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transnational law transnational law (lex mercatoria or international business law) and "Principle of foreseeability of loss" 2020-05-25 13:38:56

No. VII.2 - Principle of foreseeability of loss

Claims for damages are limited to the loss which the non-performing party foresaw or could reasonably have foreseen at the time of the conclusion of the contract as being the likely result of its non-performance.

1 The purpose of the Principle of foreseeability, which is modelled after Art. 74 CISG, is to ensure that the damages to be paid by the non-performing party are linked to the contract and do not fall outside the scope of that contract and are therefore totally unexpected by the other party.

2 This purpose makes it clear that the foreseeability test does not relate to the amount of damages, but to the type and nature of damages which must be seen in relation with the purpose and nature of the contract. The perspective to be taken in performing the foreseeability test is that of the non-performing party at the moment of the conclusion of the contract and, in cases in which that party is unable to foresee the damage for whatever reasons, the perspective of a reasonable person in the situation of that party.

Please cite as: "Commentary to Trans-Lex Principle , "
Arbitral Awards
Court Decisions
International Legislation
Model Laws
Model Terms
National Legislation
Principles / Restatements
Contract Clauses
1. Causality between Performance and Damages & Reasonableness
Sales & Purchase Contract
Liability for Breach of Contract

Any party breaching the Agreement shall take liabilities for breach of contract and compensate for the economic loss to the other party incurred by the violation. The compensation amount shall be equal to the loss caused by the breach, including the benefits that may be acquired after fulfillment the Agreement (...)

Services Contract

If the Principal refuses to renew or continue work under this contract, the terminated Agent shall be entitled to reasonable compensation for his activities that may have resulted in the apparent success in the business of the terminated Agent. Specifically, the terminated Agent shall be entitled to compensation for his promotional activities and efforts at client relations that result in goodwill that may accrue to the new Agent.

2. Limit of Liability Linked to Defaulting Party's Perspective
Sales & Purchase Contract
Liability for Breach of Contract

(...) The compensation amount shall not (...) exceed the possible loss that should be foreseen at establishment of contract by the defaulting party

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