Study On The Rescission Of Contract By The Defaulting Party

Article 94 of the General Principles of the Contract Law of China stipulates the conditions for exercising the general legal right of rescission.However,the subject of exercising the right of rescission is defined only by the word "party",and no distinction is made between the subject of right.There are three different views on whether the party in breach of contract is included in the "party" and becomes the subject of the right of rescission of contract.Then,based on the traditional moral concept,the parties are only the parties who abide by the contract;affirming that the pursuit of equality and economic benefits of the main body of the contract is emphasized,the analysis of the parties from the perspective of literal interpretation certainly includes the party who breaches the contract;and the compromise theory holds that the subject of legal rescission is only the party who abides by the contract,except that the purpose of the original contract cannot be realized due to force majeure.In judicial practice,there are more and more cases in which the breaching party requests rescission of the contract.Most courts,in accordance with Article 110 of the Contract Law,have decided to support the breaching party's request for rescission of the contract.From the perspective of legal interpretation,the three exceptional clauses actually performed provide an explanation path for the legitimacy of the breaching party's right to rescission of the contract.However,in order to protect the legitimate rights and interests of the non-fault party,the contract rescission right of the breaching party should be strictly defined in terms of the conditions for exercising the right,the way of exercising the right and the responsibility assumed.This article is divided into four parts altogether in the structure and content.The first part is the combing of the main provisions of the current law on the right of rescission of contracts.It mainly introduces the provisions of the general principles and rules of the Contract Law on the subject of the right ofrescission of contracts and the differences in the understanding of the "parties" in the article 94 of the Contract Law.The different views in the theory make the right of rescission of contracts of the breaching party to be discussed and explained.The second part is mainly based on the analysis of the case of Xinyu Company v.Feng Yumei in the Supreme Court Bulletin and similar cases in judicial practice.It demonstrates the legitimacy of granting the breaching party the right to rescind the contract in judicial practice.By analyzing and integrating the judgment basis of the court supporting the breaching party to terminate the contract,it is concluded that the proviso clause in Article 110 of the Contract Law provides an explanation path for the breaching party to exercise the right to terminate the contract.The third part demonstrates the legitimacy of granting the breaching party the right to rescind the contract from the perspective of legal theory.Although the actual performance is the primary way to bear the liability for breach of contract,it also has some limitations.Compared with the actual performance system,the system of contract rescission has its own independent value.The benefit principle and cost-benefit analysis method in the theory of efficient breach of contract provide a theoretical basis for the breaching party's right of rescission of contract.The pluralistic value of law aims at balancing the interests of all parties,rather than merely tending to safeguard the rights of the defending party,so conditionally endowing the breaching party with the right of rescission of contract is reasonable in theory.The fourth part focuses on the limitation of the breaching party's right to terminate the contract.Only when the proviso stipulated in Article 110 fails to achieve the purpose of the contract and the breaching party has no malicious intentions,can the breaching party's right to rescind the contract be applicable.At the same time,in order to safeguard the interests of the party who breaches the contract,the party who breaches the contract needs to compensate the party who breaches the contract completely for its performance interests,and executes its rights by litigation in accordance with the provisions of the principle of change of circumstances.At this time,thenature of the right of rescission of the party who breaches the contract is to form a right of action.Therefore,giving the breaching party the right to rescind the contract under the limited conditions and fully compensating the breaching party not only enables the parties to get rid of the yoke of the deadlocked contract in time and realize the organic unification of legal pluralistic values in individual cases,but also avoids the waste of social resources and improves the overall economic benefits.