On Statutory Obligation Under Contract

Along with the changes of social and economic conditions, the contract law is undergoing a tremendous transformation, which is represented on and also influences the trend that there are a large number of statutory obligations in the contractual relations between parties. Therefore, in the theoretical studies of contract law, it should be important to study the statutory obligations under contract. However, our research in this area is yet few. Based on the analysis of types of statutory obligation and its impact on the principle of freedom of contract, this paper discusses how to, in practice, conduct a reasonable restrictions on the statutory obligation under contract, aiming at maintaining the balance between the strains of statutory and contractual obligations , making sure that the Contract Law can fully embody the parties'autonomy and realize the justice of contract effectively at the same time, ensuring the full play of the parties'initiative and maintaining the social harmony and orderly development. The paper can be divided into four parts.Part One Concepts of Statutory Obligations under ContractBecause the study bases on the theory and practice of the contract law in China, the Contract, referred in this paper, is defined within the specific scope of the Contract Law of PIC. The obligation of contract is defined as"a legally mandatory duty based on the contractual relationship and borne by the parties to the contract". The obligation of contract is related to both the rights of the other party in the contract and also the state power; different from the obligation in the Contract Law; the obligation of contract is primary but not secondary obligation. As a contrast concept of contractual obligation, the statutory obligation under contract is defined as"obligation under contract, borne by parties, whose contents are directly confirmed by the legislators or by judge or arbitrator according to the legal procedures".Part Two Types of Statutory Obligation under ContractAccording to the origins, statutory obligation can be divided into two types: statutory obligation confirmed by the law and statutory obligation confirmed by judgment. statutory obligation confirmed by the law can be defined as the obligation under contract which is borne by parties, and whose contents are directly confirmed by the legislators in the law, and it can be categorized into obligation of non-violation of public orders and customs and obligation of good faith. In some specific conditions when the judicial organ goes into the contractual relations, the judicial organ can ascertain directly the obligation of parties through judgment procedures. And this kind of obligation, ensured through judgment procedure, does not belong to contractual obligation yet. Because statutory obligation confirmed by judgment mainly occurs in the procedure of interpreting or modifying the contract, it is divided, in this paper, into obligation occurring in the procedure of interpreting the contract and obligation occurring in the procedure of modifying the contract. Through the analysis of types of statutory obligation, the paper reveals the mechanism in which the statutory obligation acts to adjust the relations between parties of the contract.Part Three Impact of Statutory Obligation on Principle of Freedom of ContractAs a kind of obligation of contract imposed to the parties, the occurrence of statutory obligation inexorably influence the basic principle of contract law—the principle of freedom of contract. In the classical contract laws, there exists, to some extent, statutory obligation; however under the concept of absolute liberalism, it does not play an important role in the contractual relations between parties. In modern contract laws, the statutory obligation expands a lot, which impacted the principle of freedom of contract greatly. In fact, the statutory obligation, restrictions to freedom of contract, has the same value target with principle of freedom of contract, and both of them aim to realize the justice of contract. Making necessary restrictions to the freedom of contract is not decline of the principle, but to force it to its original value and position. In addition, the statutory obligation takes contractual obligation as its premise, and it can be exist independently without the contractual obligation. It indicates that the contractual obligation takes kernel position in the obligation groups of contract, and the expansion of statutory obligation can not essentially change the rule-position of freedom principle. Because of the over- interference of statutory obligation to freedom, it is necessary to make proper restrictions. In China, it lacks the tradition of freedom. So it is very important to understand the impact of statutory obligation on freedom of contract and to make effective mechanism to restrict statutory obligation properly.Part Four Discussion of Reasonable Restrictions on Statutory Obligation under ContractCombined with the legal practice in China, the author discusses the problem of how to make reasonable restrictions to statutory obligation under contract. The points are as follows:(1) Specific regulations and proper restrictions should be laid on the judicial acts of judicial organs when judging the obligation of non-violation of public orders and customs;(2) It should be ensured that the standard of good-faith obligation is the basic ethical requirement to middleman; in the conditions of referring profit-balance between only the two parties, the law should allow parties to agree on getting rid of the detailed good-faith obligation undertook in some, except some usual, conditions. (3) The statutory obligation, occurred in the procedure of interpreting contracts by judicial organ, should get the negative recognition of parties, and the law should endow the parties the rights to limit the public rights'over-interference to legal autonomy through the cancelled rights in contract law.(4) Proper restrictions should be laid on the statutory obligation occurring in the procedure of modifying the contract by tight restriction on the conditions in which the contract should be modified. In legislation, the necessary procedure of voluntary negotiation between parties should be set to contract modification. Meanwhile, the right to cancel contract, which had been modified, should be endowed to the party who possesses right to request the modification.