Research On The Termination Right Of The Breaching Party Under Contract Deadlock

In recent years,with the continuous optimization of the business environment and the continuous improvement of relevant institutional mechanisms,contract deadlock is a new situation and problem in judicial practice,which leads to low efficiency of contract transactions and great waste of social resources.It is necessary to confirm the judicial termination system and allow the defaulting party to apply for judicial termination.Although the Civil Code of the People’s Republic of China(hereinafter referred to as the "Civil Code")stipulates that both parties can apply for termination of the contract through judicial channels in case of contract deadlock,there is no clear provision on the circumstances in which the defaulting party can exercise the right to terminate.This article aims to explore this issue.Subsequently,a study was conducted from an empirical perspective on the provisions of the Civil Code on the right to terminate the breach of contract by the defaulting party.Based on relevant cases in judicial practice in China in recent years,the problems in the case of the defaulting party’s right to terminate the contract were analyzed and explored,and improvement suggestions were proposed for the judicial practice of the defaulting party’s right to terminate the contract.The newly added second paragraph of Article 580 of the Civil Code serves as a continuation and supplement to Article 110 of the original Contract Law,and legislators hope that it can break the contract deadlock.The legislative purpose of this clause is to free both parties from contract deadlock and solve the problem of imbalanced interests between both parties,making up for the lack of such situations in the original contract law.Firstly,this article provides a theoretical explanation of the system of the defaulting party’s right to relief under contract deadlock,analyzing its constituent elements and the inherent legitimacy of the system.Secondly,based on the Supreme People’s Court Gazette case "Xinyu Company v.Feng Yumei Shop Sales Contract Dispute Case"(hereinafter referred to as "Xinyu Company Case"),we searched and sorted out relevant cases in recent years where the defaulting party has applied for contract termination.It was found that over half of the defaulting party’s contract termination rights cases have received support from courts or arbitration institutions,The paper specifically analyzes the basis for supporting the right of the defaulting party to terminate the contract in judicial judgment,and summarizes the problems that exist in the judicial practice of the defaulting party’s right to terminate the contract.The main problems include: the application conditions and limitations of public remedies are not clear,that is,the conditions for the defaulting party to exercise this right should be strictly restricted to avoid this system becoming an endorsement for the defaulting party to obtain improper benefits;Once again,in judicial practice,there is no unified determination of the time for contract termination.Whether the time of notification,prosecution,or judgment is used as the time for contract termination;And how the defaulting party assumes liability for damages after exercising the right to terminate the contract.Finally,suggestions for improving the right of the defaulting party to terminate the contract were proposed,as follows: firstly,the nature of the defaulting party’s right to terminate the contract should be clarified.Article 580(2)of the Civil Code stipulates that the nature of the defaulting party’s right to apply to a court or arbitration institution to terminate the contract should belong to the judicial right to terminate;Secondly,it is necessary to clarify the applicable conditions for the defaulting party’s right to terminate the contract.The author analyzes it from an objective,value,and procedural perspective,and confirms that the defaulting party’s application for judicial termination of the contract should comply with the principle of continuing to perform and cannot achieve the purpose of the contract,and violate the principles of good faith,fairness,and efficiency.When the above conditions are met,the court may decide to terminate the contract;Thirdly,the time for the defaulting party to terminate the contract should be clearly defined,and determined by the court or arbitration institution based on the specific circumstances of the case;Fourthly,it is necessary to clarify the liability of the defaulting party for damages after exercising the right to terminate the contract,following the rules of predictability and certainty,while also considering the obligation to mitigate losses.