Real estate perspective: a brief analysis of the conditions for the termination of the cooperative development of real estate contract.
Published:
2022-01-20
1. issues raised
A contract for cooperative development of real estate refers to an agreement between two or more parties that one party provides land and the other party provides funds, technology, labor, etc., to jointly develop land and build houses, and to share the benefits according to the agreed proportion after the completion of the project development.
Due to the scarcity of land resources, the intensive demand for capital and the government's strict control of development qualifications, land, capital and qualifications have become the three essential elements of real estate development in China. If the civil subject can not have these three conditions at the same time, but also to participate in real estate development projects, the choice of cooperation in real estate development becomes inevitable. At the same time, due to the long cycle of cooperative development of real estate, the requirements for enterprise management and continuous supply of funds are high. In the various stages of development, construction and sales, disputes will inevitably arise between the cooperative entities. This paper intends to discuss the applicable conditions for the termination of cooperative development of real estate contracts through five cases.
2.-related views and cases, refereeing views
(I) both parties have not breached the contract, but cannot reach an agreement on the specific operation of the cooperation project, resulting in a long period of time unable to start construction, the contract shall be terminated
Case one:Guangxi Guisheng Real Estate Co., Ltd. and Nanning and Kehe Real Estate Development Co., Ltd. cooperated to develop real estate contract disputes (Nanning City (Region) Intermediate People's Court of Guangxi Zhuang Autonomous Region (2015) Nanmin No. 2)
The Court held that:On the issue of whether the Joint Stock Investment and Operation Contract and the Supplementary Agreement signed by both parties should continue to be performed or should be terminated. Although there is no breach of contract between the company and Guisheng company, the contract and supplementary agreement signed by both parties do not specify the time limit for the performance of their respective obligations in the cooperation project, and there is no agreement on the specific operation details of the cooperation project. If both parties can reach an agreement on the above details, both parties still have the basis to continue to perform the contract. However, the two parties have not been able to negotiate and reach an agreement on this, and the organization responsible for the operation of the cooperation project agreed in the contract has not been established, so that the cooperation projects agreed by both parties have not started construction for up to ten years after the contract was signed. In addition, the two parties in this case have formed a contractual relationship of cooperative development of real estate, not a simple monetary debt. This kind of contract has the nature of partnership. The performance of the contract requires both parties to reach an agreement through consultation and cooperate with each other. Now Guisheng Company firmly does not agree to continue to perform the cooperative development contract with the base company. The contract between both parties should not be enforced. Therefore, in accordance with the above provisions, and the company's request to order both parties to continue to perform the "Joint Stock Investment and Operation Contract" and the "Supplementary Agreement", the court does not support it, and the contract between the two parties should be terminated.
If the (II) terminates the contract due to the breach of contract by one or both parties, the breach of contract results in the loss of the basis of trust between the parties.
Case two:Qingdao Blue Light and Jun Real Estate Co., Ltd., Jinan Xiangjiang Real Estate Co., Ltd. and other joint venture and cooperative development of real estate contract disputes (Shandong Jinan Intermediate People's Court (2020) Lu 01 Minchu No. 1665)
The Court held that:The evidence provided by Blu-ray Company can fully prove that the bank account was judicially sealed up due to the dispute between the third party and the entrusting party and Zhang Bo, which seriously affected the project management work of the entrusted party. After the entrusted party and Zhang Bo were notified in writing, the obstruction was not eliminated within 90 days. Due to the reasons of the entrusting party Xiangjiang Company, the sales contract cannot be stamped with the official seal and invoices are not issued, so that the project cannot be sold for more than 90 days, which meets the termination conditions agreed by both parties in the contract. The establishment of the contract involved is based on the full trust of the parties to each other, the realization of the purpose of the contract requires mutual assistance and cooperation between the two parties, once the basis of trust is lost, the contract will be difficult to continue to perform. Therefore, Blu-ray Company advocates the termination of the entrustment contract signed by both parties due to the breach of contract by Xiangjiang Company, and the Court supports it.
Case three:Yongzhou Zijin Real Estate Development Co., Ltd. and Daoxian Huaying Real Estate Co., Ltd. Joint Venture and Cooperative Development of Real Estate Contract Dispute (Hunan Higher People's Court (2019) Xiang Min Shen No. 2098)
The Court held that:According to the facts of the whole case, although Zijin Company and Huaying Company both had breach of contract in the process of contract performance, Zijin Company's fault in this case is obviously greater than that of Huaying Company. In view of the fact that the two parties have been fighting for many years and have lost the basis of trust, the purpose of the contract for joint development and operation of the two parties cannot be realized. Therefore, the second-instance judgment lifted the case "Daoxian Dongfang Lido Phase III Project Cooperation Development and Phase II Project Construction Contract" in compliance with the law.
Both parties to the (III) are responsible, but under the premise of non-fundamental breach of contract, the contract should be judged to continue to perform from the perspective of saving economic costs and ensuring the continuity of the project.
Case four:Foshan Gaoming District Xinwei Construction Engineering Company, Mai Jixiong and Foshan Gaoming District Sanjian Real Estate Company and other joint venture and cooperative development of real estate contract disputes (Foshan Intermediate People's Court of Guangdong Province (2014) Fo Zhong Fa Min Yichu Zi No. 62)
The Court held that:Regarding the issue of whether the "Cooperation Contract" should continue to be performed. According to the facts ascertained in this case, there are no obstacles to the presale of 3-4 cross-permits for 1-4 commercial residential buildings in Bihewan, which were disputed by both parties during the litigation, and the mortgage of Ming Guoyu (2006) No. 5067 land use right involved in Xinwei Company's loan of 55 million yuan to Xi 'an Credit Union. From the perspective of saving economic costs, in view of the continuity of the construction project in this case, in the absence of evidence that both parties have fundamentally breached the contract and there are serious quality problems in the project involved, the court determined that the "cooperation contract" will continue to be performed.
(IV), if the cooperative project has been basically completed and there is no problem of compulsory performance, the cooperative real estate development contract should not be easily terminated.
Case Five:Lanzhou Tan Jianzi Yongchang Trading Co., Ltd. and Aizitai Real Estate Development Co., Ltd. jointly developed real estate contract disputes (Supreme People's Court (2012) Min Yizong Zi No. 126)
The Court's view:The court of first instance held that Aizhitai Company owed as much as 0.12 billion yuan in principal and interest for the project and materials, resulting in the suspension of the project so far, making it impossible to perform the joint construction contract. Therefore, it was decided to terminate the contract. Yongchang Company and Nongken Electromechanical Company paid Aizitai Company the actual input of Aizitai Company in the completed project of Yinlang Building to Aizitai Company and obtained the completed project. In the second instance, the Supreme People's Court held that although Aizitai Company did not successfully handle the planning procedures, it could be legalized by completing the relevant planning procedures, which was not a fundamental breach of contract and resulted in the failure to realize the purpose of the contract. Although Aizitai Company has delayed the performance of its debts, it has not yet reached the serious level of failure to realize the purpose of the contract. In the case that the main works of the project involved have been completed, it is determined that Yongchang Trading Company and Nongken Mechanical and Electrical Company enjoy the legal right of termination, resulting in a significant imbalance in the interests of both parties to the contract. Accordingly, the judgment was revised to reject the request of Yongchang Company and Nongken Electromechanical Company to terminate the contract.
3. Summary
1, through the above cases, the referee's point of view can be seen, the cooperative development of real estate contracts have a strong "human nature". The obligations of the parties to the cooperation are not purely pecuniary obligations, but a whole of obligations that are intertwined with pecuniary and non-pecuniary obligations. Therefore, in cases where the unwillingness of the other party to cooperate makes it difficult to enforce a non-monetary debt, the case of "the subject matter of the debt is not suitable for compulsory performance" as stipulated in article 580, paragraph 1 (2), of the Civil Code shall be applied to terminate the contract. Secondly, from the economic point of view of contract performance, if one party is obviously unwilling to continue to perform, the project will not only get the cooperation of the other party, but also face the situation of intentional destruction and delay. At this time, it is not only ineffective to promote their "cooperation" by coercion, but also uneconomical.
2, in the process of cooperative development of real estate, the key point to judge whether the contract can be terminated is whether the breach of contract leads to the loss of the basis of trust between the two parties. If the basis of trust between the parties is lost as a result of a breach of contract by one or both parties, the purpose of the contract can no longer be achieved, and the most appropriate disposal measure is to terminate the contract and compensate for the damage rather than enforce performance.
3. In addition, considering that the cooperative development of real estate contracts has the characteristics of long development cycle, many participants, professional terms, complex performance, etc., so the liquidation and liquidation after the termination of the contract is also extremely complex, it is difficult to accurately balance the interests of all parties. In practice, minor breaches of contract between the two parties in the process of project promotion occur from time to time. If the contract is easily terminated, the transaction cost will rise and the transaction order will be extremely unstable. If both parties are at fault in the course of cooperation, but there is no fundamental breach of contract that prevents the project from proceeding, the provisions of articles 179 and 577 of the Civil Code may be applied, and the breaching party shall compensate the breaching party for the loss and then continue to perform the contract. If the cooperation project is basically completed, whether it is a pecuniary obligation or a non-pecuniary obligation has been basically fulfilled and there is no compulsory performance, it should be more prudent to terminate the contract from a fair point of view, so as to avoid the situation that one party exercises the right of termination and leads to a significant imbalance in the interests of both parties to the contract.
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