A Study On Breach Of Contract And Damages For Non-Pecuniary Loss

At the very first part of this thesis, it is intended to evaluate whether it is necessary and feasible to establish such a rule that the non-pecuniary loss flowing from the breach of contract is compensatory, though which is quite controversial amongst judges and scholars in diverse jurisdictions. Then the author talks about two distinctive types of situation arising out of this topic, and at last to make it clear that the theme of this thesis that the author would lay a significant emphasis on is a study on damages for mental distress resulting from a breach of contract, in which situation no tort liability is formed, and for the purpose of this thesis only, the situation is defined as a pure breach of contract.In the first chapter, in order to make the readers to be able to perceive a whole picture about what this thesis is going to talk about, the author mainly introduces the traditional classification of ‘loss’ in the compensatory field of law, the terminology, the functions and the rights or interests intended to be protected in relation to nonpecuniary loss compensation. Based on studying some materials, I further draw a conclusion that the non-pecuniary loss is typically physical or mental pain or suffering, it can not be valued economically, it is uncertain and tied to subjective feelings of the innocent party. Its compensation maintains both functions of compensation and comfort and intends to mainly protect the rights and interests in connection to human personality.In the second chapter of this article, the author mainly does some comparative introduction with respect to non-pecuniary loss compensation law in Britain, German and Taiwan. Since the author is relatively better at English reading than doing research work in Germany, more importantly, the case law evolution in the field of contractual remedy for non-pecuniary loss is rather sophisticated and worth delicate study, thus, it leads to a much more detailed discussion about English case study in this field. Specifically, the discussion in English common law would set as a starting point the case Farley v. Skinner, which is commented by several knowledgeable House of Lords judges, and a detailed and original analysis by the author based on the process of reasoning by each judge, brief introduction during case comparison, as well as rule application would be presented. In the end of this part it would be concluded that the rules set up during the English common law evolution on non-pecuniary loss compensation resulting from a pure breach of contract seem to be in a lack of systematic rationalization. It further seems to be subject to judge’s satisfaction about the likelihood or gravity of the non-pecuniary loss of the innocent party in a certain type of pure breach situation. After that, the author went on to examine the law in Germany. It is observed that only non-pecuniary loss resulting from infringement towards certain personal rights and interests stipulated in German Civil Code, as to the specific type of contract that breach of which would allow a non-pecuniary loss compensation is limited to vacation and sightseeing contract and the discriminatory type of breach of an employment contract. Otherwise no non-pecuniary loss is allowed to be compensated while based on a breach, not even the non-pecuniary loss resulting from a breach of a marriage ceremony service contract, which is widely admitted in other jurisdictions. The Taiwan law in this field is quite similar to that in Germany. That is, only what is specifically prescribed by law provisions is allowed to be compensated as non-pecuniary loss, otherwise no case law makes any comment on this topic.In the last chapter the author is dedicated to make a thorough study on China’s law in this field and try to deliver certain suggestions on law transformation. The law says nothing about non-pecuniary loss compensation resulting from breaking of a contract, instead the compensation for non-pecuniary loss becomes an exclusive compensatory scope of tort liability. It is observed that the non-compensatory loss compensation system, as narrowly applied as it is, is mainly established by several official judicial interpretation as released by the Supreme People’s Court of China, which is also a source of law while with limited and inferior legal effect than the law enacted by the National People’s Congress. Later the doctrine of compensation for non-pecuniary loss in tort liability is adopted by and integrated into tort law and state compensation law of China. Besides aforementioned brief chronological introduction, the author would make some comments on the present law structure and provisions in this field, and further emphasize the necessity to allow compensation for nonpecuniary loss in certain contract breach situations. The author also collects some related cases and endeavors to have them summarized into different categories, so as to set up a ‘road path’ to foreseeable decisions in similar cases. Unfortunately, there is generally no clear and convincing rationalization and law application in the judgement, thus a collection of instructions and guide based on past case law seems to make no sense at all. The author in the final part shows thoughts about how to transform and change the law to integrate into the present system the non-pecuniary loss compensation resulting from contract breach, while not to arouse much contradiction, through expanding interpretation of law and borrowing certain convincing and suitable rules based on the aforementioned study of law in different jurisdictions.