On Compensation For Value After The Statutory Termination Of Sales Contract

To implement the legislative intention that the goal of the return is to bring the relationship between the two parties back to when they have not signed the sales contract,,the duty of return upon the statutory termination of the sales contract in China should be interpreted as liabilities based on the original contractual relationship.The duty of return is full return,not restitution of unjust enrichment.Return in the original state is the physical return,but the return is often impossible to be realized.Impossibility of return of the original state should be subject to the provisions of Art.110 of Contract Law,but not Art.58.There are four forms of it.And then the duty of compensation for value will occur.Compensation for value is a substitute and relief for impossibility of return of the original state.The seller may claim compensation at its estimated price,if the return of the original state is impossible.However,the compensation for value is not the same as monetary creditor’s right.Under certain circumstances,the seller can choose the replacement claim of compensation.The object of compensation for value is consistent with its scope.It includes interests of use and fruits.However,there is no compensation for value of the consumables for their interests of use.Compensation for value shall be dealt with respectively according to different circumstances to see whether such loss is attributable to the buyer,the seller,or both parties if the impossibility of return for the subject matter occurs due to having been damaged,lost or some other similar reasons.When it comes to the connotations of attributability,the impossibility of return of the original state’s is consistent with the connotations of the rules of liability for breach of contract and the burden of object risk.When to determinate which part should be attributable,from the perspective of damage to or loss of a subject matter that should be returned,the conversion of identity between creditor and debtor should be paid attention to when the contract is terminated.(1)In principle,the buyer shall compensate for value,if the damage or loss cannot be attributable to any party.However,there are two exceptions: a)In accordance with principle of honesty and credibility,the buyer’s obligation of compensation for value shall be eliminated,if the seller improperly takes advantage of the circumstance where the damage or loss caused by the subject matter not being delivered to the buyer still occurs.b)If the subject matter delivered by the seller has any major defect,the risk of damage to or loss of the subject matter shall be borne by the seller after the buyer refuses to accept the subject matter or terminates the contract,and the seller does not have the right of claiming compensation for value.(2)The buyer shall compensate for value,if the damage or loss can be attributable to him or her.(3)The seller’s right of claim to compensation for value shall extinguish,if the damage or loss can be attributable to him or her.(4)The seller’s right of claim to compensation for value shall be deducted according to his proportion of the responsibility if both parties bear the responsibility.In addition,the buyer shall compensate for value if he or she decides to dispose of the subject matter out of preference,even though the subject matter’s defect that produces the right to terminate the contract appears only in the course of processing or modification.The price of compensation for value shall be calculated on the basis of the subjective value agreed upon by the parties because the contract is terminated but it has not been eliminated.When delivering the defective subject matter,the subjective value should be subtracted according to the ratio between the objective value of the subject matter actually delivered and the objective value of the subject matter that meets the quality requirements at the time of acceptance.If the two parties have not agreed on the consideration,the objective value shall be adopted.So shall the interests of use and fruits.The benchmark time of calculating the price of compensation for value for the subject matter and its fruits should be the time when the contract is terminated.In the specific calculation,a comprehensive inspection must be conducted on the two occasions when the subject matter is accepted and when it is damaged or lost.The benchmark time of interests of use is when it occurs.The place of calculation of the subject matter and fruits for return shall be where the subject object has been delivered originally.The place of calculation of interests of use shall be where it occurs.