Study On The Rule Of Reasonable Foresight In Contract Law Of Peoples Republic Of China

In varied market economy environment, any transaction is not completely isolated. In complex transactions, failure of one transaction will lead to the other failures in a series of transactions. On the other hand, the losses caused have an element of uncertainty. If the defaulting party are required to take all the damages incurred by breach one contract, the defaulting party will bear overmuch risks, and it will dampen the parties'enthusiasm to conduct the transactions broadly due to the increase of transaction cost; On the other hand, if there is no limitation to the extent of compensation, when a default occurs, the defaulting party will have to face numerous irrelevant claims and disputes which will lead to waste of judicial resources. For reducing the risk to the parties, encourage market economic transactions, a restrictive rules to compensation of damages was established, we called the important rule"The rule of foresight"or"the Rule of Reasonable Foresight".This article attempts to analyze the relevant legislation and theoretical basis of the Rule of Reasonable Foresight, and study hot to further develop and perfect it in Contract Law of Peoples Republic of China.This article consists of following parts:Chapter I: Comparative study international legislation and judicial practice in France, Britain, the United States, Japan, Italy and other countries, analysis the application and the evolution of the Rule of Reasonable Foresight. This rule originated in the Roman law, formed in the French Civil Law and developed in Common Law. This rule is considered one of the classic rules in Common Law. Whether in Roman law or in modern Common Law, the amount of compensation for losses should not exceeding the probable losses caused by the breach of contract which has been foreseen or ought to be foreseen when the defaulting party concludes the contract.Chapter II: Analyze the theoretical value of the Rule of Reasonable Foresight and its special significance in the current economic situation. The rule is a direct manifestation and inevitable demand of principle of equality and principle of encourage transactions in contract laws. Especially under current economic situation, this rule is meaningful for resolving conflicts and disputes effectively, maintaining the integrity of market order, safeguarding environment of investment legal institutions. The theoretical value of this rule and the goal of Contract Law under current situation are consistent.Chapter III: Analyze the contents of the Rule of Reasonable Foresight, overall expound the legal constitute Items of this rule from the subject of foresight, time of foresight, object of foresight, extent of foresight and the standard of foresight. By analyzing and comparing, this article summarizes that the subject of foresight is the defaulting party, the time of foresight is the time of contract signed, and the object of foresight is the type of damage.Chapter IV: The author points out that the Rule of Reasonable Foresight as defined in Section 113 paragraph 1 of Contract Law is only in quote stage. This rule has not formed the complete theory and policy system in China's laws. The definition and classification are indefinite. The available interests loss in indemnity loss range is not accept by court. To strengthens the manipulations and instructions of the Rule of Reasonable Foresight, the author points out that the precondition to application of this rule should be expressly limited, unified legislation and operable evaluation regulation should be adopted.