Research On The Rules Of The Breaching Party Applying For Contract Termination Under "Contract Deadlock"

In recent years,a large number of contract deadlock problems have arisen in China’s judicial practice,in which the contract is deadlocked when there are obstacles to the continued performance of the contract and the parties cannot agree on the cancellation of the contract and the compensation for damages.The number of cases in which the defaulting party as the plaintiff requests the court to dissolve the contract has been increasing,and in order to properly solve this problem,the legislator established the rule of application for dissolution of contract by the defaulting party in Article 580,paragraph 2 of the Civil Code.The establishment of this rule gives the parties a chance to get out of the impasse and can effectively balance the interests between the parties.However,the rule has not only caused a lot of controversies in academic circles,but also inconsistencies in the interpretation and application of this provision by courts in practice.It was found that the scope of application of Article 580 of the Civil Code is limited and cannot solve all contractual deadlocks in practice,and there are inconsistencies in the interpretation and determination of the applicable conditions by the courts when adjudicating;at the same time,Article 580 of the Civil Code does not make clear provisions on the legal consequences of contract dissolution,i.e.,the time of contract dissolution and the liability for breach of contract.These problems have led to inconsistent standards of adjudication when courts use this rule to deal with contractual deadlock disputes in practice.Therefore,it is necessary to conduct an in-depth analysis of the content of Article 580 of the Civil Code and further clarify its scope of application,conditions of application and legal consequences,so as to better play the role of this provision in breaking contractual deadlocks.To address the problems,we first analyze and study the types of contracts with deadlock in practice,the conditions for the court to support the breaching party to terminate the contract,the determination of the time of contract termination,and the scope of liability for breach of contract,starting from three typical cases.On this basis,the reasonableness and scientificity of the rules on the application for contract rescission by the defaulting party are argued,and finally suggestions for the improvement of judicial application are put forward.When an impasse is formed in the performance of a contract,rules such as the rule of change of circumstances,the rule of release for material cause and the rule of derogation cannot really solve all the problems of contract impasse in practice effectively.The breach of contract when the party meets the conditions to apply for the termination of the contract in line with the requirements of the principles of efficiency,good faith and fairness in China’s civil law.Therefore,in the judicial application of this rule,firstly,from the legislative purpose,it is clear that the scope of application of Article 580 of the Civil Code can be expanded and interpreted to include the failure of performance of monetary debt.Secondly,in order to prevent the defaulting party from recklessly terminating the contract to the detriment of the defaulting party,on the basis of a precise understanding of the specific meaning of "failure to perform","excessive cost of performance" and "contractual purpose".It is necessary to add "the continued performance of the contract is unfair to the defaulting party" and "the defaulting party is not in bad faith" to the restriction conditions.Finally,the time of termination of the contract should be determined as the date of the court’s decision,and the scope of liability for breach of contract should be determined as compensation for the loss of performance interest of the defaulting party.