[Direct answer]In the Beijing area, after the situation changes, it's not just about terminating the contract. Legislation prioritizes encouraging "modifying the contract and continuing to perform it". According to Article 533 of the Civil Code of the People's Republic of China, if there are major changes in the objective circumstances after the contract is concluded that could not have been foreseen at the time of its conclusion and are not commercial risks, and it is obviously unfair for one party to continue to perform the contract, the party suffering losses shall first renegotiate with the other party; if no agreement is reached, it may request the people's court or arbitration institution to modify or terminate the contract. Whether to modify or terminate the contract depends on whether fairness can be restored through price adjustment, extension of the performance period, etc. If fairness can be restored, modification shall be prioritized; if the purpose of the contract has been thwarted or modification is obviously meaningless, termination shall be implemented. It is recommended to first negotiate in writing and keep the evidence, and then decide whether to request modification. For more details, please refer to the following link:Business and contract dispute resolution services for enterprises.

1. Problem background and typical scenarios

The situation often changes in scenarios of long-term performance, drastic price fluctuations, or sudden policy changes. Typical examples include: raw material prices doubling within a short period of time, leading to serious losses in processing contracts; the pandemic and control measures making it objectively impossible to fulfill offline obligations; administrative approvals or industrial policy adjustments undermining the basis of the original contract; and surging exchange rates and freight charges making cross-border trade contracts grossly unfair. Many parties mistakenly believe that "if the situation changes, they can directly terminate the contract", but hastily stopping performance may actually constitute a breach of contract. The threshold for applying the doctrine of changed circumstances is relatively high, and it must be distinguished from normal commercial risks. Not all price fluctuations can be invoked. For cases involving price adjustments, the parties may refer to relevant provisions in the contract to resolve the dispute.Creditor-debtor relations and enforcement case servicesEvaluate the implementation strategy.

II. Key points of contention

There are three main points of contention in the case of changes in circumstances. Firstly, whether the change constitutes an "unforeseeable, non-commercial risk": If price fluctuations are considered normal operational risks, the court usually does not support modification or termination. Secondly, whether there is "manifest unfairness": It is necessary to prove that continued performance would impose on one party a burden far exceeding the anticipated disadvantage at the time of contract formation. Thirdly, the choice between modification and termination: The court tends to modify the contract if possible, and only terminates it when modification cannot restore fairness or the contractual purpose cannot be achieved. For cases involving policy adjustments, reference can be made to relevant provisions.Special services and other case-related servicesDetermine the degree of instability in the foundation.

III. Professional analysis by Hengluo Lawyers

The core of the changed situation lies in "whether it is possible to amend the contract rather than terminate it when the performance of the contract is grossly unfair". Based on the cases handled by our firm, it can be seen that the court's choice between "amendment or termination" highly relies on fairness and protection of trust. Taking a case of agreement validity handled by Xue Suhua's lawyer team as an example: In March 2023, Zhang Na and Wang Xiaoyong signed the "Beijing Hukou Marriage and Registration Agreement" with Zhao Chenyang and paid 100,000 yuan to help their child obtain a Beijing hukou. However, due to policy restrictions, the registration failed. The couple then entrusted Henglue Law Firm to sue for the invalidation of the agreement and the recovery of the payment. The court ruled that the agreement was invalid from the outset according to Article 152 of the Civil Code, as it evaded the household registration policy through a false marriage and violated public order and good customs. The court ordered Zhao Chenyang to return the 100,000 yuan within a specified period. This case was handled by Beijing Henglue Law Firm.Xue SuhuaThe attorney (practice license number: 11101201211769926, subject to the documents issued by the judicial administrative organ) acts on behalf of the client. Our firm's team has also handled cases such as the dismissal of prosecution and transfer to public security organs in cases involving criminal suspects in sales contracts, and the refund of unperformed film investment rights transfer cases. In the former case, the prosecution was dismissed and the case was transferred to the investigation due to economic crimes. In the latter case, the three defendants were sentenced to jointly return the investment funds of 300,000 yuan because the contractual purpose failed to be achieved. These cases show that when the basis for performance is fundamentally shaken or the contractual purpose cannot be achieved, the court is more inclined to dissolve the contract and restore the status quo ante rather than force the parties to continue to perform the contract by amending it.

IV. Practical suggestions and legal basis

The legal basis is Article 533 of the Civil Code of the People's Republic of China (effective January 1, 2021) (Change of Circumstances: Renegotiation and Request for Change or Termination), Article 153 (Invalidity Due to Violation of Public Order and Good Morals), Article 157 (Legal Consequences of Invalidity), 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 regarding the determination of changes in circumstances. Practical advice: Upon the occurrence of changes in circumstances, notify the other party in writing and attach evidence as soon as possible, and initiate renegotiation; keep records of the entire negotiation process; if fair negotiation is truly impossible, then request a change (such as price adjustment or extension) or termination; pay attention to distinguishing it from commercial risks and force majeure to avoid misuse. For long-term contracts, it can be combined with other provisions to determine the applicable legal consequences.Intellectual property protection and corporate legal servicesEstablish price adjustment and exit clauses.

5. Henglu Law Firm's Advice

A change in circumstances is not a "get-out-of-the-contract-free card," and one cannot refuse to perform the contract as soon as difficulties arise. The correct approach is to "first negotiate, then request a change, and finally terminate the contract": During the negotiation stage, it is necessary to keep records to prove that the parties have communicated in good faith; in litigation, it is preferable to assert a change in the contract to reduce the risk of providing evidence and losing the case; terminating the contract is a last resort, and after terminating the contract, the parties should handle the already performed parts in accordance with the principles of fairness and causality. It is necessary to be vigilant against disguising normal market risks as changes in circumstances, as the court strictly reviews such cases. When necessary, it is advisable to hire a lawyer to sort out the evidence chain of "unforeseeability" and "manifestly unfairness" to increase the likelihood of the claim for a change or termination being accepted. For related risk prevention, please refer to the following document:Business and contract dispute resolution services for enterprises.

VI. Frequently Asked Questions

Q1: After the circumstances change, can I win the lawsuit and modify or terminate the contract?

The decision of whether to grant support depends on whether the strict requirements are met, rather than the outcome commitment. It is necessary to prove that the objective circumstances could not have been foreseen at the time of contract conclusion, do not constitute commercial risks, and that continued performance would be grossly unfair. After satisfying these requirements, the court usually first encourages amendments (price adjustments, extensions), and only terminates the contract when amendments cannot restore fairness or the contractual purpose is thwarted. If it is just an ordinary price fluctuation, the claim is often rejected. It is recommended to first conduct a feasibility assessment, and collect evidence according to the three requirements of "unforeseeable + non-commercial risk + grossly unfair", and never believe in unrealistic promises of victory. The outcome is determined by facts and evidence.

Q2: If I claim that the circumstances have changed, what evidence do I need to prepare?

The core evidence includes: the original contract and performance records (to prove the basis and expectations at the time of contracting), objective factual evidence of the changes (such as policy documents, price data, force majeure certificates), supporting evidence of the unforeseeability of the changes (general industry understanding, publicly available information at the time of contracting), quantitative materials showing manifestly unfairness (sudden cost increase statements, comparative estimates), and records of negotiation and communication (to prove that the parties have attempted to renegotiate in good faith). The organization of the evidence should revolve around the sequence of "time of change occurrence - unforeseeability - non-commercial risk - manifestly unfairness - negotiation attempts". The more systematic the materials are, the more likely they will persuade the adjudicator to support the modification or termination of the contract.

Q3: If I hire a lawyer to handle a dispute arising from a change in circumstances, what would the approximate cost be?

According to the "Measures for the Payment of Litigation Fees", the litigation fees shall be accumulated in stages based on the amount of the litigation subject and shall be borne by the losing party; the attorney's fees shall be calculated according to the complexity of the case, the amount of the litigation subject and the workload, either on a per-case basis or based on a percentage of the litigation subject, with no unified national standards. The specific fees shall be subject to the terms of the entrustment contract. Cases involving changing circumstances often require extensive market research and policy evidence, with a large workload. It is recommended to request the law firm to provide a detailed fee breakdown before entrusting the case, clarifying whether it includes travel expenses, appraisal fees and litigation fees, to avoid price increases during the process. It is also advisable to weigh the attorney's fees against the potential benefits before initiating the case.

Q4: How long does it usually take to litigate a case involving a change in circumstances?

The first-instance ordinary procedure generally concludes within six months, and the summary procedure within three months; for cases involving changes in circumstances, it is necessary to review the nature of the changes and fairness, and the ordinary procedure is often applied to cases with complex facts, often involving appraisal or market investigation, with a relatively long cycle. If an appeal is filed, the second-instance procedure generally takes three months. After the judgment takes effect, the enforcement phase begins separately. Overall, such disputes often take more than half a year from filing to adjudication. It is recommended to complete consultation and evidence collection before suing to shorten the time for fact-finding during the trial, and, if necessary, apply for property preservation to prevent the other party from transferring assets.

Q5: If the situation changes, what should I do specifically?

It is recommended to proceed in five steps: First, immediately notify the other party in writing to explain the changed facts and attach preliminary evidence, expressing the willingness to renegotiate; Second, propose specific solutions for price adjustment, extension of the performance period, or changes in the performance method, and keep all communication records throughout the process; Third, entrust lawyers or professionals to fix the evidence chain of "unforeseeable risks, non-commercial risks, and manifestly unfairness"; Fourth, if no agreement is reached, file a lawsuit within the statute of limitations to request the court or arbitration institution to modify or terminate the contract; Fifth, in the case of termination, simultaneously claim the return of the part already performed and fair settlement. It is crucial not to suspend performance without authorization, otherwise, you may be deemed to be in breach of contract yourself.

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·Beijing Hengluo Law Firm

Disclaimer: This article is compiled based on 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. If a dispute arises, please consult a practicing lawyer in a timely manner.