Unilateral Cancellation of Contracts in French, English and Chinese Law

Abstract

This paper offers a comparative evaluation of the unilateral cancellation of contracts in French, English and Chinese contract law. The main propositions and conclusions are: (1) in principle, contracts should not be unilaterally cancellable by any contracting party; (2) with several preconditions, efficiency requires the unilateral cancellation of open-ended contracts to be permitted, as in fixed-term contracts where the right to unilateral cancellation is expressly provided for; (3) in order to deter opportunism, such cancellation should only be awarded if it is not due to socially harmful behaviour – a good faith standard for cancellation should be introduced; (4) a certain advance notice period should be given in order to enable the non-cancelling party to adapt to the new, changed circumstances and to recoup their initial investment; and finally (5) analysis reveals that Chinese contract law differs from French and English contract law.