[Direct answer]In the Beijing area, the entrustment contract is based on a personal trust relationship, and both the principal and the agent enjoy the "arbitrary right of rescission", which means they can terminate the contract at any time. However, rescission does not mean zero liability. According to Article 933 of the Civil Code of the People's Republic of China, if the termination of the contract causes losses to the other party, except for reasons not attributable to that party, the principal of a gratuitous entrustment contract shall compensate the agent for direct losses, and the terminating party of a paid entrustment contract shall compensate the other party for direct losses and foreseeable benefits. The terminating party of a gratuitous entrustment contract shall only bear liability in the case of intentional or gross negligence. The rescission shall be notified to the other party, and the notice shall take effect upon its receipt. It is recommended to evaluate the scope of loss compensation and leave written records before rescinding the contract. For more details, please refer to the following link:Legal services for corporate commercial and contract disputes.

1. Problem background and typical scenarios

Power of attorney contracts are widely used in litigation representation, investment management, asset holding, and service provision. Typical scenarios include: the principal withdrawing a lawyer or agent due to mistrust; the agent unilaterally terminating the contract due to a dispute over compensation; and disputes over whether the agent can refuse to perform the task if instructed not to do so, leading to claims for compensation. Many people mistakenly believe that the power of attorney can be revoked at will without liability, or conversely, that once the power of attorney is granted, they are "bound" and cannot withdraw. In fact, the right to revoke the power of attorney is a statutory right, but it is accompanied by the obligation to compensate for losses. In cases involving investment holding disputes, it can be combined with other legal provisions to resolve the dispute.\nFinancial capital and cross-border legal services involving foreign affairsHandle it.

II. Key points of contention

There are three key points of contention. Firstly, the boundaries of the right to terminate the contract at will: whether any entrusted contract can be terminated at any time, and how to identify exceptional circumstances. Secondly, the scope of compensation for losses: the liability for compensation differs between paid and unpaid entrusted contracts, and whether the expected benefits are supported and how direct losses are defined. Thirdly, the notice of termination and its effectiveness: the method of notification, the point of arrival, and the handling of the part that has already been performed. For cases involving cross-regional enforcement, reference can be made to relevant provisions.Creditor-debtor relations and enforcement case servicesThe repayment path of the loan.

III. Professional analysis by Hengluo Lawyers

Taking the second-instance trial of a trust contract dispute handled by our firm as an example, the parties, upon the introduction of others, transferred 500,000 yuan to a private equity fund employee to subscribe for the new third board's targeted equity issuance. Due to not meeting the accredited investor qualifications, the other party promised to contact the nominal holder on behalf of the client. After losing the civil litigation and the first-instance trial of the trust contract, the client hired a lawyer to appeal. In terms of timeline, the client transferred 500,000 yuan in May 2015, but the stocks could not be liquidated over the past ten years. The nominal holders were successively accused of acting on behalf of different entities without any basis. After losing the first-instance trial, the client hired a lawyer to appeal. In terms of amount, the investment involved 500,000 yuan and interest. In terms of claims, the client believed that a de facto trust relationship had been formed with the other party, and that the other party had unilaterally changed the nominal holder without completing the trust matters, so the funds should be returned. The other party argued that it was just a friend's help and there was no trust relationship. After Henglu Law Firm intervened, we sorted out the other party's self-admission of acting as a nominal holder in multiple written statements, and combined WeChat and transfer receipts to build a chain of evidence, confirming that the other party had failed to fulfill its trust obligations and breached the contract by unilaterally changing the nominal holder. The second-instance court adopted our opinion and ruled to recover the investment of 500,000 yuan and interest. 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

The core basis is Article 919 (definition of the entrustment contract) and Article 933 (arbitrary right of termination and compensation for losses of the principal and the trustee: if the termination causes losses to the other party, the non-remunerated entrustment shall compensate for the direct losses, and the remunerated entrustment shall compensate for the direct losses and the expected benefits; if the terminating party acts with intent or gross negligence, the non-remunerated entrustment shall also bear responsibility) of the Civil Code of the People's Republic of China (effective on January 1, 2021), Article 928 (the principal's obligation to pay remuneration) and Article 565 (effectiveness of the notice of termination). Practical suggestions: before termination, calculate the expenses already performed and the losses of the other party; exercise caution in exercising the right of termination in a remunerated entrustment to avoid bearing the responsibility for the expected benefits; avoid intentional and gross negligence in a non-remunerated entrustment; send a written notice of termination and keep the record of its delivery. For cases involving agency holding structures, relevant provisions can be combined with the above-mentioned provisions for reference.Intellectual property protection and corporate legal servicesClarify the legal relationship.

5. Henglu Law Firm's Reminder

The entrustment contract can be terminated at any time, but "at will" does not mean "without liability". The first step is to determine whether the contract is paid or unpaid, and to define the boundaries of compensation liability; the second step is to calculate the other party's direct losses and even potential benefits before terminating the contract, and to keep the expense vouchers; the third step is to terminate the contract in writing and specify the settlement of the part already performed and the return of materials; the fourth step is to defend against the other party's claims based on the actual scope of losses and the degree of fault. Never hide information or refuse to refund expenses just because trust has broken down, nor assume that terminating the contract at any time necessarily exempts you from all liability. If you need professional support, you can seek help from a professional organization or lawyer.Special services and other case-related servicesEvaluate the plan.

VI. Frequently Asked Questions

Q1: If I terminate the agency contract at any time, will I be required to pay a large amount of compensation?

The exemption from liability depends on whether the entrustment is paid or not and the degree of fault, rather than the result commitment. According to Article 933 of the Civil Code, the party who terminates the paid entrustment shall compensate the other party for direct losses and foreseeable benefits; the party who terminates the unpaid entrustment shall only compensate for direct losses, and the terminating party shall bear responsibility only if there is intentional or gross negligence. If the termination is not attributable to you (such as the trustee's fundamental breach of contract), you do not need to compensate. It is recommended to calculate the expenses already performed and the foreseeable losses of the other party before terminating the contract, to defend against improper claims according to the facts, and not to refuse to compensate all the losses on the grounds of "terminating the contract at any time", nor to believe in the misinterpretation of "zero liability".

Q2: To terminate the agency contract, what evidence do I need to prepare?

The core evidence includes: the entrustment contract and the remuneration agreement (proving whether the entrustment is paid or unpaid, and the entrusted matters); the vouchers and results of the performed part (expense bills, work records); the notice of termination issued by you and the delivery receipt; the counter-evidence of the other party's losses (proving that the losses are not true or unforeseeable); and the records of the trustee's unauthorized termination or breach of contract. The organization of the evidence revolves around "the establishment of the right to arbitrary termination - the scope of losses - the degree of fault". If there are missing materials, WeChat records and transfer records can be used to supplement them. Never lose the opportunity to defend yourself just because the evidence is weak.

Q3: For disputes over the termination of a power of attorney contract, how much are the attorney's fees and litigation costs?

The litigation fees shall be calculated in accordance with the "Measures for the Payment of Litigation Costs" based on the amount of the litigation request (such as the refund of expenses, compensation for losses) and accumulated in stages, to be borne by the losing party; for simple confirmation of termination, the fees shall be calculated based on the amount of the claim. The attorney's fees shall be charged on a per-case basis or based on a percentage of the amount of the claim, subject to the specific provisions of the entrustment contract. There is no uniform standard, and the risk-sharing arrangement is subject to a percentage cap. It is recommended to clarify the fees before entrusting the case, and for small-value matters, prioritize consultation and litigation for overall disputes to avoid cost inversion.

Q4: How long does it usually take for the termination of a commission contract to take effect or yield results?

The notice of termination takes effect upon its receipt by the other party, without the need for court adjudication; the part that has been performed enters the settlement stage. If the other party files a lawsuit in objection, the first-instance ordinary procedure takes six months and the summary procedure takes three months, and the appeal to the second instance generally takes three months; the enforcement of the refund involved after the judgment takes effect shall be dealt with separately. Overall, if there is no dispute, the notice takes effect upon its receipt and the matter is concluded; if there is a dispute, it often takes several months from the termination to the final determination. It is recommended to specify the settlement and the arrangement for the return of materials in the notice to shorten the dispute cycle.

Q5: I want to unilaterally terminate a power of attorney contract. What should I do specifically?

It is recommended to follow four steps: First, confirm whether the entrustment is paid or unpaid, and assess the boundaries of liability for compensation; Second, calculate the expenses already incurred and the foreseeable losses of the other party, and organize the expense vouchers; Third, draft a notice of termination, clarify the arrangements for terminating the contract according to the right of arbitrary termination, settling the outstanding part of the contract, and returning the materials, and deliver it in writing and keep the receipt; Fourth, if the other party makes a claim or refuses to return the materials, negotiate the scope of losses and faults in accordance with the facts, and if no agreement is reached, litigate. Throughout the process, keep the correspondence and delivery records, and if necessary, entrust a lawyer to evaluate the compensation and handle the handover.

The above answer is based on the judicial practice in Beijing. The adjudicative opinions in other provinces or cities may vary. For specific cases, please refer to the local rules and evidence situations.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Corporate commercial legal services·Attorney Xiong Binrong·Beijing Hengluo 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 you encounter disputes, please consult a practicing lawyer in time.