This study examined the Defaulting Party’s Right of Rescission (DRR) in Chinese civil law from historical, theoretical and practical perspectives. The approach adopted by this research was PRISMA, which involved screening 207 documents, but only 50 were analysed systematically, while seven actual judgment cases published by Chinese legal authorities were critically reviewed. The study examines the development of DRR in common law systems, particularly efficient breach theory, which posits that a breach is justified if it produces greater efficiency. This theory’s importance and application in Chinese law are considered, with a notable turn towards recognizing parties’ practical difficulties caused by unforeseen events. The contributions of Chinese scholars, who argue for equilibrium between contractual freedom on the one hand and stability plus judicial discretion on the other hand, are synthesized. It also discusses possible misuse, vagueness of important phrases, and the need for clear directions as well as uniform criteria. This study pinpointed a number of practical problems and opportunities for law reform. This calls for the establishment of a clear legal framework and strict judicial scrutiny to ensure that the DRR is applied correctly. Furthermore, increasing the transparency and accessibility of DRR-related jurisprudence as well as continuous training for legal practitioners are necessary steps toward enhancing its consistent application in fairer ways. The balance between flexibility and contract stability should be maintained together with economic principles integration as well as fairness principles integration so that it can serve its intended purpose more equitably, thereby remaining an important tool within the Chinese legal system.