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After the completion of the conditions of the contractual agreement, the right of the rescission still requires the other party to continue to perform the contract
Column:JUDICIAL CASES Time:2018-11-05

[case index]

Case of sales contract dispute between Cathay Pacific Commercial Bank Co., Ltd. and Yingda E-Commerce Software System (Shanghai) Co., Ltd.

First trial: (2009) Pumin II (Business) Chu Zi No. 8319

Second trial: (2010) Shanghai No. 1 Middle People (Business) Final Word No. 1509

[referee]

 After the completion of the contractual conditions, the right holder shall exercise the contract or continue to perform the contract. If the right holder requests the opposite party to continue to perform the contract, it shall be deemed that it has waived the right of rescission by its own actions and the right of rescission is extinguished.

[Basic case]

The plaintiff Guotai Shihua Commercial Bank Co., Ltd. (hereinafter referred to as Cathay Bank) and the defendant Yingda E-Commerce Software System (Shanghai) Co., Ltd. (hereinafter referred to as Yingda Company) signed a bank software contract in April 2004, stipulating: The plaintiff is preparing to upgrade his Shanghai representative office to a Shanghai branch. After the original and the defendant negotiated, the defendant will provide the plaintiff with the TAIBs Bank Comprehensive Application System and provide guidance and training and related services to the plaintiff's employees; the total contract price that the plaintiff should pay to the defendant. The amount is US$285,000; the defendant agrees that if the plaintiff fails to obtain the legal license of the People’s Republic of China after one year of signing the contract (calculated from the date of signing the contract), the plaintiff has the right to terminate the contract. In this case, the defendant will be receiving The plaintiff allowed the defendant to remove all TAIBs-related devices within one month after the plaintiff's notice, and the plaintiff allowed the defendant to remove all TAIBs-related devices. After the contract was signed, the defendant installed the TAIBs system for the plaintiff. The plaintiff paid the defendant $45,600 on July 22, 2004, and paid the defendant $46,600 on December 23 of the same year for a total payment of $91,200. After May 2005, the plaintiff failed to obtain a business license to open a branch. However, from May 2005 to February 2006, the plaintiff still requested the defendant to perform the contractual obligations by e-mail, and the defendant also fulfilled the obligations under the contract as required by the plaintiff.

The plaintiff, Cathay Bank, alleged that it had signed a "Bank Software Contract" with the defendant in preparation for the opening of the Shanghai branch. However, due to policy reasons, the plaintiff has not been able to open in Shanghai. On December 1, 2008 and November 6, 2009, the plaintiff informed the defendant and reiterated that the contract had been terminated, and urged the defendant to refund and remove the TAIBs system. However, on November 17, 2009, the defendant sent a letter to the plaintiff refused to refund the collected payment. The plaintiff dismissed the right according to the contract, sued the court, and requested the order to cancel the bank software contract signed between the original and the defendant. The defendant returned the payment of RMB 754,853.28.

The defendant Yingda Company argued that it did not agree with the plaintiff’s claim. After the plaintiff appeared in the contract to exercise the right of rescission, he did not propose to terminate the contract. Instead, he required the defendant to continue to perform the contractual obligations, indicating that the plaintiff gave up the contractual right of rescission and changed the contract. The main body of the contract stated that the signing time was April 2004, and the expiration of the one-year period in May 2005, the plaintiff had obtained the right to cancel the contract, and the plaintiff filed the termination of the contract with the defendant on November 6, 2009, which exceeded the reasonable period.

[decision result]

The court of first instance ruled that the plaintiff, Cathay China Commercial Bank Co., Ltd., rejected all claims.

After the verdict, the plaintiff refused to appeal.

The judgment of the second instance court: dismissed the appeal and upheld the original judgment.

[referee opinion]

The court of first instance held that the focus of the dispute between the two parties in this case is whether the plaintiff has the right to exercise the right of rescission as agreed in the contract. According to the agreement between the original and the defendant in the contract, if the plaintiff fails to obtain a legal license after signing the contract for one year, it has the right to terminate the contract. However, the e-mail provided by the defendant proved that the plaintiff still required the defendant to continue to perform the contract after the above conditions for the termination of the contract, and the defendant also fulfilled the contractual obligations as required by the plaintiff. The plaintiff’s actions indicated that he had waived the contractual right to terminate the contract. After the agreement is made to cancel the condition, the right holder shall choose to exercise the contract or continue to perform the contract. If the right holder chooses to continue to perform the contract, it means that he will waive the contract. If the right holder accepts the performance of the opposite party and allows him to enjoy the right of rescission, it will undoubtedly harm the interests of the opposite party and violate the principle of fairness stipulated in the Contract Law. To take a step back, even if the plaintiff did not give up the right of rescission, it should be exercised within a reasonable period of time. As the right to form, the right to terminate a contract must be restricted by the period of exclusion. Otherwise, the relationship of rights and obligations between the parties will remain in an uncertain state for a long time, which is not conducive to the protection of the security of the relative transaction. Although the defendant in this case did not urge the plaintiff to exercise the right of rescission, the plaintiff did not obtain a legal license after one year agreed by the contract. He already knew that the right of rescission had already occurred. He should weigh the pros and cons within a reasonable period of time and decide whether to cancel the contract or not. The plaintiff failed to provide valid evidence that it had been notified of the defendant’s dismissal on or before December 1, 2008, and even if the plaintiff did not notify the defendant to terminate the contract on December 1, 2008, it had clearly exceeded the reasonable period and its right of rescission had been extinguished. . In summary, the plaintiff has lost the right to terminate the contract, and the reasons for the termination of the contract are not valid. The plaintiff refused to support the lawsuit requesting the defendant to return the purchase price based on the contract.

 

The court of second instance held that: after the completion of the conditions for the termination of the contract, the party with the right of rescission may issue a notice of termination of the contract to the other party, or may request the other party to continue to perform the contract, but the rescission right holder may only choose one of them, otherwise The contractual legal relationship between the parties will be in an unstable state. If, after the completion of the contractual rescission condition, the rescission right still requires the other party to continue to perform the contract, it means that it waives the right of rescission in an implied manner. Therefore, the case of China Thai Bank has lost the right to cancel the contract.

[Judge analysis]

The Contract Law stipulates that when a party has the right to terminate the contract, the contract can be terminated. However, if the party enjoying the right to resuccessually asks the other party to continue to perform the contract after the completion of the right to cancel the right, the right to release the right is not clearly defined. The Contract Law has loopholes in the provisions for the removal of the right to eliminate the right. In this regard, the provisions of the Contract Law on the cause of the elimination of the right to cancel can be applied analogically, and the loopholes in the law can be supplemented by reference to the theory of the invalidity of rights in the Civil Law and the principle of “prohibition of estoppel” in the Anglo-American legal system.

1. The "Contract Law" applies to the stipulation of the loopholes and the right to cancel the contract

With regard to the situation of the dissolution of the right to cancel, the "Contract Law" only stipulates in Article 95: "If the law stipulates or the parties agree on the time limit for the exercise of the right to terminate the right, if the party does not exercise the time limit, the right shall be extinguished. The law does not stipulate or the parties have not agreed to exercise the right to terminate the exercise. The time limit shall not be extinguished after a reasonable period of time after the other party has lodged a complaint. In this case, the parties did not agree on the time limit for the exercise of the right of rescission, and the defendant did not urge the plaintiff to exercise the right of rescission. Therefore, only from the Contract Law. According to the clear regulations, the defendant’s defense against the demise of the right to dismiss has no legal basis, and the plaintiff’s right to revoke has not been eliminated. The plaintiff can cancel the contract accordingly. However, the absence of a law does not mean that the law does not want such a provision. Civil law hermeneutics refers to the unsatisfactory state of the legal system that violates the legislative intent.

In the nature of law, the right to release is a kind of right to form. Starting from the above principles of civil law hermeneutics, we can look for the relevant provisions of the Contract Law on other forming rights. Article 55 of the Contract Law stipulates two situations in which the right of revocation is also eliminated as the right to form. The second item stipulates that the party with the right of revocation knows the revocation of the cause of revocation or waives the right of revocation by its own actions. wipe out.

The right to cancel may refer to the provisions of the right to revoke the right to form. After a party has the right to terminate, it has not issued a notice of termination to the other party, but instead continues to require the other party to perform the contract. The act waived the right of rescission, and the right of rescission was immediately extinguished. After that, the rescission right could no longer be brought to the other party to terminate the contract. The first and second trials of this case all considered that after the completion of the right to resuccessive conditions, the rescission right still required the other party to continue to perform the contract, and gave up the right of rescinment in an implied manner. Although it was not explicitly stated that it refers to the provisions of the Contract Law on the right to revoke, But the effect of the application is exactly the same.

Second, the theory of rights failure

Another defense of the defendant believed that the plaintiff did not exercise the right of rescission within a reasonable period of time, resulting in the elimination of the right to dismissal. Although the "Contract Law" does not stipulate the period of rescission, the use of the civil law's theory of the invalidity of rights can still limit the time limit for the rescission. The so-called theory of rights invalidation, according to the view of Mr. Wang Zejian, a scholar in Taiwan, means that the right holder does not exercise his rights within a certain period of time. If the special circumstances are sufficient for the obligor to properly trust the creditor not to perform his obligations, then the principle of good faith may not be used. Again for the claim. The theory of the invalidity of rights is based on the principle of honesty and credit of civil law. It is a special form that prohibits the abuse of rights. For the entire legal field, regardless of public law, private law and procedural law, all rights, regardless of all claims, formation rights, and defense rights. , can be applied. On the effect of the invalidation of rights, the doctrine holds that the invalidity of rights is a special form that prohibits the improper exercise of rights. The right itself is not eliminated, and only defenses occur.

In this case, the plaintiff did not exercise the right within the corresponding period after the rescission took place, and requested the other party to continue to perform the contract, which caused the other party to rely on the plaintiff to no longer exercise the right of rescission. The plaintiff then requested the termination of the contract, which clearly violated the honesty and credit. In principle, the defense of the plaintiff’s exercise of the right of rescission has been established within a reasonable period of time, and the plaintiff’s exercise of the right of rescission should be restricted.

Third, the principle of "forbidden estoppel" in the Anglo-American law

The principle of estoppel in the Anglo-American law was established by the British modern law chief Justice Dunning in the High Trees Case. The basic meaning of this principle is: to achieve the principle of fairness and justice in law, that is, in the original In the agreement on the rights and obligations between the parties, if one of the parties has expressly exempted or changed the terms of the contract from the other party, if the other party has initiated the operation due to trust, or permits the promiser to repent of his promise, the counterpart shall In case of damage or loss, the court does not allow it to repent. Since then, the principle of estoppel in the Anglo-American law has been extended to the prohibition. Article 90 of the United States (Second) Restatement of Contract Law also adopts this principle, stating: “If the promisee should reasonably expect that its promise would induce the promisee to take certain certain, substantive actions or Restraint, and the promise does induce the act or restraint to occur, then the promise should be binding, because only by enforcing the promise can we avoid injustice. In this case, the plaintiff asks the other party to continue after the right of rescission The performance is fulfilled, and the other party also performed the contract according to the plaintiff's request. If the plaintiff is allowed to terminate the contract according to the original contract cancellation right, it will damage the defendant's trust in the plaintiff and violate the principle of fairness and justice of the contract.

The reason why China's "Contract Law" stipulates that the party with the right of revocation knows that the right of revocation is waived by its own actions after the revocation of the matter, and the right of revocation is eliminated. The reason is also to protect the reliance interest of the other party and the stability of the contract state. Whether it is the right to revoke or the right to revoke, once a party has the right to form, it has the right to unilaterally revoke or terminate the contract by its own will, and the contract is immediately in an unstable state, and the other party will always worry about the termination of the contract. Your own performance is unnecessary. Therefore, Article 95 of the Contract Law also stipulates that the other party has the right to make a reminder. If the right to release is not exercised within a reasonable period of time after the other party has lodged a complaint, the right of termination shall be extinguished. After a party’s right of rescission is established, the act of requiring the other party to continue to perform the contract will cause the opposite party to generate trust, that is, the party enjoying the right of rescission will no longer exercise its right of rescission, and the law should protect the other party’s trust. Therefore, the establishment of the right to revoke and the right to revoke the rights of the right holder can be arbitrarily waived and the principle of "forbidden estoppel" in the Anglo-American law is legally connected.

In the case that the law has loopholes in the elimination of the right to terminate the contract, the law fills the legal gap according to the principle of good faith, and actually establishes the rule that “the party enjoying the right to abandon the right to cancel the right to cancel the right to cancel the right” And it is in line with the theory of power failure in civil law. It not only has the significance of civil law interpretation methodology, but also has important significance for perfecting China's contract cancellation system.

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