On the Systemic Positioning of Disgorgement of Profits from Breach of Contract

Article 62 of the General Provisions on Contract Law in the Civil Code includes the benefits obtained by the breaching party due to the breach as one of the factors for the court to consider when determining the recoverable benefits. Currently, there are many views suggesting that this can be developed into a rule for the disgorgement of profits from breach of contract. Discussions on the positioning of the disgorgement of profits from breach of contract within the legal system should return to the essence of the matter. If the disgorgement of profits from breach of contract is categorized under the system of management without mandate, it would conflict with existing rules. Given the broad connotations and extensions of unjust enrichment, including the disgorgement of profits from breach of contract under this category remains unjustifiable. The compensability of profits from breach of contract originates from the compensability of recoverable benefits. Therefore, discussions on the disgorgement of profits from breach of contract should return to the system of damages. Although the disgorgement of profits from breach of contract somewhat exceeds the strict control of the principle of full compensation, rationality can still be found through reliance interests and fault.