Reporter Tao Yuqiong
Core Tip The contractor may terminate the contract at any time before the contractor completes the work, and if the contractor suffers losses, it shall compensate for the losses.
Under normal circumstances, once the contract is concluded, it is legally binding and cannot be changed or terminated by the parties without authorization. However, for some special contracts, the law provides for an "arbitrary right of rescission", allowing one party to the contract to rescind the contract without reason. In the Civil Code, the contractor is given the right to terminate the contract at will.
So, with the "right of arbitrary rescission", can the contractor terminate the contract arbitrarily without restriction? No! The Civil Code clearly stipulates that there are boundaries and restrictions on any right.
【Typical Case】
Case 1: Company A and Company B signed a processing order contract on March 22, 2012, and Company A processed a batch of furniture for Company B. The contract stipulates that the arrival of the goods within 25 days from the date of receipt of the deposit is as follows: After the completion of the processing, the company A notifies company B to accept the acceptance in its factory, and company A will send the furniture to the designated place of company B. After the contract was signed, Company B paid a deposit of 100,000 yuan on the same day, but it did not receive the acceptance notice until the end of 2012, and Company B refused to continue to perform the contract. Company A then sued the court to require Company B to continue to perform the contract, but Company B insisted on terminating the contract.
Case 2: Company A and Company B have a business of processing customized carts. On April 7, 2015, Company A sent a purchase order to Company B through QQ to purchase 2,000 carts, and the agreed delivery time was June 15, 2015. After that, Company B notified Company A to pick up the goods, but Company A refused to pay the corresponding payment and claimed to terminate the contract, while Company B confirmed that 2,000 carts had been produced and asked Company A to continue to perform the contract.
【Judge's Statement】
Assistant Judge Liu Xian of the Fourth Civil Division of the Xi'an Intermediate People's Court
"The right of arbitrary rescission, also known as the right of rescission at any time, means that one or both parties to a contract may unconditionally terminate an established contract without any reason." Liu Xian pointed out that the provisions on the discretionary right of rescission of the contractor in Article 787 of the Civil Code follow the provisions of the contract law before, but add the time limit of "before the contractor completes the work", so as to avoid the contractor arbitrarily transferring the risk to the innocent contractor.
The reason why the law sets this seemingly extremely "willful" right for the contractor in the contract is that Liu Xian said that it is out of consideration for the pursuit of freedom and efficiency value in the contract. The contracting contract is a type of contract concluded by the contractor in order to meet its own special needs, the contractor completes the work and delivers the work results according to the instructions of the contractor, and the contractor pays remuneration, which is established on the basis of the trust of both parties to the contract and is closely related to the specific needs of the contractor. If the contractor no longer needs the contractor to continue to complete the work due to changes in subjective and objective reasons after the contract is formed, it is of little significance if both parties are required to continue to strictly abide by the contract and mechanically maintain the order value of the contractual relationship. Therefore, the law encourages resources to withdraw from inefficient areas and flow to highly efficient areas, allowing contractors to terminate contracts and compensate contractors for losses, avoiding both parties to the contract from investing more time, energy or money, and avoiding the waste of social resources. Since this particular reason occurs only on the side of the contractor, the law does not provide for the contractor's right of arbitrary rescission. In addition, the discretionary right of the contractor is a mandatory norm of the law and cannot be excluded or changed by agreement.
"But 'arbitrary' does not mean 'willful.'" Liu Xian stressed that according to the provisions of the Civil Code, the right of termination of the contractor enjoys arbitrary rescission does not mean that the rescission right of the contractor is not subject to any restrictions. The exercise of the right of arbitrary rescission by the contractor shall satisfy two conditions:
1. The contractor shall propose to terminate the contract within the validity period of the contract, that is, the contractor's right of rescission only exists before the contractor completes the work results. If the contractor has completed the work as agreed, unless the contractor has breached the contract and the purpose of the contract cannot be realized, the contractor must accept the work results and may not arbitrarily terminate the contract. This is because, after the completion of the contracting work, the nature of the contract is no different from the contract for the sale of specific goods, and the contractor has the basis of the right of arbitrary rescission, that is, the strong relationship of trust between the contractor and the contractor no longer exists. For example, in Case 1, Company B's refusal to continue to perform the contract is a sign of rescission of the contract, at which time Company A has not yet completed the work content as agreed to send the furniture that has passed the acceptance to the designated place of Company B, so Company B can exercise the right of rescission to terminate the contract at will. However, Company A in Case 2 could not terminate the contract because the other party had completed the production of the cart, and even if it had not yet been delivered, Company A could not arbitrarily terminate the contract.
2. The contractor exercising the right of arbitrary rescission of the contract shall notify the contractor, and may terminate the contract from the time the notice reaches the contractor in a manner that the contractor can determine orally, in writing, to determine that the contractor has received and understood the expression of intent to terminate the contract. After the contract is terminated, the contractor shall deliver part of the completed work to the contractor, and if there is any surplus of raw materials provided by the contractor, it shall also be returned. In addition, if the contractor pays remuneration in advance according to the contract, the contractor shall return the remaining price to the contractor after deducting the completed part of the remuneration. If the rescission of the contract causes losses to the contractor, the contractor shall compensate. According to the provisions of the Supreme People's Court, the scope of compensation shall be determined with reference to the legal consequences of the termination of the contract and in conjunction with the performance of the contract, generally including the price paid by the contractor for the purchase of materials to complete the contracting work, the remuneration that the contractor should receive for the completion of the work part, and other losses suffered by the contractor. However, it should be noted that if the contractor completes the contracting work in advance in order to speed up the progress of the work, and after receiving the notice of the contractor to terminate the contract, fails to take appropriate measures to cause the loss to expand, it shall not claim compensation for the expanded loss, and shall bear the corresponding loss according to the degree of fault.
Author: Tao Yuqiong
Source: Shaanxi Daily