Is the limitation of action applicable to the interpretation of contract invalidity by Shanghai Lawyers

1. There is still a big dispute on whether the invalid contract is applicable to the limitation of action

There are different views on whether the limitation of action is applicable to the invalid contract in the judicial theory and practice circles. Even the Supreme Court has two typical cases which are totally opposite on whether the limitation of action is applicable to the invalid contract. The Supreme People's Court (2005) min Yi Zhong Zi No. 104 case is a typical case for the Supreme Court to determine that the invalid contract is not applicable to the limitation of action; however, in the judgment of the Supreme Court (2003) min Er Zhong Zi No. 38 case, it establishes that the invalid contract is still subject to the limitation of limitation of action. These two cases come from the Supreme People's court, but the results are quite different, which shows that even the Supreme Court still has a great controversy on the limitation of action of invalid contracts.

2. The Supreme Court's basic opinion on whether the limitation of action is applicable to invalid contracts

In response to the reporter's questions about the provisions on the application of the limitation of action system in the trial of civil cases, the head of the second civil division of the Supreme People's Court explained the limitation of action of invalid contracts as follows:

The limitation of action of the right of claim involved in the invalid contract is indeed an urgent issue in judicial practice. However, in the course of discussion, there are quite a lot of disputes on the starting point of limitation of action, and no tendentious opinions have been formed. Therefore, the trial committee of the Supreme People's court has decided not to stipulate the issue temporarily, which needs further study.

In the legal relationship of invalid contract, there are three main claims: the right to confirm the invalidity of contract, the right to return property and the right to claim compensation for loss. In judicial practice, it mainly involves two kinds of limitation of action: first, whether the above claim is applicable to the limitation of action. Although the claim of confirming the invalidity of a contract is clearly a claim, it is essentially a right of formation in substantive law. Therefore, the general theory holds that it is not applicable to the limitation of action, but to the exclusion period. However, as the system of invalidation of contract involves the protection of national interests and social public interests, the contract law of our country does not stipulate the exclusion period for confirming the claim of invalidation of contract. If the right of claim for return of property is the right of claim for unjust enrichment, the provisions of limitation of action shall apply. The claim of compensation for loss is the claim of creditor's right arising from the fault liability of contracting, so the limitation of action should also be applied. Second, the right of claim stipulated in the limitation of action shall be applied, and the period of limitation of action shall be calculated from when. This issue is the most controversial issue in the theoretical and judicial practice circles at present. There are three main controversial views: the first one is that the contract shall be calculated from the date when it is confirmed to be invalid. The reason is that the invalidity of a contract can only be confirmed by a court or an arbitration institution. Only when a judgment or an award confirms the invalidity of a contract can a claim for restitution of property and compensation for losses arise. Only when the obligee knows or should know that his rights have been infringed can the limitation period begin to run. As for the non interest of the obligee caused by the invalidity of the contract, it can be solved according to the principle of fairness through the provisions of the substantive law, and should not be solved by the calculation of the starting point of the limitation of action in advance. The second view is that it should start from the date of expiration of the performance period. The reason is: the parties sign and perform the contract based on the validity of the contract, and their reasonable expectation for the realization of the rights is the date when the contract performance period expires. Therefore, after the expiration of the contract performance period, the parties know or should know that their rights are infringed, regardless of whether the contract is confirmed invalid afterwards. Moreover, the losses caused by the invalidity of the contract are mainly caused by the parties' failure to perform their contractual obligations, rather than the confirmed invalidity of the contract. The third view is that the above two views are inadequate. The former will cause the problem of right sleep, while the latter will cause the helpless of invalid contract to be treated effectively. The first two provisions should be combined to make a compromise provision, that is, the validity of the contract is confirmed, and the limitation period for returning property and claiming for compensation for loss is calculated from the date when the contract is confirmed to be invalid. However, if the time limit for performance of the contract expires, the party fails to perform or fails to fully perform the contract, and the party requests to return the property or compensate for the loss on the ground of invalidity of the contract, the limitation period shall be calculated from the date of expiration of the time limit for performance.