Research On The Determination Standard Of Prospect Interests In Breach Of Contract

Article 113(1)of the contract law of the People’s Republic of China stipulates that the losses including benefits that the other party would have been able to obtain upon the contract being performed,but this amount shall not exceed the total losses that the breaching party,at the time of concluding the contract,foresaw or should have foreseen would probably result from breach of contract.However,courts in our country seldom hold.However,there are few judgments that support the prospect interest in our country.Prospect interest has the characteristics of future and uncertainty.Prospect interest loss is not the loss caused by the breaching party,but the loss of the non-breaching party’s future benefit caused by the breach of the contract.In practice,it is difficult to judge the property,scope and calculation of prospect interest due to its characteristics of future and uncertainty.Just as the Guiding Opinions on Several Issues Concerning the Trial of Cases on Disputes over Civil and Commercial Contracts under the Current Situation stipulated by the Supreme People’s Court,currently,against the background of breach of contracts by a relatively large number of market players,breach of contracts shall usually result in loss of obtainable profits.So,to ensure the realization of prospect interest can promote the realization of the purpose of the contract and ensure the transaction security of market entities.By sorting out the judgments of courts at all levels on prospect interest,the existing problems in judicial practice mainly include the following categories:First of all,the property and scope of prospect interest is unclear.Some courts regard prospect interest as indirect loss,meanwhile some regard as lost opportunities.We consider prospect interest only as loss of profit.Secondly,the determination of predictability rule is unclear.The common problems are that the judges are not aware of the constitutive requirements of predictability rule and how to determine “rational person” criterion.I think that the constitutive requirements of predictability rule are as followed: the predictable subject is the breaching party,the predictable time is at the time of the conclusion of the contract,the content of predictability should be the type the loss,rather than the specific amount,the criterion of predictability should be “rational person” criterion,via whether or not a rational person can foresee harm in a given situation to determine if the loss can be predicted.“Rational person” criterion is composed by knowledge and abilities.If the party concerned has mastered the relevant knowledge,it shall be deemed that a rational person can foresee the loss.The ability of rational man is mainly considered from the aspect of the class to which he belongs.The standard of ability of special merchant is necessarily higher than that of ordinary merchant,while the ability of ordinary merchant is higher than that of ordinary natural person.Thirdly,the application of deterministic rules is rather confusing.The issue of certainty mainly includes how the court determines that the prospect interest has certainty and the standard of proof of certainty.First,according to the rules of evidence,it is required to prove that the interest obtained is deterministic,and the proof degree should be "reasonable certainty" rather than absolute certainty.Reasonable certainty is a relaxation of the standard of deterministic proof,which can only be proved to a reasonable degree.Another criterion is the "fact-amount" distinction criterion,that is,the non-breaching party only needs to prove the facts of the available interests but does not need to prove the specific amount of the available interests,so it can be consistent with the predictable content.Secondly,other factors affecting the certainty,including geographical environment and business performance,are taken into account and deducted accordingly.Finally,it is about the concrete calculation of prospect interest.Due to the uncertainty of prospect interest,it is impossible to have a completely accurate method to calculate the available interests,but the range of available interests can be determined with a large direction first,and then some methods can be used for specific calculation.In the author’s opinion,the amount of available interest compensation = the contract benefits lost by the non-breaching party + other direct or indirect losses suffered by the non-breaching party-costs and losses avoided due tothe default of the other party.For the contract benefits lost by the non-breaching party,which is the most difficult to judge,the comprehensive comparative law and our legal precedents believe that there are the following methods.First of all,if both parties agree on the profit standard of future income in the contract,it can be referred to when calculating the amount of Prospect interest.Secondly,the non-breaching party’s own operating profit to determine the amount of interest.Third,use the industry’s profit criteria to determine the amount.When other methods cannot independently prove the amount of benefits available,the method determined by the judge according to the specific case,relying on free conscience and empirical rules.