On The Nature Of Liquidated Damages And Application Of Law

Originated in Roman law system, fine for breach of contract system, as a modern civil and commercial contracts relief measure, has been widely used in practice. But there is great difference of legislative provisions of contract breach fine in different national legal system. Civil law countries recognize the punitive nature of the contract breach fine, while Common law countries as early as in the 19th century established a compensation payment of the contract breach fine system. Academics on the nature of the breach are a matter of opinion. Article 114 of China's Contract Law stipulates the contract breach fine, with written expression unclear. The provisions do not clearly define whether contract breach fine including the punitive nature. The fuzzy statement of the nature of contract breach fine triggered more controversy and different explanations, which resulted in perplexity during the application of the provisions. Although, in recent years some judicial interpretation have been promulgated to try to resolve the problem of non-compliance of the applicable law, but many confusing legal issues of contract breach fine application still exist in judicial practice.This paper attempts to make recommendations, with a new view to the contract breach fine research, on the nature of contract breach fine should be compensation, punitive coexist, through the study of different national legislation on the different provisions of contract breach fine, combined with existing academic disputes, and the expurgation of confusion and false in the concept of contract breach fine.Chapter I, to discuss the difference on the nature of payment of breach contract of the two legal systems. Continent Law countries recognize the payment of breach contract has the dual attributes of compensation and punishment. France Law and Germany Law both admit that the dual attribute of punishment and compensation, just with the different focus on these two attributes. Germany Law focuses on the punishment to defaulting party, stresses the punishment nature of payment of breach contract; French Law focuses on the compensation to observant party, stresses the nature of compensation. Common law countries have completely different understanding of the nature of payment of breach contract from the Continent law countries, they denied that dual attributes of the default, and not recognize it has the nature of punishment.Chapter II, to discuss the judgment standards on the nature of payment of breach contract through the legislative study from at home and abroad, writer believes that it should comprehensively analyze the nature, based on the purpose of parties, combine with the content, amount and the relationship between payment of breach contract and other relief forms. At the same time, writer specifies the differences on the elements of liability of punitive payment and compensatory payment of breach contract.Chapter III, by analyzing the argument about the nature of payment of breach contract in domestic Academe and Law, we can see that our laws allow payment of breach contract has the compensatory and punitive nature, but it is not, as some scholars believe that the payment has the compensatory nature in principle and punitive nature as exception, or believe that the payment of breach contract only has the compensatory nature. The writer believes that in China, the payment of breach contract has both compensatory and punitive nature.Chapter IV, in view of the problems of default law application in China, writer thinks that only take "loss" as payment of breach contract amount adjustment standard is improper, it should be guided by the Civil law principles, differentiate the compensatory payment and punitive payment, join different reference factors, and consider adjustment standard of payment of breach contract. At the same time, writer also suggests that legislation should specify the punitive default payment, and to make more specific and more workable adjustment standards.