Contract Deadlock:a Study On The Application Of The Breaching Party To Terminate The Contract

The contract termination system occupies an important position in China’s contract legal system.Regarding the exercise of the legal right to rescind the contract,China’s law stipulates the statutory right of rescission,agreed rescission and agreement rescission,and the right to rescind the contract has been clearly determined in the traditional legal theory of contract as the right of the non-breaching party to the contract,unless it is agreed at the time of conclusion of the contract text,or the parties agree to terminate the contract in the process of performance.Under normal circumstances,the right to rescind the contract becomes a means of breach of contract relief adopted by the non-breaching party to the contract in the case of last resort.However,in practice,there are many cases in which the breaching party applies to the court as the plaintiff to terminate the contract,and the characteristics of such cases are manifested in the fact that in some cases,the contract cannot be performed due to the behavior of one party,and the two parties to the contract have not reached an agreement on issues such as liability assumption,resulting in the deadlock in which the contract cannot be performed and cannot be terminated,resulting in the breach of contract applying to the court for rescission of the contract.The most representative case is the 6th communiqué case "Xinyu Case" issued by the Supreme People’s Court in 2006,in which both levels of courts have ruled to terminate the contract for the sale and purchase of shops involved in the case,which has triggered a heated discussion in the domestic legal theory circles,and even after the promulgation and effectiveness of China’s Civil Code,the topic of the breaching party’s application for rescission of the contract is still worth exploring.For example,article 580 of the Civil Code,after several deliberations,finalizes the content of the clause,especially the second paragraph of the article has legal support for the application of the breaching party to rescind the contract that will be discussed in this article.When there is indeed an impasse in the contract,based on the particularity of the contract termination of the breaching party,in certain circumstances,it is impossible to use the rules of actual performance,performance of the right of defence and force majeure as an alternative means to deal with the difficult problem of the deadlock in the contract.Therefore,the right to apply to the court or arbitration institution for rescission of the contract in breach of contract is also in line with the principles of efficiency,good faith and fairness,and the issue of contract deadlock is determined and resolved by the authoritative authority.Of course,in order to more fully implement the strict rules of the contract,prevent the breaching party from arbitrarily applying for rescission of the contract,wasting judicial resources,and harming the legitimate rights and interests of the non-breaching party to the contract,the law should strictly limit the applicable conditions for the breaching party to apply for rescission of the contract.First,the substantive conditions include non-malicious breaches by the breaching party to the contract on a subjective level;At the objective level,the contract is in an impasse,disputes are difficult to resolve,and the interests of both parties to the contract are unbalanced.Second,procedural conditions mean that the breaching party needs to exercise its rights through litigation or arbitration,rather than simply notifying the non-breaching party of the contract to terminate the contract,so as to ensure that the conditions for the exercise of the breaching party’s right to rescind the contract are scientific and reasonable,and will not produce unfair phenomena.Thereafter,after determining that the contract is terminated,adhering to the concept of balancing the interests of both parties,the law should also stipulate that the breaching party should fully perform its obligations such as compensation,compensation,or the return of the original property after the termination of the contract,and actively perform the obligations of the post-contract.On the basis of the full performance of obligations by the breaching party,only then can the contract deadlock be completely resolved,so that the problem of the contract deadlock can be solved in an all-round way,and then draw a perfect end to the elimination of the contract.