The Study Of Prospect Compensation Rules In Liability For Breach Of Contract

Contract is an essential mean to guarantee the security for market transactions.In the past,compensations for breach of contract stipulated in the contract law primarily focused on the direct loss,only striving to ensure that the compensation can help the injured party get back to what it is like before the signing of the contract.However,with the economic development,compensation merely for the direct loss is not enough to make up for the injured party's interest loss.The injured party also hopes that he can be compensated in cases where his reasonable interests expected at the time of signing the contract,that is prospect interests,are harmed.China's Contract Law has established the legal status of prospect interest in article 113 with related judicial interpretations,clarifying that the party who breaches the contract should assume compensation liability for the prospect interest loss arising from this breach.As to problems such as what is prospect interest;how it manifests itself in different contracts;in what circumstances the breaching party should assume compensation liability;how to determine the amount of the prospect interest loss and how to calculate the amount of the compensation,China's current legislation either does not have explicit stipulations or lays excessive emphasis on principles,giving rise to a poor maneuverability in juridical practices.Therefore,the court shows a low support rate for litigation claims regarding the prospect interest.Greater freedom given in the adjudication has brought about chaotic judgment results.In this article,by collecting and screening related cases,making an overview of the prospect interest and combing relevant legislations and legal precedents at home and abroad,the author pointed out some problems concerning the rules of the prospect interest compensation arising from the breach in China's current legislation and juridical practices.Meanwhile,some helpful suggestions were proposed,for the purpose of refining China's compensation system of the prospect interest arising from the breach,protecting legitimate interests of contracting parties and maintaining transaction securities.The entire text can be divided into five parts:The first part is introduction of these problems.In order to analyze problems about the prospect interest compensation in China's current legislation and juridical practices,the author collected and organized relevant judicial cases,from which five typical cases were selected and put in a form for further analysis.The brief introduction of these five cases,thejudgment reasons and results given by the court were illustrated in this form.Based on the analyses of these five typical cases,the author found that these problems were concentrating on identification and compensation rules of the prospect interest.The second part is overview of the prospect interest.It is necessary to ascertain the definition of the prospect interest before discussing the compensation.Considering this part as the theoretical basis of this article,the author analyzed implications of the prospect interest,pointed out its characteristics,illustrated differences between the prospect interest and related similar concepts and explained the necessity for legislation to protect the prospect interest.How the prospect interest manifests itself in different contracts was discussed in the third part.Combining China's relevant legal documents and guidelines released by Supreme People's Court,different manifestations of the prospect interest in different contracts were distinguished and defined in this section to clarify the types of the prospect interest.The fourth part is identification rules of the prospect interest.Identification rules are applied to judge whether the breaching of the contract has caused any prospect interest loss that should be assumed compensation liability by the breaching party.The author analyzed this problem from two perspectives.One is foreseeability rule and the other is deterministic rule.Firstly,the implications and specific applicable conditions for these two rules were introduced.Then,problems discovered from courts' applying of these rules in China's current legislation and juridical practices were studied on the basis of case analyses.Finally,by combining relevant overseas legislations,legal precedents and theories,the author put forward some suggestions concerning how to further refine foreseeability rules as well as set up and refine deterministic rules in future legislation.The fifth part mainly illustrated calculation rules of the prospect interest compensation.Once affirming that the breaching party who caused the prospect interest loss should assume the compensation liability,the next step is to determine the compensation amount in accordance with calculation rules.The author divided this section into three parts.The first part is rules to calculate the amount of the prospect interest loss.In this part,combining cases with domestic and foreign legislations,advantages and disadvantages of different calculation methods were analyzed to recommend a calculation rule suitable to be applied in China.The second part is restrictive rules regarding the amount of the prospect interest compensation.From the perspective of maintaining legitimate interests of the breaching party and keeping a balance between interests of both contact parties,the author maintained that China'slegislation should further restrict the amount of the prospect interest compensation in a reasonable way.The third part introduced several methods to calculate the amount of the prospect interest compensation.Some methods adopted by the courts in juridical practices were summarized and concluded in this part.Moreover,the author also suggested that these calculation methods should be established in a legislative form.