[Direct answer]In the Beijing area, it is not always possible to terminate the contract when the other party breaches the contract. According to Article 563 of the Civil Code of the People's Republic of China, the party in compliance only enjoys the right to terminate the contract under statutory circumstances such as the other party's delay in performing the main obligations and still failing to perform after being reminded, or the delay in performance/other breaches of contract that make the purpose of the contract impossible to achieve; Article 566 stipulates the legal consequences after termination. Whether the contract can be terminated depends on whether the breach of contract constitutes a fundamental breach of contract, rather than the other party's slight breach of contract. It is recommended to first fix the evidence of the breach of contract, assess the extent of the impact on the purpose of the contract, and, if necessary, send a letter of reminder before exercising the right to terminate the contract. For more details, please refer to the following link:Business and contract dispute resolution services for enterprises.

1. Problem background and typical scenarios

Breaches of contract are extremely common in commercial activities, and typical scenarios include: the buyer delaying or refusing to pay; the contractor delivering goods that do not meet the agreed standards and refusing to make corrections; the service provider suspending services midway; and the partner transferring contractual rights without authorization. Many parties who comply with the contract directly declare the contract "null and void" after the other party breaches the contract, but are sued for breach of contract because they do not meet the statutory conditions for termination. The Beijing District Court tends to be stricter in determining fundamental breaches of contract, requiring the party in compliance to first provide evidence that the purpose of the contract has failed or that the other party still refuses to perform after being urged to do so. In cases involving the realization of creditor's rights, the court may consider the following factors:Creditor-debtor relations and enforcement case services.

II. Key points of contention

There are three key points of contention. Firstly, the determination of fundamental breach of contract: whether the degree of breach results in the failure to achieve the contractual purpose, which is the core of the right to rescind the contract. Secondly, the notice procedure: for delayed performance of major obligations, it is usually necessary to give a notice and set a reasonable time limit first, otherwise the rescission may be deemed improper. Thirdly, the consequences of rescission: how to return the part that has been performed, and how to calculate the breach of contract penalty and damages. In practice, it is also necessary to distinguish between the agreed right to rescind the contract and the statutory right to rescind the contract, and to review whether the contract stipulates the conditions for rescinding the contract. For special disputes, reference can be made to relevant provisions.Special services and other case-related services.

III. Professional analysis by Henglue Law Firm

In the contract disputes handled by our firm, whether the right of rescission is exercised properly often determines the outcome of the case.
The first case is an arbitration case concerning a commissioned creation contract: Shanghai A Technology Company and Shenzhen B Network Company signed a "Project Outsourcing Agreement" to produce virtual IP materials. After the materials were accepted as qualified, the other party delayed paying 583,000 yuan. Beijing Henglu Law FirmXiong BinrongThe lawyer (practice license number: 11101202211410897, subject to the document issued by the judicial administrative organ) represented the client in applying for arbitration. The arbitration tribunal adopted the main opinion and ruled that the defendant should pay the contract amount of 583,000 yuan and compensate all the lawyer's fees. This case shows that when the other party delays payment and constitutes a breach of contract, the party in compliance with the contract can terminate the contract through arbitration and claim for compensation.
The second case is a contract for reserving a shop lease: After signing the "House Lease Confirmation", Zhang *hai customized the decoration but maliciously refused to lease the shop. Company A entrusted Beijing Henglu Law Firm to handle the caseZhu GuijingThe lawyer (practice license number: 11101202011246828, subject to the document issued by the judicial administrative organ) filed a lawsuit, and the court determined that the reservation contract was established and that the defendant had breached the contract maliciously. The court ordered the defendant to pay 365,000 yuan as compensation for the decoration costs.
The third case, an internet service contract dispute: After Wang Li negotiated with Company A to terminate the contract, the other party refused to refund the service fee of 34,433 yuan. After Company A appealed, Beijing Henglu Law Firm handled the case.Xue SuhuaThe lawyer (practice license number: 11101201211769926, subject to the document issued by the judicial administrative organ) represented the defendant in the second instance. The court rejected the appeal and upheld the original judgment of refund.
The above case shows that the termination of a contract and the pursuit of accountability require evidence and legal qualification as a prerequisite. Professional lawyers can effectively organize the path of terminating a contract and pursuing claims.

IV. Practical suggestions and legal basis

The legal basis is Article 563 (Circumstances of the Statutory Right of Rescission), Article 564 (Period for Exercising the Right of Rescission), Article 565 (Notice of Rescission and Objections), and Article 566 (Consequences of Rescission) of the Civil Code of the People's Republic of China (effective January 1, 2021); as well as provisions on breach of contract liability and damages. Practical advice: First, determine whether the breach of contract is a fundamental breach; send a written notice of default and keep evidence; issue a notice of rescission in accordance with the contract or the law; promptly claim restitution, liquidated damages, and compensation after rescission; and pay attention to the exclusionary period for the right of rescission, as failure to comply with the time limit may result in loss of rights. It is recommended to entrust a lawyer to draft the notice of rescission and evaluate the scope of claims.

5. Henglue Law Firm's Reminder

When exercising the right of rescission, it is advisable to exercise caution rather than abuse it. It is recommended that the party in compliance first fix the evidence of the other party's breach of contract (communication records, acceptance certificates, payment vouchers); distinguish between general breaches of contract and fundamental breaches of contract to avoid prematurely rescinding the contract and becoming the breaching party; the notice of rescission must be in writing and given within a reasonable time limit; the notice of rescission should clearly state the basis and consequences to prevent disputes during the objection period. For long-term cooperation or major transactions, it is preferable to negotiate amendments rather than directly rescind the contract to reduce business losses. If rescission is necessary, prepare evidence for claiming compensation simultaneously and advance the overall strategy of "rescission + recovery of damages".

VI. Frequently Asked Questions

Q1: If the other party breaches the contract, can I directly terminate the contract?

This cannot be generalized. According to Article 563 of the Civil Code, you only have the right to rescind the contract in legal circumstances such as the other party's delay in performing the main obligations and still not performing them after being urged, or breaching the contract and making the contractual purpose impossible to achieve. Generally, for minor breaches of contract, you can only claim for repair, price reduction or compensation, and cannot directly rescind the contract. If the contract has stipulated the conditions for rescission, the contract can also be rescinded according to the agreement when the conditions are met. If the rescission is deemed improper after the fact, you may instead bear the liability for breach of contract. Therefore, you should first assess the nature and extent of the breach of contract, and if necessary, consult a lawyer to determine the path of rescission. Never declare the contract void solely based on your emotions.

Q2: If I want to terminate the contract, what evidence do I need to prepare?

The core evidence includes: the contract text and supplementary agreements (determining rights and obligations and terminating the agreement), performance records and delivery receipts (proving the other party's performance), evidence of the other party's breach of contract (late notice, unqualified acceptance certificates, communication records), reminder letters and delivery receipts (proving that the reminder procedure has been carried out), and proof of losses (expenses and foreseeable loss of benefits). The evidence should be organized around "the fact of breach of contract—fundamental breach of contract or after reminder—the amount of losses". If the materials are complete, it will be easier to obtain support for termination and claims; if the reminder evidence is missing, it will be more secure to exercise the right of termination after making corrections.

Q3: How much does it cost to hire a lawyer to handle the termination of a breach of contract?

The attorney's fees depend on the contract value, complexity, and stage of the case. They are usually charged on a per-case basis, as a percentage of the contract value, or on an hourly basis. The specific fees are subject to the terms of the retainer agreement and there is no uniform standard. Property cases are subject to a cap on the contingency fee. Court fees are calculated according to the amount of the litigation request and are borne by the losing party. Dissolution and claims are often asserted together, which makes the costs relatively manageable. It is recommended to clarify the scope of fees and refund conditions before entrusting the attorney, evaluate the amount of refunds and compensation that can be claimed, and then decide whether to litigate to avoid the cost-reversal of small-scale disputes.

Q4: How long does it typically take from receiving the termination notice to receiving the compensation?

From the issuance of the notice of termination to the receipt of compensation, the timeframe depends on the legal process. If the other party has no objections and complies with the requirements, it may be resolved within a few weeks; if no agreement is reached and litigation is initiated, the first-instance ordinary procedure takes six months and the summary procedure takes three months, and small-amount cases with clear facts may be resolved even faster; the appeal process typically takes three months in the second instance. After the judgment, the enforcement process will be handled separately. Overall, for cases of breach of contract termination with relatively minor disputes, it often takes several months from claiming to receiving the compensation. It is recommended to apply for property preservation at the same time as the termination to prevent the other party from transferring assets and shorten the actual recovery period of the compensation.

Q5: If the other party breaches the contract, what should I do first?

Here's the translation of the four steps suggested: 1. Immediately secure evidence of the other party's breach of contract, organize contract documents, performance and communication records, and confirm the nature and extent of the breach. 2. Determine whether the statutory or contractual conditions for termination are met. If a reminder is required, send a written notice of default and retain proof of delivery. 3. Send a termination notice in accordance with Article 565 of the Civil Code, clearly stating the basis for termination, the effective date, and subsequent claims for compensation. 4. Simultaneously calculate losses and prepare claims, and if necessary, hire a lawyer to draft legal documents or file a lawsuit. Throughout the process, avoid unilaterally ceasing your own performance to avoid being counter-accused of breaching the contract, and maintain a defensible position at all times.

This article is written based on the common judicial interpretation in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

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. →Business and commercial legal services·Attorney Xiong Binrong·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open 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. In case of disputes, please consult a practicing lawyer in time.