"One Room Two Sell" The First Buyer To Lose The Compensation Study

With the rapid development of Chinese real estate market, the disputes of sales contract areincreasing progressively, including the phenomena of “twice sales for one house”. There is stillvacancy in the current Chinese law regarding how the default party should undertake the liabilityfor damages, what the scope of compensation for the damage is, especially how to compensate forthe house price difference in the “twice sales for one house” contract dispute. Because of the“twice sales for one house” default behavior of the seller, the first buyer would have to find theother houses. At present, the house prices of China increase so fast that the first buyer may have topay more to buy a similar house.However, in most of the trial practice recently, only double return of the advance payment forthe house can be supported, rather than the entire compensation for the house price difference. Asa consequence, the benefits of the seller’s default are far more than the amount of compensation,inducing the risk of default. The sentence is based on the article113of the "Contract Law": theestablished foreseeability rules have not been clearly explained in the disputes of housing salescontract. On this basis, the author suggests that the legislature should incorporate the loss of houseprice difference into the foreseeable range, in order to crack down on the speculative default andachieve the function of compensation.The paper falls into four chapters as follow: From the angle of the judicial decisions of thetypical “twice sales for one house” contract disputes, the first two parts explained the causes of“twice sales for one house” default and the difficulties first vendee confronted in the breach ofcontract. The third and fourth part first analyzed the foreseeable rules of French and British patternin the Compensation for Damage, and then discussed the applicable scope and the value of theforeseeable rules in China. The author put forward suggestions for the application of foreseeablerules in the “twice sales for one house” contract disputes in china from three aspects:First of all, the loss of house price difference should be incorporated in the foreseeable range.As to the seller’s motives, the deliberate default behavior is to sell houses at a higher price withthe apparent awareness of the rising prices. The function of loss compensation is to compensatefor the loss and keep the original benefit of observant party. The vendee must pay more to buysimilar houses, so that the house price difference compensation is legal and reasonable.Secondly, the foreseeable extent should be determined by the standard when the defaulter defaulted.However, when the seller sold the house to the third person, it is possible to foresee the hous e prices at the time of default. Therefore, it is more reasonable to refer to the time of default ratherthan the time of contract to determine the standard of foreseeable extent.Thirdly, the author established the method to calculate the house price difference. If theamount of compensation was determined in the contract, the court should comply with the contractbased on the principle of contract freedom and the private law autonomy. If there is no agreement,the professional real estate price appraisal institution should be responsible to evaluate thedisputed property prices, or the court should assess the price difference according to the similarcondition of the house price on the market. Protecting the benefits of the observant party shouldcome first when evaluating the loss.