An Empirical Study On The Judgment Of Liquidated Damages

As a way to substitute the liability of contract, liquidated damages plays an important role in Contract Law. Liquidated damages can replace the liability of damage, mitigates the party’s burden of proof, and make sure the two sides of contract can do their best to fulfill their contractualobligations.The contract law makes a principle provision of liquidated damages system in it’s article 114. With the continuous development of the contract law theory, the educationalcircles have had a deeper view on the liquidated damages theory and they have made many researchachievement.But in judicial practice, the application of liquidated damages are ambiguousandvague.As a way to replace the compensationfordamages,liquidated damages has a great influence in protecting both sides of the contract. The court and arbitralinstitution play a significant role in the adjustment of liquidated damages, and these two institution directly determine the effect of liquidated damages. Analyze of the court’s referee standards in judicial practice and sum up a set of universally applicable standard in the adjustment of liquidated damages are good for the contracting parties. Based on the Contract Freedom Principle, liquidated damages are contracting parties’ free agree through pre-estimate of loss on the future. The external effect of contracts should be recognize as long as the parties’ agree are not contrary to the law. The Contract law gives the rights to the parties to appeal the court to adjust the liquidated damages when it’s too high or lower than the actual loss. The court or arbitration body has the discretion to adjust the liquidated damages in the process, it can be based on the actual loss, considering the expected benefits of the parties, the status of compliance, the degree of fault to make reasonable adjustments to liquidated damages. However, these provisions are too principle, in judicial practice different court has different understand and practice. On the allocation of the burden of proof, some court tends to give more burden of proof to defaulting party and some court will consider the case of proof of both parties. The adjusted basis of liquidated damages is that whether it’s too much higher or lower than the actual losses, therefore, confirmed a kind of criteria to define the difference between the penalty and the actual loss is necessary for liquidated damages adjustment. The defining of actual loss, what does the 30 percent mean,it is the level of liquidated damages or the court’s judgment standard in the adjustment of liquidated damages, the demarcation of expectation interest and the apply of foreseeability rule, this series of questions are yet to be analyzed and summarized through the research of judicial practice. The Study of liquidated damages has become more and more mature, but the tremendous difference in judicial practice may hinder the penalty system to play its due role, analyze the court’s decision and attempt to find a more unified rules for liquidated damages can do great good to the liquidated damages theory and judicial practice.