The Assessment Of Damages For Breach Of Contract

The system of compensation for breach of contract is one of the core theories in the whole private law system,with its theoretical system being extensive and profound,its academic research having already been fruitful and yet the heat of its research not being cooled down.However,there is still one branch of the system of damages for breach of contract,named as the assessment of damages for breach of contract,being in a relatively less discussed part of it,which bears a lot of theoretical and practical problems that need to be resolved.Law in force in PRC establishes two major rules,the principle of complete compensation and the rule of predictability for the calculation of damages for breach of contract.However,due to the excessive abstraction and generality of them,the two rules have not played a good normative role in the judicial practice.Since the judges apply multiple specific calculative standards in the judicial practice,similar disputes on the calculation of damages for breach of contract may result in various arbitral results.The lack of legislative provisions,combined with the inconsistency of judicial decisions on the issue of the calculation of default damages,to some extent,reflects the inadequate construction of the theoretical system on the calculation of damages for breach of contract in academic circles and the low legislative and judicial reference rate on the theory of compensation for breach of contract.This paper attempts to provide theoretical support for the practice,and on the other hand,it is dedicated to play a role in the development of study of the assessment of damages for breach of contract and to serve as a spur to induce valuable opinions.The object of assessment of compensation for breach of contract includes benefits(interests)and losses.The assessment of “loss” cannot avoid the measurement of “interest”,and the existence of the interests of contract is the premise of the calculation of losses for breach of contract,and the acquisition or recovery of contractual interests is also the purpose of calculation of damages for breach of contracts.Attainable interests,also known as anticipant interests in judicial practice,are basically as the same concept as expectation interests in Anglo-American law.Attainable interest differs from lost interest,with the only coincidence between the two lying in the range of expectation interests under the contract law.The calculation of damages for breach of contract is legally normative because it is not only the results of damage incidents or regarded as a kind of mathematical measurement method,but is also subject to the regulation and guidance of the values and objectives,basic principles and specific rules of the damages law,contract law and private law.Full compensation,encouragement of transactions and autonomy of will provide guidance on the formulation and application of the calculation rules of compensation for breach of contract.Rule of foreseeability limits the maximum amount calculated for damages for default.“Savings Resulting from the Breach Offset Against Loss”,and contributory negligence rule and rule of mitigation decrease the amount calculated for damages for breach of contract.In the choice of calculative method of default damages,the doctrine of multiple choice should be adopted.That is to say,with regard to the choice of calculative method,obligee's option and obligor's demurrer should be contingently reserved;when the amount of compensation figured out by abstract method is no less than that figured out by specific method,and the prima facie evidence is hard to prove the exact amount worked out by specific method,then the abstract method is adopted,exclusive of the parties' option and demurrer on the choice of calculative method;when the amount of compensation worked out by specific method is higher,the obligee enjoys option of choosing specific method,even if it is likely ending up being rejected by the obligee because of lacking prima facie evidence.The calculating method of balance shall be provided by the contract law,which means that the price of compensation shall be determined by the difference between the proprietary status of the claimant resulted from the breach of contract of obligor and the presumed proprietary status of the claimant resulted from the complete performance of contract of the obligor or the presumed proprietary status of the claimant when the contract has never been entered into.The standards of calculation of the liability for breach of contract include three categories: price,time and place.The price criterion includes the contract price,the market price,the substitute price,and the cost price.The relation between the theory of balance and the price criterion is that the difference is calculated at the value of difference between the substitute price or the market price and the contract price.The time criteria for the calculation of the default damages consist of the time of breach,the time of claiming the damages by non-defaulting party,and the time of non-defaulting party knowing the breach of contract;the choice of a specific time standard is made upon comprehensive examination.The impact of the location standard on the calculation of the damages is reflected in the impact of the locale on the market price.In principle,the market price applies to the price of the debt performance.If there is no market in the place of performance,the resale and alternative transaction price can be chosen.The calculation formula of default damages is composed of four factors: loss of value,other loss,avoided expenditure and avoided loss.The loss of value is the application of the difference calculation method,the other loss is indirect damages,the avoidance of expenses and the avoidance of losses are the profit and loss rules and the use of the impairment rules.Expectations of damages for the loss of value and other losses to reduce the deductible expenses and then to avoid the loss.The cost of trust can be divided into basic trust costs and incidental costs,which are reasonably satisfied and do not exceed the expectation of interest.In addition,compensation with incidental costs is made available to the defaulting party at the time of the contract as a prerequisite.