Calculation Criteria for Compensation in the Unwinding of Failed Contracts
Article 157 of the Civil Code stipulates that the recipient of a failed contract must compensate for its value if he is unable to make restitution,but it does not specify the calculation criteria for compensation.There are two main views on this issue:the objective criteria and the sub-jective criteria.The Ninth Minutes of the National Courts'Civil and Commercial Trial Work insists on the subjective criteria.And it gives preference to the portion of the value added or diminished by the goods on the principle of equal sharing,taking into account a combination of factors.There are some problems with these provisions.The Supreme People's Court's Interpretation of the General Provisions of the Contract Book of the Civil Code partially corrects these problems,but there is still room for improvement.By Compensation should in principle be based on objective criteria,but there are some exceptions.In the case of an appreciation or depreciation in value,for example as a result of the resale of the goods,the corresponding appreciation or depreciation shall accrue exclusively to the recipient.The moment at which the objective value of the goods is assessed is the transfer of as-sets.The method of valuing the goods must follow the principle of proportionality.
compensationfailed contractsunwindingunjust enrichmentallocation of risk