Real Estate Perspective... How to determine the right to terminate the buyer's contract in the case of late delivery of real estate development enterprises?

Published:

2022-11-24

Presentation of 1. issues Under the mode of commercial housing presale system and presale capital supervision system, real estate development enterprises (hereinafter referred to as "development enterprises") implement the "high turnover" strategy, through continuous land acquisition and new projects, in order to achieve rapid return of funds. In recent years, under the macroeconomic impact of malaise and depression, the slowdown in growth and tight liquidity have led to the inability of some development companies to make up for the funding gap, which in turn leads to construction stagnation, failure to deliver on schedule, and even unfinished projects and failure to deliver presale commercial houses, thus violating the main contractual obligations of the Commercial Housing Sales Contract (hereinafter referred to as the "sales contract") on "delivery". At this time, the buyer claims the right in addition to liquidated damages, often will also require the termination of the contract, then its right of discharge and the specific exercise method, exercise period how to determine? What is the judicial value orientation of our country? 2. Analysis and Judicial Decision (I) analysis of the "right of rescission" "Late delivery" belongs to the breach of contract of the development enterprise, according to the basic principle of "there is an agreement from the agreement, no agreement from the statutory", in the case of the sale contract does not give the buyer the right to terminate the contract, it can only exercise the legal right of termination. 1, for the vast majority of "late delivery" of commercial housing, buyers are based on "delayed performance" and exercise the legal right of discharge. Items 3 and 4 of paragraph 1 of article 563 of the civil code stipulate two situations in which the contract is terminated due to delay in performance of the debt. item 3 stipulates that "one of the parties delays in performance of the main debt and fails to perform within a reasonable period of time after being urged"; Item 4 stipulates that "one of the parties delays in performance of the debt or has other breach of contract, resulting in the failure to achieve the purpose of the contract". According to the Supreme People's Court's (I) on the Understanding and Application of Contracts in the Civil Code, item 3 is aimed at the situation where "the period of performance does not have a substantial impact on the realization of the purpose of the contract", that is, the debtor's performance after the expiration of the period of performance will usually only make the creditor suffer limited losses and will not completely defeat the purpose of the contract. Item 4 is aimed at the situation where "the period of performance has a substantial impact on the realization of the purpose of contract, that is, if the debtor does not perform on the agreed date or time limit, the creditor's contract purpose will not be achieved, such as the seller to the manufacturer to order Christmas goods, if the manufacturer does not supply on time, will inevitably cause the seller's contract purpose completely failed. According to the above point of view, with respect to the "late delivery" of commercial housing by development enterprises, buyers enjoy the legal right of release based on the provisions of paragraph 1, item 3 above. 2, the buyer based on the "delay in performance" and the exercise of the statutory discharge right, the need to perform the "reminder" of the pre-procedure. Under the circumstances stipulated in paragraph 1, paragraph 3, of article 563 of the Civil Code, the creditor is not allowed to terminate the contract immediately, and it shall issue a reminder to the debtor for the performance of the debt, which is generally made after the expiration of the period of performance, with the main purpose of establishing a grace period as soon as possible and clarifying the conditions for the exercise of the right of discharge. If the debtor fails to perform at the expiration of the grace period, the creditor may exercise the right of discharge. According to the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Laws in the Trial of Disputes over Commercial Housing Sales Contracts (2020 Amendment)" (hereinafter referred to as the "Commercial Housing Interpretation"), Article 11, paragraph 1, the seller delays the delivery of the house or the buyer delays the payment of the house purchase, and still fails to perform within a reasonable period of three months after being urged, and the person with the right of release requests to terminate the contract shall be supported, unless otherwise agreed by the parties. That is, in the absence of an express agreement, the "grace period" is a reasonable period of three months. As far as "late delivery" is concerned, "reminder" is a necessary pre-procedure for property buyers to exercise the legal right of rescission, and only after the expiration of the grace period agreed by both parties or the reasonable period of three months (not agreed upon), the property buyer can exercise the legal right of rescission only if the development enterprise has not fulfilled its delivery obligation. For example, (2022) Lu 01 Min Zhong No. 7098, which is represented by our lawyers, holds that "only when the breaching party fails to perform its contractual obligations after the expiration of a reasonable period of time, can the breaching party exercise the right to terminate the contract. *** No reminder was made to** company, so the conditions for its exercise of the statutory right of discharge are not fulfilled." 3. When the buyer exercises the legal right of discharge for a very small number of "failed purposes", if the development enterprise has the delivery conditions stipulated in the contract in the course of litigation, the buyer no longer enjoys the right of discharge. In practice, when the buyer exercises the legal right of rescission based on a very small number of "failed purposes", such as the project has major quality problems and cannot pass the completion acceptance for a long time, or is in a "unfinished" state of shutdown for a long time, if the development enterprise has the delivery conditions during the litigation process, especially before the first trial, the referee will consider that the breach of contract of the development enterprise is no longer sustainable, the purpose of the buyer's contract for delivery has been achieved, and the "continued performance" of the sales contract is realistic and operable, thus diverting its attention to ordering the development enterprise to "pay the bill" for its breach of contract in the form of "money"; according to the provisions of Article 577 of the Civil Code, the development enterprise is required to bear the responsibility in a more rational and moderate way such as "continuing to perform, taking remedial measures or compensating for losses, thus does not support the buyer's request to terminate the contract. For example,(2020) Lu 01 Minzong No. 13241 judgment held that "Dayao Real Estate Company, as the seller, has postponed the delivery of the house, but has obtained the" Housing Construction Project Completion Acceptance Record Form "and the" Real Estate Development Project Comprehensive Acceptance Record Certificate "of the project involved, and notified Liu Zhuangzhuang to accept the house. The purpose of the contract signed by both parties can be realized, and the conditions for continued performance are met, therefore, Liu Zhuangzhuang's request to terminate the contract involved was not supported by the court." (II) Analysis of the "Time Limit for the Exercise of the Right of Discharge" 1. Analysis of the 30-day period for the exercise of the right of rescission as agreed in the contract of sale and purchase. The general sales contract will stipulate the time limit for the exercise of the right to terminate the sales contract and the supplementary agreement in the "Annex" supplementary agreement. For example, if there is a legal or agreed reason that the buyer has the right to terminate the sales contract and the supplementary agreement, and the development enterprise fails to receive a written notice of the termination of the contract within 30 days from the date of the occurrence of the cause, it shall be deemed that the buyer has waived the right to terminate the sales contract and the right (if any). (1) The law gives the subject of the contract the right to freely agree on the time limit for the exercise of the right of discharge. Article 564 of the Civil Code stipulates that if the law stipulates or the parties agree on a time limit for the exercise of the right of rescission, the right shall be extinguished if the parties do not exercise it at the expiration of the time limit. That is, the law on the exercise of the right to terminate the contract left a "white place type loophole", and the agreed circumstances of the right to terminate the exercise of the time limit is not guided, this is the legislator left to the contract parties to negotiate a consensus of the white place, but also to urge the parties to fully exercise the right of self-determination, in order to facilitate the signing of the contract and the conclusion of the transaction. (2) The clause does not exclude the right to terminate the contract of the buyer, there is no unreasonable restriction of the main rights of the buyer, legal and effective. First of all, according to Article 497 of the Civil Code, the format clause is invalid if "the party providing the format clause excludes the main rights of the other party. Whether or not to enjoy the right of rescission and the time limit for the exercise of the right of rescission are two aspects of different levels of rights under the right of rescission; the limitation of the time limit for the exercise of the right of rescission in the contract of sale and purchase does not affect the exercise of the right of rescission, and the right of rescission is valid as long as the exercise of the right within the agreed time limit. That is, the restriction on the period of exercise of the buyer's right of rescission in the contract of sale does not exclude the buyer's objective right of rescission, which is legally valid. Secondly, according to Article 497 of the Civil Code, the format clause is invalid if "the party providing the format clause restricts the main rights of the other party. The right of rescission belongs to the right of formation, which can be expressed by the unilateral intention of the rescission holder to break the existing trading rules and eliminate the validity of the contract, and both the Civil Code and the Commodity House Interpretation impose strict restrictions on the period of exercise of the right of rescission. The legal principle behind it is that, on the one hand, if the rescission right owner neither exercises nor gives up the rescission right enjoyed, because the contract may be rescinded at any time, the rights and obligations established by the contract will be in an unstable state for a long time, which is contrary to the legislative purpose of transaction security and maintaining the stability of social and economic order; on the other hand, the rescission right owner will not exercise the rescission right for a long time, it is also sufficient to prove that it has no real intention to terminate the contract and can be regarded as a waiver of its own rights. That is, the contract of sale limits the period of termination of the buyer's right to 30 days, which, based on the interpretation of the text, does limit his rights; however, based on the interpretation of the purpose, such "restrictions" are in line with the original intent of the legislation, in line with the true wishes of the person with the right to release, and are "reasonable" and legal and effective. For example, (2021) Lu 0103 Minchu No. 8424 judgment held that "the time for the defendant to deliver the house involved to the plaintiff is before July 31, 2020. If the defendant fails to deliver the house to the plaintiff within the agreed time limit due to the defendant's reasons, the plaintiff agrees to give the defendant a 60-day extension period for the delivery of the house. Therefore, the plaintiff has been aware of the fact that the defendant has overdue the delivery of the house since September 29, according to the contract and supplementary agreement for the sale of commercial housing involved in the case, the period for the exercise of the right of rescission shall be 30 days from September 29, 2020. Now the plaintiff has not provided evidence to prove that it has claimed to the defendant to rescind the contract and supplementary agreement for the sale of commercial housing involved in the case within the above period. Therefore, the court does not support the plaintiff's request to confirm the termination of the" Jinan Commercial Housing Sale Contract "signed by the defendant on May 9, May 9, 2021." (3) In the event that the development enterprise extends the delivery period, the period for exercising the 30-day discharge right shall be calculated from the expiration of the extended delivery period. In practice, if the development enterprise has determined that it cannot deliver the house as promised or the fait accompli of late delivery before the expiration of the delivery period, it will generally "notify" the buyer to postpone the delivery of the house in the form of "delayed delivery notice" or "letter to the owner" or "reply to the owner's claim for a certain project", and determine the specific time limit after the extension. If the "notice" is issued before the buyer files a lawsuit, the period of exercise of the 30-day discharge right shall be recalculated from the expiration of the delivery period after the extension. For example,(2021) Lu 01 Min Zhong No. 10828 Judgment held that "in accordance with the contract and supplementary agreement, the company shall deliver the house that has obtained the completion acceptance record before December 31, 2019. ......** Before filing this case, the company had issued a notice of deferral to the delivery of the property to April 30, 2021. **This case was filed on May 13, 2021, not exceeding the agreed period of exercise of the right of discharge." Here, our lawyers suggest that the development enterprise must conservatively and reasonably estimate the delivery time point before issuing any written document of the nature of "notice of delayed delivery" to ensure that the actual delivery can be made on the postponed date. Otherwise, every action of the development enterprise will give the buyer a new 30-day time limit for the exercise of the right of rescission, thus keeping the contractual relationship in an unstable state. 2, on the sale of the contract did not agree on the term of the case, the buyer's right to discharge the exercise of the period of how to determine the analysis. (1) In the case of the development enterprise's reminder, the buyer shall exercise the right of cancellation within three months after the reminder. According to the provisions of Article 564 of the Civil Code, if the law does not provide for or the parties do not agree on a time limit for the exercise of the right of rescission, ...... or if it is not exercised within a reasonable period of time after being urged by the other party, the right shall be extinguished. According to the provisions of Article 11 of the "Commercial Housing Interpretation", there is no provision in the law or the parties have not agreed. After being urged by the other party, the reasonable period for the exercise of the right of cancellation is three months. In practice, after overdue delivery, the usual practice of development enterprises is to inform the buyers of the fact that they are overdue and the new delivery period, and there are few cases of urging the buyers to exercise the right of discharge; and once the "reminder" is made, the exercise period of the buyer's right of discharge is three months after the reminder. (2) In the absence of a reminder by the development enterprise, the buyer shall exercise the right of cancellation within one year from the date when he knows or should know the cause of cancellation According to the provisions of Article 564 of the Civil Code, if the law does not provide for or the parties do not agree on a time limit for the exercise of the right of rescission, the right shall not be exercised within one year from the date on which the person of the right of rescission knows or should know the cause of the rescission, ......, the right shall be extinguished. According to the provisions of Article 11 of the "Interpretation of Commercial Housing", if the other party does not call for notice, the person with the right of release shall exercise it within one year from the date when he knows or should know the cause of the release. If it is not exercised within the time limit, the right of rescission shall be extinguished. For example, (2021) Supreme Court Minshen No. 1273 Judgment held that "Chunfa Company shall have the right to terminate the contract, which shall be effective from January 30, 2018. Since the parties have no evidence that Xingdingan Company has urged Chunfa Company to exercise the right of termination since January 30, 2018, the exercise period of this right shall be exercised within one year from the date of occurrence, I .e. before January 30, 2019, according to the above judicial interpretation." (III) analysis of the value orientation of judicial adjudication on the removal of property buyers. The Supreme People's Court issued.<全国法院民商事审判工作会议纪要>的通知》法〔2019〕254号确立了“鼓励交易”的基本价值取向，明确指出“合同是市场化配置资源的主要方式，人民法院在审理合同纠纷案件时，要坚持鼓励交易原则，充分尊重当事人的意思自治。要依法审慎认定合同效力。要根据诚实信用原则，合理解释合同条款、确定履行内容，合理确定当事人的权利义务关系，审慎适用合同解除制度，促进诚信社会构建”。   我国司法实践一直以来的裁判导向也是鼓励交易，不轻易解除合同。正如（2015）民申字第1124号民事裁定书认为“社会资源的流转有利于社会财富的增加，基于此，合同法的基本价值取向是鼓励交易，所以，除非一方当事人严重违约导致交易目的不能实现，人民法院在个案中判断是否应当解除双方当事人之间的合同关系时，应当秉持前述立法精神，综合个案情况在利益平衡的基础上具体考量。在交易相对人存在一般违约的情况下，尤其是如果解除合同将导致社会财富的不当浪费时，不宜支持当事人解除合同。”                               三、小结   我国民商事合同法律制度的根本理念，在于尊崇契约自由、鼓励市场交易、维护交易稳定，此为权利行使的内在动力；而又之所以设立法定解除权，在于当主客观情况发生重大变化、合同履行陷入僵局时，</全国法院民商事审判工作会议纪要>

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