On The Theory And Practice Of Compensation For Profit Loss

The original principle of damages for breach of contract is to fully compensate the aggrieved party so that he could return to where the breach hasn’t taken place. As one of the contractual damages, damages for profit lost stand a special place while it also abides by the above principle. Based on the Fairness Principle and Efficiency Priciple, it is necessary to give some certain limit to the scope of damages, i.e. Predictability. Predictability is some kind of modification to Principle of Full Compensation, which is wholly based on the sum equal to the loss the aggrieved party suffered, because Predictability takes account in the balance of rights and interests between the aggrieved party and the other party. By the analysis on theoretical basis and legislation development, in relevant of Article74of CISG, we can better understand how to decide the scope of damages for profit lost and how to comprehend the essence of Predictability. Although relevant PRC laws and case precedents have laid down the principles of how to determine such cases, however, in the legal practice, different courts hold different views on the application of Predictability. The crux to solve this kind of dispute is to establish an integrated system and unified standard to rule these disputes, so as to protect the legal rights and interests of contractors.