Research On The Problems In The Judicial Intervention With Liquidated Damages

As a form of breach of contract, liquidated damages are widely applied in the contract practice in China. In the judicial practice, different judges have different discretions on how to intervene with the amount of agreed liquidated damages between the parities to the contract, and major differences arise therefrom and even different judges make greatly different judgments for the similar cases. This paper is designed to make research on the judicial intervention with liquidated damages and proposes some suggestions for the improvement of the system in the legislation and justice in China.This paper is composed of five parts. The first part discusses the basic problems in liquidated damages, the second part the legal base of the judicial intervention with liquidated damages, the third part the principles to be complied with by l the judicial intervention with liquidated damages, the fourth part factors to be referred to the judicial intervention with liquidated damages and the fifth part the thoughts and suggestions for liquidated damages in China.The first part briefly elaborates the definition and nature of liquidated damages, the dual natures of the compensation and punition of liquidated damages recognized by Article 114 under the Company Law of the People's Republic of China and the legislation evolution and status quo of liquidated damages in China.The second part elaborates the legal base and necessity of judicial intervention with liquidated damages: the autonomy of the parties'intent is the prerequisite for the occurrence of liquidated damages, combination of contract freedom and contract justice is the legal base for the judicial intervention with liquidated damages, and it is therefore necessary to intervene with liquidated damages.The third part elaborates the judicial intervention with liquidated damages shall comply with the inactive intervention principle, appropriate judicial intervention principle and predictable principle.The fourth part elaborates the factors to be referred to by the intervention with and adjustment of liquidated damages in the judicial practice, that is, the actual losses as the base, the combination with the performance of the contract, the fault of the parties to the contract and expected interests to make fair and reasonable adjustments. The fifth part, using the litigation case in the work as an example, thinks about the relationship between the efficiency breach and judicial intervention with liquidated damages, contract rescission and the claim for liquidated damages and proposes the opinions and suggestions for the liquidated damages in China by the thought over the case.