Research On The Compensation Mechanism Of The Pure Economic Loss

Pure economic loss is a financial or pecuniary loss which is not casuallyconsequent upon physical injury to the victim’s own person or property; or is a harmsuffered in absence of the infringement of a legally protected right or interest. Pureeconomic loss widely exists in the social life though it is not a statutory concept. InEU and US, the courts have developed into a wealth mode of rules for pure economicloss in their own legal system. With the development of economy and diversity ofsocial life in our country, the problem of pure economic loss will be significant andprominent. Due to the lack of guidance on the legislative and judicial, the scale of thejudges’ discretion becomes difficult to defy in pure economic loss cases. Thatundermines the legal authority and certainty. How to grasp the concept of pureeconomic loss, classification and compensation cases scientifically is one of theimportant issues in the area of civil law in China. China has promulgated the Law onthe Liability of Infringement which gives the space to the solution of pure economicloss.In this paper, the pure economic loss is discussed on the civil law and law andeconomics analysis. By comparison method of processing mode and combining withChinas national conditions and legislative and judicial practice, a scientific andreasonable compensation mechanism is built. Law and economics paradigms are alsoconsidered.The first part of this paper is the study and explores of pure economic loss inthe civil law, the concept of pure economic loss, classification definition andintroduces this concept with cases to make it clearer. The main rules for pureeconomic loss with their reason and irrationality are also introduced.The second part of this paper is on the analysis of the law and economics ofpure economic loss. The basic attitudes of law economists in the solution to thisproblem are introduced. It provide theoretical support for last part.In the third part, the typical mode of France, Germany, the United Kingdom andthe United States are introduced and compared so that we can get reference from them.The fourth part of this paper describes our current legislative and judicialsituation. We can find the probability to solve pure economic loss problems.In the fifth part of this paper, a picture of pure economic loss compensationmechanism is drawn. This mechanism is based on the Law on the Liability ofInfringement and the basic situation of China is with full consideration. With theparadigm of Economics Analysis of Law, this mechanism will be more scientific andreasonable.