Study On The Disgorgement Damages For Breach Of Contract In Anglo-American Law Of Contracts

Eisenberg Professor, the American famous scholar, stated there is another interest beyond the three protected interests by the contract and it is the disgorgement damages. The disgorgement damages is the interest which is the promisee's interest in requiring the promisor to disgorge a gain that was made possible by her breach but did not consist of a benefit conferred on her by the promisee, and it is different from the restitution interest. The disgorgement damages for breach of contract are found for the two principles conflicted in some situation. It is a principle in the law of restitution that one should not gain by one's own wrong; it is a principle of the law of contracts that damages for breach should be based on the injured party's lost expectation. If the injured party's lost expectation equals or exceeds the gain by the party in breach, then the damages based on expectation strip the party in breach of all gain, and make the injured party whole. But if the injured party's lost expectation is less than the gain realized by the party in breach of all gain. This situation brings the two principles into conflict.The damages of breach of the contract are to reimburse the loss of the injured, and the damages in the law of restitution are against the unjust richment of the defendant, including the illegal transfer property and the illegal gains. So the two principles are conflict when the loss of the plaintiff is not equal to the gains of the defendant. And the Anglo-American judges and scholars are discussing the disgorgement damages and attempt to redefine the concept of the breach of contract and employ the disgorgement damages to break away the dilemma.Although China is the civil law, we face the same social problems with the Anglo-American. Thus I choose the disgorgement damages for beach of contract in Anglo-American as the topic of the dissertation. I hope to introduce it China to modify the system of breach of contract of the people's republic of China. The dissertation is divided into six parts: the origin of the disgorgement damages; the appropriation of the disgorgement damages; the contracts to which the disgorgement damages can be applied; the identification of the disgorgement damages; the measuring of the disgorgement damages;the feasibility and legal construction of the disgorgement damages for the damages system of breach of contract in the people's republic of China.The first chapter is about the origin of the disgorgement damages. The special damages are the equity damages which exists extensively outside the contract law and it is popular the trust law and the tort law and the intellectual property law. In Anglo-American the disgorgement damages is through the constructive trust applied to the breach of contract to prevent the plaintiff from the insufficient compensation. And the judge has the discretion to construct trust on the contracts which are involved the fiduciary duty and the property rights. So the contract right is seemed as the property. Until 2001 the British privity definitely approved the disgorgement damages of breach of contract. And the same time the American is in hot discussion on the Restitutionary Restatement Third among which the 39 section is about the disgorgement damages for the opportunistic breach.The second chapter is about the appropriation of the disgorgement damages."No relief, no right"is the traditional thought mode. Under the mode, the aim of the damages of breach of contract is not to protect the contract right but to the adequate relief for the injured. The utilitarian thought mode creates the efficient breach, which is the optional mode raised by Holmes Judge. However the optional judge can not benefit the trust relation between the two parties of the contract and make the stability of the market order and improve the corporations of the two parties. In fact the theory of the contract right raised by Kant is the property theory of the contract. The chapter three is about the four kinds of contracts which could apply the disgorgement damages. They are the specific contract, the restrictive contract; the contract involved the fiduciary duty and the defective contract. The plaintiff of the four contracts is often in the condition of inadequate compensation, for example no financial loss. The disgorgement damages are the useful supplement for the expectation interests to resolve the problem.The fourth chapter is about the conditions of disgorgement damages. It is subdivided into three parts. The first is the strict liability of the disgorgement damages. The second is the condition of the disgorgement damages, and the third is the reasons of free from the liability. The disgorgement damages aims to deterrent the willful defendant and the default of the defendant is the prerequisite of the disgorgement damages, but the plaintiff burdens the default proof. So the Anglo-American adopts the strict liability for disgorgement damages. There are five conditions to identify the special damages. The defendant gains the profits; he breaches the contract; there is the causation between the profits and the breach of contract. And the most important is the inadequate compensation under the expectation rule.The fifth chapter is about the measure of the disgorgement damages and it is the most important and the most difficult for stating. The problem of measuring is a legal one but not in the discretion of the judge. Thus there are the limited rules and measuring rules. When measuring the gains of the defendant there are some limited rules as measuring the loss of the plaintiff under the expectation rules. To prevent the unjust richment of the plaintiff, the measuring is limited by the cause, for example the remoteness and joint cause. The measuring the gains of defendant is not limited by the foreseeability rule and is under the theory of consequence of directness, and the time of the gained profits is another limited rule.There are two kinds of measures for disgorgement damages. One is the subject measures. And the gains by breach of contract is directly measured and includes the positive gains, for instance the difference with the resale price and the contract price, and the negative gains, for example the saving costs which is not deduced for nonperforming the contract. The indirect gains are the most important for measuring the gains. It is the profits gained by defendant's investment by the gains for breach of contract. In the trust law it is illegal and should belong to the plaintiff. And if the breach of contract is willful, it is in the disgorgement damages. Among the gains by the joint cause, the profits gained which are not by the breach of contract are deduced, for example the skill and effort of defendant, market and so on.The sixth chapter is based on the defect of the system of the damages of breach of contract, and manifests the necessity and feasibility of the disgorgement damages in China to modify the system of breach of contract.And the formality and the substance of the disgorgement damages are the another important thing.