The Rule Against Recovery of Pure Economic Loss in China: A Misconceived Doctrine

Zweigert and Kötz have shown the value of the functional approach to comparative law. Rules may be formulated differently in different legal systems, but the results may be the same. By trying to explain why the results are the same, we may arrive at a principle that explains what really is at stake.

Because Chinese law is in a stage of transition and development, it offers us a unique opportunity to apply the functionalist method in a different way. Often the rules that should be applied have yet to be worked out. Consequently, we find judges reaching results with no clear rule to guide them. If these judges reach similar results without the guidance of any clear rule, once again, the similarity can suggest a theory of what is really at stake. If these judges, without clear rules, are deciding cases in the same way as judges in the West, who are applying rules that are clear but different in different jurisdictions, then we have a very strong confirmation that the similarity in results is due to some common but unstated principle.

This Article shows how that method can be applied to the problem known in Western law as recovery for pure economic loss.