,and the consignor bears the costs of handling commission affairs.The establishment of the commission contract relationship is different from the establishment of most contractual relationships,although in general,the establishment of any contract is based on mutual trust,the trust degree of the commission contract is relatively high due to the following reasons: the result of the consignee's handling will be directly borne by the consignor;the results of handling commission affairs cannot be formulated at the time the contract is signed,thus the results of the commission contract always depend on the subjectivity of the consignee,while for other contracts,the subjects of the contracts are often specific,if there is no unexpected factor such as force majeure,generally as long as the two parties do really fulfill their obligations they shall be able to achieve the intended purpose of the contract,therefore the degree of trust of commission contracts are higher than other normal contracts;The commission contract and its arbitrary rescission rights are derived from the provisions of ancient Rome.At that time,the commission was mostly used for the duty help and friendly help within friends and there is great distinction between free man and slave thus the service provided by free man is honorable which cannot be valued by consideration.Due to the abovementioned reasons,commission contract had characteristics of trust and being unpaid.Actually,there appeared an indirect practice which in fact correct the practice of being unpaid that parties of the commission contract may not be able to pay the consideration,but they can promise each othercertain honoraria,donation or certificate of honor.Besides,the doctor,teacher and lawyer can be paid although the paying obligation is moral not obliged.After then,France,Japan,Italy,etc.,accepted the existence of the paid commission contracts.Although Germany insisted on the commission without consideration,it also formulated the provisions on employment contract,contract for work and paid handling affairs.The right of arbitrary rescission belongs to the special statutory right of rescission and belongs to the right of formation which allows one party to take a unilateral action.As the unilateral will of the party,either party to the commission contract can decide whether to exercise the right or not and when to exercise the right.In the "Institutions",Gaius first established the principal arbitrarily rescission ofconsignor,the reasons for this principal is based on the mutual trust of the parties,the loss of trust makes it not necessary to continue to perform the contract,and the consignor can give up his own interests.Later the arbitrarily dismissal right of consignee is established based on the rupture of friendship between the two parties,the physical discomfort of the consignee,and the futile work of handling the affairs.Through the above analysis,the author believes that the legitimacy of the base of establishment of the commission contract and the legitimacy of its arbitrary rescission right are based on the trust and freedom to handle their own affairs.The second part mainly analyses the scope of application of arbitrary rescission right in commission contract.This part will analyze the differences between the commission contacts and other named contracts like contract for work.The key part of this part is whether the right of arbitrary rescission on commission contract needs to be restricted in civil,commercial,paid or unpaid contracts.It is controversial in judicial trial and theoretical circles,while the restriction is not provided in main foreign legislations.Although Germany stipulates that the commission is unpaid,but it also has the provisions of employment contracts,contracts for work,and paid handling affairs.The author analyses the view of the scholars who support the restrictions on the scope,the main reasons why they support the restriction is that they are of the view that the unpaid nature is the basic feature of the commission contract and the payment has caused damage to the basis of trust.The author analyses thecharacteristics of commission contracts and the legitimacy of the right of arbitrary rescission of the entrustment contract,as well as the origin and the acceptance of the payment in foreign legislations,and is of the view that being unpaid is not the basis of the commission contract but the derived characteristic of the most important characteristic trust,commercial commission contracts are still based on the trust,there should not be any restriction on the scope,as for the imbalance of interests in the commercial contracts,it can be balanced by the compensation.This part will also analyze the application in the mixed contract constituted by the commission contract and the non-commission contract,The jurisprudence and some papers are of the view that the arbitrary rescission right is not applicable to the whole such mixed contracts.The author is of the view that the application of this kind of mixed contract should be distinguished based on the internal rights and obligations.The commission contracts' rights and obligations shall be subject to the relevant provisions of the commission contract.The non-commission part shall be governed by other named contract provisions or the general provisions of the contract law;this part will also distinguish simultaneous contracts and mixed contracts,the classic jurisprudence of Japan is of the view that the contract shall not enjoy the right of arbitrary rescission if the commission contract contains the interests of the consignee.The author believes that case abovementioned is actually a simultaneous contract where corresponding provisions of law should apply to the different parts which means the arbitrary rescission right should be recognized for the commission-related parts.The third part focuses on whether the special exclusion of arbitrary rescission right is effective.The academic views of this issue are quite controversial.Scholars who are of the denying view reckons that the article 410 of the contract law is a mandatory provision and cannot be excluded,the unpaid commission contract doesn't contain profit relationship like paid commission contracts,the trust need to be protected,and the commission contract must be unconditionally allowed to be dismissed by the parties once the trust relationship is broken.Scholars who are of the supporting view reckons the article 410 of the contract law belongs to the authorization norm which can be excluded,the spirits of autonomy of private lawshould be fully respected when the special exclusion does not violate any interests of society,public or third-party.More foreign legislations are of the supporting views.The author queried nearly 400 cases with the key words of waiver of arbitrary rescission right.These disputes are mostly about commercial commission contracts,mainly in litigation risk agency contracts and real estate commission sales or entrusted operation management contracts.The author believes that article 410 of the contract law is an arbitrary norm from the perspective of the content and meaning of the mandatory norm,there is no mandatory or prohibition content in this article and there doesn't involve any interests of public,social or third parties.In theory,the effectiveness of the exclusion of the agreement should be recognized.However,based on the civil and commercial legislative spirit and the significant differences in value orientation,the issue should be analyzed differently between civil and commercial contracts,the basis for the establishment of the commission contract is trust,but the exclusion of the contract is based on the consideration of a stable relationship under the trust of both parties.The party's autonomy of interests and the arrangement of its own rights and interests should be respected.The exclusion of arbitrary rescission does not limit other ways to end the contracts.Being unpaid is not the legitimacy of the arbitrarily rescission of the commission contract,and its arbitrary rescission should not be affected by being unpaid,besides,the unpaid contract can be protected by the principle of public order and good custom,due to the above reasons,the validity of the arbitrary rescission right should be recognized for the civil commission contract.At the same time,for the continuation contracts that are based on high degree of trust,the risk of restraining personal freedom,the risk of unbalanced risk distribution and moral hazard should be prevented by the right of rescission.However,commercial contracts have the characteristics of pursuing profit and a high degree of autonomy.Merchants should obtain the protection of law in advance for the risk distribution in business activities,which would be able to stabilize the basis of transactions,promote commercial profitability and development,curb opportunism,and improve transaction efficiency,the validity of the arbitrary rescission right should be recognized for the commercial commission contract.The fourth part mainly analyses the scope of compensation after the arbitrary rescission.The practice and the theoretical circles both have great controversies on this issue,but there is a general trend of analyzing the issue based on the category of being paid or unpaid,commercial or civil.In practice,civil commission involves less controversy over compensation scope,while commercial entrustment has more controversy,especially whether the performance of benefits should be compensated,based on the civil and commercial legislative spirit,major differences in principles,and the analysis of civil but paid as well as commercial but unpaid commission contracts,the author believes that the issue should be divided into civil and commercial matters.The scope of compensation for civil entrustment contracts should be limited to the fiduciary benefit.The scope of compensation for commercial entrustment contracts should be benefits of performance.For civil contracts,the exercise of statutory special right of rescission should not be equated with breach of contract in nature and consequence,and the compensation of performance benefits violates the trust of the commission contract.Although the entrustment contract is a continuation contract,the effect of its dismissal is future-oriented,it does not mean that some of the interests that have already been fulfilled cannot be balanced.Professor Lin Chenger and other scholars believe that in this case,the concept of restitution can be used in a broad sense.For the subject matter of labor and service,the restitution for the service provider means to repay the money received.The intention is to return the interests of both parties to make both parties get back to the state before the contract is reached.There is a big difference between the commercial commission contract and the civil commission contract in terms of the scope of loss and reasons for rescission.Based on the 400 cases the author has read,the disputes arising from the arbitrary rescission of the civil commission contract are mainly regarding the return of the prepaid fee,the return of the gains due to the handling of the commission affairs and the losses caused by consignee's faults,basically do not involve disputes over the compensation scope.The commercial disputes always involve consulting companies,service companies,law firms and other business entities that specialize in services.For those business entities,"time is money",thehuman resources,initial investment,and other losses caused by losing other opportunities are usually far greater than civil commission,it is difficult to balance with actual loss compensation,and the reason for the rescission is often the abandonment of the performance of the benefits,the compensation for the performance of the benefits is more consistent with cause and effect;More,the basis for the conclusion of the commercial commission contract is not only the trust,but also the pursuit of profit,besides,commercialcommission contracts always put more emphasis on profits and efficiency than civil commission contracts commercial entities generally bear heavier responsibility than civil entities,the legitimate expectations for profit should be protected.