The Normative Implication And Illustration Of "Breaching Party’s Right To Terminate The Contract"

Traditional theory generally believes that only the non-defaulting party of the contract can enjoy the right to terminate the contract.The 2006 Communique case announced the Xinyu case,supporting the breaching party to terminate the contract for the first time in judicial practice.Since then,the academic circles have successively begun to conduct theoretical research on the breaching party’s right to terminate the contract.In the process of the compilation of the Civil Code,there have been major disputes in the theoretical and practical circles as to whether the breaching party can enjoy the right to terminate the contract.At present,there are mainly two views on whether the breaching party can enjoy the right of rescission,the "negative theory" and the "limited affirmative theory".The "negative theory" believes that the breaching party should not have the right to terminate the contract.If the breaching party can terminate the contract,it will violate the principle of strict adherence to the contract and violate the nature of the termination of the contract as a means of remedy for the observant party.This will easily lead to moral hazards and contradict the value orientation of contract law..The author did not agree with the "negative" view,and responded to the refutation one by one.The "Limited Affirmation Theory" supports the breaching party’s right to terminate the contract,and believes that it conforms to the efficiency value of contract law and meets the needs of judicial practice.It is a new understanding of morality and does not go beyond the scope of morality.Therefore,the research on this issue is of great value."Civil Code of the People’s Republic of China"（hereinafter referred to as "Civil Code"）and the breaching party’s right to terminate the contract has full theoretical justification.First,in the process of contract performance,a contract deadlock is formed,giving the defaulting party the right to cancel,which helps both parties to get rid of the contractual constraints and invest in new transactions,which is in line with efficiency values.Second,the breaching party’s right to rescind the contract helps to ensure that both parties to the contract have equal rights to remedy,balance the interests of all parties,and conform to the principle of fairness.Third,the actual performance is substitutable and the damage compensation is sufficient,which ensures that the breaching party’s termination of the contract conforms to the theory of breach of contract relief options.Fourth,granting the breaching party the right to terminate the contract will help break the deadlock of the contract,realize the purpose of the termination of the contract,conform to the non-punitive function of the termination of the contract,and conform to the essence of the contract termination system.Regarding the determination of the nature of the breaching party’s right to terminate the contract,the author believes that the breaching party’s right to terminate the contract should belong to the right of litigation,which is an incomplete right of termination.The right to terminate the contract belongs to the right of formation in nature,and the right of formation can be divided into the right of formation and the right of formation.The right of formation is the exercise of the right by issuing a notice to the other party,and the right of formation is the exercise of the right through judicial channels.The complete right of rescission can be remedied either through private or public means.The incomplete right of rescission only includes the right of litigation and can only be remedied through judicial procedures.Therefore,the breaching party’s right to terminate the contract is an incomplete right to terminate the contract,and it is a form of litigation right.The breaching party’s right to terminate the contract has a sufficient practical basis for entering the law.After sorting out related cases,the author found that before the Civil Code came into effect,the number of related cases showed an overall upward trend,and they were widely distributed throughout the country.The distribution of cases was mainly concentrated in lease contracts,sales contracts and other types.In these cases,the proportion of courts supporting the breaching party to terminate the contract reached 69.4%as a whole.The main applicable legal basis is Article 110 of the Contract Law.The supporting reasons for the judgment mainly include balancing the interests of the parties,failing to achieve the purpose of the contract,High performance costs,reducing social wealth waste,etc.The empirical research on judicial practice fully shows that it is necessary and urgent to grant the breaching party the right to terminate the contract.The design of the applicable conditions of the breaching party’s right to terminate the contract is the key to its application.The author believes that it should include two parts:substantive conditions and procedural conditions.At the level of substantive conditions,it should meet the four conditions of obstruction to continued performance,obvious unfairness to continued performance to the defaulting party,failure of the observant to exercise the right to terminate the contract,which violates the principle of good faith and the defaulting party’s non-malicious breach of contract.At the level of procedural conditions,the breaching party can only exercise its rights through judicial procedures through courts or arbitration institutions,so as to prevent abuse of rights.The determination of the liability of the breaching party for damages is equally important for the exercise of rights.The assumption of liability for damages is an important part of guaranteeing the smooth exercise of the breaching party’s right to terminate,therefore,it should be considered.Based on the analysis of academic theories,the experience of other countries’ laws and judicial practice,the author believes that the scope of damage compensation should be based on performance benefits,and relied on benefits as a supplement.There are two ways to calculate damages:abstract and specific.The abstract calculation method mainly calculates the loss in the usual situation.The specific calculation method can learn from the two generally recognized methods of "substitution transaction" and "market price".The second paragraph of Article 580 of the Civil Code provides for the termination of the contract by the breaching party.However,there are still some problems with this clause and it is difficult to be self-consistent.First,the system is confused,and the nature and logic of the provisions are not clear enough.It is the confusion in the scope of application,which only includes non-monetary debts and does not cover comprehensively.Under the background that the current Civil Code has been promulgated and implemented,the author tried to solve the above confusion by way of interpretive theory.Putting the breaching party’s contract termination rule in the chapter on liability for breach of contract conforms to the characteristics of this chapter and is reasonable.At the same time,logical flaws in theory do not affect its application in judicial practice.According to the analysis,the author believes that it covers both monetary debts and non-monetary debts.