The Studies On Mitigation In Breach Of Contract

Damages for breach of contract are limited under three major rules: predictability rule, contributory negligence theory and mitigation rule. The thesis focuses on demonstration of the mitigation rule. The mitigation rule developed from contract law of common law system. In civil law, there was no mitigation rule or it was incorporated into Mitverschuden theory. In my opinion, this rule has value of its existence, foreign legislation, international conventions, as well as Article 114 of China's"General Principles of Civil Law"and Section 119 of"Contract Law"all provides for the rule. However, the domestic study on them was much too brief. Therefore, this thesis seeks to demonstrate it from various aspects and exhibits a panorama of the rule.This thesis is divided into seven parts. Part I introduces the concept of mitigation rule and with the expositions of the former scholars, analyzes its nature and gets a conclusion-----mitigation is "no real obligation". With the provisions of international conventions, foreign laws also Chinese laws, the thesis processes comparative study.Part II focuses on the relationship between mitigation rule and Mitverschuden rule. Based on the comparative study in part I, I found there was no mitigation rule or it was incorporated into Mitverschuden theory in civil law countries, while in common law countries, there was independent mitigation rule, different viewpoints of the relationship between the two theory also exist among domestic scholars. Confronted with such a status, the thesis analyzed the reasons for this situation on basis of history background of civil and common law legal system, and then processed the theoretical distinction between them.Part III demonstrated the legal basis and practical value of mitigation rule. In common law, the legal basis is "efficiency theory," "proximate cause and punishment theory," and " the priority of reliance interests theory", in civil law, the legal basis is honesty and credibility principles. The practical value of mitigation rule is to promote the accumulation of social wealth, and provide a method for distributing legal responsibility between the parties after breach of contract.Part IV focuses on the standards of reasonableness for the mitigation measures. A major task of mitigation rule is to judge whether mitigation measures are"reasonable"or not. This thesis presents two standards as "reasonable person" and "bona fide" to weigh whether a mitigation measure is reasonable or not."Reasonable person"standard requires the non-breaching party to take measures as a person of common sense, and "bona fide" standard requires the non-breaching party act in good faith. The two standards should be combined to consider reasonableness of mitigation measures.Part V is the main part of this thesis, the thesis sums up six major mitigation measures——suspending performance, replacement, continuance to performance, the new offer of the breaching party, the non-breaching party'striving for the available interests, the non-breaching party's keeping goods safe, etc. Then the thesis analyzes the six major measures from the aspects of applicable occasions, corresponding legal consequences, as well as unique characteristic of them.Part VI summarizes the three legal consequences: the portion of the non-breaching party's loss which is attributable to his failure to mitigate will not be recoverable; the non-breaching party may recover from the breaching party the reasonable expenses for mitigation; whether the additional profits obtained by non-breaching party should be deducted from damages.Part VII discusses a special circumstance-----mitigation rules'application in anticipatory breach. There are many differences between the United Kingdom and the United States on such problem. British law gives the non-breaching party a right to choose whether to recognize the default, he may choose to recognize the other's breach of contract, then he shall assume mitigation obligations, on the contrary, he would be relieved from mitigation obligations, while in the United States, the non-breaching shall assume mitigation obligations, regardless of his recognition of the violating party'breach.