The Purpose Of The Contract And Its Frustration

The expression “frustrate the purpose of the contract” appears many times in the current legislation of Contract Law of the People's Republic of China.Yet the attention it has received from the legislators is far less than enough.It is difficult to have an absolutely uniform standard for the determination of “the purpose of the contract”,because of the subjective part it includes and its close relationship to the terms and the motivation of contract.So,the controversy in theory and practice never ends.And with a widespread controversy aroused anew during the ongoing codification of the subsections of the Civil Code of the People's Republic of China about “the system of legal relief” and “clausula rebus sic stantibus”,the necessity to carry out further research is imperative.The frustration of the purpose of the contract,as a significant criterion of Legal Relief,is related to the validity and performance of the contract.Also,it is an important type of change of circumstances.So,it is more abstract in the application,and difficult to grasp.Hence,this article starts with the concept of the purpose of the contract,and classify it.Then I will analyze the specific connotations and applicable conditions of the system of legal relief and clausula rebus sic stantibus,and their differences and connections.On the basis of the above,I will try to provide reference ideas for the compilation of Contract Law and the interpretation of related systems.This paper is mainly divided into four parts for discussion.The first part centers on differentiating and analyzing the concept of the purpose of the contract,which includes the rationality of the concept,and its scope and determination,etc.Then I put forward reasonable types as the basis of the full-text analysis after referring to the classification of English law,German law and the existing theories.The purpose of the contract can be divided into the basic purpose from subjective perspective,and the further purpose from objective perspective,for its relationship to the terms and motivation of the contract.The former is the payment that the parties want to pursue,so the basic purpose with a specific perspective should be adopted.And the latter is the motivation of the parties to conclude the contract,which has legal significance only in special circumstances.The second part focuses on analyzing “frustrate the purpose of the contract” of the system of legal relief in Article 94 of Contract Law.I clarify that the frustration in this provision includes not only the basic purpose but also the further purpose by understanding “the purpose of the contract”.The frustration of the purpose of the contract,like the fundamental breach of contract,is a criterion to determine whether the breach of the contract is significant enough to set off the statutory termination right.While we identify the failure of the realization of the payment,which is also called the purpose of the contract,as the frustration.However,it is necessary to analyze the standards in the system of legal relief combination with different types of performance obstacles in terms of specific application.Generally speaking,in the event of impossibility,the purpose of the contract cannot be achieved naturally;in the case of repudiation,it depends on the importance of the obligation of the repudiation in the entire contract;in the presence of delay in performance,it depends on the influence of the performance period on the payment;Under the situation of incomplete fulfillment,it depends on the impact caused by the breach and whether measures can be taken to remedy it.At the end of the second part,this article gives a brief response to the disputes.Like the creditor still have the right to terminate the contract when the breach of the protection obligation affects the payment that the contract cannot continue to perform;and it is inadvisable to stipulate granting the breaching party the statutory right of termination in the system of legal relief because of the abuse of right and the irrationality of the legal system it can easily cause.The third part shows that the frustration of the purpose of the contract means that the basic purpose can be achieved according to realization of the benefits of the contract content,but the further purpose cannot be achieved here.It is concluded by analyzing the clausula rebus sic stantibus of the Article 26 of the “Interpretation of Contract Law(II)”,and exploring the theoretical basis and types of extraterritorial regulations.Therefore,the purpose of the contract here refers in particular to further purpose.And at the last section of this part,I analysis of the necessity of “frustrate the purpose of the contract” on the base of above.“Obviously unfair” is not equivalent to “frustrate the purpose of the contract”,so it should not be deleted in the legislation.Otherwise,it will form a legal loophole.The fourth part mainly compares the “frustrate the purpose of the contract” between these two systems on the basis of the foregoing.As far as the scope is concerned,the “purpose of the contract” in the system of legal relief has a broader meaning than clausula rebus sic stantibus.The former includes not only basic purpose but also further purpose,while the latter refers only to further purpose.With regard to the terms of contract,the purposes of the contract in the former must all be the contents without exception,while the latter is not included in the contents in any case due to its supplementary of application.As far as legal effects are concerned,although both of them can terminate the contract,the former shall be in the form of notice,while the latter shall be in the form of judicial procedure.Yet the basic purpose is not totally irrelated to the further purpose.The further purpose is not always incapable of being included in the contract content,and its inclusion is relative: in the system of legal relief,further purpose can be included as obligation of debtors in the contract content through transaction habits,principles of good faith.But in the clausula rebus sic stantibus,it can only be used as the basis but not as the content,otherwise,its application is excluded.