When the contracted land is expropriated, the land contract is terminated and the follow-up treatment is made

Liu v. a villager committee over a contract dispute over land contracting and management rights

-- Termination of the land contract and subsequent treatment when the contracted land is expropriated

Summary of the trial

When the contracted land is expropriated, if the conditions for termination stipulated in the contract have been fulfilled, the contract shall be terminated. After the contract is terminated in accordance with the contract, the employer shall return to the contractor the contract fee for the unfulfilled contract period and pay the corresponding interest.

Basic facts of the case

The plaintiff, Mr. Liu, claimed that on January 1, 2011, the plaintiff and the defendant signed a land contract, and the defendant contracted the land adjacent to the South-to-North Water Diversion Canal to the plaintiff for a contract period of 30 years, with a contract fee of 343.8 yuan per mu, which was paid at one time, totaling 72,216 yuan. After the contract was signed, when the village handed over the land to the plaintiff after the trees were pruned, the stumps were left in the ground, uneven, potholed, without drainage ditches and roads, and it was impossible to cultivate at all. After the plaintiff contracted the contract, he hired an engineering team to dig out tree stumps, level the land, dig drainage ditches, build roads, and transform potholes that could only be planted with trees into fertile fields. The aim is to obtain greater benefits during the contract period. Because the defendant broke the contract in the middle of the contract, the plaintiff could not recover the benefits after paying, causing losses to the plaintiff.

At the end of 2017, the plaintiff heard that the contracted land was occupied and the measurement had been completed, but the plaintiff had not seen the expropriation notice, nor had anyone informed the plaintiff that the land had been expropriated, let alone the compensation after the land expropriation. The plaintiff sought confirmation from the village secretary and learned that the matter was true. The village secretary admitted that he had signed on behalf of the plaintiff. The plaintiff heard that the land idle fee had been paid to the village for two years, but the plaintiff had not received any notice from the village requesting the termination of the contract, nor had he received any compensation. The plaintiff repeatedly approached the defendant to deal with the land occupation, but the defendant only promised to pay the land idle fee for two years first, and pay the rest after the compensation study. But so far, the land has been occupied for 3 years, and the plaintiff has not received a penny of compensation. In summary, the plaintiff did not know whether its contracted land had been expropriated in accordance with legal procedures, and even if the contracted land was expropriated in accordance with the law, the plaintiff was entitled to relevant compensation.

Therefore, a lawsuit was filed: 1. requesting that the original defendant be ordered to terminate the land contract signed on January 1, 2011 in accordance with the law; 2. ordering the defendant to pay 18,000 yuan in compensation for the land occupied before the land acquisition that had been allocated in place (between 2019 and 2020); 3. ordering the defendant to return the unfulfilled land contract fee of 48,132 yuan and interest (based on 48,132 yuan, calculated from January 1, 2011 to the date of the defendant's return, calculated at a monthly interest rate of 2 cents), 4. ordering the defendant to compensate the plaintiff for the loss of 47,700 yuan; 5. the litigation costs of this caseThe defendant shall bear the preservation fee and the preservation insurance premium.

The defendant's village committee argued: 1. The land involved in the case had been occupied during the construction of the Yellow River moat, and the land contract signed between the plaintiffs and the defendant had been terminated. 2. According to the contract, in case of state expropriation during the contract period, the plaintiff shall unconditionally obey, because the compensation for the seedlings obtained by the expropriation belongs to the plaintiff, and the land and other compensation are owned by the defendant, so the compensation for the occupation cannot be paid to the plaintiff. 3. With regard to the contract fee for unfulfilled period, the defendant agreed to refund it to the plaintiff, and the plaintiff's request for a monthly interest rate of 2 cents was unfounded, and the interest should not be paid. 4. The plaintiff's so-called loss of 47,700 yuan for land consolidation did not exist at all, and the land was contracted according to the current status of the land when it was contracted at that time.

After trial, the court ascertained that on January 1, 2011, a village committee (Party A) of the contract-issuing party and the contractor Liu (Party B) signed a land contract, stipulating that: (1) Party A will be located on the land of the only child, east to the original third team field, west to the drainage ditch, south to the drainage ditch, north to the village ration (land), 7 acres contracted to Party B for planting. (2) The contract period is 30 years, from January 1, 2011 to December 30, 2041. (3) Contracting method: The contract fee is 343.8 yuan per mu per year, and the contract fee for 30 years is paid at one time, with a total contract fee of 72,216 yuan, and the contract is paid for 30 years when the contract is signed, and the payment is 72,216 yuan. During the contract period, all expenses shall be borne by Party B. (4) Liability for breach of contract: 1. During the contract period, both parties are not allowed to terminate the contract without reason, otherwise the breaching party shall pay liquidated damages of 1,000 yuan, except for changes in national policies. ...... 3. During the contract period, in case of national or collective expropriation, Party B shall unconditionally obey, and the compensation for the seedlings obtained due to the expropriation shall be owned by Party B, and the land and other compensation shall be owned by Party A.

In 2018, the compensation agreement signed by a sub-district office of Party A, a village committee of Party B, and Liu of Party C stated that due to the construction needs of the moat project, it was necessary to clear the ground appendages of Party C within the relevant scope starting from Fenghuang Mountain in the west, crossing the Jiping Trunk Canal to the Qianzhai Mountain on the north bank, and along the left embankment of the Jiping Trunk Canal to the west of the border between Qianruan Er and Yushan Street.

In order to reduce Party C's losses and ensure the smooth progress of the project construction, Party A, Party B and Party C reached the following agreement through consultation: (1) Party A, Party B and Party C shall count, verify, sign and approve the ground appurtenances to be removed by Party A, Party B and Party C. (2) According to the price certification report issued by the Certification Center of Pingyin County Price Bureau, Party A shall give Party C a one-time compensation of 760 yuan for ground objects. (3) Party C shall remove the ground appurtenances within three days after signing the agreement, and Party A shall have the right to carry out the next step of the project. (4) After Party C removes the appurtenances on the ground, Party A shall pay Party C a lump sum compensation. The signature of Mr. Liu at the place where the compensation agreement was signed indicated by Chang Benyin. A sub-district office paid Liu 760 yuan on October 25, 2018. The land involved in the case was occupied by the moat project.

On February 18, 2022, the People's Court of Pingyin County, Jinan City, rendered the (2021) Lu 0124 Min Chu No. 2915 Civil Judgment: Within 10 days after the judgment took effect, the defendant village committee returned the plaintiff Liu's land contracting fee of 53,393 yuan and interest (based on 53,393 yuan, calculated according to the interest rate of the People's Bank of China for the same period from January 1, 2011 to August 19, 2019, and calculated according to the one-year loan market quotation rate announced by the National Interbank Funding Center from August 20, 2019 to the date of payment); After the judgment was pronounced, neither party appealed, and the judgment has taken legal effect.

Grounds for the Trial

The effective judgment of the court held that the parties may agree on the conditions for one party to terminate the contract. If the conditions for rescission are fulfilled, the person with the right to terminate the contract may terminate the contract. In this case, although there was a dispute between the plaintiff and the defendant over the time of termination of the contract, the plaintiff should unconditionally obey in the event of state or collective expropriation during the contract period, the land involved in the case had been expropriated by the moat project, the conditions for the termination of the contract had been fulfilled, and the plaintiff had paid compensation for ground objects, so it was determined that the contract was terminated on October 25, 2018. According to the contract, in case of national and collective expropriation during the contract period, Party B shall unconditionally obey, because the compensation for the seedlings obtained by the expropriation belongs to Party B, and the land and other compensation are owned by Party A, so the plaintiff's request for the defendant to pay 18,000 yuan for land occupation compensation from 2019 to 2020 has no factual and legal basis and is not supported.

At the time of signing the contract, the plaintiff paid a one-time contract fee for 30 years, and the contract fee for failing to perform the contract period should be refunded. Since the contract was terminated on October 25, 2018, the defendant should return the contract fee after that, so the defendant should return the plaintiff's contract fee of RMB 53,393. Since the contract involved in the land expropriation case was terminated, the plaintiff was not at fault, and the defendant should pay interest on the contract fee from January 1, 2011, the date of receipt of the contract fee, to the date of return. However, the plaintiff's claim that the monthly interest rate should be calculated at 2 cents has no factual and legal basis. The court determined that the interest shall be calculated at the People's Bank of China interest rate for the same period from 1 January 2011 to 19 August 2019, and at the one-year loan market quotation rate published by the National Interbank Funding Center from 20 August 2019 to the date of payment. The evidence submitted by the plaintiff was insufficient to prove that it had incurred expenses to sort out the land involved in the case, and that it had actually cultivated the land for many years, so the plaintiff's claim for compensation of 47,700 yuan from the defendant was not supported.

Links to legal provisions

Article 562 of the Civil Code of the People's Republic of China The parties may terminate the contract if they reach a consensus through consultation.

The parties may agree on the grounds for one party to terminate the contract. The person who has the right to terminate the contract may terminate the contract if the cause of termination occurs.

Article 566 of the Civil Code of the People's Republic of China: After the contract is terminated, if it has not been performed, the performance shall be terminated; If it has already been performed, the parties may request restitution or other remedial measures according to the performance and the nature of the contract, and have the right to claim compensation for losses.

If the contract is terminated due to breach of contract, the person with the right to terminate may request the breaching party to bear the liability for breach of contract, unless otherwise agreed by the parties.

After the termination of the main contract, the guarantor shall still bear the guarantee liability for the civil liability to the debtor, unless otherwise agreed in the guarantee contract.

Article 49 of the "Rural Land Contracting Law of the People's Republic of China" Where rural land is contracted through bidding, auction, public consultation, etc., and certificates such as land contracting and management rights certificates or forest rights certificates are obtained through registration in accordance with law, the land contracting and management rights may be transferred, leased, shared, mortgaged or otherwise transferred in accordance with law.

First instance: Civil Judgment of Pingyin County People's Court of Jinan City, Shandong Province (2021) Lu 0124 Min Chu No. 2915 (February 18, 2022)