Research On The Retroactive Effect Issue Of Contract Rescission

The retroactive effect issue of the contract rescission is a basic problem of the system of contract rescission, because it affects to the legal effect of contract rescission and, determines the method and standard about how to arrange the benefits and legal relatives of the parties. Our Act of Contract does not express its opinion on this issue, which incurs kinds of interpretations in legal community and authorities. Though the interpretations are so different from each other and it has no common opinion all over the world, few researches have been done by home lawyers. We should compare the retroactive effect of the contract rescission in legislation and jurisprudence; then analyze and compare the two theory of retroactive effect on the basis of legal practices at home; finally, demonstrate that the non-retroactive theory is the rational basis of the legal effect of contract rescission. In the discussion of the paper, the method of logical analysis, the method of comparative law and the method of positivism have been employed. In the paper, the refutation to the theory of retroactive effect is successful and the construction of the theory of non-retroactive effect is not enough indeed.Besides the foreword and conclusion, the paper which amounts to 35000 words could be divided into four parts.The first part is about the definition the retroactive effect issue of the contract rescission. In discussion, the concept of rescission is of broad sense which means the act that can extinguish both rights and duties of parties from the contract by expressed or implied intention of one party, or the agreement of parties after contracts were legally and effectively established. It includes consensual rescission, the rescission by consensual right and rescission by legal right. The focus of disagreements about the retroactive effect issue is that the retroactive theory versus the non-retroactive theory.The second part is the comparison of legislation about the retroactive effect issue. We compare and analyze the main legislation or regulation of two families of law, the International Civil and Commercial Law. The retroactive effect issue mainly occurs in the countries of Romano-Germanic family. These Acts always claim that the contracts are retroactively extinguished from the beginning, and restitutions are the capital way of remedy, and the compensation for contract breach also can be claimed. The regulations lead to serious logical conflict between the retroactive extinguishing of contract and the compensation of contract breach. The contract rescission always has no retroactive effect in Anglo-American Law, so that the issue is hardly a problem. By the influence of the former, the International Civil and Commercial Laws, such as CISG, PICC, PECL, all adopt the non-retroactive rescission. So do the German and Holland. It is an obvious tendency that the rescissions have no retroactive effect.The third part is the comparisons and analyses of theories of retroactive effect of rescission in jurisprudence. The retroactive effect issue, in nature, is the disagreement between retroactive theory and non-retroactive theory. So, to compare the two theories in jurisprudence is important. The same points of the both are the missions and targets, extinguishing contract relatives that after the rescinding, and the compensations for actual damages. But, there are acute differences between them in the fiction of should-be situation, which leads to serious disagreement in the way of resolution, the nature of restitution and the compensation for damages. We can discover that, from comparison, the retroactive theory produces serious logical conflict, or can not provide sufficient protection to the parties. And the non-retroactive theory is more reasonable.The forth part is the choosing of the theory of retroactive effect, on the basis of home legal practices. This part is very important. Firstly, it is to interpret the regulation of our Act of Contract. Then, we compare the both theories of retroactive effect, includes: to incur logical conflict, to destruct the stability of trade, to satisfactory the requirement of economic benefit, and to break the principle of justice. At the end, we analyze 'the restitution of ownership' which is the most important supporting reason of retroactive theory, and demonstrate that its effect is not so overwhelming, and it is harmful to use it after rescission.