A Liquidated Damages System

By studying the basic questions of damages for breach of contract issues, this paper talks about what the damages for breach of contract is, its character, its function, its meaning, and when and under what situation it can be adopted. It also concerns its theoretical basic, judiciary interruption on it, comparing it to other means of legal damages for breach of contract, etc. The purpose of this paper is to give some advice on how to promote the damages for breach of contract system.Damages for breach of contract is a payment set in a contract by the parties, which will take effect when a breach of contract happens. Being a means of duty, it is set by parties through negotiation. It includes the sum of money that should be given to the other party, which is independent to the performing of contract. Damages for breach of contract is a means of civil duties. It also has the function of guarantee that differs from the traditional means. Being an important means of damages for breach of contract, it has the character of speedy that omits the troublesome of calculating the lost, and it is consistency to the principle of efficiency. It also has the function of caution and supervising. To adapt the means of damages for breach of contract, a damages for breach of contract clause must exist in a contract, and breach of contract has occurred.Among many papers on this issue, seldom of them concern thetheoretical basic of it. So, the author of this one tries to illustrate its theoretical basic which comes from the principle of safety of commercial, the principle of guarantee, the principle of freedom of contract, and the principle of damages for breach of contract for the lost.Lawyers seem to pay more attention to practical problems, and the author emphases some hot issues met in practice, such as the nature of damages for breach of contract, judiciary interruption issue, and comparing it to the other means. Although it is not mature, it is meaningful.Aftermath bringing into effect the Contract Law of the People's Republic of China, it puts forward the damages for breach of contract system. Since the market economy in China is not mature, there are a lot to do to promote the damages for breach of contract system. So the author gives his advice on the damages for breach of contract system, regarding it important to take equal evaluation on its nature of damages for breach of contract as well as equalization. He also points out the principle of damages for breach of contract system should be volunteer, responsibility for malpractice, suitable interruption by the state. Construction of damages for breach of contract should include four main parts: existing of damages for breach of contract clause in a contract, occurring of breach of the clause, and malpractice of the wrongful party. Damages for breach of contract system should mainly includes: 1) parties of a contract should have writtenin their contract that the wrongful party should pay damages for breach of contract to the opposite party when breach of contract, except that none malpractice proven exists or breach of contract occurs because of the intent of the opposite party; 2) after the damages for breach of contract being paid, the opposite party should also requires the contract to be carry out or the lost to be compensated; 3) when the damages for breach of contract is too high that breaks the balance between the parties, it should be asked to be reduced by the court or the arbitration bureau.