The Adjustment Of Over-high Liquidated Damages

Liquidated damages is an integral part of contract law responsibility system. Theestablishment of liquidated damages is to encourage both the parties actively toperform the contract and realize the purpose of the contract, also to release theobservant from the duty of proof and reduce the difficulty of proof for loss after oneparty breaches the contract. It can compensate the non-breaching party loss ofcontrace according to liquidated damages. Liquidated damages makes advanceforecast and remedical measures for the possible risks in the contract performance toensure both the parties perform the contract obligation under the condition of phasecontrolled and the breach of contract be solved in time in the performance of contract.Liquidated damages system is of great significance in the field of civil andcommercial contract behavior standardization as long as reasonably controllinng thescope and number of liquidated damages.The construction of the liquidated damages system attaches great importance inour country."The People’s Republic of China contract law "(hereinafter referred to asthe" contract law ") confirmed2, article114in1999clarifies that the people’s court isappropriate to reduce the rules for excessive liquidated damages in the contractsituation. The supreme people’s court’s explanation of some issues about how to apply"The People’s Republic of China contract law "(2)(hereinafter referred to as the"contract law judicial interpretation2") article29elaborates the liquidated damagessystem. Provisions of the standard of the high court ruled that liquidated damages(liquidated damages due to breach of contract is more than thirty percent of the lossescaused by the parties can be identified as "too much higher than the loss caused by"),the basic principles of how to adjust the excessive liquidated damages (fair principleand the principle of good faith) and factors considered in the process of adjustment(the execution of the contract, the parties, the degree of fault and the expectedbenefits and other comprehensive factors). It provides a clearer path and standardlegal judgment for our country judicial decisions affairs by eliminating the confusion on the theoretical knowledge and the specific adujusting measure to liquidateddamages.However, different courts and judges to the understanding of the aboveregulations still exist inconsistent views and understanding in judicial practice. On thetheoretical knowledge of liquidated damages, losses for the nature of the liquidateddamages and the inconsistent understanding for more than thirty percent of the highstandard the liquidated damages (hereinafter referred to as the "standard" thirtypercent") still exist. Many problems exist in "thirty percent standard" in judicialpractice; In the process of adjustment of liquidated damages, the applicable principleto adjust liquidated damages, the procedure and method to adjust liquidated damages,the judge’s interpretation to liquidated damages in court, the confirm of actual lossand the factors considered in the adjustment of liquidated damages still have differentunderstanding. Although there are laws shall be applicable, the standard of judicialjudgment is still not unified in the trial practice. The unformed standard can not guidethe default liability problem in the field of civil and commercial matters throughjudicial practice.In this paper, I will cite Germany, France, Britain and the United States’sprovisions on the nature of the liquidated damages in terms of theoretical knowledgeto determine the nature of the liquidated damages in our country combining with thereality of our country. I will clarify the principle of the adjustment of liquidateddamages in China, the program and means for adjusting the liquidated damages andmany factors in the process of adjustment after interpreting the problems that exist inthe judicial practice on "thirty percent standard". I hope to achieve the legislativepurpose of liquidated damages after solving the above problem and eliminating thejudiciary differences.