Research On The Gains And Losses Offset Rule

As an important rule in compensation area, the gains and losses offset rule isworld widely recognized in both legal theory and legal practice. In China, eventhough the rule has been widely used in legal practice, it does not have a theoreticalbasis in Chinese laws. The lack of basis in theory would create confusions whenapplying the laws and it may lead to conflicts when deciding the measure of damagesin certain cases. The economy in China has been developing in a growth and steadymanner since21stcentury, especially after China’s entering WTO; however, series ofnewly raised and complicated legal issues appear while developing. No matter it is atort or breaching contract, the key to settle is to decide the liability and magnitude ofdamages on a reasonable basis. This suggests that a principle needs to be made inlegal theory in compensation area, and the applicable details need to be updated andfurther improved by keeping pace in times. In many important draft laws oramendments exists the shadow of the gains and losses offset rule, for example, thedraft version of Contract Laws of People’s Republic of China and The Tort Law of thePeople’s Republic of China, but still the rule has not been adopted for a considerableamount of time. Until31stof March, The rule was finally adopted by article31of theInterpretation of the Supreme People’s Court on Issues Concerning the Application ofLaw for the Trial of Cases of Disputes over Sales Contracts promulgated by theSupreme of People’s Court The article hereof states that “where one party to a salescontract obtains benefits due to the breach of contract by the other party, if the lattermakes claim for deduction of such benefits from the amount of compensation for losses, the people’s court shall support such claims.”This thesis is mainly about the study of the gains and losses offset rule whichwas demonstrated in Interpretation of the Supreme People’s Court on the lawapplicable to the contract cases. It is believed that the importance of the rule wouldbe realized through the study of the paper, and a further detailed and definiteregulation is required. At last but not least, a legislation proposal initiated by thewriter.The paper is divided into four main parts.Firstly, an overview of gains and losses offset rule. This chapter mainlyillustrates the basic concepts of the rule, and it also introduces the application of therule from the perspective of legal theory and legal practice in various countries. Abasic understanding could be achieved through the study.Secondly, the theoretical basis of gains and losses offset rule. This chapterintroduces the history of the rule and it has done a thoroughly research on themainstream of the rule in different stages. The research on the basis would promotethe interpretation of the rule.Thirdly, the gains and losses offset rule components. This chapter has putforward the three main components of the rule in details through the combination oftheory and practice. This chapter is the focal point of this paper, the rule will beillustrated in depth with respect of its applicable situation, restriction and exclusioncases This chapter would be helpful to solve the problems that rose in reality.Lastly, the initiation of gains and losses offset rule. This chapter begins withcombing through the legislative conditions of the rule in our country, and then givesthe suggestions on the ground of the outcome of the research and theoretical andpractical experiences that extracted from various countries as references.