Research On The Adjustment Of The Liquidated Damages

As a remedial method to the performing of contract in civil and commercial law, the liquidated damages system, with its origin traced back in Roman law, is widely applied in the practice. The adjustment system of the liquidated damages, acting as an important component of the system of the liquidated damages, is adopted generally in legislation systems all over the world, China being no exception. If the liquidated damages agreed by the parties to the contract is lower or excessively higher than the losses caused, the court or the arbitration institution could make an appropriate adjustment according to either party's request under the Article 114 of the contract law of the people's republic of China (hereinafter referred to as"Contract Law"). However, there are many controversies over the nature of the liquidated damages due to the ambiguity of the regulation of the Contract Law Article 114, which leads to some confusion when the court or the arbitration institution apply it in the judicial practice. Hereafter, the interpretation II of several issues on the application (hereinafter referred to as the interpretation II of the contract law) is issued by Supreme People's Court in 2009, which has given an explanation for the factors related to the application on the adjustment of the liquidated damages. Although it solved the reference standard and scope of the adjustment system of the liquidated damages, it still has not made a clear distinction between the punitive liquidated damages and the compensative one, not to mention comfirming different rules to be applied according to the distinct. So it can not completely solve the problem on the adjustment system of the liquidated damages in our country. We believe that it is necessary to perfect the system through further studying the problem. This thesis has four parts:In chapter I, we will focus on the legal foundation of the theory of the adjustment system of the liquidated damages. In this part, the legal foundation of the theory of the adjustment system of the liquidated damages will be firstly introduced. And then the typical legislations in different countries of the Civil Law, based on the development of the adjustment system of the liquidated damages, will be comparatively analyzed, illustrating the necessity and the theoretical value in the research of this system.In chapter II, the nature of the liquidated damages will be analyzed. First of all, the nature of the liquidated damages will be confirmed by comparatively analyzing the different standards on the nature of the liquidated damages. Based on that, the nature of the liquidated damages of the Contract Law's Article 114 should be set as compensative liquidated damages. Secondly, the effectiveness of the punitive liquidated damages which is agreed by the parties will be studied. We believe this kind of punitive liquidated damages should be allowed to be decided by parties under Contract Law. Finally, the rule, which should be used to identify the nature of the liquidated damages, is confirmed by comparative analysis.In Chapter III, the adjustment of the liquidated damages is analyzed. Firstly, the article demonstrated the randomicity of the liquidated damages regulation which should be restricted by its protection purpose in our country's law. Parties shall not preclude the liquidated damages in the agreement. Secondly, the article made it clear that the appliance scope of the liquidated damages should include punitive liquidated damages and compensative liquidated damages. It is believed that they have different adjustment basis. Thirdly, the article discussed the different conditions of using the liquidated damages of different types.In Chapter IV, the reference factors of the liquidate damages'adjustment is discussed . This chapter divides the reference factors of the liquidated damages'adjustment into principle factors and specific ones, and we inferred the specific rules in liquidated damages'adjustment on the foundation of this differentiation. Furthermore, we also put forward some legislative proposals to our country's lawthrough comparative Analysis.