A Study On Contract Rescission In Retroactive Effect

Whether contract rescission has retroactive effect relates how the legalconsequence of contract rescission is used. Although the Contract Law of our countryhas united regulation for, many downsides still exist, including whether contractrescission has retroactive effect, the range of liability in restitution of retroactiveeffect of contract rescission, whether contract rescission and compensation fordamages can survive simultaneously and the reasonable explanation for the range ofcompensation for damages. The consequence of contract rescission in our country’sContract Law is ruled with the power of contract rescission. The item97of ContractLaw:“After contract rescission, the contracts un-performing, stopped performing andperformed should be remedied according to performance situation and nature ofcontract, and the parties can ask for liability in restitution, other compensationmethods and claim for damages”. From the rule of our country’s Contract Law, as forthe part implemented, according to difference among practical situations, liability inrestitution can be chosen, which shows that contract rescission can have retroactivity.This enables the theory whether our country’s contract rescission has retroactiveeffect clines to the result that contract rescission has retroactive effect, recognizingthat after contract rescission, the relation of contract should disappear. This is themain opinion of our current institution and laws, but educational circles of civil lawhave different opinions in terms of the formulation of Contract Law so that there issignificant difference between the initial draft of Contract Law and final edition.Because before the publication of Contract Law, many experts in our country insistedthat contract rescission has no retroactive effect, in their speech, many think thatcontract rescission just hinder the power of contracts for the future, without anyinfluence on performed part. This opinion was not put forward by our country’sexperts. Many civil laws and laws of international trade are established according tothis theory. The drawbacks in legislation of other countries led to the continuousdispute on retroactive effect, the previous disputes grow bigger and bigger rather thansmaller and smaller that requiring further study and research. Because contract rescission is an important basic institution of Contract Law, all countries made a largenumber of regulations, and among these regulations, there is obvious differencebetween the original continental law system and Anglo-American law system, but thefocus of difference is to ensure after contract rescission whether the contract hasretroactive effect. Combined with our country’s judicial practice, the article studiessome law methods by analyzing and comparing relative opinions on the problems ofretroactive effect of contract rescission in the continental law system andAnglo-American law system so as to point the drawbacks in relative legislationtheory of our country and on this base, analyze the opinions of retroactive effect andnon-retroactive effect reasonably. Finally the thesis argues that the contracts have noretroactive effect is the efficient base for the power of contract rescission. The thesismainly uses logical analysis, comparison and demonstration. Focusing on whethercontracts have retroactive effect after contract rescission, the thesis beginsdemonstrating, and from the effect after contract rescission the thesis beginsresearching. In argument, the author discusses mainly retroactive effect of the theoryof contract rescission, liability in restitution after contract rescission andcompensation for damages. Author tries to prove the correction of no retroactiveeffect from the outside to the inside and the way of distinguishing different opinionsas well as the reasonability of practical application.