On The Contract Right To Rescind The Exercise

The rescission right of contracts is the right to render the contracts null and void by unilateral intention of the contractual parties based on statutory or agreed reasons before the contracts are performed or fully performed since the conclusion of the contracts. This paper aims to examine the flaws in the current system of the performance of the rescission right of contracts in P.R.China and present the proposals for improving such system by introducing such system in P.R.China as well as in other countries respectively belonging to Civil Law system and Common Law system. This paper is composed of four parts:The first part generally introduces the rescission right of contracts in four aspects, namely the concept, the type, the nature and the characteristic of the rescission right of contracts. First, it analyzes the connotation of the concept of the rescission of contracts by distinguishing some related concepts to the rescission of contracts which include the termination of contracts, the invalidation of contracts and the withdrawal of contracts. It also further develops the meaning of the rescission right of contracts. Secondly, it introduces two types of the rescission right of contracts, namely the agreed right of rescission and the statutory right of rescission. According to the different conditions triggering to exercise the statutory right of rescission, it also introduces the discretionary right of rescission, the rescission right due to Force Majeure, the rescission right due to the anticipatory breach of contracts and the rescission right due to breach; thirdly, it introduces two views on the nature of the rescission right of contracts, namely the view of liability and the view of right. Further, it examines the nature of the rescission right of contracts in three aspects, namely the right of formation, the claim against property and accessory right. Last, it presents the characteristic of the rescission right of contracts which refers to the procedural, instantaneity and selectivity.The second part introduces the systems of the performance of the rescission right of contracts in major countries in both Civil Law system and Common Law system. For Civil Law system, it presents the related laws regarding the rescission right of contracts respectively in France, Germany and Japan. For Common Law system, it presents the related laws regarding the rescission right of contracts in U.S.A. and UK.The third part further analyzes and examines the current system of the performance of the rescission right of contracts in P.R.China in three aspects, which are the reasons giving rise to the rescission right of contracts,the procedures of performance of the rescission right of contracts and the legal consequences of exercising the rescission right of contracts. First, by analyzing the related provisions in the contract law of P.R.China with respect to the reasons giving rise to the rescission right of contracts, the conclusion can be drawn that there are four reasons giving rise to such right, which are the object of contract becomes unachievable due to Force Majeure, anticipatory breach of contracts, delayed performance and the fundamental breach of contracts. The above four reasons are also intensively examined. Secondly, regarding the procedures of performance of the rescission right of contracts, it introduces the exercising party, the way and the limit of the performance of the rescission right of contracts. Last, regarding the legal consequences of exercising the rescission right of contracts, it mainly examines the retroactive effect of the performance of the rescission right of contracts and also briefly introduces the indemnification of damage caused by the performance of the rescission right of contracts.The fourth part analyzes the problems in the system of the performance of the rescission right of contracts of P.R.China and presents some proposals for improving such system. The existing problems mainly include as follows: there are some flaws in the legislative model of contract rescission system in P.R.China; the provisions about the reasons giving rise to the rescission right of contracts are imperfect; the provisions about the procedures of performance of the rescission right of contracts are imperfect; the provisions about the legal consequences of exercising the rescission right of contracts are not clear. The proposals for such above problems are as follows: establish a dualistic structure of the legislative model for the system of termination of contracts and the system of rescission of contracts by distinguishing the continuous contracts and non-continuous contracts; the concept of the object of contract should be clarified in order to facilitate the judicial practice; the time limit for exercising the rescission right of contracts, the way of exercising the rescission right of contracts and the time limit for confirming the rescission right of contracts should be provided; the retroactive effect of the performance of the rescission right of contracts should be clarified.