[Direct answer]In the Beijing area, both the principal and the agent may terminate the contract at any time, but they should pay attention to the consequences of compensation. According to Article 933 of the Civil Code of the People's Republic of China, the principal or the agent may terminate the agency contract at any time. If the termination of the contract causes losses to the other party, except for reasons not attributable to that party, the party terminating the unpaid agency contract shall compensate for the direct losses caused by the improper timing of the termination, and the party terminating the paid agency contract shall compensate for the direct losses of the other party and the benefits that could have been obtained after the performance of the contract. Therefore, the right to terminate the contract at will is a statutory right. When exercising this right, the party should generally notify the other party, and the termination shall take effect upon the arrival of the notice. At the same time, it is necessary to properly handle the handover of affairs and the settlement of expenses to avoid bearing compensation liability due to the improper timing of the termination.

1. Problem background and typical scenarios

When entrusting others to handle matters, appointing lawyers, entrusting financial management, or entrusting others to handle affairs, if the relationship between the two parties deteriorates and one party wants to "terminate the contract at any time", the other party may claim compensation for the costs already invested. The entrustment contract is based on trust, and the law grants both parties the right to terminate the contract at will, but termination is not without cost: the scope of compensation for unpaid entrustment and paid entrustment is different. In practice, how to deliver the notice of termination, when the termination takes effect, and how to hand over and settle the matters already carried out are all high-risk areas for disputes. Only by understanding the conditions and consequences of termination can we reduce the risk.

II. Key points of dispute

The controversy focuses on four aspects: First, the scope and nature of the right to arbitrary termination, and whether it can really be terminated at any time; Second, the difference between the scope of compensation for paid and unpaid entrusted services, and how to determine direct losses and potential benefits; Third, the meaning and burden of proof of "circumstances not attributable to the party concerned"; Fourth, the form, delivery, and consequences of the notice of termination. In practice, courts usually first confirm the entrusted relationship and the fact of termination, and then determine the scope of compensation based on whether it is paid or unpaid.

III. Professional analysis by Henglue Lawyers

First, the nature of the right of arbitrary rescission. The agency contract is based on trust between the parties, so the law grants the principal and the agent the right to rescind at any time without the other party's consent and without the premise of the other party's breach of contract; however, the exercise of this right must not violate special legal provisions and the principle of good faith. Second, the distinction of compensation scope. If the rescission causes losses to the other party, the rescinding party in a paid agency contract shall compensate for the other party's direct losses and the benefits that could have been obtained after the contract was performed; the rescinding party in an unpaid agency contract shall compensate for the direct losses caused by the improper timing of the rescission. The differences between the two are obvious, with the compensation scope being broader in paid agency contracts, including the expected benefits. Third, the review of exemption grounds. If the occurrence of losses cannot be attributed to the rescinding party, such as those caused by the other party's fault or objective circumstances, the rescinding party may not bear compensation; the party claiming exemption shall provide evidence of the grounds. Fourth, the notice and consequences of rescission. The right of rescission is generally exercised through notice, and the rescission takes effect upon the notice reaching the other party; matters involving the transfer of affairs, the return of materials, the settlement of fees, and the remuneration for completed work shall be handled simultaneously upon rescission, and written confirmation shall be provided when necessary. Fifth, practical suggestions. The rescinding party should assess the compensation risks, choose an appropriate time to rescind, and retain evidence of notice and delivery; the rescinded party should fix the portion of the work performed and evidence of losses, and promptly claim remuneration and compensation. In a case of agency contract disputes handled by our firm, although the parties did not have a written contract, the lawyer proved the existence of the agency relationship through payment receipts and communication records, and clarified that the agent failed to complete the entrusted matters as agreed. Ultimately, the second-instance court reversed the judgment and supported the return of the investment funds and interest. This shows that in an agency relationship, even without a written contract, as long as the true intentions and performance of the parties can be reconstructed, the rights, obligations, and responsibilities can still be determined according to law, and the settlement at the time of rescission or termination should also be based on evidence. This case was handled by Beijing Henglu Law Firm.Xiong BinrongThe attorney (practice certificate number: 11101202211410897, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical Suggestions and Legal Basis

The first step is to confirm whether it is a fiduciary relationship and whether it is paid or unpaid, and then determine the scope of compensation accordingly. The second step is to issue a written notice of termination and retain the delivery certificate to clarify the time of termination. The third step is to properly handle the handover of affairs, return of materials, and settlement of expenses to avoid expanding losses. The fourth step is to claim corresponding compensation for the completed entrusted affairs and claim compensation for the losses caused by improper termination. If no agreement can be reached through negotiation, the matter shall be resolved through litigation. The main legal basis: Article 909 of the Civil Code of the People's Republic of China (Liability for Fiduciary's Fault), Article 933 (Right of Arbitrary Termination and Compensation), and Article 565 (Effectiveness of the Notice of Termination upon Delivery); the above provisions shall come into effect on January 1, 2021, and the specific application shall be subject to the currently effective provisions.

5. Henglu Law Firm's Advice

Three sentences on the termination of a power of attorney: Both parties can terminate it at any time, but there will be costs involved; for a paid power of attorney, the compensation will cover the direct losses and the expected benefits; for an unpaid power of attorney, the compensation will cover the direct losses caused by the improper termination; written notice and retention of the delivery, and the handover and settlement should be completed in one go. For matters related to contracts and enterprises, you can consult through the following channels:Business and contract disputes in enterprisesWe provide a comprehensive solution for services, which includes the integration of corporate and equity mattersIntellectual property protection and corporate lawFor reference, you can check the sections related to enforcement and recovery of debtsDebt recovery and enforcementFor any inquiries regarding difficult commercial disputes, please feel free to consult us.Special servicesTeam.

VI. Frequently Asked Questions

Q1: Can a contract of entrustment be terminated at any time?

Yes. Both the principal and the agent may terminate the agency contract at any time, but if this results in losses for the other party, the party concerned shall bear corresponding compensation according to whether the termination is with or without compensation. The obligation to settle accounts and make compensation cannot be exempted simply by terminating the contract.

Q2: What evidence do I need to prepare to claim compensation after the contract is terminated?

The entrustment contract, the notice of termination and the proof of delivery, the records of performance and expense outlays, the supporting materials for proving losses and potential benefits, as well as the evidence of the other party's fault or exempting circumstances.

Q3: Are the handling costs of such disputes high?

For straightforward cases, the cost is manageable, and the fees are charged based on the amount in dispute. Clients can negotiate with lawyers to pay in stages or on a contingency basis, subject to the provisions of the contract of engagement.

Q4: How long will it take to process it?

Negotiation and settlement are usually faster; for those entering litigation, the first-instance trial is generally concluded within a few months. However, cases involving the determination of recoverable benefits or complex evidence may take longer, subject to the court's scheduling arrangements.

Q5: What should I do if the other party doesn't agree to the termination?

The right to rescind the contract without the consent of the other party. The party may issue a notice of rescission in accordance with the law, and the rescission shall take effect upon the arrival of the notice; if the other party refuses to hand over or settle the account, the party may claim through litigation in accordance with the agreement and the law.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the necessary evidence, to avoid missing the statutory time limits. →Business and commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If a dispute arises, please consult a practicing lawyer in time.