Front.Law China (2006)1:121-152 135 Causation Nowadays in China,the mighty theory on problems of causation adopts a bifurcated approach,namely distinguishing"cause in fact"and"cause in law."In determining whether a defendant should bear a liability of damages,the judge must decide whether there is a cause in fact between the act of the defendant and the loss of the plaintiff.Here a cause in fact,as is popularly accepted,is a relationship of conditio sine qua non,and it may be tested by the"but for”test31 Reasons for exemption Though reasons for exemption may be determined by the parties in their contract,as is known as exemption clauses,the only reason for exemption that can be found in General Provisions of CCL is a force majeure (art.117).Since CCL adopted the"Strict Liability Principle,"the scope of reasons for exemption becomes even more important than ever.But insofar as the provisions of CCL are concerned,we can say that the strict liability in CCL is stricter than the strict liability in Common Law.Because there is a principle named "Frustration of Contract"in Common Law,and its scope is much bigger than the scope of force majeure32 Scope of damages According to art.113 par.I of CCL,where a party fails to perform its obligations under the contract or does not perform its obligations as contracted and thus causes losses to the other party,the damages shall consist of a sum equal to the loss actually caused by the breach, including the gains that should be obtained had the contract been performed,but may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract as a possible consequence of the breach of contract.Here as a method of limiting damages,CCL,instead of following the German theory of Adequate Causal Relationship,adopted the Rule of Foreseeability. If we compare art.113 par.I of CCL with its corresponding part of Japanese law (JCC art. 416),we may find there are some characteristics of CCL that differs from Japanese law.First, there is no distinction between“general loss”and“special loss'”in CCL,and the rule of foreseeability applies to all kinds of losses.Second,in CCL it is by"the time of the conclusion of the contract"and not by "the time of the breach of the contract"that the rule of foreseeability is applied.Third,in CCL it is by the party in breach and not both"parties"that the rule of foreseeability is applied.Although art.416 of JCC is learned from Common Law and French law,but since Professor Wagatsuma,the general theory of Japan interprets art.416 of JCC by the German theory of Adequate Causal Relationship.This is a typical example of a dual structure of the“Code Reception”and“Theory Reception'”in Japan..3 Of course,itis 3 See Shiyuan Han,Studies on damages for breach of contract,(1999),pp.147-159;Jianyuan Cui ed.,Law of contract,(2000,2nd ed.).Law Press China,pp.285-288. 32 See G.H.Treitel,The Law of contract (9th ed.1995).pp.778-810. See Zentaro Kitagawa,The history and theory of Japanese legal science.(1968).Nipon Hyoulonshia Press.Causation Nowadays in China, the mighty theory on problems of causation adopts a bifurcated approach, namely distinguishing “cause in fact” and “cause in law.” In determining whether a defendant should bear a liability of damages, the judge must decide whether there is a cause in fact between the act of the defendant and the loss of the plaintiff. Here a cause in fact, as is popularly accepted, is a relationship of conditio sine qua non, and it may be tested by the “but for” test.31 Reasons for exemption Though reasons for exemption may be determined by the parties in their contract, as is known as exemption clauses, the only reason for exemption that can be found in General Provisions of CCL is a force majeure (art. 117). Since CCL adopted the “Strict Liability Principle,” the scope of reasons for exemption becomes even more important than ever. But insofar as the provisions of CCL are concerned, we can say that the strict liability in CCL is stricter than the strict liability in Common Law. Because there is a principle named “Frustration of Contract” in Common Law, and its scope is much bigger than the scope of force majeure. 32 Scope of damages According to art. 113 par. 1 of CCL, where a party fails to perform its obligations under the contract or does not perform its obligations as contracted and thus causes losses to the other party, the damages shall consist of a sum equal to the loss actually caused by the breach, including the gains that should be obtained had the contract been performed, but may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract as a possible consequence of the breach of contract. Here as a method of limiting damages, CCL, instead of following the German theory of Adequate Causal Relationship, adopted the Rule of Foreseeability. If we compare art. 113 par. 1 of CCL with its corresponding part of Japanese law (JCC art. 416), we may find there are some characteristics of CCL that differs from Japanese law. First, there is no distinction between “general loss” and “special loss” in CCL, and the rule of foreseeability applies to all kinds of losses. Second, in CCL it is by “the time of the conclusion of the contract” and not by “the time of the breach of the contract” that the rule of foreseeability is applied. Third, in CCL it is by the party in breach and not both “parties” that the rule of foreseeability is applied. Although art. 416 of JCC is learned from Common Law and French law, but since Professor Wagatsuma, the general theory of Japan interprets art. 416 of JCC by the German theory of Adequate Causal Relationship. This is a typical example of a dual structure of the “Code Reception” and “Theory Reception” in Japan.33 Of course, it is 31 See Shiyuan Han, Studies on damages for breach of contract, (1999), pp.147–159; Jianyuan Cui ed., Law of contract, (2000, 2nd ed.), Law Press China, pp.285–288. 32 See G. H. Treitel, The Law of contract (9th ed. 1995), pp.778–810. 33 See Zentaro Kitagawa, The history and theory of Japanese legal science, (1968), Nipon Hyoulonshia Press. Front. Law China (2006) 1: 121–152 135