[Direct answer]In the Beijing area, the original price shall remain valid—fixed-price contracts are binding on both parties. The supplier has no legal basis to unilaterally raise prices, and if the buyer refuses, the supplier must still supply at the original price. Any suspension of supply would constitute a breach of contract. What needs to be clearly distinguished here is "commercial risk" and "change of circumstances": normal price fluctuations (in public precedents, a price increase of about 30% is considered a foreseeable commercial risk) do not constitute a justification for price increases. Only major changes that were unforeseeable at the time of contracting and where continued performance would be manifestly unfair can justify a request for renegotiation or even a court-ordered modification or termination of the contract. The legitimacy of a price increase must be determined by the court, not by the supplier.

I. Problem Background and Typical Scenarios

The raw materials have skyrocketed overnight, and the supplier has sent a "price adjustment notice": if you don't accept it, we will cut off the supply; the buyer's production line is waiting to start production, but if they accept the price increase contract, their profits will be eaten up—the unilateral price increase notice tests not just emotions, but also a thorough understanding of the rules governing changes in the situation.

II. Key points of contention

First, the demarcation between commercial risks and changes in circumstances. Second, the procedural obligations of renegotiation. Third, the allocation of default risks after refusing price increases. Fourth, the preventive design of contract terms.

III. Professional analysis by Henglue Lawyers

The first layer: Comparing the two cases to clarify the dividing line: In one public case, the cable company applied for a price adjustment because the copper price rose from 6.987 yuan per ton at the bidding to 7.9 yuan per ton, but the request was rejected. The court held that the sharp rise in copper prices was a major change unforeseen at the time of contracting, and continuing to perform the contract at the original price would be clearly unfair to the supplier, constituting a change in circumstances—the epic fluctuation in raw materials exceeded normal forecasts, providing a legitimate basis for price adjustment. In another case, Company B claimed a change in circumstances and unilaterally terminated the contract due to the rise in choline chloride prices caused by the pandemic and power restrictions. The court held that the price increase of only about 30% was still a normal commercial fluctuation that the supplier could reasonably foresee, and did not constitute a change in circumstances, ruling that it was a breach of contract. Under the same rules, three variables—the magnitude of the price increase, the predictability, and industry practices—determine which side prevails. The legitimacy of the price increase is a conclusion reached by the court on a case-by-case basis, not self-evident through unilateral notifications. The second layer: Re-negotiation is a precondition: The exercise path of a change in circumstances is first to negotiate—the party adversely affected renegotiates with the other party, and if no agreement is reached within a reasonable period, the party may request the court or arbitration institution to modify or terminate the contract. Skipping the negotiation and suspending supply or unilaterally terminating the contract directly will result in liability for breach of contract even if the substantive elements of a change in circumstances are met. The "negotiating while supplying" approach is prudent, and keeping records of the negotiation (minutes of meetings, correspondence) lays the groundwork for future litigation. The third layer: The right to refuse price increases: If the buyer refuses the price increase, the supplier still has the contractual obligation to supply at the original price. Suspending or delaying supply constitutes a breach of contract, and the buyer may claim continued performance, damages for breach of contract, and compensation for losses (including the difference in price from purchasing from third parties). At the same time, be vigilant against reverse risks—if the supplier's claim of a change in circumstances is ultimately supported by the court, the party that insists on the original price may face the result of the contract being modified or terminated. A rational strategy is to participate in the negotiation and retain evidence (purchasing hedging arrangements, lock-in price agreements) to turn "refusal" into "reasoned and justified refusal". The fourth layer: Clause prevention is the best approach: Long-term supply contracts should embed price adjustment mechanisms (price adjustment formulas linked to raw material indices, thresholds and upper limits for price adjustment), pre-negotiation clauses, and clauses on damages for supply interruption and compensation for alternative purchases—the best solution to price increase disputes is written into the contract on the day of signing. Clause design should give both parties a fallback position in the face of price fluctuations, rather than allowing either party to hold the other hostage with "rise or not rise".

IV. Practical suggestions and legal basis

The first step is to send a written response to the price increase notice, stating that you do not accept the increase and request to continue fulfilling the contract. The second step is to document the evidence of the losses caused by the suspension of supply and the price difference between the alternative purchases. The third step is to participate in the renegotiation and keep a full record of the process. The fourth step is to sue for continued performance or compensation if the negotiations fail. The main legal basis: Articles 533, 509, and 577 of the Civil Code of the People's Republic of China, and the relevant provisions of the Interpretation of the General Provisions of the Contract Chapter of the Civil Code by the Supreme People's Court; the specific application shall be subject to the currently effective regulations.

5. Henglu Law Firm's Reminder

Three key points on price increases in supply contracts: Refusing to raise prices under fixed-price contracts is justified, and stopping supplies constitutes a breach of contract; a 30% price increase is considered a risk, while exponential price hikes may be deemed exceptional circumstances, with the court ultimately deciding the matter; incorporating a price adjustment formula into the contract ensures victory in price increase disputes on the signing date. Disputes involving price increases and changes in circumstances can be resolved through legal channels.Business and contract disputes in enterprisesThe service obtains an overall solution, which involves the integration of payment and the enforcement of breach of contract penalties.Creditor's rights and debts, and enforcementFor reference, you can refer to the section on the construction of an enterprise's compliance systemIntellectual property protection and corporate lawFor any questions regarding difficult situations, please feel free to consult us.Special servicesTeam.

VI. Frequently Asked Questions

Q1: Can suppliers raise prices just because the cost of raw materials has increased?

No. Both parties to a fixed-price contract are bound by it. Normal price fluctuations are a commercial risk, and there is no legal basis for either party to unilaterally raise the price.

Q2: What is the minimum increase that can be considered a change in circumstances?

There is no fixed ratio. In public judgments, an increase of about 30% is considered a foreseeable commercial risk. Only a sudden increase of several times that could not be foreseen at the time of contract signing may constitute a change of circumstances, which will be evaluated by the court on a case-by-case basis.

Q3: If the other party refuses to accept the price increase and cuts off supplies, what should I do?

The suspension of supply constitutes a breach of contract, and the party can claim the continuation of performance, the breach of contract penalty, and the loss of the difference in the price of alternative purchases. Evidence should include the fixed reminder and the proof of the losses.

Q4: Should I participate in the negotiation?

Yes. If the circumstances change, renegotiation is a prerequisite. Participating in the negotiation not only leaves evidence but also avoids losing points in the process. It's the most stable approach to supply goods while negotiating at the same time.

Q5: How to prevent price increases in long-term contracts?

The pricing formula incorporating the raw material index, the triggering threshold, the pre-negotiation process, and the compensation clauses for supply disruptions aim to replace the adversarial negotiation process with a more structured mechanism.

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.

VII. Related public cases (for reference only, not handled by our firm)

The following cases are all sourced from the official websites of courts at all levels, judicial authorities, and authoritative media, and are not related to the cases handled by our firm. They are provided solely for reference in understanding relevant adjudication rules and do not constitute opinions on specific cases.

[Case Number]The case number has not been made public.
[Trial Court]The People's Court of Pingyin County, Shandong Province (the second-instance judgment was upheld)
[Judicial Summary]After the Power Construction Company signed a fixed-price procurement contract with the Cable Company, the price of copper rose from 68,970 yuan per ton at the time of bidding to 79,000 yuan per ton. The Cable Company applied for a price adjustment, but the purchaser refused to negotiate and terminated the contract on the grounds of the supplier's late delivery, claiming more than 920,000 yuan in breach of contract penalties. The court held that the significant increase in copper prices constituted a major unforeseen change at the time of contract signing, and it would be unfair to continue to fulfill the contract at the original price. This constituted a change of circumstances, and the supplier had the right to request a price adjustment through negotiation. The purchaser's refusal to negotiate and its delayed notification leading to late delivery did not constitute a breach of contract on the supplier's part. The court ruled to dismiss all the purchaser's claims, and the appellate court upheld the original judgment. Key points: Under a fixed-price contract with a change of circumstances, the parties may negotiate an adjustment. The party refusing to negotiate may not unilaterally shift the risk to the other party.
[Source]The People's Daily Client (Special News Briefing Conference on Enterprise-Related Sales Contract Disputes of Pingyin County People's Court) (2025)

[Case Number]The case number has not been made public.
[Trial Court]The People's Court of Nanchang High-tech Industrial Development Zone
[Judicial Summary]Company B claimed that the price of choline chloride increased due to the pandemic and power and production restrictions, and therefore invoked a change of circumstances to unilaterally terminate the contract. The court held that: the contract price increase was only about 30%, which was still a price fluctuation that the supplier could reasonably foresee and was within the scope of normal commercial risks, and did not constitute a change of circumstances; Company B also failed to provide evidence to prove the specific impact of epidemic prevention and control measures on its performance and the fulfillment of its obligation to give timely notice. The court determined that Company B was in breach of contract and should compensate the purchaser for the price difference losses of over 540,000 yuan incurred when purchasing from a third party. Key points: Whether the price increase exceeds the scope of normal commercial risks is the key to distinguishing between a change of circumstances and a breach of contract, and the party claiming a change of circumstances bears the burden of proof.
[Source]The official website of the People's Court of Nanchang High-tech Industrial Development Zone published an article titled "Interpreting the Law through Cases: Is the Price Fluctuation of the Subject Matter During the Sales Process Due to a Change in Circumstances or Commercial Risk?" (2023-08).

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with evidence materials, to avoid missing the statutory time limit. →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.