Study On The Right To Terminate The Contract By The Breaching Party

In China’s contract law,it is a traditional rule that parties to a contract must adhere to the strict rules of the contract,and the right to rescind the contract can only be enjoyed by the person who does not violate the contract.Since the Xin Yu case,the number of cases in which the breaching party proposes to rescind the contract has been increasing in judicial practice,and it is no longer possible to solve the problem of contractual deadlock in the current stage of contractual transactions by continuing to allow only the defaulting party to rescind the contract according to the traditional rules.Article 580(2)of the Civil Code is a bold attempt and innovation in this context,providing that the breaching party may exercise the right to rescind the contract after strict restrictions are met.Its legislative purpose is to fill the legal defects,free the parties from the prison of contractual deadlock,and solve the problem of imbalance of interests between the parties.However,due to the intense academic controversy over the provisions of the second draft of the first trial of the Civil Code regarding the defaulting party’s right to terminate the contract,Article 580 of the Civil Code ended up with its obscure and simple expression in legislative provisions.As a new system,the Civil Code does not explicitly stipulate the conditions for the application of the right of release of the defaulting party,but in order to make the newly established system truly play its value,it is necessary to improve its connotation from the perspective of legal interpretation.This paper,after sorting out the provisions of the existing norms on the right of release of the defaulting party,conducts a study on its application,so that the system can better serve the judicial practice.This paper is divided into four chapters.In the first chapter,on the basis of clarifying the meaning of the defaulting party’s contractual right to rescind,and defining the nature of its right,and then comparing it with the statutory right to rescind from various aspects,such as the source of the right,the subject of exercise,the attribution of the right,and the effect of the right,and finally introducing the function and value of the defaulting party’s contractual right to rescind.In the second chapter,the current legislative status of the defaulting party’s contractual right to rescind is sorted out,the provisions of Article 48 of the Ninth Civil Code and the bumpy legislative process of Article 580,Paragraph 2 of the Civil Code are analyzed,and the arrangement of the systematic location of the present-day provisions of Article 580,Paragraph 2 of the Civil Code is explained.Chapter 3 discusses the application of the defaulting party’s right to rescind the contract.Since the Civil Code is too simple and does not specify the conditions for its application,scholars have different opinions on the conditions for its application.The article summarizes the existing norms and doctrines and concludes that the conditions for the application of the right to rescind the contract of the breaching party should not only meet the existence of defenses,but also the two conditions that the breaching party is not in bad faith and that the continuation of the contract would be obviously unfair to the breaching party.In terms of the applicable procedures,we analyze the way to exercise the right to rescind the contract of the breaching party,which is different from the general right to rescind the contract,and it is reasonable for the legislation to stipulate that the breaching party must exercise the right through litigation or arbitration.The feasibility of adding a pre-litigation renegotiation procedure is analyzed in order to address judicial pressure.Chapter 4,discusses the legal effect of the exercise of the defaulting party’s right to rescind the contract,shows that the effective time of contract rescission should be when the judgment takes effect and explains the reasons,and finally defines the scope of damages to be borne by the defaulting party after the rescission,so as to support the defaulting party to break the contract deadlock while balancing the interests of the defaulting party.