Abstract: As an original contribution to China's civil law, Article 580(2) of the Civil Code of the People's Republic of China establishes the breaching party's right of rescission, a provision that has sparked considerable controversy in both theory and practice. Empirical evidence shows that since the Civil Code came into effect, the proportion of cases supporting the breaching party's right of rescission has risen markedly; however, judicial opinions remain divided. Divergent understandings regarding the timing of contract termination, insufficiency of damages, and the exclusion of "monetary obligations" have become the most salient issues in judicial application. Based on case studies and empirical analysis, this paper proposes several approaches to improve the application of this right: (1) regarding the determination of termination time, the "date of service of the copy of the statement of claim" should apply only to contracts that are legally or factually confirmed as impossible to perform, while a typological framework should be developed for cases requiring individualized adjudication according to specific circumstances; (2) an independent rule for compensating profits from breach should be established to deter intentional breaches; and (3) the necessity of applying the breaching party's right of rescission in disputes involving monetary obligations should be affirmed, while at the same time narrowing the scope of such monetary obligations and allowing partial reference application to resolve contractual deadlocks.