Rules For The Discount Compensation In Invalid Bilateral Contracts

Article 122 and Article 157 of General Rules of the Civil Law respectively stipulate the legal effect of unjust enrichment,which is that improper benefits shall be returned and if it cannot be returned or is not necessary to be returned,it shall be compensated.Article 986 and Article 987 of the draft civil code(December 16 th,2019)respectively stipulate that a beneficiary in good faith may claim a defense that the benefit does not exist,and a beneficiary with ill intention shall not make this claim.This provision has been controversial in the application of bilateral contracts.In order to reasonably limit the non-exist benefit defence of beneficiary in good faith,many theories has been developed including the theory of balances,the theory of property decision,the theory of claim of restitution of reciprocal payment against delivery.However,these haven't solved the problem fundamentally.The key to limiting the non-exist benefit defence of beneficiary in good faith should be whether the beneficiary has recognized the benefit of the object of unjust enrichment.If the beneficiary has expressly or impliedly recognized the benefit,he shall not claim in any way that the benefit does not exist even though he is in good faith.This is because that the beneficiary's recognition of the benefit of the object of unjust enrichment contradicts with the claim that the object of unjust enrichment does not increase his property.According to estoppel principle,the beneficiary is deprived of the right to claim the defence that the benefit does not exist.It is usually believed that the compensation liability of beneficiary with ill intention does not take fault as a essential.Theories pay more attention to how to identify ill intention such as whether he who should know there is no legal reason is beneficiary with ill intention.However,the crucial reason for beneficiary with ill intention to undertake enhanced liability is not whether he clearly knows or should know there is no legal reason but whether he recognizes the benefit of the object of unjust enrichment.If the beneficiary accepts the object of unjust enrichment as he knows there is no legal reason from the beginning or disposes or refuses to return the object of unjust enrichment after knowing that,it can be ascertained that the beneficiary has recognized the benefit of the object of unjust enrichment.Therefore,the beneficiary is precluded from the defence that the benefit does not exist.Therefore,beneficiary in good faith shall be interpreted as a person who does not recognize the benefit of the object of unjust enrichment and beneficiary with ill intention shall be interpreted as a person who recognize the benefit.