On Rescission Of Contract In Anticipatory Breach

Anticipatory breach of contract derived originally from prejudication in England.Evolved over more than a century, this form contract-breaching, beingcorresponding with and different from any factual contract breaching, has beentaken as a vital part of contractual obligation in Anglo-American legal system.Legislatures of many countries and the United Nations Convention on Contracts forthe International Sale of Goods have all adapted this prime of legislation fromAnglo-American legal system. Our country has also introduced this advanced legalsystem into our unified Contract Law for the first time. The system of anticipatorybreach of contract has a practical significance. When one of the parties breaches thecontract earlier, it enables the client, in the process of enforcing the contract, to takeactive remedial measures, or to seek effective guarantee for his anticipatory interestsof the contracts or to obtain damages at an early time to conclude the contractrelations. In that case, trading orders can be well maintained and losses may bemaximally reduced. Anticipatory breach of contract has two different forms anticipatory repudationand diminished expectation. Anticipatory repudiation occurs when on of the partiesunequivocally states during the term of a contract, without a warrant, that he doesnot intend to complete most of his obligations under the contract. It is quite differentfrom the post refusal of carrying out a contract, for it is expectative right, instead ofactual obligatory right, that has been infringed. Moreover, anticipatory repudiationmay be avoided: as the contract term has not expired, on the occasion that the partyconcerned completes all his obligations under the contract in due time. Obligee mayrefuse to accept the obligor's conduct of anticipatory repudiation and insist on theobligor's duties to be completed. Otherwise, the obligee may acccept the obligor'smanifestation of anticipatory breaching, and then resort to relevant remedies, likerescinding the contract and claiming for damages. Diminished expectation occurswhen obligee has sound reasons to foresee the possiblility that the obligor is notwilling to or not able to enforce the contract although the obligor hasn't made anystatement for his intention, and the obligor cannot provide any guarantee upon theobligee's request for completing his obligations under the contract. In ContinentalLaw System, there is a similar system called Einrede der Unsieherkeit, but it is still 3quite different from the system of anticipatory breach of contract in terms ofpreconditions, gist, scope of application integrant requirements, and remedialmeasures. These differences mirror the variant value concept of the two systems.Upon comparisons, the system of anticipatory breach of contract protects thedamaged party more adequately than the system of Einrede der Unsieherkeit. Whenthe obligor breaches the contract in the form of diminished expectation, the obligeemay suspend the performance of the concerned contract and ask the obligor toprovide adequate performance guarantee in a certain period of time. If the obligorfails to provide the mentioned guarantee in a certain period of time, if the obligorfails to provide the mentioned guarantee, the obligee will have the right to rescindthe contract and claim for damages for relief. This article tries to view anticipatory breach of contract from a different angle.Rescission of contract is an important remedy that a non-breaching party can resortto when his expectative interest is to be damaged by the refusal of performing thecontract of the other party. But rescission is not to be applied in any case. TheAnglo-American legislation lays a number of restrictions on the application ofrescinding a contract especially in Diminished Expectation. Since there are a varietyof differences between the legislatures of different states, China, being a nationwhich has a tradition of R...