Legal Effect Of The Contract Rescission System

The contract rescission system is one of the independent system in contract law of the people's republic of China, the main function of the contract rescission system is to guarantee the legitimate interests of parties'when the contracts falling through. Although our current contract law has a unified regulation of this system, there are still many aspects need to be specified. Particularly when it comes to the object of contract rescission,retroactive, restitution and the compensation for damage, that are still many disputes which leads to the chaos of the effects of the contract rescission system and the difficult to fulfill the purpose of contract rescission in practice. Based on the current contract law of China, the analyses on the related domestic and outside theories and legislation of the contract rescission system ,and the successful legislative experience, the author comprehensively applies many study methods to make a deep analysis and systematic study on the effects of contract rescission system.Chapter one discusses the definition of contract rescission in an extensive way, points out there are two kinds of ways to rescind a contract, by compare the system of contract rescission with the contract termination system and contract withdrawal system to limit the scope of this paper is to discuss only the legal reason to rescind the contract and excludes rescission through consultation. Then discusses the character and object of the contract rescission system to definite the meaning of it in an all round manner. Chapter two discusses the retroactive of the contract rescission system, including the main doctrine of effect of contract rescission——direct effect, indirect effect, compromise of that and the liquidation relationship. Analyses all the main doctrine of effect of contract rescission to clear the foundation of this paper and issues the following chapters will discuss.Chapter three discusses the definition of restitution in the contract rescission system and the scope of restitution.Chapter four points out the parties can ask for compensation for damage after the contract was rescinded, then discusses two theories——the concept of performance interests and trust interests, on the damage scope of the contract rescission system and discusses the use of penalty for breach of contract in the contract rescission system.Chapter five discusses the application of restitution and compensation for damage under different kinds of contract rescission situation by introduce the two theories of the relationship of restitution and compensation for damage of contract rescission system in the German law and Civil law.