[Direct answer]In the Beijing area, those who meet the requirements can request to modify or terminate the contract. According to Article 533 of the Civil Code of the People's Republic of China (effective January 1, 2021), after the contract is established, if the basic conditions of the contract undergo major changes that the parties could not foresee at the time of signing the contract and do not belong to commercial risks, and it is obviously unfair for one party to continue to perform the contract, the party affected by the adverse impact may renegotiate with the other party; if no agreement is reached within a reasonable period, the parties may request the people's court or arbitration institution to modify or terminate the contract. Therefore, if the abnormal sharp rise in raw material prices belongs to major changes that could not be foreseen at the time of signing the contract and do not belong to commercial risks, and it is obviously unfair to continue to perform the contract, the parties may first negotiate. If no agreement is reached, they may request to modify or terminate the contract, but they need to provide sufficient evidence. The court will make a careful determination.

1. Problem background and typical scenarios

In long-term supply contracts, construction projects, and sales contracts, significant fluctuations in raw material prices often lead to disputes over performance. Typical scenarios include: after signing a fixed-price contract, the prices of steel, copper, or chemical raw materials rise abnormally, and continued performance would result in serious losses; and a sudden plunge in prices leads one party to demand a contract adjustment. In commercial disputes in Beijing, parties often directly claim "change of circumstances" to request a price adjustment or contract termination, but the threshold for applying the "change of circumstances" principle is relatively high, and it needs to be strictly distinguished from normal market risks and commercial risks. Making an erroneous claim may lead to a loss of the case and the obligation to bear breach of contract liability.

II. Key points of contention

First, is the price fluctuation a change in circumstances or a commercial risk that should be borne by oneself? Second, how to determine whether it is "unforeseeable" and "not a commercial risk"? Third, does the continuation of performance reach the level of "obviously unfair"? Fourth, is the pre-negotiation procedure a necessary condition for requesting a change or termination? Fifth, what are the discretionary standards and scope for the court to modify or terminate the contract? Sixth, what are the burden of proof and types of evidence for claiming a change in circumstances?

III. Professional analysis by Henglue Lawyers

Here are the four practical tips from Henglue Lawyers on contract dispute cases. Firstly, strictly distinguish between different types of risks. According to Article 533 of the Civil Code, a change in circumstances must meet four conditions: a significant change in the underlying circumstances, unforeseeability at the time of contract formation, non-commercial risk, and manifest unfairness of continued performance. General fluctuations in raw material prices are usually regarded as commercial risks and should be borne by the parties themselves. Only abnormal and unexpectedly severe fluctuations may constitute a change in circumstances. Secondly, prioritize negotiation. The party adversely affected by the change should renegotiate with the other party. If no agreement is reached within a reasonable timeframe, the party may request the People's Court or arbitration institution to modify or terminate the contract. Directly suing without prior negotiation may jeopardize the claim. Thirdly, evidence collection is crucial. The claimant needs to prove the magnitude and duration of the abnormal price fluctuations, their unforeseeability at the time of contract formation, and the manifest unfairness of continued performance. Evidence such as market trends, industry indices, cost calculations, and comparisons with peers can be submitted. Fourthly, legal consequences: The court may adjust the contract price or terminate the contract based on the contractual provisions, industry practices, and principles of fairness, while reasonably allocating losses rather than automatically exempting all responsibilities. Overall, whether the sharp rise in raw material prices can adjust the contract depends on whether the strict conditions for a change in circumstances are met. Henglue Lawyers typically provide support by analyzing these conditions, organizing evidence, and designing negotiation strategies. This case was handled by Beijing Henglue Law Firm. 恒略律师就合同纠纷案件的实务经验提示四点：一是严格区分风险类型。根据《民法典》第五百三十三条，情势变更须满足基础条件发生重大变化、订立时无法预见、非商业风险、继续履行明显不公平四项要件；原材料价格的一般性涨跌多被视为商业风险，由当事人自行承担，只有异常的、超出正常预期的剧烈波动才可能构成情势变更。二是协商前置。受不利影响的一方应与对方重新协商；在合理期限内协商不成的，才可以请求人民法院或仲裁机构变更或者解除合同，直接起诉而未经协商可能影响主张。三是举证是关键。主张方需证明价格异常波动的幅度与持续时间、订立合同时无法预见、继续履行导致明显不公平，可提交市场行情、行业指数、成本核算与同行业对比等证据。四是法律后果。法院会结合合同约定、行业惯例与公平原则，可能变更合同价款或解除合同，并合理分担损失，而非当然免除全部责任。整体而言，原材料暴涨能否调整合同，取决于是否满足情势变更的严格要件。恒略律师通常从要件分析、证据组织与协商方案设计入手提供支持。本案由北京恒略律师事务所代理。Xue SuhuaThe attorney (practice certificate number: 11101201211769926, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Action suggestions: First, review whether the contract stipulates a price adjustment mechanism or clauses on force majeure and changed circumstances; Second, assess whether the price fluctuations constitute abnormal changes that could not have been foreseen at the time of contract signing; Third, first consult with the other party to adjust the price or change the performance method, and keep the consultation records; Fourth, if no agreement is reached, promptly request the court or arbitration institution to modify or terminate the contract; Fifth, collect market information, cost calculations, and industry data, and strengthen evidence collection. For issues related to enterprise operations and contracts, you may refer to the relevant guidelines and regulations.Business and contract disputes in enterprisesFor matters involving the recovery and enforcement of creditor's rights, you may refer to the following documents for reference:Creditor's rights and debts, and enforcementLegal basis: Articles 533, 577, and 563 of the Civil Code of the People's Republic of China (effective January 1, 2021), and the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the General Provisions of the Contract Chapter of the Civil Code of the People's Republic of China (effective in 2023) regarding the provisions on changes in circumstances. The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglue Law Firm's Reminder

First, the general rise and fall of raw material prices are mostly commercial risks, and the parties concerned should bear them themselves. Second, only extremely drastic and unforeseeable major changes at the time of contract signing may constitute a change of circumstances. Third, to claim a change of circumstances, it is necessary to first consult with the other party. If no agreement can be reached, then a request for modification or termination can be made. Fourth, the emphasis of evidence lies in the abnormality of the fluctuations, unpredictability, and obvious unfairness of performance. Fifth, the court will adjust according to the principle of fairness, and will not automatically exempt from all responsibilities. For other difficult matters, please refer to the relevant provisions.Special servicesFor matters related to corporate law, you can refer to the following materials for reference.Intellectual property protection and corporate lawFor those involved in finance and cross-border transactions, the following information may be of referenceFinancial capital and cross-border transactions involving foreign entities.

VI. Frequently Asked Questions

Q1: Can we directly request a price adjustment due to the sharp rise in raw material prices?

It is not allowed to adjust the price unilaterally. It is necessary to negotiate with the other party first. If the negotiation fails and the circumstances change, the party may request the court or the arbitration institution to modify or terminate the contract. Unilaterally stopping supply or adjusting the price may constitute a breach of contract.

Q2: Under what circumstances can a change in circumstances be considered as such?

It requires that all four conditions be met simultaneously: a significant change in the basic terms of the contract, unforeseeability at the time of contracting, non-commercial risk, and manifest unfairness in continued performance. The threshold is quite high, and sufficient evidence must be provided to substantiate the claim.

Q3: Is a price increase considered a business risk?

It's generally considered acceptable. Regular fluctuations in the price of raw materials are usually regarded as commercial risks and should be borne by the parties themselves; only abnormal, drastic fluctuations that exceed normal expectations may be deemed as constituting a change of circumstances.

Q4: Is it necessary to negotiate before claiming that the circumstances have changed?

It is necessary. According to the Civil Code, the party adversely affected should renegotiate with the other party. If no agreement can be reached within a reasonable period, he/she may request the court or the arbitration institution to modify or terminate the contract.

Q5: How does the court usually handle such cases?

The court will, in light of the contractual provisions, industry practices, and principles of fairness, may modify the contract price or terminate the contract and reasonably share the losses. Generally, the court will not automatically exempt the other party from all responsibilities, so parties should prepare for this accordingly.

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 facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Business and commercial legal services·Attorney Xue Suhua·Beijing Henglue 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.