On Reliance Interest Damages

One party may proactively deliver a lot of resources and pay abundant costs in preparingthe performance of a contract or performing a contract with the reliance that the otherparty will sign the contract with him or believe that the contract is effective. On thecontrary, due to the negligence or misconduct of the other party, the contract is not signedeventually or the contract becomes invalid or revoked. Under such circumstances, the partywith reliance suffers actual damages in the meanwhile loses some business opportunitiesas well. If no protection to the party with reliance and no remedies to be sought for suchdamages, in one hand, it will foster dishonest and non-credible illegal activities andon the other hand it will detriment the standards of credibility. To improve the healthyand orderly development of commodity market economy, it is essential to protect theinterests of the party in reliance and support the compensation to the damages incurredthereof from legislation’s perspective.In this dissertation, the writer first introduces the concept and theories of thereliable interests. The writer further introduces the situations where the reliableinterests incur and the difference between reliable interests and expectation interests.Then the writer raises the concept，characteristics and the grounds of the damages to thereliable interests. The writer further elaborates the scope of the damages by focusingon direct losses and indirect losses. Moreover, the writer introduces the principle tofollow in compensation of the reliable interests and the restrictions in applying thecompensation of reliable interests. Latter, the writer presented China’s stance inprotecting the damages to the reliably interests by introducing two real cases, onere-trial case in the Supreme Court and an appellate case, such as the scope of compensation,the calculation method of the loss of business opportunity, the restriction rule incompensating the reliable interesting and so on. By introducing the insufficiency in thelegislation related to reliable interests and the difficulty in calculating the damagesrelated to the direct losses and indirect losses, the writer comes out some suggestionsin legislation to specify the reliable interests, the scope and content in protecting the damages to the reliable interests, the way in confirmation the direct and indirect lossesand the burden of proofs in order to clarify the compensation in reliable interests inlegislation and operability in the practice to achieve the balance of fairness and thedevelopment of economy by protecting the reliable interests.