The Research Into Damages Dissolution Regulated By Contract Law

Based on the theory of legal rescission of liability for damages according to contract, the analysis of the legislative pattern of rescission of contract both at home and abroad as well as the analysis of the regulation of the retroactive effect of rescission of contract by China Contact Law, Article 97, the thesis has discovered that the Article 97, with regard to legislation of responsibility of legal rescission of liability for damages, has taken the coexistent mode between legal rescission of contract and compensation for breach of contract, which doesn’t absolutely mean that the observant party can insist on both rescission of contract and compensation for breach of contract, when facing the situation. Whether the observant party is able to ask for compensation for damanges while insisting on legal rescission mainly depends on what the law has regulated about the retroactive effect of dissolution of contract. If it were of retroactive effect, the contract would no longer exist and there would be no compensation; while if it were of no retroactive effect, potency of legal rescission of contract would refer to future and observant party could come up with compensation. In China Contact Law, there is no definite regulation of the retroactive effect of legal rescission of contract. The thesis believes that observant party is the optimum judge of interests of contract and can claim the retroactive effect of legal rescission of contract according to the specific judicial practice. If the contract is breached, observant party may choose to discharge the contract or protect their own interest through retroactive effect of rescission of contract and there is no need to raise compensation for breach of contract; if observant party rescinds the contract and expects the retroactive effect refers to future, or if repristination cannot make up the loss, the observant party can ask for the responsibility of compensation after termination of the contract. The thesis tries to make clear the logical links between legal rescission of contract and responsibility of breach of contract and attempts to pursue the optimal judicial remedies for observant party in the case of breach of contract.