I. INTRODUCTION
In a market economy, commercial activities take place dynamically with the participation of various entities for profit-making purposes. Commercial relationships are primarily established through contracts; however, not all damages arising in the course of business originate from contractual breaches. In practice, liability may arise from the non-performance or improper performance of agreed obligations, but it may also stem from acts infringing upon general legal obligations prescribed by law. This reality necessitates a clear distinction between contractual liability and non-contractual liability (tort liability) in commercial activities. Proper differentiation between these two legal regimes is significant in determining the applicable legal grounds, the scope of compensation, the burden of proof, and the statute of limitations.
II. CONTRACTUAL LIABILITY IN COMMERCIAL ACTIVITIES
Contractual liability is a form of legal liability that arises when a party fails to perform, or improperly or incompletely performs, obligations undertaken in a contract. Pursuant to Clause 1, Article 351 of the 2015 Civil Code, an obligor who breaches an obligation shall bear civil liability toward the obligee. In the commercial sector, Article 303 of the 2005 Commercial Law provides that liability for damages arises when there is a contractual breach, actual damage, and a direct causal relationship between the breach and the damage.
Accordingly, the basis for contractual liability is the existence of a lawful contract and a breach of obligations under that contract. A defining characteristic of contractual liability is its close connection to the agreed terms and commitments between the parties. The scope of liability is generally determined within the limits of the agreed obligations and the remedies stipulated under Article 292 of the 2005 Commercial Law, including specific performance, penalties for breach, compensation for damages, suspension of contract performance, termination, or cancellation of the contract.
Regarding fault, Clause 2, Article 351 of the 2015 Civil Code stipulates that a breaching party shall bear civil liability unless it proves that it was not at fault. This reflects the principle of presumed fault in contractual liability, which protects the aggrieved party and enhances the binding force of commercial commitments. As for the scope of compensation, Article 419 of the 2015 Civil Code provides that damages for breach of contract include actual losses and the benefits that the aggrieved party would have obtained had the contract been properly performed. Thus, contractual liability aims to protect the expectation interest of the non-breaching party.
III. NON-CONTRACTUAL LIABILITY IN COMMERCIAL ACTIVITIES
Unlike contractual liability, non-contractual liability arises not from the breach of agreed obligations but from acts infringing upon general legal obligations. Article 584 of the 2015 Civil Code stipulates that any person who infringes upon the life, health, honor, dignity, reputation, property, or other lawful rights and interests of another person and causes damage must provide compensation.
Non-contractual liability arises only when all constituent elements are present, including an unlawful act, actual damage, a causal relationship between the act and the damage, and fault on the part of the tortfeasor (except in certain cases of strict liability). In contrast to contractual liability, the claimant in non-contractual liability must prove all elements constituting liability. Consequently, the burden of proof generally rests with the injured party.
In commercial activities, non-contractual liability may arise in various situations, such as when an enterprise disseminates false information damaging a competitor’s reputation, causes damage to a third party’s property during the transportation of goods, or infringes intellectual property rights. Although the liable party may be a trader, if the damage does not originate from the performance or non-performance of a contract between the parties, liability shall be determined under the tort provisions of the Civil Code.
IV. FUNDAMENTAL DIFFERENCES BETWEEN THE TWO TYPES OF LIABILITY
The core distinction between contractual liability and non-contractual liability lies in their legal basis. Contractual liability is grounded in the breach of obligations established by agreement, whereas non-contractual liability arises from the violation of general legal obligations prescribed by law. While the existence of a lawful contract is a prerequisite for contractual liability, non-contractual liability may arise even in the absence of any prior contractual relationship between the parties.
Another key difference concerns the burden of proving fault. In contractual liability, fault is presumed, and the breaching party must prove the absence of fault to be exempted from liability. Conversely, in non-contractual liability, the claimant must prove the fault of the party causing the damage. Regarding the scope of compensation, contractual liability may include expectation interests under Article 419 of the 2015 Civil Code, whereas non-contractual liability primarily aims to compensate for actual and direct damage in accordance with the principles set out in Article 585 of the 2015 Civil Code.
In practice, certain acts may exhibit characteristics of both contractual breach and tortious conduct. Where damage arises directly from the performance or non-performance of contractual obligations, contractual liability should take precedence. Only when the infringing act exceeds the scope of contractual obligations or affects the interests of a third party should non-contractual liability be considered.
V. CONCLUSION
Contractual liability and non-contractual liability constitute two important legal mechanisms for ensuring order and fairness in commercial activities. Although both aim to compensate for damage and protect lawful rights and interests, they differ significantly in terms of legal basis, burden of proof, and scope of compensation. Accurate differentiation between these two legal regimes is not only of theoretical importance but also of substantial practical value in resolving commercial disputes, thereby contributing to consistent and effective application of the law.
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