In long-term contracts,the time factor signifies higher predictive risks and a stronger requirement for mutual trust between the parties.It is necessary for the law to provide with additional opportunities for parties to escape from the binding force of the contract.The request for termination is a specific manifestation of the inherent limitations of contractual obligations,arising from the due consensus of private autonomy and not contravening the principle of pacta sunt servanda.Article 580,paragraph 2 of the Civil Code is neither directly applicable nor analogously extended to the contractual deadlock in long-term contracts.Article 591 of the Civil Code imposes a duty on creditors to mitigate damages through substitute transactions,thereby restricting the creditor's right to demand performance,which can only partially alleviate the deadlock in long-term contracts.It is necessary to apply the principle of good faith through interpretative methodologies to substantiate the rule allowing termination for a compelling reason,in order to fill legal loopholes and to meet the demand of terminating the long-term contract where the relationship of trust has been broken.To ensure clarity in the changes of legal relations and consistency within the values of the legal system,the parties can only apply to the courts or arbitration institutions for termination.This right to apply for judicial termination constitutes a formative action right and is subject to rules of the statue of repose.In adjudicating specific cases,judges should consider substantive evaluative factors for a thorough benefit measurement and reasoned justification.The time of termination can be determined by referring to Article 59 of the Interpretation of the General Principles of Contracts of the Civil Code,and the effect of termination is not retroactive in principle.
long-term contractcontractual deadlockimpossibility of performanceduty of mitigationjudicial termination
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