Research On Expectation Damages Under The Restriction Of Modern Contract Law

The loss of the expectation interest refers to the interest which under the premise of the legal act coming into effect, the creditor should obtain through the fulfillment of the debt. The expectation damages refers to the damage resulted by the unrealization of the effect of the valid legal act due to the debtor’s unfulfillment of the debt. The goal of the compensation of the damage of expectation interests is to make the interest of the creditor return to the due state in which the contract would be fulfilled. The expectation damages, which plays an important role in the contract‐breaching damage compensation system, is nevertheless not explicitly stipulated in the legal provisions of our country, and the interpretations of its range are various. Through comparing the regulations in the common law system, the continental law system and the international legislation, the author hereby concludes that the scope of the compensation of the damage of expectation interests is the sum of the actual damage and the due interests. Meanwhile, the author analyses the characteristics of the expectation interests, and points out the relations between the expectation interests and the due interests, the actual damage and the reliance interests.For the calculation of expectation damages, calculation method and calculation standard are essential. The formula is below: expectation damages=loss of value+other losses‐avoided expenditure‐avoided loss. In this formula, there are different methods of calculation of the loss of value, the avoided expenditure, and the avoided loss in different cases. So in this paper, the author describes the method of calculation about these three factors, and introduces two methods of compensation about liquidated damages which are specific methods and abstract method. In addition, there are other three methods. They are promised calculation method, analogy calculation method and estimation calculation method. After choosing the method, calculation standards are also important which include the standard of time, location and price.Normally the compensation of the damage of expectation interests abides by the principle of full compensation, but under the constraints of modern contract law, several restriction rules are stipulated, including the rule of predictability, the rule of fault offsetting, the rule of mitigation and the rule of profit and loss offset. These regulations protect the fairness and impartiality of the law of contract: they not only compensate the damage of the injured party, but also limit his possible interests. Meanwhile, the rule of predictability considers the degree of predictability of the breaching party, the rule of mitigation prescribes that the injured party shall have the duty to mitigate the loss, while the rule of fault offsetting excludes the cases in which the injured party is at fault.Regarding the problem that how to calculate the expectation damages, in our country, lacking of legislation still exists. There is no legal definition of expectation damages in our law. But it can be found that the range of the damages which the injured party can obtain is the same as the range of expectation damages. Of course, expectation damages should be limited by certain rules in the law and practice; our law also has provisions in this aspect. In Contract Law, the article113and article119provide the rule of predictability and the rule of losses mitigation. However, our law does not provide calculation methods and calculation standards of damages. Therefore, the author puts forward a few legislative suggestions about the range of expectation damages, limitation rules, calculation methods and standards of calculation. We can reference relevant provisions of the common law countries and civil law countries to defined expectation damages, in order to improve our contract compensation system and protect the economic interests of the parties to the contract.