Should I be held responsible for the breach of contract caused by force majeure?

If the contract cannot be performed due to force majeure, the liability shall be exempted in part or in whole according to the influence of force majeure, unless otherwise stipulated by law.

1. What is force majeure?

Article 153 "Force Majeure" in the General Principles of Civil Law of People's Republic of China (PRC) refers to the unforeseeable, unavoidable and insurmountable objective situation.

1. Characteristics of Force Majeure

Unforeseen, inevitable and insurmountable.

(1) Unforeseen

That is, people's will cannot be transferred, and the parties can't foresee the occurrence of events at all. In case of earthquake and house collapse, the transaction cannot continue. However, if the parties can foresee it through some channels, it cannot be considered as force majeure. If the transport ship did not listen to the weather forecast before going out to sea, and the goods were damaged due to the storm at sea, the parties concerned could have made predictions and judgments through the weather forecast, and the parties concerned shall bear the losses.

(2) Inevitable

That is, it is impossible to take task measures to avoid it. Even if an unforeseeable disaster happens, it is not force majeure if the consequences can be avoided. If the ship encounters a storm at sea, there is a safe haven nearby, but it is also responsible for the damage to the goods if it does not go in.

(3) it cannot be overcome

This is the last feature of force majeure. It means that the parties can't overcome the consequences of the incident, that is, there is no way to stop it. This is force majeure.

Government or social behavior, such as policy change, alternation of state power, etc.

2. The scope of force majeure

(1) Natural disasters, such as earthquakes, typhoons and tsunamis;

(2) government actions, such as expropriation and requisition;

(3) Social abnormal events.

Second, are you liable for breach of contract caused by force majeure?

Article 107 of the General Principles of Civil Law of People's Republic of China (PRC): If the contract cannot be performed or damage is caused to others due to force majeure, it shall not bear civil liability.

Article 117 of the Contract Law of People's Republic of China (PRC): If the contract cannot be performed due to force majeure, the liability shall be exempted in part or in whole according to the influence of force majeure, unless otherwise stipulated by law. If force majeure occurs after the delay in performance, the parties concerned cannot be exempted from their responsibilities.

Case:

Mr. Wang of Beijing sold a commercial house under his name before March 17, 2065438, and was going to use the house payment as the down payment to buy a house. After the price was settled, Mr. Wang signed a purchase contract with the owner. On March 26th, Beijing issued the "Announcement on Further Strengthening the Management of Commercial and Office Projects", clarifying that commercial projects under construction and on sale are prohibited from being sold to individuals. Although the commercial projects that have been sold can be sold to individuals when they are listed and traded again, buyers must meet the qualifications of no house, tax payment or social security for five years.

The person who bought the commercial house under Mr. Wang's name did not have the qualification to buy a house, so he proposed to terminate the contract. Mr. Wang can't pay the down payment because he has no money to sell the house. The owner of Long Ze thinks that Mr. Wang has breached the contract and demands him to pay the penalty.

The lawyer explained:

If the purchaser loses the qualification to purchase a house due to policy reasons, so that he can't continue to perform the purchase agreement, it can usually be considered as a "change of circumstances" and does not bear the unilateral liability for breach of contract. However, if the purchaser is still qualified to purchase a house, just because the down payment of the loan is increased and the loan term is shortened after the implementation of the policy, it does not necessarily lead to the purchaser's inability to perform the contract, and it cannot be simply recognized as force majeure or a change of situation.

The general principle is that if the implementation of the New Deal has a significant impact on the performance ability of buyers, and buyers demand to cancel the contract because the New Deal can't handle mortgage loans as expected, they can generally support it, and the seller will refund the deposit and the paid purchase price. However, if the seller can prove that the buyer has full performance ability, the buyer's claim to terminate the contract based on the new housing policy cannot be established.

In case of default risk due to property market policy changes, both parties shall do their utmost to take all remedial measures to minimize the losses and notify each other in the agreed way within the time limit stipulated in the contract.

Due to the characteristics of force majeure, judges usually need to judge whether the breach of contract constitutes force majeure before making a final judgment. Because of the complexity of the case, the judge has personal discretion, and the judgment results are different under different circumstances.

Source: General Principles of Civil Law of People's Republic of China (PRC) and Contract Law of People's Republic of China (PRC).

Yu Xue, Legal Department of Beijing Chain Home, also contributed to this article.

This content only applies to Beijing.