| Legal termination of contracts ("LTC") is an important mechanism in the Contract Law of PRC. The complexity existing in the mechanism itself and the features of the particular mechanism in the Contract Law of PRC have led to theoretical controversies and confusion in judicial practice.This dissertation analyzes certain difficult issues in the judicial practice by resorting to relevant theories expecting to provide better guidance to the practice. Among them, this dissertation focuses on certain issues of LTC, such as notice of LTC, relief for inappropriate exercise of LTC, the subject of LTC, extinguishment and restriction of LTC, legal effect of LTC, and so forth. It partly involves the common problems coexisting in LTC and termination of contracts by agreement ("ATC").This dissertation regards that: whereas termination by agreement sets stricter conditions than that by LTC without violating the compulsory provisions of laws and administrative regulations, as per the principle of party autonomy, LTC should not apply. The contract clauses on notice of LTC take effect only when they are in accordance with the Arrival Theory. When LTC is inappropriately exercised, the other party is entitled to accept the termination of the contract and demand the breaching party to undertake breach liabilities. The subject of LTC may contain the breaching party, who is entitled to terminate a contract under certain conditions. Regarding the extinguishment of the termination right, the creditor's any behavior contrary to the termination of contracts may be deemed an implied waiver, unless the creditor is able to give reasonable proof that such adverse behavior does not indicate a waiver of the termination right. Termination right may be restricted by indirect application of the principle of good faith due to the Lapse of Right Theory and direct application of the principle of good faith. This dissertation analyzes the theoretical controversies between the Direct Effect Theory and the Eclecticism Theory with comparative analysis method and summarizes the common points thereof so as to lessen confusion to the practice caused by such theoretical controversies. |
