Breach of contract remedies: Compensate or indemnify?

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There are a different breach of contract remedies and the most common remedy for a breach of contract is compensation for the losses arising out of the breach, or, to use the English term, “damages”. In most, if not all, jurisdictions, this remedy is available by law and it is not necessary to make express provision for it in the contract itself.

Lexicon_cover_pic-CMYKIt is also possible for a contract to make provision for other remedies in the event of breach. An example of this is the right to terminate a contract for breach (see China Business Law Journal volume 2 issue 1, page 58: When a contract comes to an end).

Another contractual remedy that is recognised in many jurisdictions is an “indemnity”.

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葛安德 Andrew Godwin
葛安德
Andrew Godwin

A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre. Andrew’s new book is a compilation of China Business Law Journal’s popular Lexicon series, entitled China Lexicon: Defining and translating legal terms. The book is published by Vantage Asia and available at www.vantageasia.com.