The Legel Results Of The Rescission Of The Continuous Contract

Time, as an important factor, have different effects towards the performance of the contract. Consequently, contracts have been classified as momentary contracts and continuous contracts. The fundamental character of the continuous contracts is that time plays an important role during the performance of contracts and the contents of payments also rely on the time. The characters and essence of the continuous contracts are distinguished with the momentary contracts, so that the regulations applied are different as well. The classification of momentary contracts and continuous contracts has been confirmed in BGB. In BGB, the rescission and the termination of a contract are different systems in the obligation law. The former applies to the momentary contract and the later one applies to the continuous contract, so the lawmakers regulated them separately and designed different regulations for them. The general provisions of the Contract Law of China are designed based on the momentary contract and don’t distinguish the momentary contract with the continuous contract. Because of the different characters from the momentary contract, the special characters of the continuous contract shall be taken into consideration when the law is applied. Article 97 of the Chinese Contract Law is about the legal results of the contract rescission. Although the system is designed based on the momentary contract, it can also be applied to the continuous contract because the regulation is general and abstract itself. However, this also results to the ambiguity and uncertainty in the legal practice. The application of this regulation shall be further made clear and definite. Three results have been regulated in Provision 97 of the Chinese Contract Law: request that the original position be restored or other remedial measures be taken, and has the right to claim compensation for any loss. For the continuous contract, it is a general principle that the general position shall not be restored and the restoration as an exception. The compensation is a kind of liability for the breach of the contract, it includes the performance profits and the receivable profits, but the calculation of the receivable profits shall consider and balance the profits of both parties. “Other remedial measures” include the compensation for the loss resulting from the breach of the contract, repair, exchange, remaking, the reduction of the price. For exception, the price compensation can be applied.The aim for the research of this thesis is to make the legal results of the rescission of the continuous contract furthermore clearly, and research more about Provision 97 of the Chinese Contract Law with the consideration of the characters of the continuous contract. What to expect is that the legal results of the rescission of the continuous contract can be embodied. This thesis takes the Germen regulations and theories as reference, and adopts the method of legal explanation, including words explanation and system explanation etc. The relevant theory has been clarified. Based on this, the relevant problems are discussed with the characters of the continuous contract.This thesis has been written in four parts.Chapter One begins with the discussion about the concept of the continuous contract, and then researches the characters and essence of the continuous contract. The continuous contract is a kind of contract, whose performance cannot be completed by one-off delivery but completed by continuous delivery with the elapse of the time. There are three characters of the continuous contract: time is the core factor; continuity without limitation and wastage; high trust between parties. The essence of the continuous contract is the maximum of the party’s profit and a economic tool to avoid risk. The meaning of the formulation of this part is to emphasize the characters and essence of the continuous contract, which are different from the momentary contract, and build a foundation for the below discussion.Chapter Two discusses the topic about the retrospective effect after the rescission of a contract. In this chapter, the question on whether the rescission of a contract has retrospective effect has been first discussed. Two theories, “Direct Effect Theory” and “Compromise Theory”, are analyzed, and the Germen theory has also been referred to. According to the comparison, “Compromise Theory” fits better to the current legal system and is able to protect the legitimate rights and profits of the parties. Consequently, according to the view of “Compromise Theory”, the retrospective effect does not exist after the rescission of a contract. After the discussion on the theory, the continuous contract is classified as inherent continuous contract and continuous supply contract, and then discuss furthermore with the above theories. After the rescission of the continuous contract, the given delivery can be restored in some exception situation, and not as the scholars said that it cannot be restored. There are two concrete exception situations: the subject matter delivered according to the continuous supply contract has defect; the trust beneficiary has serious tort towards the trust principal, which leads to the rescission of the trust contract.Chapter Three focuses on the loss compensation after the rescission of a continuous contract. The research on this question also begins with the general theories and then analyses the essence of the loss compensation right after the rescission of a continuous contract. Based on this, the question about the loss compensation scope after the rescission of a continuous contract has been discussed furthermore. The scope includes only the performance profits and the receivable profits, the trust profits excluded.The key point of Chapter Four concentrates on the concrete content of “other remedial measures”. Although “other remedial measures” is one of the legal results of the contract rescission stipulated by the Contract Law, the scholars discussed this legal result seldom. In order to research “other remedial measures”, the comparative law method and the words explanation method have been adopted. By comparing Chinese law with Germen law on the legal results of the contract rescission and explaining the words’ meaning of Provision 97 of Contract Law, it is clarified that “other remedial measures” includes liquidation damages, price compensation, repair, exchange, remaking, price reduction etc. Based on this, the application of the above remedial measures after the rescission of the continuous contract has been discussed combined with the character of the continuous contract.