Research On The Foreseeability Rule In The Contract Law

According to the purpose of damage-compensation system, the court will attempt toput the plaintiff in the position he or she would have been in had the contract beenperformed. In some situations, however, the plaintiff may sustain unusual and greatlosses as the result of a breach of contract. The courts have for a long time realized thatto award the plaintiff full compensation for all of his or her losses due to the breach, nomatter how bizarre or unforeseeable those losses are, would simply be unfair to thedefendant, and possibly paralyzing to commerce as well. Just as Germany scholarLarenz said,”people shall not be liable for the consequences that cannot be reasonablycontrolled.” Therefore, the courts have developed certain limits on the kinds of damages,such as the foreseeability rule which was derived from the famous English case ofHadley v. Baxendale and then followed universally. As the rules of Hadley, a plaintiffsuing for breach of contract may recover only damages either arise naturally, i.e.,according to the usual course of things, from the breach of contract or arise from thespecial circumstances under which the contract was actually made only if these specialcircumstances were communicated by the plaintiff to the defendants.We have clearly stipulated the foreseeability rule, conducive to the realization ofcontractual justice and ensurance of the security, in Chinese Contract Law. But this ruleis so flexible that there are many obstacles during the application, although it doescreate space for the judicial discretion. Because of the lack of authoritative explanationand system research, some judges will apply not the foreseeability but the liquidateddamages clause or the mediation way to solving disputes in practice. Moreover, we haveno substantial progress in the research of the causation theory, and this makes it difficultto confirm the range of damages. One of the reasons is the judge quality, but moreimportant reason is the abstract and complexity of causation.This article take foreseeability as a thesis, through coparing legislations of France,British and U.S., analyzes its components and relationship with other theories,especially the causation theory, and then makes a deep research on its judgmentstandard and practice in China. Research on the foreseeability rule is important to thelimitation of damage compensation and the realization of fair justice.