Supplying Of Omitted Terms And Adaptation Of Long-term Contracts

The article focuses on supplying of omitted terms and adaptation of long-term contracts on the basis of UNIDROIT Principles of International Commercial Contract 2016,combining with reports of UNIDROIT Governing Council,discussion of working group on long-term contracts,as well as articles and practices of China.It consists of five part:Part One: Definition of Long-term ContractsThe particularities of long-term contracts,the three characters of long-term contracts,and the differences between long-term contracts and others are contained.The process of discussion from 2013 to 2016 is introduced,because of the difficulties of defining the term,a new defining method which describe the key characters is emphasized,and the risks of the long-term contracts with long-term transactions are described.To be performed over a period of time,ongoing relationship between the parties and the complexity of the transactions are the three key characters of long-term contracts.The difference between long-term contracts and one-shot contracts are whether there is a dependent transaction,longterm contracts focus on the relationship between the parties while continuous contracts care about the duration of time,long-term contracts is a part of the generalized relational contracts.Part Two: Supplying the Omitted Terms of Long-term ContractsThe base and the some measures of supplying are included.The open terms not prevent a contract from coming into existence.And long-term contracts need to be supplied based on the incomplete contract theory.The article analyzes the methods for supplying the omitted terms at length.The methods can be integrated into three levels.The terms being agreed upon in further negotiations or being determined by one of the parties or by a third person stands on the first level.The application of “gap-filling” provisions in the chapter can be placed in the second level.If some provisions are not appropriate,the judge shall also adjust them regard to the intention of the parties,the nature and purpose of the contract,good faith and fair dealing,reasonableness and so on.That is the third level.Part Three: Adaptation of Long-term ContractsThe foundation of adaptation and breakthrough of hardship are comprised.Good faith,fair dealing and cooperation between the parties are of great importance in long-term contracts.However,there is a progress as for the issue about whether the judge can adjust the contract.For there is no clear boundary between foreseeable and unforeseen circumstances,it is unreasonable that adaptation of long-term contracts is on the premise that the disadvantaged party should not foresee the events.Also,“foreseeable circumstances” does not equal “allocating the risks reasonably”.In long-term contracts,parties may have already foreseen the risks,but leave terms open in some reasons.In such circumstances,the relationship between the parties and the reasonable expectation should be considered.Part Four: The Enlightenment for Contract Law of ChinaThe formation and the performance of the contracts are composed.The article advocates that the definition of long-term contracts should be incorporated in our Contract Law so as to complete the supplying of omitted terms and adaptation of longterm contracts.The certainties of quantity and price are not obligatory for the formation of contracts.Framework contracts is a part of long-term contracts.Contract Law of China could add more “gap-filling” provisions,provisions about “reasonableness”,together with other factors about the appropriate clauses.There is distinction between “foreseeable events” and “reasonably allocating the risks”,enlarging the scope of change of circumstances or adding more clause may be effective measures.Part Five: The Conclusion...