Compensation for damages, also referred to as damages, is the duty of the breaching party to pay legal compensation for damages suffered by the breaching party in the event of non-performance of the contract. It is one of the methods commonly used in the responsibility for breach of contract, the main purpose of which is to make up for the damage suffered by the compliance party as a result of the breach by the other party。
I. The principle that compensation for loss should be based on full reparation
The principle of full reparation, which refers to the damages suffered by the breaching party, should be compensated by the breaching party and is an effective measure to fully and comprehensively protect the interests of the breaching party. Compensation for loss should be contingent upon the breaching party's loss; at the same time, the breaching party should also be compensated in full for the loss suffered by the compliance party, which would enable the compliance party's interests to reach the appropriate state of performance of the contract through compensation。
If a party fails to perform a contract or to perform a contractual obligation in a manner that is inconsistent with the agreement and causes loss to the other party, compensation for the loss shall be equal to that resulting from the breach, including benefits that may accrue after the performance of the contract, but shall not exceed the loss that may have been foreseen or should have been foreseen by the breach of the contract by the party in breach of the contract. Compensation for loss should include not only compensation for the entire factual loss of the compliance party, i. E. The actual loss of property, loss and expenses incurred by the compliance party, but also the loss of available benefits。
Loss of available benefits, although not real property losses, is a property interest that would have been available to the parties had the contract been performed. For example, in a contractual relationship involving resale, where the buyer was unable to resell because the seller had not delivered the goods, the loss of profit suffered by the buyer was a loss of profit and the breaching party was compensable. The available benefits are characterized as follows: 1. The available benefits are a future interest and are derived from the actual performance of the contract. 2. The available benefits are subject to the conditions for their realization and will be acquired by the parties as long as the contract is contractually performed. The available benefit is the benefit expected to be obtained by the performance of the contract by the parties at the time of its conclusion, and the benefit reasonably foreseeable at the time of the contract。
The “reasonable anticipation” rule should be applied to the benefits of reparation. That is, the amount of compensation is limited to the loss that the breaching party could or should have foreseen to the other party as a result of its breach of contract. Here, the subjects foreseen are the defaulting party, not the compliance party, in order to preserve equity; the time foreseen is at the time of the conclusion of the contract rather than at the time of the breach in order to exclude the impact of market changes on compensation; and the standards foreseen should be a reasonable and normal one。
Ii. Methodology of compensation for compensation of compensation for business provided by the parties
The parties may agree on the method of calculating compensation for damages arising out of default. In other words, the question of compensation for loss may be made by the parties at the time of the conclusion of the contract. It differs from the method used to calculate the amount of compensation for the loss after the loss has been incurred by agreement between the parties. Since compensation for loss presupposes the existence of a breach of contract, it is difficult to determine compensation when damage has occurred, and its calculation is time-consuming. Thus, the agreed method of calculating compensation for loss facilitates the determination of compensation for loss and the timely resolution of the dispute。
Iii. Compensatory and punitive nature of compensation for damages
Compensation for loss is intended to compensate for the damage suffered by the compliance party. It is therefore premised on the occurrence of actual damage and on the actual occurrence of damage as a criterion for determining the scope of compensation, which is the compensatory characteristic of compensation for loss. At the same time, compensation for damages is punitive in certain circumstances. For example, the operator who fraudulently provides goods or services to consumers should be liable for double compensation under the consumer protection act。
Iv. Relationship of compensation for loss to other forms of liability for breach
If one of the parties fails to perform its contractual obligations or if the performance of the contractual obligations is inconsistent with the agreement, the other party, after performance of the obligation or taking remedial action, is entitled to compensation for the loss. If the agreed amount of the breach is less than the loss, the party may request the court to increase it. It follows that the breaching party's continued performance is compensable if it is not sufficient to compensate for the breaching party's losses. In the case of late payment of the price or remuneration, for example, interest should also be paid. The remediation measures are compensable. For example, transportation costs incurred for the repair of commodities. Where the amount of the breach is less than the amount of the loss, an increase may be claimed, i. E. Compensation should also be provided to cover the shortfall。
