On Damage Compensation For Rescission Of Contract

On the relationship between the contract rescission and the damages for breachof contract, there are coexist legislation and no-coexist legislation in the practice ofinternational legislation, while there are alternative doctrine and socialist doctrine inthe theory circle. The relationship has experienced the transition from alternativedoctrine to socialist doctrine, the author thinks the socialist doctrine is the best choice.Although the rescission is stipulated in the chapter of termination of the rights andobligations in our country, but the termination of the contract is different conceptfrom the rescission of the contract. The essence of the termination of the contract isthe liability for breach of contract. In fact, it’s the non-performance of debt ratherthan the termination of the contract in German legislation. So the rescission of thecontract should be stipulated in the chapter of the liability for breach of the contract.The nature of the rescission of the contract is the right to claim rather than the right offormation. Among academics there’re two theories about the bases on which the claimof compensation for breach of contract, which are compensation for contracts fail toperformance and compensation for contracts’ termination. According to the article115of China’s General Principles of the Civil Law and the article97,107and113of theChina Contract Law, the claim of compensation for damage on termination of thecontract is not based on the damage of the reliance interest but on the damage of theundertaking benefit. On the retroactivity of terminating of the contract, there existfour doctrines, the direct effect theory, the indirect effect theory, the compromisetheory and the liquidation relationship theory. The author adopted the general view ofthe German, what is the liquidation relationship theory. The scope of the damagecompensation of the rescission of the contract legislation is different in differentcountries. In our country, the Uniform Contract Law was enacted through series oflegislative evolution. In the Uniform Contract Law, the scope should include thedamage compensation for breach of contract, the damage compensation for acquirable interests,the damage compensation for restitution and the damage compensation forinherent interests. But the scope should be subject to the rule of causality,foresee-ability and loss reduction.