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

The right to terminate the contract is the right of the parties to end the relationship of the contract’s rights and obligations in accordance with the law or the agreement in advance.The unified theory holds firmly that only the observant party has the right to terminate the contract when a breach of contract occurs.In 2006,the Supreme People’s Court Bulletin Case “Xinyu Company v.Feng Yumei” broke through the traditional judicial practices and affirmed that the defaulting party could terminate the contract for the first time.Since then,more and more courts have upheld the defaulting party to terminate the contract.The academic community began to pay attention to the defaulting party’s termination of the contract,and opinions both for and against remains hotly disputed.The enactment of the Minutes of the Work Conference’s Civil and Commercial Trial of the Supreme People’s Court(IX)and Civil Code has pushed the discussion to the “peak”,and then extended to the validity,application condition and legal consequence of the defaulting party’s termination of the contract.Whether the defaulting party has validity to terminate the contract is the basis for discussing the right of the defaulting party’s termination of the contract.Civil Code entitles the defaulting party’s right to terminate the contract has sufficient theoretical basis and legal guarantee.On the one hand,the theoretical foundation of the right of the defaulting party’s termination of the contract is consolidated,which not only conforms to the internal value of the basic principles of contract law,but also has the support of the core theory of efficiency,and meets the purpose and function of termination of contract or the needs of the selection theory of remedy for breach of contract.On the other hand,the legal basis for the defaulting party’s right to terminate the contract is sufficient;for instance,Article 563,Article 580,Article 9 and Article 509 of Civil Code or Article 48 of the Minutes of the Work Conference’s Civil and Commercial Trial of the Supreme People’s Court(IX)all provide sufficient interpretation space for the defaulting party’s right to terminate the contract.So does the right of termination the contract of the defaulting party have reasonable and legitimate conditions.The application condition of the defaulting party’s right to terminate the contract is special,which specifically divided into entity and procedural conditions.The former requires that the defaulting party’s fulfilling the terms of the contract wouldn’t achieve the purpose of the contract,the undefaulting party’s rejection of terminating the contract is obviously unfair on the defaulting party,and the defaulting party is non-malicious default.The latter requires the defaulting party to terminate the contract through litigation or arbitration and renegotiate with the undefaulting party before.After the two parties failed to renegotiate with each other and then send the dispute to the court or the arbitration institution,which would finally conduct a substantive review and make a judgment.What legal consequence of the undefaulting party’s right to terminate the contract is another important question.The undefaulting party’s termination of the contract has the general effect of the contract’s termination,such as retroactivity and responsibility for breach of contract and so on.At the same time,it also has the special effect: the people’s court has certain discretion to assume the damages for breach of contract after terminate the contract,the judge shall deal with the damages which have their particularity in the scope of compensation and the specific calculation together with the judgment and the time point of the termination of the contract should be when the supportive judgement was made.