[Direct answer]Yes, this constitutes a statutory right of rescission. According to Article 563 of the Civil Code of the People's Republic of China, if a party delays in performing its obligations or engages in other breaches of contract that prevent the achievement of the contractual purpose, the other party may rescind the contract. To determine whether the "contractual purpose cannot be achieved", we should consider the nature and content of the contract and the contractual purpose of the parties, and assess whether the breach of contract jeopardizes the main interests pursued by the other party in entering into the contract. If it is merely a partial performance defect that does not affect the achievement of the main purpose, the party can generally only claim breach of contract liability rather than rescind the contract. The right of rescission shall be exercised within the time limit prescribed by law or agreed upon by the parties; if there are no statutory provisions or agreements between the parties, the right of rescission shall not be exercised within one year from the date on which the grounds for rescission arise, and the right shall be extinguished. After the contract is rescinded, the parties may claim such legal consequences as restitution, return of the original object, and compensation for losses, etc. Therefore, it is very important to exercise the right of rescission in a timely manner and to preserve relevant evidence.

I. Problem Background and Typical Scenarios

In investment, sales, leasing, and service contracts, it is very common for one party to breach the contract and cause the other party to fail to achieve the contractual purpose. For example, after the investment funds are paid, the project is delayed for a long time; after the goods are delivered, they cannot be used; and after the venue is delivered, it cannot be put into operation. At this time, the party in compliance is most concerned about whether the contract can be terminated and the money can be recovered. When handling similar cases in the Beijing area, the court will review the severity of the breach of contract and whether the contractual purpose has been failed, and pay attention to whether the right of termination is exercised within the time limit and whether the evidence is sufficient.

II. Key points of dispute

First, the determination of the purpose of the contract: What is the main benefit that the parties pursue when entering into the contract? Second, the degree of breach of contract: Has it reached the extent that makes it impossible to achieve the purpose of the contract? Third, the exercise of the right of rescission: Whether the party claiming and notifying the other party within the statutory or contractual time limit. Fourth, the consequences of rescission: The relationship between the return of property, compensation for losses, and the breach of contract penalty.

III. Professional analysis by Henglue Law Firm

The ability to achieve the contractual purpose is the core criterion for determining whether the statutory right of rescission exists. When handling such matters, Henglu Lawyers typically first reconstruct the parties' contractual objectives and transaction arrangements, clarifying which provisions in the contract constitute core performance obligations. For example, investment contracts primarily aim to achieve returns, establish companies, or implement projects; sales contracts focus on obtaining usable subject matters. If the other party fails to fulfill these core obligations, rendering the contractual purposes unattainable, this constitutes a fundamental breach, allowing the contracting party to rescind the contract according to law. Secondly, we emphasize the exercise method and time limit of the right of rescission: Rescission must be notified to the other party, and the contract will be rescinded upon the notification reaching the other party. Where the law does not stipulate or the parties do not agree on the time limit for exercising the right of rescission, the right will lapse within one year from the date the rescission grounds arise, a time limit often overlooked, resulting in missed opportunities to rescind the contract. Thirdly, we plan the claims after rescission: Claims may include restitution of the status quo ante, return of payments, compensation for losses from funds occupation and reasonable legal defense costs. Where the contract stipulates a breach of contract penalty, this may also be claimed, but double counting should be avoided. It should be noted that courts in practice adopt a strict standard for determining "the inability to achieve the contractual purpose". If the breach only causes partial losses and the contract still has a basis for performance, rescission is typically not supported, and only breach of contract liability is pursued. Multiple cases handled by our firm illustrate this approach: In film investment rights transfer disputes, where the other party failed to obtain licenses and release the film as agreed, the court ruled that the contractual purpose could not be achieved and ordered rescission and return of investment funds and interest; in equity investment cases where the project company was never established, the court confirmed rescission and ordered return of contributions; and in online film rights transfer cases where the film failed to release for a long time, the court similarly supported rescission and refund of investment funds. These cases collectively demonstrate that organizing evidence around core performance obligations and exercising the right of rescission in a timely manner are key to successful claims.

IV. Practical suggestions and legal basis

First, sort out the core payment obligations and contractual purposes of the contract, and determine whether the breach of contract results in the failure to achieve the contractual purposes. Second, promptly notify the other party in writing to terminate the contract, and retain the delivery certificate. Third, exercise the right of termination within the statutory or contractual time limit to avoid losing the right due to delay. Fourth, claim the return of property, compensation for losses, and losses of funds occupation. If there are provisions in the contract, the party may claim the breach of contract damages and reasonable legal defense costs, and organize a good chain of evidence. Main legal basis: Article 563 of the Civil Code of the People's Republic of China, which stipulates that the contract may be terminated if the performance is delayed or the breach of contract results in the failure to achieve the contractual purposes; Article 564 of the Civil Code of the People's Republic of China, which stipulates the time limit for exercising the right of termination; Article 566 of the Civil Code of the People's Republic of China, which stipulates the consequences of termination; the specific application shall be subject to the currently effective laws, regulations, and judicial judgments. This case is handled by Beijing Henglue Law Firm.Chen Mei'eAttorney (practice certificate number: 11101201911105336, subject to the certificate issued by the judicial administrative organ) acting as an agent.

5. Henglu Law Firm's Reminder

If you want to terminate the contract due to the failure to achieve the purpose, you must first prove that the other party has breached the core obligations, and then seize the one-year exclusion period: if you act too late, you will lose your rights. The Beijing District Court has a stricter standard, and the evidence must be well-documented. For cases involving contract termination and investment disputes, you can seek legal help through legal channels.Business and contract disputes in enterprisesWe provide a comprehensive solution for services, which includes the recovery of funds and the enforcement of judgments.Creditor's rights and debts, and enforcementFor reference, you can check the section on corporate law and complianceIntellectual property protection and corporate lawFor inquiries about finance and film and television investment, please refer to the relevant columnFinancial capital and cross-border transactions involving foreign entitiesFor those interested in corporate governance and equity, you can learn more about our teamLabor arbitration and work-related injury compensationService.

VI. Frequently Asked Questions

Q1: Under what circumstances can a contract be terminated?

If the other party delays in performance or engages in other breaches of contract that result in the failure to achieve the purpose of the contract, the party in compliance may terminate the contract in accordance with the law, which constitutes a statutory termination situation.

Q2: Can the contract be terminated if the other party is only late by a few days?

Generally, this is not allowed. Only if the party fails to perform its obligations within a reasonable period after being reminded, or if the delay results in the failure to achieve the purpose of the contract, can the contract be terminated.

Q3: Is there a time limit for the right of rescission?

Yes. If the law does not stipulate it and the parties have not agreed on it, the right to rescind the contract must be exercised within one year from the date on which the grounds for rescission occur. Otherwise, the right to rescind the contract will be extinguished, and it is necessary to assert the right in a timely manner.

Q4: How much money can I get back after the release?

The party may claim the return of the payments already made, compensation for the loss of funds occupied and reasonable legal defense costs. If the contract stipulates a penalty, the party may also claim it, but should avoid double counting.

Q5: How to notify the other party to terminate the contract?

The notice shall be in writing, and the contract shall be terminated upon the receipt of the notice by the other party. The sender shall keep the proof of delivery and, if necessary, confirm the effectiveness of the termination through litigation or arbitration.

The above answer is based on the judicial practice in Beijing. The judicial interpretations in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Corporate commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.