Nonperformance of Contractual duty Imperfect Performance Contractual Liability and Torts.

Nonperformance of Nonperformance of Contractual dutyContractual duty

Imperfect PerformanceImperfect Performance

Contractual Liability and TortsContractual Liability and Torts

Imperfect PerformanceImperfect Performance

Definition of Imperfect PerformanceDefinition of Imperfect Performance

Legal Basis of Imperfect PerformanceLegal Basis of Imperfect Performance

Nature of Imperfect PerformanceNature of Imperfect Performance

Classification of Imperfect PerformanceClassification of Imperfect Performance

Liability arising from Imperfect PerformancLiability arising from Imperfect Performancee

Definition of Imperfect PerformanceDefinition of Imperfect Performance

The performance tender by the defaulting The performance tender by the defaulting party is not in conformity with the tenor of tparty is not in conformity with the tenor of the prestation (the content of performance he prestation (the content of performance agreed, or the term of the contract).agreed, or the term of the contract).– The defaulting party performed.The defaulting party performed.– Performance is not in conformity with the tenoPerformance is not in conformity with the teno

r of the prestation.r of the prestation.Tender a defective goodsTender a defective goodsCaused damage to the interest inherent to the aggrCaused damage to the interest inherent to the aggrieved party. ieved party.

Foundation of Imperfect PerformanceFoundation of Imperfect Performance

The defaulting party breached the ancillary duty The defaulting party breached the ancillary duty or incidental dutyor incidental duty– Three layers of contractual dutyThree layers of contractual duty

Principal dutyPrincipal duty– Promised by the partyPromised by the party– Purpose of the contractPurpose of the contract

Secondary dutySecondary duty– Promised by the partyPromised by the party– Secondary dutySecondary duty

Ancillary dutyAncillary duty– Based on the good faithBased on the good faith– The duty to protect the other partyThe duty to protect the other party– The duty to assist the other partyThe duty to assist the other party

Nature of Imperfect PerformanceNature of Imperfect Performance

Non-performanceNon-performance– Breach contractual dutyBreach contractual duty

DelictDelict– Breach duty of careBreach duty of care

Classification of Imperfect Classification of Imperfect PerformancePerformance

Defective PerformanceDefective Performance– Tender unqualified goodsTender unqualified goods

Detrimental PerformanceDetrimental Performance– Tender unqualified goods and caused further Tender unqualified goods and caused further

damage to the aggrieved partydamage to the aggrieved party

Liability arising from Imperfect Liability arising from Imperfect Performance under ROC Civil CodePerformance under ROC Civil Code

ElementsElements– The defaulting party performed.The defaulting party performed.– Performance is not in conformity with the tenoPerformance is not in conformity with the teno

r of the prestation.r of the prestation.Tender a defective goodsTender a defective goods

Caused damage to the interest inherent to the aggrCaused damage to the interest inherent to the aggrieved party.ieved party.

– The nonconformity is imputable to the defaultiThe nonconformity is imputable to the defaulting partyng party

Liability arising from Imperfect Liability arising from Imperfect Performance under ROC Civil CodePerformance under ROC Civil CodeImpossible to cure ( applied the rule of liability of Impossible to cure ( applied the rule of liability of Impossibility) (ROC CC 227I)Impossibility) (ROC CC 227I)– Claimed damages due to impossibility of perfect Claimed damages due to impossibility of perfect

performance (ROC CC 226)performance (ROC CC 226)Defective performance: Recovery of property lossDefective performance: Recovery of property loss

– Claimed damages for injury incurred by detrimental Claimed damages for injury incurred by detrimental performance (ROC CC 227II)performance (ROC CC 227II)

Recovery of property lossRecovery of property lossIf the injury to personality right occurred, the aggrieved party If the injury to personality right occurred, the aggrieved party may claim emotional damage. (ROC CC 227-I)may claim emotional damage. (ROC CC 227-I)

– Rescinded the contractRescinded the contractDischarge the aggrieved party’s duty. (ROC CC 256); Discharge the aggrieved party’s duty. (ROC CC 256); claimed the profit back awarded from the aggrieved party claimed the profit back awarded from the aggrieved party (ROC CC 259)(ROC CC 259)

Liability arising from Imperfect Liability arising from Imperfect Performance under ROC Civil CodePerformance under ROC Civil CodePossible to cure (applied the rule regulating delay of performance) Possible to cure (applied the rule regulating delay of performance) (ROC CC 227I)(ROC CC 227I)– Claim the cure of performanceClaim the cure of performance

Claim to cureClaim to cure– Enforced through specific performanceEnforced through specific performance

Claim damage incurred by its delay of performanceClaim damage incurred by its delay of performanceIf delay to cureIf delay to cure

– Notice to cure within a reasonable period of time (ROC CC 254, 255)Notice to cure within a reasonable period of time (ROC CC 254, 255)– Lapse of time, rescinded the contractLapse of time, rescinded the contract

Discharge the aggrieved party’s duty. (ROC CC 254, 255)Discharge the aggrieved party’s duty. (ROC CC 254, 255)Claimed the profit back awarded from the aggrieved party (ROC CC 259)Claimed the profit back awarded from the aggrieved party (ROC CC 259)

– Claimed damages for injury incurred by detrimental performance (ROC Claimed damages for injury incurred by detrimental performance (ROC CC 227II)CC 227II)

Recovery of property lossRecovery of property lossIf the injury to personality right occurred, the aggrieved party may claim If the injury to personality right occurred, the aggrieved party may claim emotional damage. (ROC CC 227-I)emotional damage. (ROC CC 227-I)

ROC Civil CodeROC Civil Code

Article 227Article 227– If a debtor incompletely performs his obligation by reason of a cirIf a debtor incompletely performs his obligation by reason of a cir

cumstance to which the debtor is imputed, the creditor may execcumstance to which the debtor is imputed, the creditor may execute his right according to the provisions of the default or the impoute his right according to the provisions of the default or the impossibility of the performance.ssibility of the performance.

– In addition to the injury arising from the incomplete performance In addition to the injury arising from the incomplete performance in the preceding paragraph, the creditor may claim compensatioin the preceding paragraph, the creditor may claim compensation for other injuries arising therefrom, if any.n for other injuries arising therefrom, if any.

Article 227-1Article 227-1– If the creditor’s personality has been injured by reason of the deIf the creditor’s personality has been injured by reason of the de

btor’s non-performance, the debtor shall be bound to compensatbtor’s non-performance, the debtor shall be bound to compensate for the injury in compliance mutatis mutandis with the provisione for the injury in compliance mutatis mutandis with the provisions of Article 192 to Article 195 and Article 197.s of Article 192 to Article 195 and Article 197.

ROC Civil CodeROC Civil CodeArticle 192Article 192

– A person who has wrongfully caused the death of another shall also be bound to make comA person who has wrongfully caused the death of another shall also be bound to make compensation for the injury to any person incurring the medical expenses, increasing the need in pensation for the injury to any person incurring the medical expenses, increasing the need in living, or incurring the funeral expenses.living, or incurring the funeral expenses.

– If the deceased was statutorily bound to furnish maintenance to a third party, the tortfeasor sIf the deceased was statutorily bound to furnish maintenance to a third party, the tortfeasor shall also make compensation to such third party for any injury arising therefrom.hall also make compensation to such third party for any injury arising therefrom.The provision of the second paragraph of Article 193 shall apply to the compensation of the The provision of the second paragraph of Article 193 shall apply to the compensation of the preceding paragraph.preceding paragraph.

Article 193Article 193– If a person has wrongfully damaged to the body or health of another, and caused the injured If a person has wrongfully damaged to the body or health of another, and caused the injured

person to lose or decrease his laboring capacity, or to increase the need in living, the tortfeaperson to lose or decrease his laboring capacity, or to increase the need in living, the tortfeasors shall be bound to make compensation to the injured person for any injury arising therefrsors shall be bound to make compensation to the injured person for any injury arising therefrom.om.

– The court may, on the application of the parties, order the compensation of the preceding paThe court may, on the application of the parties, order the compensation of the preceding paragraph to be made in periodical payments of money, but the court shall compel the tortfeasragraph to be made in periodical payments of money, but the court shall compel the tortfeasor to furnish security.or to furnish security.

Article 194Article 194– In case of death caused by a wrongful act, the father, mother, sons, daughters and spouse In case of death caused by a wrongful act, the father, mother, sons, daughters and spouse

of the deceased may claim for a reasonable compensation in money even if such injury is nof the deceased may claim for a reasonable compensation in money even if such injury is not a purely pecuniary loss.ot a purely pecuniary loss.

ROC Civil CodeROC Civil Code

Article 195Article 195– If a person has wrongfully damaged to the body, health, reputatiIf a person has wrongfully damaged to the body, health, reputati

on, liberty, credit, privacy or chastity of another, or to another’s pon, liberty, credit, privacy or chastity of another, or to another’s personality in a severe way, the injured person may claim a reasoersonality in a severe way, the injured person may claim a reasonable compensation in money even if such injury is not a purely nable compensation in money even if such injury is not a purely pecuniary loss.pecuniary loss. 　　 If it was reputation that has been damaged, thIf it was reputation that has been damaged, the injured person may also claim the taking of proper measures fe injured person may also claim the taking of proper measures for the rehabilitation of his reputation.or the rehabilitation of his reputation.

– The claim of the preceding paragraph shall not be transferred or The claim of the preceding paragraph shall not be transferred or inherited, except a claim for compensation in money has been prinherited, except a claim for compensation in money has been promised by contract or has been commenced.omised by contract or has been commenced.

– The provisions of the preceding two paragraphs shall be mutatis The provisions of the preceding two paragraphs shall be mutatis mutandis applied when a person has wrongfully damaged to anomutandis applied when a person has wrongfully damaged to another’s status based on the relationship to their father, mother, sother’s status based on the relationship to their father, mother, sons, daughters, or spouse in a severe way.ns, daughters, or spouse in a severe way.

Nonconforming Performance in Quality Nonconforming Performance in Quality under PRC Contract Lawunder PRC Contract Law

Elements of Elements of Nonconforming Performance in QNonconforming Performance in Quality uality – Duty to perform in accordance with the quality Duty to perform in accordance with the quality

prescribed in contract.prescribed in contract.PRC CL PRC CL §107, §111 §107, §111

– Performance does not meet the prescribed Performance does not meet the prescribed quality requirementsquality requirements

Defective performanceDefective performance


LiabilityLiability– Cure of non-conforming performance (PRC Cure of non-conforming performance (PRC

CL CL §107, GPCL §111)§107, GPCL §111)Decided by original contractDecided by original contract

– The breaching party shall be liable for breach in The breaching party shall be liable for breach in accordance with the contract. (PRC CL accordance with the contract. (PRC CL §111)§111)

Decided by subsequent agreement or trade usage Decided by subsequent agreement or trade usage – Where the liabilities for breach were not prescribed or Where the liabilities for breach were not prescribed or

clearly prescribed, liability shall be decided in clearly prescribed, liability shall be decided in accordance with Article 61. (PRC CL accordance with Article 61. (PRC CL §111)§111)


Decided by the aggrieve party’s selection Decided by the aggrieve party’s selection – If liability cannot be determined in accordance with If liability cannot be determined in accordance with

Article 61 hereof, the aggrieved party may, by Article 61 hereof, the aggrieved party may, by reasonable election in light of reasonable election in light of the nature of the subject the nature of the subject matter and the degree of lossmatter and the degree of loss, require the other party to , require the other party to

assume liabilities for breach by way of assume liabilities for breach by way of repair, repair, replacement, remaking, returning the goods, or replacement, remaking, returning the goods, or reduction in price or remuneration, etc.reduction in price or remuneration, etc.

– If repair, replacement, or remaking is If repair, replacement, or remaking is impossible, improper or impractical to enforce, impossible, improper or impractical to enforce, the cure of performance shall not be enforced. the cure of performance shall not be enforced. (analogues to PRC CL (analogues to PRC CL §110§110 ) )


– Claimed damage (PRC CL Claimed damage (PRC CL §107, GPCL §111 )§107, GPCL §111 )After the cure of non-conforming performance, if the After the cure of non-conforming performance, if the other party has sustained other loss, the breaching other party has sustained other loss, the breaching party shall pay damages. (PRC CL party shall pay damages. (PRC CL §112)§112)the amount of damages payable shall be equivalent to the amount of damages payable shall be equivalent to the other party's loss resulting from the breachthe other party's loss resulting from the breach

– including any benefit that may be accrued from performance including any benefit that may be accrued from performance of the contract, provided that the amount shall not exceed of the contract, provided that the amount shall not exceed the likely loss resulting from the breach which was foreseen the likely loss resulting from the breach which was foreseen or should have been foreseen by the breaching party at the or should have been foreseen by the breaching party at the time of conclusion of the contract. (PRC CL time of conclusion of the contract. (PRC CL §113)§113)

PRC PRC GPCLGPCL

Article 111Article 111– If a party If a party fails to fulfill its contractual obligatiofails to fulfill its contractual obligatio

nsns or violates the terms of a contract while fulf or violates the terms of a contract while fulfilling the obligations, the other party shall havilling the obligations, the other party shall have the right to demand fulfillment or the e the right to demand fulfillment or the taking taking of remedial measures and claim compensatioof remedial measures and claim compensation for its lossesn for its losses. .

PRC PRC GPCLGPCL

Article 116 Article 116 – If a party If a party fails to fulfill its contractual obligationfails to fulfill its contractual obligation

ss on account of a higher authority, it shall first on account of a higher authority, it shall first compensate for the losses of the other party ocompensate for the losses of the other party or take other remedial measures as contractualr take other remedial measures as contractually agreed and then the higher authority shall bly agreed and then the higher authority shall be responsible for settling the losses it sustainee responsible for settling the losses it sustained. d.

PRC Contract LawPRC Contract Law

Article 107Article 107– If a party fails to perform its obligations under If a party fails to perform its obligations under

a contract, or a contract, or rendered non-conforming rendered non-conforming performanceperformance, it shall bear the liabilities for , it shall bear the liabilities for breach of contract by specific performance, breach of contract by specific performance, cure of non-conforming performance or cure of non-conforming performance or payment of damages, etc. payment of damages, etc.

PRC CLPRC CL

Article 111 Liabilities in Case of Quality Non-Article 111 Liabilities in Case of Quality Non-compliancecompliance– Where a performance does not meet the prescribed Where a performance does not meet the prescribed

quality requirements, the breaching party shall be quality requirements, the breaching party shall be liable for breach in accordance with the contract. liable for breach in accordance with the contract. Where the liabilities for breach were not prescribed or Where the liabilities for breach were not prescribed or clearly prescribed, and cannot be determined in clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the aggrieved party accordance with Article 61 hereof, the aggrieved party may, by reasonable election in light of the nature of may, by reasonable election in light of the nature of the subject matter and the degree of loss, require the the subject matter and the degree of loss, require the other party to assume liabilities for breach by way of other party to assume liabilities for breach by way of repair, replacement, remaking, acceptance of repair, replacement, remaking, acceptance of returned goods, or reduction in price or remuneration, returned goods, or reduction in price or remuneration, etc. etc.

PRC CLPRC CL

Article 61 Indeterminate Terms; Article 61 Indeterminate Terms; Supplementary AgreementSupplementary Agreement– If a term such as quality, price or remuneration, or If a term such as quality, price or remuneration, or

place of performance etc. was not prescribed or place of performance etc. was not prescribed or clearly prescribed, after the contract has taken effect, clearly prescribed, after the contract has taken effect, the parties may supplement it through agreement; if the parties may supplement it through agreement; if the parties fail to reach a supplementary agreement, the parties fail to reach a supplementary agreement, such term shall be determined in accordance with the such term shall be determined in accordance with the relevant provisions of the contract or in accordance relevant provisions of the contract or in accordance with the relevant usage. with the relevant usage.

PRC CLPRC CL

Article 107 Types of Liabilities for Article 107 Types of Liabilities for BreachBreach– If a party fails to perform its obligations under If a party fails to perform its obligations under

a contract, or rendered non-conforming a contract, or rendered non-conforming performance, it shall bear the liabilities for performance, it shall bear the liabilities for breach of contract by specific performance, breach of contract by specific performance, cure of non-conforming performance or cure of non-conforming performance or payment of damages, etc. payment of damages, etc.

PRC CLPRC CL

Article 110 Non-monetary Specific Article 110 Non-monetary Specific Performance; ExceptionsPerformance; Exceptions– Where a party fails to perform, or rendered non-Where a party fails to perform, or rendered non-

conforming performance of, a non-monetary conforming performance of, a non-monetary obligation, the other party may require performance, obligation, the other party may require performance, except where:except where:

(i) performance is impossible in law or in fact;(i) performance is impossible in law or in fact;

(ii) the subject matter of the obligation does not lend itself (ii) the subject matter of the obligation does not lend itself to enforcement by specific performance or the cost of to enforcement by specific performance or the cost of performance is excessive;performance is excessive;

(iii) the obligee does not require performance within a (iii) the obligee does not require performance within a reasonable time. reasonable time.

PRC CLPRC CL

Article 112 Liability for Damages Article 112 Liability for Damages Notwithstanding Subsequent Performance Notwithstanding Subsequent Performance or Cure of Non-conforming Performanceor Cure of Non-conforming PerformanceWhere a party failed to perform or Where a party failed to perform or rendered non-conforming performance, if rendered non-conforming performance, if notwithstanding its subsequent notwithstanding its subsequent performance or cure of non-conforming performance or cure of non-conforming performance, the other party has performance, the other party has sustained other loss, the breaching party sustained other loss, the breaching party shall pay damages.shall pay damages.

PRC CLPRC CL

Article 113 Calculation of Damages; Damages to Article 113 Calculation of Damages; Damages to ConsumerConsumer– Where a party failed to perform or rendered non-conforming Where a party failed to perform or rendered non-conforming

performance, thereby causing loss to the other party, the amount performance, thereby causing loss to the other party, the amount of damages payable shall be equivalent to the other party's loss of damages payable shall be equivalent to the other party's loss resulting from the breach, including any benefit that may be resulting from the breach, including any benefit that may be accrued from performance of the contract, provided that the accrued from performance of the contract, provided that the amount shall not exceed the likely loss resulting from the breach amount shall not exceed the likely loss resulting from the breach which was foreseen or should have been foreseen by the which was foreseen or should have been foreseen by the breaching party at the time of conclusion of the contract.breaching party at the time of conclusion of the contract.

– Where a merchant engages in any fraudulent activity while Where a merchant engages in any fraudulent activity while supplying goods or services to a consumer, it is liable for supplying goods or services to a consumer, it is liable for damages in accordance with the Law of the People's Republic of damages in accordance with the Law of the People's Republic of China on Protection of Consumer Rights.China on Protection of Consumer Rights.


Classification of and Element of delictious liabilitClassification of and Element of delictious liabilityy– Intentional or negligent Infringement of rightIntentional or negligent Infringement of right

A person who, intentionally or negligently, has wrongfully daA person who, intentionally or negligently, has wrongfully damaged the rights of another is bound to compensate him for maged the rights of another is bound to compensate him for any injury arising therefrom.any injury arising therefrom.

– Intentional Infringement of interestIntentional Infringement of interestThe same rule shall be applied when the injury is done intentiThe same rule shall be applied when the injury is done intentionally in a manner against the rules of morals.onally in a manner against the rules of morals.

– Violation of lawViolation of lawA person, who violates a statutory provision enacted for the pA person, who violates a statutory provision enacted for the protection of others and therefore prejudice to others, is bound rotection of others and therefore prejudice to others, is bound to compensate for the injury, except no negligence in his act to compensate for the injury, except no negligence in his act can be proved. can be proved.


RightsRights– Non-property RightNon-property Right

Right of personalityRight of personalityMoral right (copyright law)Moral right (copyright law)Rights arising from family statusRights arising from family status

– Property rightProperty rightThe right in remThe right in rem

– Mortgagee’s rightMortgagee’s right

The right arising from obligation (obligation-right)The right arising from obligation (obligation-right)Intellectual rightsIntellectual rights

The defaulting party breaching contractThe defaulting party breaching contract– Infringement of contractual rightInfringement of contractual right

The third party detriment the contractual The third party detriment the contractual rightright

Case StudyCase Study

X entered into a contract to hire Y as a live X entered into a contract to hire Y as a live band singer to perform in X’s theater for a band singer to perform in X’s theater for a month. Gangster Z operated another month. Gangster Z operated another theater just in front of X’s theater and theater just in front of X’s theater and threaten Y to sing at his theater instead at threaten Y to sing at his theater instead at X’ theater. Y didn’t compliance Z’s threat X’ theater. Y didn’t compliance Z’s threat and rejected his request. Z shoot Y to and rejected his request. Z shoot Y to death. Can X claim damages from Z? death. Can X claim damages from Z?

Nonperformance of Contractual duty Imperfect Performance Contractual Liability and Torts.

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Transcript of Nonperformance of Contractual duty Imperfect Performance Contractual Liability and Torts.