Front.Law China(2006)1:121-152 137 Mitigation The Rule of Mitigation of Damage was first created by an English case more that 320 years ago.37In Civil Law countries,the same rule iseither not in existence or treated as a part of the rule of contributory negligence.But in Chinese law,it is an independent rule(GPCL art.114; CCL art.119 par.1).According to the rule,the aggrieved party should take appropriate measures to prevent the increase of the loss;if it fails to do so,it may not claim damages for the increased loss. Insofar as Mitigation is an independent rule,then what is the relation between Mitigation and Contributory Negligence?As to the avoidable loss,it may be said that the aggrieved party has a fault for it.In this sense,Mitigation may be looked as a kind of Contributory Negligence. But when it comes to the effects of the two rules,there is a notable difference.The mechanism of Mitigation is"all or nothing,"while the mechanism of modern Contributory Negligence is to distribute the losses by the comparison of negligence,contribution or causation of the both sides.So strictly speaking,they are not the same.Just as a Common Law scholar has pointed out,the plaintiff's duty to mitigate occurs after the breach,while the plaintiff's contributory negligence occurs before or at the same time with the occur of loss.The key-point fact to make the distinction is time.3 The same is true in Chinese law. Enrichment accompanying losses If the aggrieved party also got some benefits from the other party's breach,the amount of damages it can obtain should be its loss minus its gain.This rule is called "Enrichment Accompanying Losses"(compensatio lucri cum damno).Though CCL and GPCL,just like Japanese law and many other countries'law,do not have an article on the rule,it is followed by Chinese Jurisdictions.Now it is generally accepted that the future Civil Code of China should have an article on the rule. Payments stipulated by the contract Introductions A contract may contain a stipulation providing for the payment of a fixed amount of money by the debtor in the event of his default.Such a clause is called a penalty clause in China.3 And rules on penalty clauses are laid down in art.114 of CCL. In civil law theories of China,penalty has been divided into two categories,namely "compensatory penalty"and"punitive penalty."The former is a kind of preliminary damages, 37Vertue v.Bird(1677).See Famsworth,Farnsworth on contracts(1990)vol.III,p.219. 38 See Harvin D.Pitch,Damages for breach of contract (1985).p.150. As to the terminology,it should be noted that in this paper such expressions as"penalty clause"would be used in the Civil Law sense (of a valid provision).While in Common Law,there is a distinction between penalty clauses and liquidated damages clauses,the former is normally invalid and the later is prima facie valid.See G.H.Treitel,Remedies for breach of contract,(1988),p.208.This difference in terminology gives rise to some awkwardness in preparing this paper.Mitigation The Rule of Mitigation of Damage was first created by an English case more that 320 years ago.37 In Civil Law countries, the same rule is either not in existence or treated as a part of the rule of contributory negligence. But in Chinese law, it is an independent rule (GPCL art. 114; CCL art. 119 par. 1). According to the rule, the aggrieved party should take appropriate measures to prevent the increase of the loss; if it fails to do so, it may not claim damages for the increased loss. Insofar as Mitigation is an independent rule, then what is the relation between Mitigation and Contributory Negligence? As to the avoidable loss, it may be said that the aggrieved party has a fault for it. In this sense, Mitigation may be looked as a kind of Contributory Negligence. But when it comes to the effects of the two rules, there is a notable difference. The mechanism of Mitigation is “all or nothing,” while the mechanism of modern Contributory Negligence is to distribute the losses by the comparison of negligence, contribution or causation of the both sides. So strictly speaking, they are not the same. Just as a Common Law scholar has pointed out, the plaintiff’s duty to mitigate occurs after the breach, while the plaintiff’s contributory negligence occurs before or at the same time with the occur of loss. The key-point fact to make the distinction is time.38 The same is true in Chinese law. Enrichment accompanying losses If the aggrieved party also got some benefits from the other party’s breach, the amount of damages it can obtain should be its loss minus its gain. This rule is called “Enrichment Accompanying Losses”(compensatio lucri cum damno). Though CCL and GPCL, just like Japanese law and many other countries’ law, do not have an article on the rule, it is followed by Chinese Jurisdictions. Now it is generally accepted that the future Civil Code of China should have an article on the rule. Payments stipulated by the contract Introductions A contract may contain a stipulation providing for the payment of a fixed amount of money by the debtor in the event of his default. Such a clause is called a penalty clause in China.39 And rules on penalty clauses are laid down in art. 114 of CCL. In civil law theories of China, penalty has been divided into two categories, namely “compensatory penalty” and “punitive penalty.” The former is a kind of preliminary damages, 37 Vertue v. Bird (1677). See Farnsworth, Farnsworth on contracts (1990) vol. III, p.219. 38 See Harvin D. Pitch, Damages for breach of contract (1985), p. 150. 39 As to the terminology, it should be noted that in this paper such expressions as “penalty clause” would be used in the Civil Law sense (of a valid provision). While in Common Law, there is a distinction between penalty clauses and liquidated damages clauses, the former is normally invalid and the later is prima facie valid. See G. H. Treitel, Remedies for breach of contract, (1988), p.208. This difference in terminology gives rise to some awkwardness in preparing this paper. Front. Law China (2006) 1: 121–152 137