The Right To Renegotiate Under The Change Of Circumstances Rules

Renegotiation is stipulated for the first time in the Civil Code of the People’s Republic of China（hereinafter referred to as the Civil Code）,but there is still room for further improvement of the specific operating rules on renegotiation.Renegotiation is established by the parties to the contract in order to adapt to the changing situation and communicate with each other to form a consensus,so as to adjust the original contract.This is not only conducive to maintaining the autonomy of the parties,prompting both parties to form a consensus on the contract adjustment,but also can save judicial resources and improve the efficiency of economic operation.In the event of a change of circumstances,if it becomes impossible or difficult to continue to perform the contract concluded between the two parties,at this time it would be extremely unfair to force the parties to perform the contract in accordance with the original contract.In this case the parties have the right to apply to the court or arbitration organization to change or terminate the contract.In this way,contract gridlock can be avoided,thus affecting market vitality.Clause 1 of Article 533 of the Civil Code stipulates renegotiation.From the way of expression of legal provisions,this article seems to deliberately avoid the qualitative issue of the right or obligation of renegotiation,but adopts a neutral expression.However,renegotiation is not necessarily the legal effect of the changed circumstances.As a party to the contract,he can freely choose whether to negotiate with the other party.Therefore,renegotiation in the change of circumstances rule should be defined as a right,and this right is a right of formation for the following reasons: First,if the negotiation is defined as an obligation,the most ideal preset is that the parties will be able to reach an agreement to modify the original contract after the change of circumstances,this is most conforms to their own interests.But if the parties have no negotiations will,forced renegotiation can only lead to waste of transaction costs.It’s better to let the judge decide;Second,if the renegotiation is defined as an obligation,it reflects a kind of legal care beyond paternity,which leads to excessive constraints on the parties’ freedom of will.It is obviously not reasonable.Of course,once the renegotiation procedure is initiated,both parties must conduct substantive negotiations with the other party in accordance with the principle of good faith.The relevant provisions on the change of circumstances set up in the Civil Code solve part of the social needs.However,the provisions on renegotiation in the articles of law are not clear,which tend to make renegotiation appear abstract and fail to realize the legislative purpose of renegotiation.The basic purpose of renegotiation system in the Civil Code is to safeguard the essential fairness of both parties.The exercise subject of the right of renegotiation is not limited to one party.The reason is that even the party who has not suffered any adverse effects will be on the verge of damage to the rights and interests of the other party due to the decline of the ability to perform the contract,so both parties have the right to start the renegotiation procedure.If the two parties fail to reach an agreement through negotiation,it is the stipulation of the right of formation to seek the court’s help to change or terminate the contract.Although there are no relevant provisions in the Civil Code such as the exclusion period of the right of renegotiation in case of change of circumstances,the parties who enjoy the right of renegotiation should exercise their rights as soon as possible in order to prevent one party from deliberately delaying renegotiation and causing more and more influence.In the process of renegotiation,both parties shall apply the exclusion period of the right of formation.When the exclusion period expires,the right of formation will no longer exist,and either party can directly appeal to the court.Before the parties reach an agreement,the original contract is still valid.In principle,the parties should continue to carry out the original contract to ensure the stability of the contract.However,in the process of renegotiation,if one party maliciously delays the negotiation process,the other party may apply to suspend the performance of the original contract,provided that appropriate guarantee shall be provided.Once the renegotiation procedure is started,the litigation rights of both parties will be temporarily limited in order to ensure that both parties can follow the principle of good faith in negotiation.The following three situations may occur when the parties exercise the right of renegotiation: the two parties reach an agreement after negotiation,fail to reach an agreement,and the other party refuses to negotiate.When the parties abuse the right of renegotiation,they need to bear certain adverse consequences.Otherwise the system will become a mere figment and lack effective binding force on the parties.As a procedural element of contract modification or termination under the change of circumstances,the purpose of renegotiation setting is to facilitate the negotiation process of both parties to proceed smoothly.Therefore,the legal consequences of abusing the right of renegotiation are generally reflected in the change of authority of contract modification or termination.If the other party takes the initiative to push forward the negotiation process and incurs expenses,or suffers losses caused by delay in performance of the contract due to adjustment of the original contract,the party who abuses the right shall be liable for damages.But the punishment of damage compensation is not the fundamental purpose of renegotiation,but only gives certain legal sanction to the party who abuses his right.Therefore,the party who abuses the right of renegotiation should mainly bear certain adverse consequences in the lawsuit and assist to bear the liability for damages.As for the vague provisions on renegotiation in the Civil Code,it is hoped that relevant judicial interpretations will be issued later to improve it,so as to ensure that renegotiation can help both parties to ease conflicts on the one hand,and reduce the pressure of handling cases in our courts on the other hand.