The law of damages in Chinese contract law: A comparative study of damages calculation in Chinese law, English law and the CISG, with empirical results from Chinese practice
PhD student: Mrs Z. Niu
Promotors: E. Tjong Tjin Tai, Mrs Prof V. Mak
Duration: 1/9/2011 - 31/8/2015
PhD defence: Tilburg, 4/9/2015
This research focuses on the similarities and differences of contractual damages assessment methods between the common law and civil law systems and the CISG, in the context of concurrent developments in the international commercial law. The main comparative subjects of this work will be the English contract law, the Dutch Civil Code 1992, the Convention on Contracts for the International Sale of Goods(CISG) and the Chinese Contract Law 1999,and the Germen Civil Code, the Principle of European Contract Law(PECL) and the Draft Common Frame of Reference(DCFR) will be mentioned in some parts as well. The typical rules of contractual damages calculation under the legal systems above will be analyzed, as well as the impact of them between each other. There are two aims of this work. First, I will do a comparative study between Dutch Civil Code 1992, English contract law, Chinese Contract Law 1999 and the CISG in order to identify the similarities and differences of contractual damages calculation rules among them. In accordance with this study, I would like to give my advice for the legislation improvement of the Chinese contract law. Secondly, I hope that the comparison between different provisions and case solutions may highlight a harmonious way to interpret the law, and may perhaps lead to an unification of legislation to some extent. I will separate this research into three parts, which follows the stages of damages calculation. First of all, since a general idea is that the right of damages is derived from the loss of the aggrieved party as a result from the breach , the scope of loss will be discussed. The loss of the injured party may include both economic loss and non-economic loss. The question here would be what kinds of loss can be seen as compensation of a breach? Nearly all of the legal systems follow the rule of full compensation. Nevertheless, the scope of it is considered to be different. For example, the Dutch Civil Code indicates that, in some circumstances, the loss of a third party can be seen as a contractual loss. However, it seems cannot be accepted by English law, the CISG and Chinese law. Moreover, under Chinese contract law, the non-economic loss cannot be recovered whereas under some of the other legal systems it can be. Another issue would be discussed in this part will be the fault of the debtor. Whether the fault can be seen as a condition of loss or a limitation of loss? The second part will relate to the methods of calculation damages, namely how to achieve full compensation, and how to recover the loss with a sum of money. The so-called concrete and abstract method will be analyzed here in that they are widely provided in the legal systems mention above(except Chinese law). How do these methods work in different kinds of contract, such as sale of goods and service contract? Who is entitled to decide which method should be used first? Since these two methods have been provided in English law, Dutch law and the CISG, whether it is necessary for Chinese law to describe them expressly. Furthermore, the calculation of loss of profits and non-economic loss would be discussed respectively, since the measures of calculation of these losses are not covered In the third part, the limitation rules will be discussed, for it is a common feature of the legal systems mentioned above that not all the loss resulting from the breach can be recovered by damages. Therefore, the full compensation rule is subject to the principles of limitation. Generally, the foreseeability and mitigation rules are widely used to limited the damages under both domestic law and international instrument. However, the foreseeability rule has been rejected by Dutch Civil Code and Germen Civil Code. In the Dutch Civil Code, the foreseeability only can be seen as a element to decide the causation between the harm event and losses. In a commentary, it is said that the forseeability should be replaced by the disproportion of contract price. When it comes to mitigation, the question would be when and how to mitigate the loss can be seen as reasonable. It is said that the obligation mitigation has to the exits of loss. However, under Dutch Civil Code, failure of mitigation is considered as contributive negligence which can be committed before occurrence of the loss.