Article 7: Where, after the reservation contract takes effect, one of the parties refuses to conclude this contract or violates the principle of good faith when negotiating and concluding this contract, resulting in the failure to conclude this contract, the people's court shall find that the party has not performed the obligations agreed upon in the reservation contract.
The people's court shall comprehensively consider factors such as whether the conditions put forward by the party during the negotiation clearly deviate from the content of the reservation contract and whether reasonable efforts have been made to conduct the negotiation.
【Purpose of the Article】
This article is about the determination of breach of the reservation contract.
【Overview of Provisions】
The reason why the parties enter into an advance contract first instead of directly entering into this contract is that on the one hand, the parties want to fix the phased negotiation results and give them legally binding force, and on the other hand, they want to leave the contents that cannot be agreed upon for further negotiations in the future, so as to retain the decision-making power on whether to finally complete the transaction. Since the parties have the right to make decisions on whether to advance the transaction to the conclusion of the contract, how to determine whether the parties have breached the reservation contract is also one of the problems that are difficult to solve in practice. We believe that if the parties expressly refuse to conclude this contract or fail to conclude this contract due to their breach of good faith when negotiating and concluding this contract, it is a breach of the reservation contract and should bear the liability for breach of contract for breach of contract. As to how to determine whether one of the parties violated the principle of good faith when negotiating and concluded this contract, resulting in the failure to conclude this contract, it should comprehensively consider whether the conditions put forward by the parties during the negotiation and conclusion of this contract clearly deviate from the content of the reservation contract and whether reasonable efforts have been made to negotiate.
【Controversial Views】
In practice, after entering into a reservation contract, the parties often refuse to sign the contract on the grounds that they cannot reach an agreement on the content of the contract. In this case, is there a breach of the reservation contract by one of the parties? In this regard, one view is that the determination of breach of the reservation contract must be based on the premise that it can be attributed to one of the parties, since the reservation contract only stipulates that the contract will be concluded within a certain period of time in the future, and the conclusion of the contract is still subject to the consensus of the parties, and the parties cannot reach a consensus on the content that has not yet reached an agreement, it should be determined that the contract is not established and cannot be attributed to the parties, so neither party should be deemed to have breached the contract. Another view was that the advance contract was entered into for the purpose of entering into the contract, and therefore a breach of the advance contract should be considered as long as the contract had not been concluded. We believe that there are many reasons why the parties are still unable to reach an agreement on entering into this contract after the conclusion of the reservation contract, and if both parties negotiate in good faith but fail to reach an agreement, it should not be considered as a breach of the reservation contract; However, if one party violates the principle of good faith when negotiating and concludes this contract, resulting in the failure to conclude this contract, it shall be liable for breach of contract for breach of the reservation contract.
[Understanding and Application]
Since the parties still retain the right to make decisions on whether to finally complete the transaction after entering into the pre-contract contract, how to determine whether the parties are liable for breach of the pre-contract has become an urgent problem to be solved. In practice, there are two situations in which a party violates a reservation contract: one is to expressly refuse to sign the contract or to express its refusal to sign the contract (e.g., the house has been sold to a third party); The second is the refusal to sign this contract on the grounds that the two parties cannot reach an agreement on the content of a certain contract. In the first case, it is easier to determine whether the parties' conduct violates the reservation contract, but in the second case, it is difficult to determine whether the parties' refusal to enter into the contract on the grounds that they cannot agree on the contents of a contract is an excuse or a fact. To this end, this article stipulates that if one of the parties refuses to conclude the contract or fails to conclude the contract due to the failure to conclude the contract due to the breach of good faith when negotiating and concluding the contract, the people's court shall determine that the party has not performed the obligations stipulated in the contract and shall bear the liability for breach of contract.
It is generally believed that after signing the reservation contract, although the parties retain the right to make decisions on whether to finalize the transaction, they also have the obligation to negotiate in good faith, otherwise the conclusion of the reservation contract is meaningless. The question is, how to determine whether the parties negotiated in good faith when entering into this contract? Obviously, even if there is no advance contract, the parties must follow the principle of good faith in the process of negotiating and concluding the contract, otherwise they will bear the liability for negligence in contracting in accordance with Article 500 of the Civil Code. Unlike pre-contractual obligations, which are usually statutory negative obligations, in the context of the parties' conclusion of an advance contract, the parties also have a positive obligation to facilitate the conclusion of the contract. Therefore, the criterion for judging whether the parties negotiated in good faith should be whether the parties have made reasonable efforts to facilitate the conclusion of the contract.
How to determine whether the parties have made reasonable efforts to facilitate the conclusion of this contract? In our view, the key to examining whether the parties have made reasonable efforts to facilitate the conclusion of this contract is to see whether the conditions put forward by the parties in the process of negotiating and concluding this contract are reasonable. If the conditions proposed by the parties are unreasonable, resulting in the failure to conclude this contract, it can be determined that the parties have failed to fulfill their obligation to negotiate in good faith, which constitutes a breach of the reservation contract. How to judge whether the conditions proposed by the parties are reasonable? In our view, the main thing is to see whether the condition clearly deviates from the content of the reservation contract. Of course, the content of the reservation contract mentioned here includes not only the agreement that the parties have expressly made on the content of this contract in the reservation contract, but also the content that can be obtained according to the contract interpretation and the rules for filling the loopholes in the contract. If the conditions proposed by the parties clearly deviate from the provisions of the reservation contract or are obviously inconsistent with the content obtained in accordance with the contract interpretation and the rules for filling the loopholes in the contract, it can be determined that the parties have failed to make reasonable efforts to promote the conclusion of the contract, which violates the obligation to negotiate in good faith.
As mentioned above, the reservation contract should have the requirements for the formation of the contract, so the content should be specifically determined. From a practical point of view, although some reservation contracts are not as detailed and detailed as the content of this contract, they should also include the parties and the subject matter of this contract; Some of the reservation contracts even make more detailed provisions on the content of the future contract. In this context, in the process of negotiating and concluding this contract, the parties cannot deviate from the agreement reached in the advance contract. In addition, even if the parties agree in the advance contract that further negotiations are required at the time of conclusion of the contract on certain contents, the conditions put forward by the parties in the process of negotiating and concluding the contract cannot clearly deviate from the content already established in the advance contract. For example, the tentative price set by the parties in the reservation contract for the sale and purchase of commercial housing is 6,000 yuan per square meter, but when entering into the contract for the sale and purchase of commercial housing, Since the price of the house soared to 12,000 yuan per square meter, the developer's claim to conclude the contract for the sale and purchase of commercial housing at the market price is a clear deviation from the agreement of the reservation contract, because although the reservation contract clearly states that the price is tentative, it also delineates a general price range for the conclusion of the contract, and if the parties seriously deviate from this price range when negotiating and concluding the contract, it should naturally be deemed that the contract has not been propelled without reasonable efforts. Think about it, if the tentative price agreed in the reservation contract is not taken into account, and the market price at the time of the conclusion of the contract is concluded, what is the significance of the parties entering into the reservation contract? Of course, if the parties do not agree on the price of this contract in the reservation contract, it should be understood that the parties use the market price or the government-guided price as the price of this contract. In this case, if the quotation of one of the parties clearly deviates from the market price or the government's guide price, it should also be deemed to be a violation of the obligation to negotiate in good faith.
It is worth noting that for the content that is not covered by the parties in the advance contract, it is naturally impossible to judge whether the parties have made every effort to promote the obligation to conclude the contract on the basis of the content agreed in the advance contract. In this case, it is necessary to judge whether the conditions proposed by the parties are reasonable on the basis of the content determined in accordance with the contract interpretation and the rules for filling the loopholes in the contract. This is because, although the purpose of the parties to conclude the advance contract is to exclude the determination of the content of the contract directly through the contract interpretation and the rules for filling the loopholes in the contract without consultation between the parties, the content determined through the rules of contract interpretation and filling the loopholes in the contract is after all a relatively fair content, and although it may not be completely in line with the wishes of the parties, it also delineates a reasonable scope for the parties to negotiate and conclude the contract. If the conditions put forward by the parties at the time of negotiation and conclusion of this contract are obviously inconsistent with those determined in accordance with the rules on contract interpretation and filling of contract loopholes, the parties shall be deemed to have failed to make reasonable efforts to facilitate the conclusion of this contract. For example, if the parties have not agreed on the price in the reservation contract, and the agreement on the price cannot be obtained through the interpretation of the contract, and in the process of negotiating and concluding this contract, if one party proposes to make a price 30% more than the market price as a condition for entering into this contract, it can be determined that the party has failed to make reasonable efforts to promote the conclusion of this contract, and has violated the obligation of the reservation contract to conclude this contract, and shall bear the corresponding liability for breach of contract. Of course, although the price proposed by some parties is higher than the market price, it cannot be determined that the parties have acted in good faith in the process of negotiating and concluding this contract, because since it is a negotiation, bargaining should be allowed, and the price quoted appropriately higher than the market price is also the premise and basis of bargaining. However, if the offer is not only higher than the market price, but the parties also refuse to bargain, it may be found that the parties have not made reasonable efforts to procure the conclusion of the contract.
In short, although the parties still enjoy the right to make decisions on whether to finally complete the transaction after the conclusion of the pre-contract contract, they should still make reasonable efforts to facilitate the conclusion of the contract when negotiating and concluding the contract, otherwise, it can be determined that the parties have violated the obligation to negotiate in good faith and should bear the liability for breach of contract for breach of the pre-contract contract. Only if the contract cannot be concluded due to the failure to reach an agreement on the pending matters after good faith negotiation, can the parties be deemed not to have breached the reservation contract. In accordance with the provisions of this Article, the people's court shall comprehensively consider factors such as whether the conditions put forward by the party during the negotiation clearly deviate from the content of the reservation contract and whether reasonable efforts have been made to conduct the negotiation. For example, in the case of Dai Moufei v. Huaxin Company, a dispute over the deposit of a commercial housing purchase agreement, the effective judgment held that: "The purpose of entering into an advance contract is to specify part of the terms of the contract before the conclusion of this contract, to fix the unanimous expression of intent of both parties in the form of contract terms, and to stipulate other terms for subsequent negotiation until the conclusion of this contract." The significance of the reservation contract is to create conditions for the continuation of negotiations under the principle of fairness and good faith, and finally to conclude a formal and well-established contract. Therefore, if one party violates the principles of fairness and good faith, or denies the settled clauses in the reservation contract, or puts forward unreasonable conditions that are unacceptable to the other party, or refuses to continue the negotiation in order to conclude this agreement, it will constitute a breach of the reservation contract and shall bear the liability for breach of contract stipulated in the reservation contract. On the other hand, if the two parties continue to negotiate under the principle of fairness and good faith, but only based on their respective interests, they cannot reach an agreement on other terms, resulting in the conclusion of this agreement, it is a cause not attributable to both parties and is not within the circumstances of breach of contract referred to in the reservation contract. In this case, the reservation contract shall be terminated and the deposit paid shall be returned. ”
Of course, if force majeure occurs after the conclusion of the reservation contract, the parties can request to terminate the contract in accordance with the provisions of Article 563, Paragraph 1, Item 1 of the Civil Code, and do not need to bear the liability for breach of contract. In addition, if there is a change of circumstances that makes it manifestly unfair to conclude this contract in accordance with the pre-contract contract, the parties may also request to modify or terminate the pre-contract in accordance with Article 533 of the Civil Code. For example, if the aforesaid parties tentatively set a price of RMB 6,000 per square meter in the reservation contract, but the price skyrocketed to RMB 12,000 per square meter at the time of negotiation and conclusion of the contract, if it can be determined that the basic conditions of the reservation contract have indeed undergone major changes that were unforeseeable by the parties at the time of entering into the reservation contract and are not commercial risks, it is obviously unfair to the parties to continue to perform the reservation contract, and the parties cannot reach an agreement on the price issue through renegotiation. You can request an adjustment of the tentative price in the reservation contract or request to cancel the reservation contract to avoid liability for breach of contract due to breach of the reservation contract. In the case of a dispute over a commercial housing pre-sale contract between Zhang and Xuzhou Tongli Chuangzhan Real Estate Co., Ltd., the effective judgment also held that: "In this case, after the plaintiff and the defendant signed the commercial housing reservation form, the construction date of the commercial housing was delayed due to the demolition and resettlement of the land used for the construction of the commercial housing. The change in area and the increase in construction cost should be an unpredictable circumstance, and should not be regarded as a deliberate breach of the reservation contract by the defendant Tongli Development Company. ”
[Practical issues]
It is a relatively difficult issue to determine whether the parties are liable for breach of contract for breach of contract if the contract is not concluded. It is generally believed that even if there is an advance contract, the conclusion of this contract still requires the parties to express their intentions. Of course, the parties should recognize and abide by the provisions of the reservation contract on the contents of this contract when entering into this contract, but the parties still need to reach an agreement on the terms that have not been agreed in the reservation contract. However, although the parties have the opportunity to negotiate further, the parties still have the obligation to negotiate in good faith due to the existence of a reservation contract. If the parties violate the principle of good faith when negotiating and concluding this contract, it shall be deemed to constitute a breach of the reservation contract. Article 4 of the Judicial Interpretation of the Contract for the Sale and Purchase of Commodity Housing stipulates that: "If the seller accepts a deposit from the buyer as a guarantee for the conclusion of the contract for the sale and purchase of a commodity house by means of subscription, order, reservation, etc., if it fails to conclude the contract for the sale and purchase of the commodity house due to the reasons of one of the parties, it shall be handled in accordance with the provisions of the law on the deposit; If the contract for the sale and purchase of commercial housing cannot be concluded due to reasons not attributable to both parties, the seller shall return the deposit to the buyer. It can be seen that the liability for breach of contract by one of the parties for breach of the reservation contract must be premised on the failure to conclude the contract due to the cause attributable to the party. To determine whether a party's conduct is imputable, it must be based on whether there is an act that violates the principle of good faith.
In the event that the parties are unable to conclude this contract after good faith negotiation, the parties shall not be deemed to have breached the contract, and therefore, either party may request to terminate the reservation contract.