Research On Compensation For Damages After Legal Termination Of Contract

Since the legal right to terminate the contract is significant to succour the aggrieved party,determining the extent of compensation and the way of calculating is concerning theimmediate interests of both the contractual parties. Therefore, the research of thecompensation for damages can make the system of contractual compensation for damages tobe more reasonable and complete, so that the aggrieved party’s interests can be betterprotected. Mainly studying at the compensation for damages of the legal right to terminate thecontract, this paper analyses on one of its values—the compensation for damages and theefficiency of the removing right，as well as the constitutive requirements of the right of claimon compensation for damages. Meanwhile, this paper states the relationship between the legalright to terminate the contract and the compensation for damages, ascertaining thecompensation scope and show clearly the way of calculating and factors that affect thecalculating. The current legislative situation of China’s compensation for damages of the legalright to terminate the contract will be analysed in the end of this paper, and its problempointed out. Some suggestions will also be made in the purpose of giving full play to thefunction of the system of legal terminating the contract, promote the truly judicial integrateand realize the justice of law.This paper is consisted of six parts:Part one mainly explain the relation of legal rescission of contract and the compensationsfor damages, which is one of the values of the system. According to the system of legalrescission of contract, the non-default party can not only perform the removing right legallyand "escape" from the contract, but also ask for compensations for the damages he or she hassuffered. Then the coexist of legal rescission of contract and compensations for damages aswell as the legislation in different countries will be discussed in this part.Part two analyses the constitutive requirements of the right to claim compensations fordamages—the default party’s violation conducts that leads to the damages of the creditor, thecausal relationship of violation and damages and the non-default party’s right to ask forcompensation. Part three states the extent of compensation. The mainly theories on the efficiency oflegal rescission—indirect efficiency theory, direct efficiency theory, compromise theory,expose and criticize theory—will be explained, and confirming that the performance ofinterest damages and other damages is the extent of compensation.In part four, the restriction rules of compensation for damages will be explained. Also,the application of the predictable rule, lightening damage rule as well as profit and lossbalance rule in judicial practices will be explained through specific cases.In part five, the way of calculating of the compensations for damages and factors, timeand places that affect the calculating will be discussed.In part six, suggestions on how to improve the current legislative situation of China’sContract Law and the legal rescission system will be offered, according to the existingproblems.