Predictability Rules In Contract Law

Compensation of damage caused by breach of contract in"Contract Law"take the full compensation principle. The compensation included not only the direct loss caused by breach of contract, but also the benefits will get after the performance. However, in practice, the application of the principle of full compensation may bring unfair effect in compensation of damage by breach of contract if according to the actual causality. Adopt the predictability rule to restrict to the full compensation principle in Contract Law is benefit to achieve the fair and justice in"Contract Law". The application of predictability rule has strong universality. Many countries'law such as Japan and Germany have this regulations."Foreign Economic Contract Law"on earlier period in our country regulated predictability rule, then in the"contract law"also set it but as a principled rule. Now much trades and contracts emerged what made the dispute of the compensation of damage a lot. Based on the historical development and current situation, this paper discussed the basis and the elements and application of predictability rule and against this situation sum up some views of the author.This article is divided into six parts:The first part introduces the concept and the historical development of predictability rule and comparative analyses the difference in some countries. Predictability rule first had been regulated in the French statute. In Britain,"Hadley v. Baxendale"had important effect on the later laws. Later,"Victoria Laundry Ltd. v. Newman Industries"explained the elements and Attention problems of predictability rule, which is called a milestone of compensation of damage for breach of contract.The second part introduces the application and its basis of predictability rule profoundly. The effect of predictability rule as a main restriction rule on the principle of full compensation and the causal relationship has been explained. Under the guidance of the principle of full compensation, the basis of predictability rule is contact with the scope of damage. So the scope of damage is very important to be defined. Comparative analysis about the theoretical classification, the author considered that the current classification of the damage can meet the conditions of our country, but for non-property damage should also be included in damages for breach of contract system.The third part combined with the test case, the elements of predictability rule are described, and the principal, predictable time, predictable content, the practical significance are also to be list and explored. On the theory, predictable time and predictable content have plenty of propositions. In our"Contract Law"predictable time is the minute when the parties conclude a treaty, the author do not think so. Though analyzed the practical application of predictable time (conclude a treaty or breach of contract) respectively, the author suggested when the party breach of contract the predictability rule could play a better compensation effect. The relaxed legislative environment is suitable for application of predictable content.The fourth part introduces the predictable standards of judgment, there are lots of theories of the standards and much people agree with the standard of"rational man". Rational man standard theory analyzes the two cases, in special cases, transmission of information should be considered. Rational man standard does not include the aspect of self-interest, so economic man standard to be proposed. Economic man standard not only includes the cognitive of rational man standard but also the aspect of self-interest in practice.The fifth part summarized and analyzed the constraint and limitation of the predictability rule. Compensation should be justice for which is the purpose of the application of predictability rule. Predictability rule restricts the scope of the damages. But when there is fraud, willful or gross negligence or the situation which contrary to the spirit of the law, predictability rule will be excluded for apply.The sixth part according to the application of the predictability rule proposed legislative and judicial suggestion and summarized the innovation of this paper. In terms of legislation, aiming at the scope of damage, the alteration of the elements, the right and obligation of the transmission of information, the author proposed some legislative advice; in judicial practice, the two questions that economic man standard should be applied and the allocation of the burden of proof should be improved get concluded. The practical significance of the predictability rule is availability. Based on the theoretical analysis, how to play a better role in practice is this article's standpoint. Hope this article could resolute the question about the compensation of damages for breach of contract.