Exploring The Rule Of Excessively High Performance Fees During Continued Performance

According to Article 110(2)of Contract Law,the claim of continue performance of creditor’s right will be excepted when the performance expenses are excessively high.However,regarding this rule-"Excessively high performance expenses",there is no clear interpretation or application in judicial trials,it even shows a tendency of "pocket clauses".Moreover,in judicial practical field,the application of this rule is confusing;There is a lack of argument for specific criteria for it,which gives rise to different standards for it;The application of the rule produces little legal effects.Even though Chinese theoretical field have not done thorough research on this rule,there is not too muchcontroversy on the issue that "Excessively high performance expenses" belongs to the scope of benefit measurement.There are not enough to identifications on what is "the performance expenses",how to judge "excessively high" and the legal effects of applying the rule-"Excessively high performance expenses".The above confusions impact the legal effect of the application of the rule.In order to identify the performance expenses,the the principles and specific scope should be determined.As for the principles of performance expenses,it should be clear that the performance expenses shall be the unilateral costs of the breaching party.The performance expenses shall not include intangible costs such as performance time and monitoring costs,and it shall not include the costs associated with performance of the incidental obligations either.In terms of the specific scope of the performance expenses,it should be clear that the expenses are the costs that the breaching party continues to perform in the original way.It should not include the basic costs incurred due to the performance of the contract,but should be limited as the additional costs that the debtor would need to pay to remove barriers to performance after a breach.It is necessary to strictly distinguish between excessively high performance expenses incurred during the performance of the contract and the ones incurred after the performance of the contract.The performance costs should not include compensation for damages to third parties outside the contract.The monetary spent in the process of repair,replacement,and rework should also comply with thegeneral provisions for the definition of performance expenses mentioned above.To judge "excessive performance cost",we should not only define the scope of performance cost,but also determine the object of performance cost comparison and the specific standard of "excessive".As for the reference system of "too high",there are great disputes in both the real theory field and the judicial practice field.There are mainly three views: one is compared with the interests of both parties to the contract,the other is compared with the interests of the debtor,and the third is compared with the interests of the creditor.In the first view,from the perspective of economic interests,it is reasonable to use the principle of efficiency breach to determine the reference frame of excessive performance costs,but the principle of efficiency breach conflicts with the legislative purpose,system and practice of our country,which is unreasonable.In the second view,when the debtor’s performance costs and the benefits of performance are seriously unbalanced,the principle of situation change should be applied instead of the principle of situation change The third point of view is that the reference system of high cost of performance should be for the interests of creditors.Compared with the interests of debtors,it is most conducive to protecting the interests of creditors.Compared with the interests of creditors,it is more conducive to maintaining the principle of good faith and economic evaluation,and it is conducive to maintaining the safety and stability of transactions Reduce transaction costs,improve the predictability of transactions,and protect goodwill trust.As for the determination of "too high" standard,the author thinks that we should refer to the explanation of "obviously unreasonable high price" in "Judicial Interpretation II of contract law" : it has exceeded 30% of the local or market guide price as the standard.At the same time,the specific factors such as the debtor’s fault and the creditor’s special interests should also be considered,and the standard should be floated up and down.As for the legal consequences arising from the application of the rule of excessive cost of performance,we should first pay attention to the functional distinction between the principle of impossibility of performance and the principle of change of circumstances.Secondly,there is a dispute about the right of the breaching party under the condition of high performance cost.If the breaching party claims theapplication of high performance cost,the exercise of the right should belong to the attribute of the right of defense,not the nature of the right of rescission(the right of formation),and the breaching party should not enjoy the right of rescission.Finally,the defense effect of excessive performance cost is the opposite of the theory of elimination of the right to continue performance and the theory of existence.The theory of existence of the right to continue performance is more reasonable,and the right to continue performance of the observant party continues to exist,but not eliminated.