Liability for Violation of the Obligation of Approval

Article 12 of the Interpretation of the General Provisions of the Contract Section refines the provisions of the Civil Code regarding the obligation to apply for approval. It constructs a two-stage liability system for the breach of the obligation to apply for approval in contracts, with the judgment of the people's court as the dividing point. As a statutory pre-contractual obligation, the breach of the obligation to apply for approval before the judgment can be subject to liability for pre-contractual fault. The counterparty may request the continuation of performance or the termination of the contract and claim compensation in accordance with Article 12. If the counterparty chooses to terminate the contract, it is deemed to have voluntarily waived the performance interest, and the scope of compensation is limited to direct losses only. After the court orders one party to perform the obligation to apply for approval, if the party still fails to perform, the counterparty may terminate the contract and claim compensation by referring to liability for breach of contract. The term "refer to" here indicates that the compensation is not entirely equivalent to the performance interest. The scope of compensation can be dynamically adjusted by drawing on the theory of transaction maturity and considering factors such as the counterparty's subjective malice, reflecting the legislative orientation of punishing malicious breaches of the obligation to apply for approval.