On the Conflict Management of Substitute Transaction Damages and Market Price Damages
Paragraph 2 of Article 60 of the Judicial Interpretation of the General Principles of Contract of the Civil Code stipulates the conflict management rule for substitute transaction damages and market price damages.The application of the rule should be based on an inquiry into the eligibility of substitute transactions.As long as the non-breaching party enters into an eligible substitute transaction,it only can recover the substitute transaction damages.The understanding of"eligibility"should be carried out from two aspects:the reasonableness of information search and the integrity of transaction selection.Whether the price of a substitute transaction"deviates from"the market price should not be used as the sole measure of whether the substitute transaction is eligible.The calculation results of damages caused by the deviation of the substitute transaction price from the market price are concentrated in two directions:the substitute transaction damages are higher than the market price damages,and the substitute transaction damages are lower than the market price damages.Only the former means that the"deviation"of the substitute transaction price from the market price will lead to the neglect of the mitigation of the substitute transaction,the deviation from the principle of full compensation,the unfair exploitation of the breaching party and the inefficient behavioral incentives of the non-breaching party.In this case,the substitute transaction is not eligible,and the non-breaching party can only recover the market price damages.
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