In order to respond to the call of the Party and the government and actively participate in the battle of epidemic prevention and control, all lawyers of Gaopeng formulated an emergency service plan at the first time, and reported our work arrangements to our clients in a letter to clients, and reminded them of legal risks in the special period. At present, Beijing Gaopeng (Yangzhou and Taizhou) Law Firm has fully launched online remote office and continues to make every effort to provide professional and efficient legal services to clients. In the near future, the teams of Gaopeng Law Firm will closely cooperate with the epidemic prevention struggle, make full use of their professional advantages, adapt to the needs of the prevention and control situation, help our clients cope with various potential crises and risks, and publish a series of legal articles one after another, please pay attention to it

On January 20, 2020, the National Health Commission issued Announcement No. 1, listing pneumonia infected by the new coronavirus as a Class B infectious disease under the Law of the People's Republic of China on the Prevention and Control of Infectious Diseases, and taking disease prevention measures for Class A infectious diseases. In order to control the spread of the novel coronavirus epidemic, the central and local governments have adopted a series of measures including isolation, lockdown, traffic control, extension of the Spring Festival holiday, postponement of the resumption of work, etc., which is bound to have an impact on the performance of enterprises' contracts. In the face of this sudden epidemic, whether the contract will still be performed, whether the parties can claim to terminate or modify the contract, and how all parties share the responsibilities have become the key issues of concern for small and medium-sized enterprises.

1. Is the coronavirus pandemic a business risk?

Commercial risk refers to an objective economic phenomenon that brings opportunities or possibilities for profits or losses to commercial entities caused by various uncertainties in commercial activities. For example, fluctuations in market prices, fluctuations in prices, changes in the social, political, economic and cultural environment, and changes in consumer values can lead to commercial risks under the conditions of market economy. Business risk is inherent in engaging in business activities, and the pandemic is generally considered not a business risk.

2. Is the new crown epidemic a "force majeure" under the law?

Article 180 of the General Provisions of the Civil Law stipulates that "force majeure refers to objective circumstances that cannot be foreseen, avoided and overcome".

Article 117 of the Contract Law of the People's Republic of China stipulates that "if a person is unable to perform a contract due to force majeure, he shall be partially or completely exempted from liability according to the impact of force majeure, except as otherwise provided by law." If force majeure occurs after a party delays performance, it cannot be exempted from liability. "Force majeure" as used in this Law refers to objective circumstances that cannot be foreseen, avoided or overcome. ”

According to the above-mentioned legal provisions, it is clear that the coronavirus epidemic has the main characteristics of force majeure stipulated by law: unforeseeable, inevitable and insurmountable.

3. Is the new crown epidemic a "change of circumstances" under the law?

According to Article 26 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of < > of the Contract Law of the People's Republic of China (II), the following conditions must be met at the same time to apply the principle of change of circumstances: 1. It was unforeseeable at the time of the conclusion of the contract; 2. Non-commercial risks caused by non-force majeure; 3. The resulting change has reached a "significant" level.

The pandemic will indeed cause a significant impact on the rights and interests of some parties to the contract, in line with the application of the change of circumstances principle.

4. Is "force majeure" the same as "change of circumstances"?

Force majeure does not equal the principle of change of circumstances, and the similarity is that both were unforeseeable at the time of conclusion and both had a significant impact on the performance of the contract; However, the change of circumstances is relatively flexible, and the parties to the contract can claim to change the contract due to the impact of the epidemic. The outbreak of this epidemic has exceeded the SARS epidemic in 2003, and it can also be considered with reference to the relevant regulations at that time. According to the Notice of the Supreme People's Court on Doing a Good Job in the Relevant Trial and Enforcement Work of the People's Courts during the Prevention and Control of Infectious Atypical Pneumonia (abolished) and the relevant judgment documents of the Supreme People's Court during the SARS epidemic, contract disputes arising from the epidemic should be treated differently in two situations: the first is that if the purpose of the contract cannot be achieved due to the impact of the epidemic, it should be recognized as force majeure; In the second case, where the continued performance of the original contract due to the impact of the epidemic will have a significant impact on the rights and interests of one party, the principle of fairness may be applied according to the specific circumstances, and it is presumed that the relevant provisions of the change of circumstances apply in this case.

5. Situations that may occur in the performance of the contract due to the impact of the new crown epidemic

(1) Apply force majeure to request rescission of the contract or postponement of performance of contractual obligations

The parties may request to rescind the contract or postpone the performance of the contract on the grounds of force majeure. Under the above circumstances, the parties shall prove the nature and purpose of the contract, the performance of the parties, and the impact of force majeure events.

(2) Apply the principle of change of circumstances to request a change of contract

The coronavirus pandemic may result in significantly higher performance costs for some contracts. In such a case, if the parties continue to perform under the original contract, their interests will be clearly undermined. Therefore, where the parties can demonstrate that the cost of performance is substantially higher than before the outbreak of the epidemic, and that this increase is related to the outbreak, the parties to the contract may be required to share the additional costs.

During the epidemic, the merchants operating in the property ceased to operate in accordance with the prevention and control requirements of the government department, and the performance of the lease contract was affected. At this point, the parties may consider claiming rent reduction. At this time, the parties should fully prove that the leased purpose has been affected by the epidemic and to what extent it has been affected by the epidemic.

In addition, in the performance of contracts such as purchase and sale, contracting, etc., if the parties are the consignees, consideration may be given to refusing to accept goods from "epidemic areas", delaying the receipt of goods, or adding relevant quality inspection standards when receiving and accepting goods. In this case, the parties need to prove that according to the nature and quality standards of the goods, the epidemic has a significant impact on the quality of the goods, and the impact is sufficient to require rejection, delay in receipt or increase the relevant testing standards.

6. Legal advice on the performance of contracts by enterprises

According to Article 118 of the Contract Law of the People's Republic of China, if one of the parties is unable to perform the contract due to force majeure, it shall promptly notify the other party to mitigate the losses that may be caused to the other party, and shall provide proof within a reasonable period of time. Therefore, we make the following recommendations:

(1) Perform the obligation to notify the other party in a timely manner

If the contract cannot be performed due to the epidemic, the other party shall be notified in a timely manner (retaining written evidence such as notice) to mitigate the losses that may be caused to the other party. and communicate with the other party on the subsequent performance of the contract, and strive to form written documents such as supplementary agreements to avoid subsequent disputes.

(2) Issue a certificate of force majeure events and retain other relevant supporting documents

Regarding the issuance of certificates of force majeure events, notary offices in some regions can already handle them. If the enterprise is unable to perform the international trade contract as scheduled or unable to perform due to the impact of the epidemic, the enterprise can apply to the local CCPIT for relevant factual certificates.

In addition, in the process of negotiation with the counterparty to the contract, the parties should keep written materials such as correspondence, letters, chat records, and supporting documents for taking effective measures to avoid or reduce losses as much as possible after the epidemic incident, in case of emergency.

In summary, enterprises should carefully consider whether to terminate the contract or negotiate to change the contract before making a business decision. When you intend to terminate a contract due to the outbreak of the new crown epidemic, you should carefully consider whether the impact of the epidemic on the performance of the contract is to the extent that the purpose of the contract cannot be achieved, and make preparations such as negotiation and response to litigation. During the special period of epidemic prevention and control, enterprises should still follow the principle of good faith, deal with issues related to contract performance in a truth-seeking manner, and promote the normal performance of contracts as much as possible.

In this national war against the epidemic, we work together to overcome the difficulties and tide over the difficulties together.

(This article is translated by software translator for reference only.)