[Direct answer]In the Beijing area, if the other party has not yet reached the performance deadline but has clearly stated or provided concrete evidence indicating that they will not fulfill the contract, the party may claim to terminate the contract and initiate litigation in advance. According to Article 578 of the Civil Code of the People's Republic of China (effective January 1, 2021), if a party explicitly states or demonstrates through their actions that they will not fulfill their contractual obligations, the other party may request them to bear breach of contract liability before the performance deadline. In addition, Articles 527 and 528 stipulate the right of defense against uncertainty: if there is concrete evidence that the other party may lose their ability to perform their obligations, lose their business reputation, transfer or withdraw funds to evade debts, or lose other performance capabilities, the party may suspend performance but should notify the other party in a timely manner. If the other party fails to restore their performance capability within a reasonable period, the party suspending performance may terminate the contract. Two points should be noted: first, exercising the right of defense against uncertainty and claiming anticipatory breach of contract termination are different approaches. The former is to temporarily suspend performance and retain the right to terminate the contract later, while the latter is to directly request the other party to bear breach of contract liability; second, the procedure should be supported by evidence and fulfill the obligation to notify, otherwise it may be deemed a breach of contract.Business and contract disputes in enterprisesThe services in this column can assist in designing a proposal path.

1. Problem background and typical scenarios

Common situations of anticipated breach of contract include: the other party explicitly stating that they will be unable to deliver or make payments; the other party having been listed on the list of abnormal business operations or facing numerous lawsuits; the other party's main assets having been seized or transferred; the other party explicitly requesting to amend the contract terms; or the impossibility of performance due to changes in the price of key raw materials or policies.Special services and other casesThe program description in the column can be used for reference.

II. Key points of contention

Focus One: The constitutive elements of anticipated breach of contract. Focus Two: The exact evidentiary standards for the right of defense against uncertainty. Focus Three: The necessity of the notification procedure. Focus Four: The method of exercising the right of rescission. Focus Five: Determining the scope of damage compensation. Focus Six: Identifying the responsible party and the impact of third parties.Intellectual property protection and corporate lawThe contract management suggestions in the column can be used for reference.

III. Professional analysis by Henglue Lawyers

Take a case of a reservation contract dispute handled by Attorney Zhu Guiying of our firm as an example: The lessor invested in customized decoration according to the lessee's requirements. After the decoration was completed and passed inspection, the lessee delayed signing the contract and ultimately stated explicitly that he would no longer lease the property. The attorney's strategy in this case was to first confirm whether the reservation contract was valid, and then focus on the determination that the other party failed to perform without a valid reason after the contract was established, constituting a malicious breach of contract. On this basis, the attorney claimed compensation for the actual decoration losses. The court ultimately awarded compensation for the decoration costs. This approach highlights a key point: The key to claiming anticipated breach of contract or breach of contract liability lies in evidence, especially evidence showing that the other party explicitly stated that it would not perform or demonstrated its non-performance through actions. If there is only a suspicion that the other party might breach the contract without conclusive evidence, it is risky to directly claim termination and compensation. Therefore, it is necessary to first collect the other party's written statements, publicly available information on its operating status, and communication records, and then decide to take actions such as suspending performance, sending a letter demanding guarantees, or even terminating the contract.Creditor's rights and debts, and enforcementThe recovery path in the column can be used for reference. This case was handled by Beijing Henglu Law Firm.Xiong BinrongThe attorney (practice license number: 11101202211410897, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical Suggestions and Legal Basis

Action suggestions: First, collect evidence showing that the other party has explicitly stated or acted in a way that indicates they will not fulfill their obligations; Second, verify the other party's operating status and litigation-related situations; Third, decide whether to suspend performance, send a letter demanding guarantees, or directly terminate the contract; Fourth, strictly follow the notification procedures and retain delivery receipts; Fifth, prepare investment receipts and alternative transaction costs when claiming losses; Sixth, evaluate the liability of third parties. Legal basis: Articles 527, 528, 563, 577, 578, and 84 of the Civil Code of the People's Republic of China (effective January 1, 2021); Specific applications shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglue Law Firm's Reminder

Firstly, to exercise the right of defense against uncertainties, there must be concrete evidence; mere speculation is insufficient to support it. Secondly, the obligation to notify cannot be omitted. Failure to notify may be deemed a breach of contract. Thirdly, suspending performance and terminating the contract are two separate actions that need to be separately documented. Fourthly, claims for compensation for anticipated breaches of contract must be based on actual losses. Fifthly, unless it constitutes an anticipated breach of contract, there is generally no breach of contract liability if the performance period has not yet arrived. Sixthly, it is important to ensure that the subject of the contract matches the contractual counterparty, to avoid making claims against the wrong party.Special services and other casesThe column can also provide guidance on how to choose a path.

VI. Frequently Asked Questions

Q1: If the other party hasn't reached the payment date yet, can I sue them in advance?

Yes, but it must meet the constitutive elements of anticipated breach of contract. According to the Civil Code, if a party expressly states or indicates through its own actions that it will not perform its contractual obligations, the other party may request it to bear the liability for breach of contract before the expiration of the performance period. This means that there must be clear evidence to prove that the other party will not perform its obligations, such as the other party's written statement that it is unable to make payments, a clear notice of order cancellation, or that its assets have been seized and it has no other ability to perform the contract. If it is just based on business rumors or market speculations, suing in advance may be rejected on the grounds of breach of contract committed first.

Q2: How should one properly exercise the right of disquieting defense?

There are three steps: First, there needs to be clear evidence to prove that the other party may encounter legal circumstances, such as losing the ability to perform, losing business credibility, transferring assets and embezzling funds, etc. General operational difficulties or delays in performance are not sufficient to support this; Second, after suspending performance, the other party should be notified in a timely manner; Third, if the other party fails to restore its ability to perform within a reasonable period of time, the contract can be terminated. If performance is directly stopped without notice, it may constitute a breach of contract on the part of the party itself. In practice, a common risk is that enterprises stop supplying goods or suspend payments based on subjective judgments, but are unable to provide evidence, and are ultimately deemed to have breached the contract.

Q3: The other party said they would pay but have been delaying it. Can I terminate the contract?

It is necessary to distinguish whether the other party has made a clear refusal. If the other party only says they will pay but fails to fulfill the obligation on time, this constitutes a delay in performance. In this case, it is usually necessary to first give a reminder and set a reasonable deadline; if the obligation is still not fulfilled within the reminder period, you can claim breach of contract and seek compensation for actual losses. Whether you can directly terminate the contract depends on whether there are agreed termination conditions in the contract or whether there are fundamental breaches of contract that make it impossible to achieve the purpose of the contract. It is recommended to first issue a written reminder and specify the performance deadline and consequences, and at the same time, be prepared for both continuing to perform the contract and terminating it.Business and contract disputes in enterprisesThe column can also provide templates and ideas for notices and termination agreements.

Q4: If a party alleges anticipatory breach of contract, how is the compensation calculated?

The scope of compensation includes losses caused by breach of contract, which typically includes necessary expenses incurred in preparation for performance, reasonable additional costs incurred due to the other party's breach of contract, and foreseeable losses of expected benefits, but does not include indirect losses that have not actually occurred. In practice, the common calculation method is: the actual investment documents plus the difference in price of the alternative transaction, plus reasonable legal defense costs. It should be noted that the burden of proof for losses of expected benefits is relatively high, requiring proof of the practical possibility of the transaction and the specific amount of the expected benefits; if the claimant claims an excessive amount without providing evidence to support it, the court may not fully support it.

Q5: Do I need the other party's consent to terminate the contract?

Not necessarily. Contractual rescission requires the consent of both parties or the fulfillment of the agreed rescission conditions; statutory rescission, on the other hand, can be exercised unilaterally as long as the statutory circumstances are met. It takes effect upon notification to the other party and does not require the other party's consent. According to the Civil Code, the circumstances of statutory rescission include force majeure rendering the contractual purpose unattainable, anticipated breach of contract, delayed performance that remains unperformed within a reasonable period after being urged, and fundamental breach of contract leading to the unattainability of the contractual purpose. When exercising the statutory right of rescission, two points should be noted: First, the rescission notice must reach the other party to take effect; second, after rescission, the other party should be notified and the settlement and return should be completed within a reasonable period. Neglecting to exercise this right may lead to adverse consequences.

The above content is based on the judicial practice in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglue Lawyers about specific situations.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, to avoid missing the statutory time limit. →Corporate commercial legal services·Attorney Xiong Binrong·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available 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. In case of disputes, please consult a practicing lawyer in time.