The Legal Consequences Of The Termination Of The Contract

Termination of contract, as repayment, offset, drawing, exemption, or mixture, is atype of legal fact which causes the discharge of contractual rights and obligations.Various kinds of rights and obligations are agreed under the contract to serve itsperformance, which is also the entire and ultimate purpose of a contract. In general, aparty of the contract will be adherent to the promises of the contract in exchange for theother party’s proper performance and adherence to the contract. However, because ofcomplicated social-economic situations, a party sometimes fails to perform what is duefrom him under the contract, which is also known as breach of contract, mechanismsrelated to which are termination of contract and remedies of losses. Thus, termination ofcontract is one of the consequences of breach of contract. The academia and legislatureof China has long stuck with Parallelism in regard to the relationship betweentermination of contract and remedies. For instance, Article115of the GeneralPrinciples of the Civil Law states that “A party’s right to claim compensation for lossesshall not be affected by the alteration or termination of a contract.” Article97of theContract Law states that “After the termination of a contract, performance shall cease ifthe contract has not been performed; if the contract has been performed, a party may, inaccordance with the circumstances of performance or the nature of the contract, demandthe other party to restore such party to its original state or adopt other remedialmeasures, and such party shall have the right to demand compensation for damages.”However, the scope of remedies upon termination of a contract, especially in case oflosses in acquirable interest, remains controversial among academia. The key point ofthis paper is how the rule for losses in acquirable interest should be applied in judicialpractice of China. We hope this paper will sort out the issue of remedies of losses inacquirable interest upon the termination of contract and through which we can providetheoretical suggestions to judicial practice regarding the scope, basis, and applyingmethod of losses in acquirable interest rule to remedies upon the termination ofcontract.This paper consists of introduction, main text, and conclusion. The introduction explains the subject, purpose and method of argument of thestudy.The main text consists of five chapters in turn, which covers the legal consequencesof termination of contract, scope of remedies upon termination of contract, theoreticalstudy of losses in acquirable interest, comparative jurisprudence study of losses inacquirable interest, and judicial practice of remedies of losses in acquirable interestupon termination of contract.Chapter one illustrates the legal consequences of termination of contract. Thischapter covers the definition and types of termination, conditions of termination,exercise of the right of termination, the retrospective effect of termination, contractclauses immune to termination, and remedies of termination of contract.Chapter two illustrates the scope of remedies upon termination of contract. Thischapter explains why remedies upon termination of contract shall include acquirableinterest by coving a summary of remedies, relationship between remedies upontermination of contract and remedies upon other breach of contract, scope of remediesupon breach of contract, scope of remedies upon termination of contract.Chapter three illustrates the concept definition of losses in acquirable interest. Thischapter compares losses in acquirable interest with indirect losses and opportunity losson the relationship.Chapter four illustrates a comparative law study of losses in acquirable interest.This chapter studies the legislature and judicial precedents of three civil law countries,i.e. Germany, France, and Japan, and two common law countries, i.e. Britain andAmerica, in regard to remedies of losses in acquirable interest.Chapter five illustrates the remedies of losses in acquirable interest upontermination of contract through study of judicial practice. This chapter is the key pointof this paper and it conducts a thorough study and analysis on the judicial practice andapplying of remedies of losses in acquirable interest in China by covering the currentlegislature, judicial practice, and rules applying of remedies of losses in acquirableinterest.The conclusion summarizes the main contents of this paper, and also restates thescope, basis, and applying method of remedies of losses in acquirable interest upontermination of contract.