At present, the existence of unreasonable contractual terms in civil, commercial, and consumer contracts is becoming increasingly common. A lack of understanding of legal regulations governing the amendment of contractual terms may adversely affect one’s rights and interests. Below, NPLAW accompanies Clients in exploring both the current situation and the applicable legal framework concerning requests for amendment of unreasonable contractual terms.
At present, the existence of unreasonable contractual terms in civil, commercial, and consumer contracts is becoming increasingly common. A lack of understanding of legal regulations governing the amendment of contractual terms may adversely affect one’s rights and interests. Below, NPLAW accompanies Clients in exploring both the current situation and the applicable legal framework concerning requests for amendment of unreasonable contractual terms.
I. Common misconceptions regarding requests for amendment of unreasonable terms
A request to amend unreasonable contractual terms is a right of the affected party upon identifying provisions that violate principles of fairness. Such a mechanism is intended to protect the rights and interests of parties in civil contractual relationships. However, it is often misconstrued as permitting unilateral modification of contracts without mutual consent. Many assume that once a disadvantageous term is identified, it may be immediately altered at will.
Another common mistake is disregarding the requirement of written form when requesting amendments to unreasonable terms. Parties often believe that oral agreements are sufficient to modify the content of a duly executed contract.
II. Understanding requests for amendment of unreasonable terms
1. Must requests for amendment be made in writing, or can they be oral?
The form of a request for amendment must comply with the form of the original contract (Clause 3, Article 421 of the Civil Code 2015).
Where the original contract is in writing, any amendment must likewise be made in writing. Oral agreements are only applicable where the original contract does not require a specific written form. However, to minimize future disputes, amendment requests should be documented in writing and duly signed.
2. Does a customer have the right to suspend contract performance while requesting amendment?
A customer does not have the right to unilaterally suspend contract performance solely on the basis of requesting amendment of unreasonable terms, unless such right has been agreed upon in advance.
Pursuant to Article 308 of the Commercial Law 2005, suspension is only permitted in the following cases:
- The other party commits a serious breach of obligations;
- The other party fails to implement agreed security measures;
- Other cases as prescribed by law.
Requests under Article 420 of the Civil Code 2015 do not fall within these grounds. Therefore, unilateral suspension may constitute a breach of contract and lead to liability for damages under Article 360 of the Civil Code 2015. Only where the other party unreasonably refuses to negotiate and causes serious damage, such conduct may be considered a breach justifying suspension, and even then, immediate written notice is required. Accordingly, during the amendment process, parties must continue to perform their obligations until a new agreement is reached or a court decision is issued.
III. Legal provisions governing requests for amendment of unreasonable terms
1. Can an amendment request be accepted where the term violates a statutory prohibition?
A request for amendment of an unreasonable term is valid where the term violates a statutory prohibition under Article 123 of the Civil Code 2015.
In such cases, the term may be declared null and void without the need for amendment. The court may intervene to amend or terminate the contract where necessary.
2. Do amendment requests affect obligations already performed?
Generally, requests for amendment do not affect obligations already performed by the parties, unless the amended terms expressly address previously fulfilled obligations or provide for retroactive effect. In most cases, parties remain bound by obligations performed under the original terms.
3. Can damages be claimed if the counterparty unreasonably refuses the amendment request?
A party may claim damages where the counterparty’s unreasonable refusal causes loss, according to Article 360 of the Civil Code 2015 on liability for breach of obligations. However, the claimant must prove that the refusal was unreasonable and resulted in actual damage. Under Article 302 of the Commercial Law 2005, compensable damages include both direct losses and loss of expected benefits.
IV. Questions regarding amendment of unreasonable terms
1. What are the legal consequences of requesting amendment of unreasonable terms?
The legal consequence is that parties are required to renegotiate to ensure fairness, or in some cases, the contract may be terminated according to Article 422 of the Civil Code 2015. If agreement is reached, the contract is amended and continues to be performed.
Where negotiations fail, a party may request court intervention to amend the contract or to terminate it. The court will only amend the contract where termination would cause greater damage than the cost of continued performance under amended terms.
2. In the absence of a clear agreement on the terms, can requesting an unreasonable amendment lead to legal action?
If amendment requests are refused, parties may pursue further negotiation or mediation. If unsuccessful, disputes may be referred to commercial arbitration where the contract contains an arbitration clause (Article 317 of the Commercial Law 2005), or to a competent People’s Court to request declaration of invalidity, amendment, or termination of the contract.
The affected party may also claim damages upon proving actual loss caused by the refusal (Article 360 of the Civil Code 2015).
3. Can the requesting party be required to prove the amendment request?
The requesting party must substantiate the grounds for amendment under Clause 1, Article 420 of the Civil Code 2015 by demonstrating a fundamental change in circumstances, including:
- The change arises from objective causes occurring after contract conclusion;
- Such change could not have been foreseen at the time of contract execution;
- The change is so substantial that the contract would not have been concluded, or would have been concluded with materially different terms;
- Continued performance without amendment would cause serious damage to one party;
- The affected party has taken all reasonable measures within its capacity to prevent or mitigate adverse impacts but without success.
Providing such justification is a critical legal basis for the acceptance of amendment requests.
4. What should be done if one party refuses the amendment request?
In such cases, the parties should continue negotiations or pursue mediation. If unsuccessful, arbitration may be invoked where applicable, or the affected party may initiate legal proceedings before a competent court.
5. Where can disputes regarding amendment requests be resolved?
Disputes may be resolved before the courts (including business and commercial disputes under Article 30 of the Civil Procedure Code 2015).
The court may only decide to amend a contract where termination would result in greater damage than continued performance under amended terms.
The law allows parties to select appropriate dispute resolution methods based on the nature of the dispute (Article 317 of the Commercial Law 2005). Parties may negotiate directly without state intervention, seek mediation through grassroots mediation bodies, or refer disputes to arbitration centers where an arbitration clause exists.
V. Are you seeking a reputable legal expert for assistance with amendment of unreasonable contractual terms?
Legal advisory services relating to amendment of unreasonable contractual terms may assist Clients in:
- Advising on current legal regulations concerning contract amendment, supplementation, and fundamental changes in circumstances;
- Reviewing and evaluating contracts to identify unreasonable or unlawful provisions;
- Advising on and drafting formal requests for amendment negotiations, records of unreasonable refusal, and legal submissions to request court amendment or declaration of invalidity under the Civil Code 2015;
- Representing clients in negotiations, mediation, arbitration, or court proceedings to protect their legitimate rights and interests.
If you have any questions or require legal assistance regarding amendment of unreasonable contractual terms, please contact NPLAW. Our experienced team of lawyers is ready to provide comprehensive, prompt, and effective advisory and legal support.
