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1ContractLaw24.PerformanceandNon-performance4.1TheprincipleofperformancePerformthoroughlyGoodfaithArticle60:Thepartiesshallperformtheirobligationsthoroughlyaccordingtothetermsofthecontract.Thepartiesshallabidebytheprincipleofgoodfaithandperformtheobligationsofnotification,assistanceandmaintainingconfidentiality,etc.basedonthenatureandpurposeofthecontractorthetransactionpractices.34.2TheregulationofperformanceNoagreementortheagreementisunclear:SupplementarytermsThecontextofrelevantclausesortransactionpractices.Theprovisions4Article62:Iftherelevanttermsofacontractareunclear,norcantheybedeterminedaccordingtotheprovisionsofArticle61ofthisLaw,theprovisionsbelowshallbeapplied:(1)Ifthequalityrequirementsareunclear,theStatestandardsortradestandardsshallbeapplied;iftherearenoStatestandardsortradestandards,generallyheldstandardsorspecificstandardsinconformitywiththepurposeofthecontractshallbeapplied.(2)Ifthepriceorremunerationisunclear,themarketpriceoftheplaceofperformanceatthetimeconcludingthecontractshallbeapplied;ifthegovernment-fixedpriceorgovernment-directedpriceshallbefollowedinaccordancewiththelaw,theprovisionsofthelawshallbeapplied.
5(3)Iftheplaceofperformanceisunclear,andthepaymentisincurrency,theperformanceshallbeeffectedattheplaceoflocationofthepartyreceivingthepayment;ifrealestateistobedelivered,theperformanceshallbeeffectedattheplaceoflocationoftherealestate;incaseofothercontractobjects,theperformanceshallbeeffectedattheplaceoflocationofthepartyfulfillingtheobligations.(4)Ifthetimelimitforperformanceisunclear,theobligormayatanytimefulfilltheobligationstowardstheobligee;theobligeemayalsodemandatanytimethattheobligorperformstheobligations,butatimelimitfornecessarypreparationshallbegiventotheobligor.(5)Ifthemethodofperformanceisunclear,themethodwhichisadvantageoustorealizethepurposeofthecontractshallbeadopted.(6)Iftheexpensesofperformanceisunclear,thecostshallbebornbytheobligor.6TheregulationaboutpriceGeneralprinciples:ItisunfavorabletothebreachArticle63:Incaseswherethegovernment-fixedpriceorgovernment-directedpriceisfollowedinacontract,ifthesaidpriceisre-adjustedwithinthetimelimitfordeliveryasstipulatedinthecontract,thepaymentshallbecalculatedaccordingtothepriceatthetimeofdelivery.Ifthedeliveryoftheobjectisdelayedandthepricehasrisen,theoriginalpriceshallbeadopted;whilethepricehasdropped,thenewpriceshallbeadopted.Intheeventofdelayinreceivingdeliveryoftheobjectorlatepayment,ifthepricehasrisen,thenewpriceshallbeadopted;whilethepricehasdropped,theoriginalpriceshallbeadopted.7PerformancetoorbythirdpartiesArticle64:Wherethepartiesagreethattheobligorperformstheobligationstoathirdparty,andtheobligorfailstoperformtheobligationstothethirdpartyortheperformancedoesnotmeetthetermsofthecontract,theobligorshallbeliabletotheobligeeforthebreachofcontract.Article65:Wherethepartiesagreethatathirdpartyperformstheobligationstotheobligee,andthethirdpartyfailstoperformtheobligationsortheperformancedoesnotmeetthetermsofthecontract,theobligorshallbeliabletotheobligeeforthebreachofcontract.8RighttorefuseorsuspendperformanceOnerouscontract:Bothpartieshaveobligationstowardseachother1.Ifthereisnoorderofpriorityinrespectoftheperformanceofobligations:performsimultaneously2.Ifthereisanorderofpriorityinrespectoftheperformanceofobligations:performaccordingtotheorder3.Buttheparty,whichshallrenderitsperformancefirst,maysuspendtheperformance.9Article66:Ifbothpartieshaveobligationstowardseachotherandthereisnoorderofpriorityinrespectoftheperformanceofobligations,thepartiesshallperformtheobligationssimultaneously.Onepartyhastherighttorejecttheotherparty'srequestforperformancebeforetheotherparty'sperformance.Onepartyhastherighttorejecttheotherparty'scorrespondingrequestforperformanceiftheotherparty'sperformancedoesnotmeetthetermsofthecontract.10Article67:Wherebothpartieshaveobligationstowardseachotherandthereisanorderofpriorityinrespectoftheperformance,thepartywhichshallrenderitsperformancefirsthasnotrenderedtheperformance,theotherpartyhastherighttorejecttherequestofperformance.Wherethepartywhichshallrenderitsperformancefirstviolatesthetermsofthecontractwhilefulfillingtheobligations,theotherpartyhastherighttorejectthecorrespondingrequestforperformance.11Article68:Oneparty,whichshallrenderitsperformancefirst,maysuspendtheperformance,ifithasconclusiveevidencethattheotherpartyisunderanyofthefollowingcircumstances:
(1)Itsbusinessconditionsareseriouslydeteriorating;
(2)Ithastransferreditspropertyandtakenoutitscapitalsecretlytoevadedebt;
(3)Itlosesitsgoodwill;
(4)Othercircumstancesshowingthatitlosesorispossibletolosethecapacityofcredit.
Wherethepartysuspendsperformanceofacontractwithoutconclusiveevidence,itshallbeliableforthebreachofcontract.noticeAppropriateguaranteeresumerescind12SpecialregulationoftheRighttorefuseorsuspendperformanceArticle70:Iftheobligeedoesnotnotifytheobligorhisdivision,mergerorachangeofdomicilesoastomakeitdifficultfortheobligortoperformtheobligations,theobligormaysuspendtheperformanceofthecontractorhavetheobjectlodged.13AdvanceperformanceArticle71:Theobligeemayrejectanadvanceperformanceofthecontractbytheobligor,exceptthattheadvanceperformancedoesnotdamagetheinterestsoftheobligee.
Additionalexpensescausedtotheobligeebyadvanceperformanceshallbebornebytheobligor.14PartialperformanceArticle72:Theobligeemayrejectpartialperformanceofthecontractbytheobligor,exceptthatthepartialperformancedoesnotdamagetheinterestsoftheobligee.
Additionalexpensescausedtotheobligeebypartialperformanceshallbebornebytheobligor.154.3SubrogationArticle73:Iftheobligorneglectstoexercisehisduecreditor'sright,thusdamagestheinterestsoftheobligee,theobligeemaypetitionthepeople'scourttobesubrogatedinhisownnametotheclaimoftheobligor,unlesssuchclaimispersonaltotheobligor.
Thesubrogationshallbeexercisedwithinthescopeofthecreditor'srightoftheobligee.Thenecessaryexpensescausedtotheobligeebyexercisingsubrogationshallbebornebytheobligor.16(1)claimstheobligeehasagainsttheobligorarelawful;(2)theobligorfailstoassertdiligentlyanydueclaimsofitsown,causingdamagetotheobligee;(3)suchclaimsoftheobligoraredue;and(4)suchclaimsarenotexclusivelyownedbytheobligor.174.4RescissionArticle74:Iftheobligorrenouncesitsduecreditor'srightortransfersitspropertygratis,thusdamagestheinterestsoftheobligee,theobligeemaypetitionthepeople'scourttorevoketheobligor'sact.Iftheobligortransfersitspropertyatanobviouslyunreasonablelowprice,thusdamagestheinterestsoftheobligee,andthetransfereeknowssuchsituation,theobligeemaypetitionthepeople'scourttorevoketheobligor'sact.
Therightofrevocationshallbeexercisedwithinthescopeofthecreditor'srightoftheobligee.Thenecessaryexpensescausedtotheobligeebyexercisingtherightofrevocationshallbebornebytheobligor.18ThetimelimitoftherightofrescissionArticle75:Thetimelimitforexercisingtherightofrevocationshallbeoneyear,commencingfromthedaywhentheobligeeisawareoroughttobeawareofthecausesofrevocation.Iftherightofrevocationhasnotbeenexercisedwithinfiveyearsfromthedaywhentheactofthe
obligortakesplace,therightofrevocationshallbeextinguished.194.5Justificationfornon-performanceImpossibility,Impracticability,FrustrationofPurpose(continuing:JustificationforNon-performance)20ChangedCircumstancesDoctrinesApply:4.5.1.Impossibilityofperformance:(1)destructionofthesubjectmatter;
(2)failureoftheagreed-uponmeansofperformance;and(3)deathorincapacityofaparty.21Example:ContractoragreestopaintOwner'shousefor$10,000.Justbeforepaintingstarts,thehouseburnsdown.Acourtwillalmostcertainlyconcludethatperformancehasbecomeimpossible,andwillthereforedischargebothparties.Contractordoesnothavetodothepainting,andOwnerdoesnothavetopayanything.22ChangedCircumstancesDoctrinesApply:4.5.2Impracticabilityofperformanceperformancewouldbeinfeasiblefromacommercialviewpointcostincreases:23Example:OilCo.contractstoselltoUtilityoilfor10yearsatapriceof$10perbarrel.Duet
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