A Study On The Rescission Of Contract By The Defaulting Party

Article 94 of the General Provisions of the Contract Law of China stipulates the conditions for the exercise of the general statutory right of rescission,but the subject of the exercise of the right of rescission is only described by the word of "party ",and the subject of the right is not clearly defined and distinguished.Who is the "party" here refer to? Does it include parties to breach of contract in a dual service contract? The current law does not give an exact answer.Strating with "Xinyu Company v.Feng Yumei’ Commerical contract Dispute Case",there are more and more similar cases in judicial practice.In December 2018,the Standing Committee of the Thirteenth National People’s Congress reviewed the draft civil code contract and formed the Civil Code(Draft)(Second Review Draft),in which Article 353(Paragraph 5)states: " If a contract fails to be performed and the party with the right of rescission fails to exercise its right of rescission,which constitutes an abuse of rights which is manifestly unfair to the other party,the People’s Court or the arbitration body may terminate the contract at the request of the other party,but without prejudice to the responsibility for breach of contract ".This clause has led to a heated discussion in academia.The system of rescission of a contract concerns the interests of both parties to the contract and the effective allocation of social resources.The traditional theory holds that the right of rescission of the contract except for force majeure and change of circumstances is only enjoyed by the observing party,and the system of rescission of the contract is only used as a remedy for the observing party,ignoring the relief function of the system of rescission of the contract to the defaulting party and the function of the allocation of social resource.,a large number of contract deadlocks have been a waste of social resources.The author tries to prove the legitimacy and rationality of the breach of the contract enjoyed by the breaching party from the perspective of legal theory,and draws a conclusion based on the relevant legislation of different countries by means of comparative research method: The defaulting party fully compensates for losses on the premise that in the case of obstacles to the performance of the contract,the existence of the contract cannot achieve the purpose of the contract,and the exclusion of the malicious defaults and pecuniary debts,giving the defaulting party the right toterminate the contract has legitimacy and reasonableness,which is beneficial to balance the parties to the contract,the interests of the society,rational allocation of the social resources,and balance order and efficiency,freedom and fairness.