Research on the System of Compensation for Mental Damage in Breach of Contract under Chinese Law: Focusing on Article 996 of Chinese Civil Code

Although the introduction of Article 996 of Chinese Civil Code has resolved the dilemma of lacking legal basis for compensation for mental damage in breach of contract and provided significant room for the development of the system of compensation for mental damages in breach of contract, this research remains unclear in terms of legal nature of the right of claim, the scope of personality rights, and the evaluation of severe mental damage. This has led to significant differences in the legal basis and outcomes of judicial decisions in practice, affecting the consistency and authority of the law. This research focuses on Article 966 of Chinese Civil Code, employing methods such as literature analysis and case method to explore the fundamental legal nature, scope of application, and objective criteria for determination under Article 996 of Chinese Civil law. Additionally, it uses comparative method to examine the systems of compensation for mental damage in breach of contract in major civil law and common law jurisdictions. Finally, the research proposes three recommendations: clarifying the independent legal nature of claim for compensation for mental damage, enumerating specific types of contracts to expand “damage to personality rights” to “damage to special emotional interests”, and establishing an objective evaluation standard for severe mental damage by comprehensively considering medical, psychological, and legal factors.