Analysis On Legal Consequence Of Contract Invalidation Or Revocation

After one contract is invalidated or revoked, there will be legal consequencesincluding restitution of property, discount compensation and indemnity of loss. In case ofmalicious conspiracy and damages of the state, collective or a third party’s interests,properties thus obtained shall be nationalized or restituted to the collective or the thirdparty. However, in practice, bases of claim right of above-mentioned legal consequencesare unclear, and some regulations are unworkable in practice. This thesis starts withhistorical evolvement of relevant clauses of “Contract Law”, combines relevant foreigninstances of legislation and legal theories, and expatiates on the nature of claim right ofthree legal consequences. Claim right nature of restitution of property is related with realright alteration mode. From “General Principles of Civil Law” to “Real Right Law”, Chinahas always adopted legislation under creditor’s formalism. In “General Principles of CivilLaw”, restitution of property is a restoration means of real right of the original thing, andbelongs to right of real claim; In “Real Right Law”, real right protection includesrestitution of the original thing, and regards possession to be legal protection interest; theowner can claim for restitution of the original thing based on possession of unjustenrichment. Therefore according to “Real Right Law”, restitution of property canconstitute the competition of right of real claim and claim right for unjust enrichment.Discount compensation is a remedy in case that the original thing cannot be restituted or itis unnecessary to be restituted; under the condition of payment of intangible labor or currency as stated in the contract, whose ownership is lost immediately after payment,there is no possibility of restitution of property, so the party can only claim for restitutionof unjust enrichment. In case of payment of things corporeal or real right stipulated bylaws, the nature of discount compensation is related with the nature of restituted property.When the party claims for restitution of property based on ownership of the original thing,failure of restitution constitutes tort compensation; When the party claims for propertypossession based on unjust enrichment, the restitution of possession shall not beimplemented according to “Real Right Law”; its nature belongs to unjust enrichment, soboth constitute the competition of claim right.“General Principles of Civil Law” doesn’tstipulate liability for wrongs in conclusion of contract, so indemnity of loss is based onclaim for fault essentials. After “Contract Law” stipulates liability for wrongs inconclusion of contract, indemnity of loss is converted into liability for wrongs inconclusion of contract; however, it doesn’t hinder the party from raising claims based ontort liability under specific conditions. Stipulations on malicious conspiracy originate fromSoviet Russia’s legislation that “unjust enrichment produced due to illegitimate reasonsshall be nationalized” and have been transformed by Chinese legislation. However,existing stipulations introduce a third party (collective) by mistake, and lack limitations ofunlawful interests; invalidation in case of damaging a third party’s interests and action ofrevocation right are contradictory, so clauses shall be improved accordingly. Lastly, thisthesis sums up the complexity of above conclusions, as well as the relation betweenestablishment background of “General Principles of Civil Law” and changes of the times,and brings forward the idea to establish general principles of Chinese civil law corpus,which is guided by construction of claim right system and aims to integrate new laws.