On The Principle Of The Changed Circumstances

For a long time,Pacta sunt servanda has been regarded as an important principle of contract law.However,due to the variability and complexity of the external environment,Pacta sunt servanda cannot solve some problems properly,thus,the principle of Changed Circumstances arises.This essay takes the principle of Changed Circumstances as the object of discussion and studies and analyzes some problems related to it,which is divided into four chapters.The first chapter describes the historical evolution and development of the principle of Changed Circumstances.The principle of Changed Circumstances first appeared in the Commentary on the Udic Law in the 12 th and 13 th centuries.As for the continental law system,in the 17 th century,the idea of natural law was dominant,and the principle of Changed Circumstances was widely applied.By the late 18 th century,the principle of Changed Circumstances had appeared in the written law of some countries.In 1921 Oertmann proposed “the theory of the basis of legal act ",which was adopted by the German courts the following year,and after world war ?,Larenz put forward "the amended theory of the basis of legal acts".After that,the principle of Changed Circumstances is generally adopted by civil law countries and regions.In common law system,the principle of Changed Circumstances is called frustration of purpose.English common law originally adhered to Pacta sunt servanda,and In 1647,Paradine v.Jane reflected and established Pacta sunt servanda in British law.But in the Taylor v.Caldwell of 1863,the judge had a different view,and in this case,the judge's opinion was regarded as the rudiment of frustration of purpose.By Krell v.Henry,frustration of purpose was formally established.In mainland China,the principle of Changed Circumstances has also experienced a tortuous development.At the beginning of the founding of new China,the handling of landlord debt,currency exchange and other issues could be regarded as the embodiment of the principle of Changed Circumstances.After the socialist transformation was completed in 1956,China established a planned economy.There are also situations in which the principle of Changed Circumstances applies,such as changes in national plans.After Reforming and Opening-up,China began to transform to a market economy,Wuhan Gas Company v.Chongqing Instrument Factory is a typical case in this period.The contract law enacted by the NPC in the late 1990 s did not stipulate the principle of Changed Circumstances,but the contract law interpretation(ii)issued by the Supreme Court in 2009 stipulates the principle of Changed Circumstances.The second part is about the legal basis,concept and constitutive elements of the principle of Changed Circumstances.First is the legal basis,The legal basis of the Changed Circumstances includes the principle of fairness and the principle of good faith.Next,the concept and constitutive elements of the principle of Changed Circumstances come.This essay divides the principle of Changed Circumstances into four elements.First,objective element,that is,the situation related to the contract has changed,this element can be divided into "circumstances" and "change".The circumstances in German law can be divided into the subjective legal act basis and the objective legal act basis.Change is objective but not universal.Second,the time element,that is,the Changed Circumstances should take place after the formation of the contract to the completion of the performance.Third,subjective element,that is,the occurrence of the Changed Circumstances is unforeseeable and non-imputable.The standard of unforeseeabilty is generally observing from the perspective of a rational general person,but sometimes the standard should be appropriately raised according to the nature of the transaction.There are three different interpretations of the non-imputability of a Changed Circumstances: whether a party is liable for foreseeable Changed Circumstances;whether the Changed Circumstances occurred after the conclusion of the contract was caused by the fault of the parties;after a Changed Circumstances has occurred,whether the parties concerned have taken appropriate measures to control the expansion of the loss.Fourth,the element of result,that is,the Changed Circumstances leads to the performance of the contract is obviously unfair or the purpose of the contract failed.The obvious unfair of contract performance is different from the general sense of obvious unfair.As for the identity of obvious unfair,the economic cost criterion should be adopted,and And it also requires Changed Circumstances causes the benefit obtained by the party is obviously under the cost,which leads to the significant loss.The purpose of a contract is expressed outside the contract at the time of conclusion,which has been clear and significant to both parties.If it cannot be realized due to the circumstance change,then the circumstance change principle can be adopted.Chapter three deals with Changed Circumstances and force majeure.First is a brief introduction to the system of force majeure.The elements of force majeure can also be divided into four: An objective situation;Unpredictable;Inevitable;Insurmountable.The forms of force majeure can be divided into three categories,namely natural disasters,social abnormal events and state or government acts.Force majeure may cause the following legal effects: failure to perform the contract or defective performance;The obligor's obligation to give notice and provide evidence;Cause the change or termination of the contract;To exonerate the parties in whole or in part;Delays in performance are not exempt from liability.Secondly,the relationship between Changed Circumstances and force majeure.It is of little significance to distinguish them from the types of facts they constitute.Conceptually,the two are very similar,but the Changed Circumstances does not have the "insurmountability" of force majeure.From the perspective of the nature of rights,rights under force majeure are the right of formation,and the rights under the Changed Circumstances are right of claim or right of action of formation.From the perspective of functional positioning,force majeure emphasizes the exemption of contract liability,while the principle of Changed Circumstances emphasizes the elimination of obstacles to contract.It is not correct to regard force majeure and the Changed Circumstances as two parallel concepts in our legislation.Force majeure may or may not be a cause of the Changed Circumstances.The relation between the two is the cross relation,and the parties can choose one according to the situation when they are overlapped.Chapter four deals with the application of the principle of Changed Circumstances.The principle of application of the principle of Changed Circumstances,in a word,applies strictly.Next comes the discussion of situation change and business risk.It is of great significance to distinguish them according to different degrees of foreseeing,different imputability and different effects on contracts.To distinguish the two,the Supreme Court has issued documents to guide lower courts to deal with the problem of distinguishing between Changed Circumstances and commercial risks.The third point is about the legal effect of applying the principle of Changed Circumstances.Generally speaking,the principle of Changed Circumstances has two effects.The first is to modify the contract,and the second is to revoke or terminate the contract.In addition to the two above,there is a renegotiation obligation.Both PICC and PECL provide for this obligation.The renegotiation obligation is obliegenheit in nature.When China formulates the civil code in the future,it should place the renegotiation obligation before the modification of the contract and termination of the contract,in order to form a three-layer structure of effectiveness.