An Analysis On The Improvement Of Objections System Against Cancellation Of A Contract

Pursuant to the Contract Law of PRC,after one party to a contract(hereinafter referred to as the Cancelling Party)delivers a notice to the other party(hereinafter referred to as the Opposite Party)to cancel the contract,if the Opposite Party holds any objections to such cancellation,he should put forward them within the stated period,if any,or where no provisions are agreed by the two parties he should submit the aforesaid objections to the court or arbitration committee for confirming the effectiveness of such cancellation within three months after receipt of such notice,otherwise the objections would not be upheld by the court or arbitration committee.In legal practice,the Opposite Party seldom raises any objections legally to the contract's termination within the stated time limit because there is few legitimate ways of resisting such termination and very short period of objection.When the Cancelling Party who in reality is not entitled to terminate a contract delivers a notice to cancel the contract(hereinafter referred to as Malicious Cancellation),the Oppoiste party's rights and interests would be damaged if he does not raise objections in time.To resolve this issue,some legal researchers and professionals hold that whether an objection raised by the Opposite Party against cancellation after the agreed or stated period is valid still depends upon if the Cancelling Party enjoys such termination right.Such point of view would be helpful to avoid Malicious Cancellation of a contract,however it won't be beneficial to urge the Opposite Party to raise objections timely,which would lead to an unstable contractual relations between the two parties in the long run.This paper tries to improve theobjection-raising system against the contract's termination with the two following suggestions: first,we should insist on the nature of right of formation for terminating a contract and its exercise way by delivering notification.In such case,either party to a contract shall do his utmost to avoid Malicious Cancellation of the contract,meanwhile we should refer to the limitation system in litigation and introduce notice mechanism,with an anticipation to amend Article 96 of Contract Law of PRC and Article 24 of Judicial Interpretation 2nd Edition on Contract Law of PRC.Second,we should abandon the perception that terminating a contract is of the nature of right of formation,while we should change the ways of delivering cancellation notice,from servicing a notice to the Opposite Party into lodging a lawsuit with a court or applying for an arbitration with arbitration committee,like the exercises of alternating and resindment rights.If so,the right to cancel a contract would be of the nature of right of formation through suit.The Opposite Party could raise objections in the litigation or arbitration process by means of defense.The conditions on termination a contract and period limit for exercise of the right of formation could be held unchanged.