Study On The Application Of Liquidated Damages Under The Circumstance Of Contract Rescission

According to the Contract Law of China, there is no obvious answer to whetherthe non-delinquent party can apply the liquidated damages clauses after the rescissionof contract, which leads to the great controversy between the theory circle andpractice circle. Theoretically, after the rescission of the contract, the liquidateddamages clauses can’t be applied, and the compensation will be the only choice to theparty of the contract. However, depending on the theory of legislation, the party canask the court for the application of the liquidated damages clauses, which prevails theother liabilities for breach of contract. In practice, the court will have differentjudgments for the same case and even the explanation is not the same. In this article,the author will take a classic case for an example, analyze the reasons for theconfusion in the application of liquidated damages, with the combination of the natureof liquidated damages, the identity of the liquidated damages to be applied in the casewill be showed, and the method to build the coexistence relationships with the otherliabilities for breach of contract will be revealed. Finally, through the introduction ofthe theory of judicial discretion, a conclusion will be reached about the legislativeproposals and practical experience to the application of the liquidated damagesclauses after the rescission of contract, in order to help build our legislation system.