A Study On The Rescission Right Of Contract Of The Defaulting Party

No remedies, no rights. The setting of the remedies for breach of contracts is toensure the realization of the rights of the parties to the contract. The parties areentitled to apply the remedies such as continuing to perform, taking remedialmeasures, compensating for losses, terminating the contract and so on. The rescissionright of contract is bestowed by the law to the parties for timely terminating a contractand releasing the binding of the contract. Although the rescission right of contractbreaks the principle of strictly performing according to the contract and is a challengeto the validity of the contract, it pursues justice and efficiency meanwhile respectingfor the value of contract order. Under certain conditions, timely rescinding thecontract can decrease the losses and meets the requirements of legal justice. Article93and94of "Contract Law" are the legal basis of applying the rescission right ofcontract. But there are some ambiguous concepts such as “the person who has theright to rescind”，“the parties” which have aroused disputes about the subject whohas the right to rescind the contract. The mainstream view is that only the observantparty has the right to rescind the contract, but not the defaulting party. By given therescission right to the observant party, it protects his right well, but in certain cases, ithas ignored the interests of the defaulting party’s. Starting from this, the paper arguesabout the necessity and propriety of bestowing the rescission right of contract to thedefaulting party. To balance the interests of the parties, I hope it will be written in the law.Chapter1is about the necessity about bestowing the rescission right of contractto the defaulting party. There are some shortages in the existing remedies system, suchas the high performance costs and the conflict between specific performance andloss-reducing principle, the conflict between the observant party having the rescissionright of contract and the principle of equality and fairness. Consequently, it isnecessary to bestow the rescission right of contract to the defaulting partyconditionally.Chapter2is about the propriety of bestowing the rescission right of contract tothe defaulting party. It’s based on the theory of efficient breach, contractualcommitment, the principle of good faith and so on. By bestowing the rescission rightof contract to the defaulting party, we can achieve not only the goal of the balancebetween social justice and justice of individual, but also social efficiency.Chapter3is about the feasibility of bestowing the rescission right of contract tothe defaulting party. There are some rules such as anticipatory breach, the limitationprovisions about specific performance, the right to terminate the going-on contractand the right to terminate without any reason which can explain the feasibility ofbestowing the rescission right of contract to the defaulting party. They share the samepurpose and effect: pursuing justice and efficiency, decreasing the losses. Theapplying of these rules set examples for us which have reduced the difficulty ofbestowing the rescission right of contract to the defaulting party.Chapter4illustrates the conditions under which the defaulting party may rescindthe contract. The Contract Law is trying to protect the anticipatory interest of theparties by performing the contract. Although it’s necessary and reasonable to bestowthe rescission right of contract to the defaulting party conditionally, we should setstrict and clear limitations in case of abusing.Chapter5is mainly focus on the calculation of the compensation. Compensatingthe losses is a way to balance the interests of the parties. By compensating theobservant party’s losses, especially the individual losses, we can achieve the goal ofbalance between the two parties and decrease the losses. We get a conclusion that it is necessary, reasonable and feasible to bestow therescission right of contract to the defaulting party. This system should be written inthe law so that we can achieve the harmonized unification of the fairness, justice,order and efficiency.