On Fundamental Breach Of Contract

Fundamental breach of contract, deriving from the English common law, is the legal system of contract, which is admitted into The U.N.convention on contracts for the International Sale of Goods (CISG), Principals of International Commercial Contracts (PICC), Principals of European Contract Law (PECL). The paper historically describes its comparison with contract breach and exposes its constitutive requirements, legalization standards, legal consequence and its value, and on the basis the paper analyzes fundamental breach of contract in Contract Law of China. The whole paper consists five parts, totaled over 33, OOO words.Part I describes its formation and development and its comparison with contract breach. Fundamental breach of contract as a legal system, originated in the Common laws. In the 19th century ,the Britain court differentiated contract terms as "condition" and "warranty" .If a party to a contract violated the condition terms, which was regarded as fundamental breach of contract, the other party would consequently claim the rescission of a contract and do so, but only had the right to ask for compensation, if the warranty terms violated. With the difficulties to distinguish such two kind terms, the Britain court gradually invented "intermediate term" and in the end, practiced to affirm a substantial breach by the practical harms.Part II describes its constitutive requirements .In general on its determination standards there are "term" and "consequence", and now the "consequence" has became the essential measurement. The formal value of fundamental breach of contract lies in restriction of the right of contract rescission. The substantial significance lies in balancing of the interests between the defaulting party and non-defaulting party. As the determination standards of fundamental breach is so abstract that we combine it with various breaches of contract, such as anticipatory non-performance, late performance, withholding performance and so on.Part III describes its legal consequence. That is also relations with the rescission of contract. The relations between fundamental breach of contract and rescission embody in two respects: the former is the cause of the latter and the latter is based on and the result of the former and this practice can promote the trade and protect the trade order, and can still remedy the benefit of the creditor when a contract substantially violated. If there are exemptions in the contract, legal consequence of fundamental breach is strict restriction for the obligation exemption of the party that substantially violates the contract terms.Part IV describes its value evaluations. The paper describes that the legal system of fundamental breach of contract has the legal value of equity, efficiency and security conforming the civil law values system.Part V analyzes fundamental breach of contract under Contract Law of China. First the paper self-criticisms three contract laws before the Contract Law of China came into force .The Economical Contract Law lacks restrictions on the rescission of contract and neglects function of the contract law as promoting transactions. But the Economical Contract Law Concerning Foreign Country regarding gravity of the consequences of the breach as the basis of the rescission of contract and legislative technology combining enumeration with generalization of the Technologic Contract Law are regarded as a success. The Contract Law of China did not use the concept of fundamental breach, but as a matter of fact it adopted the legal system.