Anticipatory Breach Of Contract Theory

According to traditional contractual law principles, breach of contract is failure to fulfill a contractual obligation. Before the contract performance period starts, the debtor has no actual obligation to make payment In this sense, breach of contract occurs only after the performance period. As declared by O. W. Holmes, "The life of the law is not logic but experience." If the debtor declares not to perform his contractual obligation before the performance period starts, either his behavior or the objective fact has shown that he will be unable to perform his obligation when the obligation-performing period arrives. Does the law allow the creditor to sit back waiting for the coming of the performance period and then seek relief from the factual breach, or allow a breach-oriented relief system to be establish beforehand so as to prevent the creditor suffering more losses? To resolve this potential risk which may happen during the period from the contract taking effect to the starting of the performance period, a system of anticipatory breach of contract is established in the Anglo law. This system not only initiates a set of legal principles concerning anticipatory breach, but also leaves space for future development in the form of statutory law. It fully embodies the contract principles of sincerity and justice, and is of great significance in balancing the interests of contract parties and settling in time contract disputes. The system is a great contribution of the Anglo law to the world's legal system.The United Nations Convention on Contracts for International Sales of Goods (1980), which entered into force on January 1,1988, establishes a perfect code of anticipatory breach of contract on the basis of the system about inassured pleading of contract stipulated by the continental law and the basic framework of the anticipatory breach of contract system. The Convention was recognized by all the signatory states. China submitted a letter of approval to the UN Secretary-General in December 1986 and became a signatory state. Therefore, to some extend, China's foreign trade circle had recognized the system about anticipatory breach of contract before the promulgation of the Contract Law of the People's Republic of China (hereinafter referred to as "Contract Law").Countries of the continental law system do not have the concept of anticipatory breach of contract of the Anglo law system. They hold that the creditor does not have the actual right to demand performance before the advent of the liquidation period, so the debtor does not have any liability for nonperformance. The performance term is set in the interests of the debtor;the debtor can perform in advance but the creditor is not entitled to demand for an early performance. What is similar to the system of anticipatory breach of contract in the continental law system is the system about inassured pleading of contract. Originated in Germany, the system about inassured pleading of contract is prescribed in the civil codes of all continental law applying countries in order to carry out the principle of justice and to prevent the early performing party from sustaining losses. This system is slightly different from the anticipatory breach of contract system of the Anglo law.The Contract Law, which was adopted on March 15, 1999, combines the basic ideas and system of the continental law and the anticipatory breach system of the Anglo law. It is a significant step forward of the Chinese legislative system. The establishment of the system of anticipatory breach of contract will not only "treat the rights and obligations of contract parties in a just manner and avoid risks of anticipatory breach of contract to some extent, but also remove or minimize the causes of possible losses." Nevertheless, the anticipatory breach system of the Contract Law is not that of the Anglo law in the full sense. Compared with the latter, the Chinese anticipatory breach system seems far thinner in content. It is weak in terms of either legal provisions or application scope. The author of this paper tries to discuss the anticipatory breach system of the Contract Law on the basis of analysis and research, and puts forward suggestions on the improvement of the system so that others may come up with further opinions.