The "Civil Code" provides for the statutory cancellation system Of contracts on the basis Of the "Contract Law", which improves the subject, conditions, rules, legal effects, and typical contract cancellation. However, there is still no distinction between breach Of contract cancellation and non-dissolution. Loopholes and drawbacks such as the termination Of the breach, the failure to clarify whether the breaching party has the right Of termination, and the failure to specify the objection period Of the terminated party. There are significant differences between the termination Of a contract due to breach Of contract and the termination Of a contract due to non-default reasons such as force majeure and change Of circumstances in terms Of the subject, conditions, rules and legal effects Of the termination, and the law should distinguish between the two.
The reasons for the statutory termination Of the contract can be divided into two types: breach Of contract and non-default. Among them, cancellation Of breach Of contract is the most common, and is currently the most widely used in judicial practice. The applicable conditions for non-default cancellation are more stringent, and they are relatively less applicable in practice. Judging from the existing regulations, whether it is to terminate the contract in breach Of contract or to terminate the contract in non-default, the most fundamental reason for the termination Of the contract is that the purpose Of the contract cannot be achieved. For issues such as the relationship between the termination Of the contract and the impossibility Of performance, the breach Of collateral obligations, and whether the contract can be terminated from the obligation to pay, etc., the fundamental judgment standard should be whether the purpose Of the contract can be achieved. Performance cannot be just one Of the circumstances that make the purpose Of the contract impossible to achieve, and breach Of the obligation to pay and collateral obligations does not mean that the contract cannot be terminated completely.
Relief Of breach usually includes two types: the observant party and the breaching party. The right to terminate the contract Of the observant party mainly applies to the provisions Of Articles 563-566 Of the Civil Code. The observant party can terminate the contract in the event Of a breach Of contract expected, delayed performance or fundamental breach Of the contract by the breaching party. The observant party can exercise the right Of termination by notice or litigation, but the way that the other party raises objections after receiving the observant notice is limited to litigation. After the contract is terminated, there is no retrospective effect, but a statutory liquidation debt is generated. The party benefiting from the performance Of the contract should return the received benefits as much as possible. If the received benefits are not suitable to be returned or can only be partially refunded , The beneficial party shall take remedial measures, and when the remedial measures are not sufficient to make up for the losses suffered by the other party, the beneficial party shall also compensate for the losses.
The right to rescind the breaching party is currently controversial in the field Of practice and academic circles. Experiences that can be used for reference in comparative law include the German debtor’s refusal to perform model and the French judicial dissolution model. Combining with the content and judicial practice Of my country's "Civil Code", the judicial dismissal model is more preferable. After all, the termination Of the contract by the breaching party is an exception to the principle Of strict adherence to the contract. In practice, the applicable conditions should be strictly controlled when applying, and the judicial review procedures Of the court should be strictly controlled. This can break the contract deadlock and prevent the abuse Of the right Of termination to the greatest extent.
The subject, conditions, and legal effects Of non-default termination Of the contract are different from those Of the breach Of contract termination. As far as the subject is concerned, when the force majeure is lifted and the situation change is lifted, only the party adversely affected by this has the right to lift it. Non-default termination Of a contract is limited to circumstances such as force majeure, change Of circumstances, and arbitrary termination as clearly defined by the law. Compensation losses after the non-default termination Of the contract are limited to the losses that need to be compensated in order to return the benefits that have been received. At this time, there is no compensation loss under the liability for breach Of contract.
The existing provisions Of the "Civil Code" are mainly aimed at the situation where the observant party terminates the contract in the termination Of the breach Of contract, and is not fully applicable to the termination Of the contract by the breaching party and the termination Of the contract without breach Of contract. The rules for the breaching party to terminate the contract and for non-default termination Of the contract should be more detailed and systematic.