| Summary: | 碩士 === 國立臺灣大學 === 法律學研究所 === 107 === According to Article 260 of Civil Code of R.O.C.: “The exercise of the right of rescission does not prejudice to the claim for compensation.”, creditors are still allowed to claim damages after they rescind a contract. However, the Article doesn’t specify the nature or coverage of the compensation, resulting in great dispute of different explanations. This thesis mainly deals with three of the most important issues regarding Article 260:
First, the courts and prevailing literature in Taiwan hold that the damages in Article 260 is that of expectation interest, which is the transformation of the original obligation after the contract is rescinded. Meanwhile, the courts and literature also hold that when a contract is rescinded, it will be extinguished from the beginning. Nonetheless, it becomes difficult to explain why a creditor can claim damages of expectation interest out of a contract that doesn’t exist. In Germany, the prevailing theory contends that “rescission” doesn’t extinguish a contract from the beginning, but only transform the obligation of the contract promise to restitution, which forms a perfect solution to the contradiction. In this sense, however, it might be no longer proper to use the term “rescission”, since in common law it mostly refers to the situation where a contract is cancelled from the beginning when it is formed under fraud, duress, or undue influence. Instead, the term “termination” will be more appropriate and correspond to the international uniform law instruments.
Secondly, the courts and literature in Taiwan argue that the creditor can still claim for damages in lieu of performance after a contract is terminated. However, along with the effect of restitution under Article 259 of the Civil Code, it can result in double-profiting of the creditor. Thus, we should reexamine the relation between “damages in lieu of performance” and “restitution”. This thesis claims that when a contract is terminated, “restitution” should first take place to reimburse the damages of the creditor, and the compensation of expectation interest deals with the rest of the damages resulted from the breach. This method works both in the civil law and common law systems.
Finally, the civil cases No. 1188 (decided in 1966) and No. 2727 (decided in 1966) of the Supreme Court have long prevented the creditors from claiming the damages that happen after the termination of contracts, despite the fact that those damages are often damages of expectation interest. On the other hand, some argues that although “damages rose after the termination” can be recovered, “damages rose because of the termination” should be precluded from compensation. This thesis holds that all of the damages above are damages of expectation interest, and thus should be compensated as long as there is a causal link between the damage and the breach of the debtor, regardless of it happens before or after the termination.
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