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| A Study of Unilateral Modification Made by Standard Terms Providers |
| Zhang Xiaomei, Zhou Jianghong |
| Guanghua Law School, Zhejiang University, Hangzhou 310008, China |
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Abstract Standard contracts can be distinguished into two main categories: one in which there is a clause that indicates the provider of the standard terms can unilaterally modify the contract (the variation clause); the other in which no such clause exists. Since the Civil Code of the People’s Republic of China has not made special provisions for the modification of standard terms, it is necessary to conform to the general principle of contract modification, that is, no modification shall be made without the consent of the counterparty. However, the modification of standard terms is a special case, since there are a large number of counterparties in the contract, and it is unrealistic to require the individual consent of counterparties. In this regard, standard terms providers may use the variation clause to meet their unilateral modification, as is often the case. On the positive side, providers’ use of the variation clause to retain unilateral variation rights can significantly reduce negotiation costs. However, on the negative side, unrestricted unilateral modification runs the risk of being abused. The court cannot recognize the validity of the unilateral modification only from the necessity and reasonableness. In this regard, according to the type of the variation clause, standard contracts can be further divided into two categories: one is the contract with a “specific clause”, that is, it stipulates under what conditions the provider can unilaterally make changes, and makes a clear agreement on the content of modification; the other is the contract with a “blank clause”, that is, the clause does not restrict the unilateral modification of the provider. The variation clause should be judged by the criterion of “transparency”. If the criterion is met, the rules of standard terms in the Civil Code of the People’s Republic of China （standard terms rule） can be used to determine whether the clause becomes part of the contract and whether it is valid. If the criterion is not met, the variation clause should be considered ineffective and the contract treated as a no variation clause contract. Therefore, about the “specific clause”, the courts can apply the rules of standard terms. The “blank clause” should be deemed ineffective because it does not meet the requirements of transparency, and such contracts should be treated as if there is no “variation clause”. As standard terms have a different rule of consent than non-standard terms, special consideration should be given to the issue of a contract modification. As long as the content of standard terms is not considered at the time of contracting, the standard terms can be modified by providers without considering the specific consent of the counterparties but should follow the rules of standard terms. However, if the modification is based on the nature of the contract, or the standard terms are considered at the time of contracting (usually core terms), the rules of standard terms modification are not applicable. On the construction of unilateral modification, when the standard terms are modified, the provider should also fulfill the obligation of notification and explanation and should guarantee the right of the counterparties of the contract to freely withdraw from the contract.
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Received: 01 March 2022
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2022, Vol. 52 
