Breach Of Contract Scope And Calculation Of Damages

Compensation for breach of contract is limited to a certain extent. This thesis, starting with analysis of the nature of contract, mainly discusses the extent of damages for breach of contract and the assessment of damages for breach of contract closely related to the extent.The first part of this thesis, namely introduction, mainly discusses the essence of contract, which, having great effects on the scope and assessment of damages for breach of contract, is not only the consensus of both parties to the contract, but also embodies public will which has been translated into law.The second part, the scope of damages for breach of contract, mainly focuses on two aspects, (1) the damage compensated by the party in breach of contract, is the damage suffered by the aggrieved party from a breach of contract, and (2) the methods restricting damages imposed on the party in breach.When one party to the contract has breached the contract, the other party to the contract, as well as a third party who is not a party to the contract, may be damaged. But according to the privity doctrine, only the other party's damage will be compensated, and the third party's not. The other party's damage consists of property damage, which includes damage suffered and profit lost, and non-property damage, both of whichshould be compensated. But it should be noted that not all the damage factually suffered by the other party are compensated.The methods restricting damages imposed on the party in breach mainly are: the rule of foreseeability, the rule of balancing out increase and decrease, the rule of contributory negligence, and the rule of mitigation of damage. The rule of foreseeability is the basic among these methods, and, should be supplemented and corrected by the use of the theory of the protection purpose of the norm, being abstract and uncertain standards. According to the rule of foreseeability, it is the party in breach who should foresee, it is when the contract is made that he should foresee, and he should foresee as a common person may do.The contents and applicability of the other three methods of damages restriction are also discussed in this part. The rule of balancing out increase and decrease, being available in both abstract and concrete damages for breach of contract, is applied when the following are satisfied, (1) there stands a debt of damage for breach of contract, (2) the aggrieved party gains some profits, and (3) there is cause and effect relationship between breach of contract and the profits. The rule of contributory negligence is applied when the following are satisfied, (1) the aggrieved party is in default concerning the loss suffered, and (2) his defaulting acts contribute to that loss. The rule of mitigation doctrine is applied when the following are satisfied. (1) the damage is resulted fromthe breach of contract by the party in breach, (2)the aggrieved party does not take reasonable steps to mitigate the damage, and (3)thus makes the damage aggravated. Additionally, the types of mitigation are discussed too.Assessment of damages for breach of contract is closely correlated to the scope of damages for breach of contract. Therefore, the third part is mainly concerned with the bases of, the methods of, the time for and the location for assessment. The basis of assessment includes the expectation and the reliance interest. The expectation interest is of principle and the reliance interest is supplementary. The reliance interest mainly appears in contracts which are profitless and where profits are difficultly ascertained. There are two methods of assessment, abstract and concrete, and the abstract one indicates the ongoing and future trend of assessment. The time for assessment is of variety, such as the time of breach, the time of judgment, and so forth. The location of assessment is where the obligations are performed.