Applicable in closed-price contracts
【Applicable Laws】
1. In the closed-mouth price contract, the construction party requires the adjustment of the project price on the grounds of the change of circumstances
For a closed-price contract, the fixed price agreed upon by the two parties in the contract shall be used as the basis for the settlement of the project payment between the two parties, and in the absence of an increase or decrease in the amount of the project, if the parties request an appraisal or appraisal of the total cost of the project, the court will not support it. However, in the course of practice, there will be a situation in which the parties have made significant changes to the time of the conclusion of the contract in the course of contract performance, in which case, if the parties request an adjustment to the project price, or if they request that the settlement be based on reality, can the court support it? On this issue, in the process of drafting the Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Project Contracts, some scholars believe that because the conditions for the parties to perform the contract have changed compared with the conditions at the time of signing the contract, if the settlement of the project payment is still carried out in accordance with the fixed price agreed in the original contract, it is obviously unfair and the principle of change of circumstances should be applied. Since the Contract Law did not stipulate the principle of change of circumstances at the time of promulgation, it was not stipulated in the Interpretation on Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Construction Contracts, but it was believed that the principle of fairness could be applied to adjust the contract cost. Article 26 of the Interpretation on Several Issues Concerning the Application of the Contract Law of the People's Republic of China (II), which came into effect on May 13, 2009, stipulates that after the conclusion of the contract, the objective circumstances have undergone major changes in the objective circumstances that the parties could not foresee at the time of the conclusion of the contract, and are not commercial risks caused by force majeure, if the continued performance of the contract is obviously unfair to one of the parties or the purpose of the contract cannot be achieved, and the parties request the people's court to modify or rescind the contract, the people's court shall, in accordance with the principle of fairness, And in light of the actual circumstances of the case, determine whether to change or terminate. In the case of a material change in the performance of a closed-price contract and the conclusion of the contract, the conditions for the application of the principle of change of circumstances are met, that is, the objective conditions on which the contract is based have changed, and the change is unforeseeable by the parties at the time of the conclusion of the contract and cannot be attributed to the two parties, and the change occurs after the formation of the contract between the two parties and before the completion of the performance, if the performance continues to be performed in accordance with the contract is obviously unfair to one party. In the consideration of such cases, a distinction should be made between general commercial risks and changes in circumstances. Article 26 of the Interpretation on Several Issues Concerning the Application of the Contract Law of the People's Republic of China (II) strictly distinguishes between commercial risks and changes in circumstances, so in the case that the parties propose that the closed-mouth price contract has undergone changes such as government economic policy adjustments and soaring prices, and require adjustments to the project cost, the court should conduct a strict review, which can be reviewed from the following aspects:
(1) Whether the adjustment change was foreseeable at the time of signing the contract. If, at the time of signing the contract, it was impossible to foresee according to the actual conditions and capabilities at that time, it can be concluded that the adjustment and change exceeded the normal scope and the parties were unforeseeable under the objective conditions at that time. If the parties did not foresee the change in the adjustment, but it was foreseeable according to the actual situation at that time, if the adjustment was requested on the grounds of the change of circumstances, it should not be supported, and the consequences arising therefrom should be borne by itself.
(2) Judging from the consequences, the judgment of commercial risk or change of circumstances can be distinguished according to the size of the consequences. Generally speaking, the result of commercial risk is that the contract can continue to be performed, but the profits obtained by one party accordingly are reduced or non-material losses are incurred; Of course, in the trial of closed-price project contract cases, the construction party requires an adjustment of the project price on the grounds of a change in the situation, and attention should also be paid to factors such as the concession of the construction party when the two parties sign the closed-price contract.
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【Risk Lawyer】Mr. Xu Haifeng, who has been engaged in legal research and legal practice for more than 20 years, has published more than 20 legal works and represented many major difficult and complicated cases, especially civil and commercial cases of the Supreme People's Court and the Provincial High Court, which has aroused many social repercussions.
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