Article 60 of the Judicial Explanation of General Principles of Contract Law of Civil Code stipulates the concrete calculation of damages based on the substitute transaction price.Substitute transaction itself is a self-help remedy against breach of contract with certain obligatory character.Although substitute transaction can be effected freely as a self-help remedy,the premise of the application of the substitute transaction rule is the avoidance of the contract,which is for certainty of judicial decision and balancing the interests of the parties.In terms of the reasonable requirement of substitute transaction effected,where a substitute transaction is commercially substitutable,it is presumed to be at the market price.It is for the breach party to claim that the price significantly deviates from the market price as a defence.When the market price itself or the deviation degree is difficult to determine,substitute transaction rule should be applied by considering the purpose and means of the non-breaching party.Excessive damages resulting from high prices of substitute transactions can be further limited by the rule of foreseeability.
substitute transactionmitigation ruleprofit lossconcrete calculation of damages
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