The Application Of Rules On The Liquidated Damages

Liquidated damages, as one way to be liable for breach of contract, are widely used in the contract practice.The two parties made use of liquidated damages clause prior to urge both sides to achieve the purpose by approximately fulfilled. Our "Contract Law" made special provisions for liquidated damages. However, because the provisions are too broad, even with the Supreme Court’s "contract dispute guidance" and other applicable judicial interpretation to be assisted, in theory or practice, liquidated damages related issues still sparked controversy, and affected the application of the rules. These controversial issues include:The nature of liquidated damages, punitive damages of abolition, the relationship between the punitive damages and liquidated damages and the distinguish of these, the scope of punitive damages, the adjustment of the amount of liquidated damages and the relationship between the liquidated damages and other responsibilities for breach of contract. The ambiguity of the Liquidated damages not only lead to parties’garble but also the confusion on the judicial application. Proper knowledge and understanding of liquidated damages system is not only related to the vital interests of the parties to the contract, but also related to the correct application of the law and justice. In this paper, starting from the nature of liquidated damages, based on the relevant laws and regulations, combine the judicial practice to propose liquidated damages applicable recommendations with the author’s thinking.Introduction of this paper is to propose full of concern and controversy problem to be solved. After the introduction of this article, we will discuss the text from the following four parts:Part I:Basic questions analysis between liquidated damages and punitive damages. Before that, at first we will introduce the meaning and function of compensatory and punitive damages. From then recognize punitive damages in line with the principle of freedom of contract, the penalty for breach of contract in line with our moral philosophy, compared to liquidated damages it can better contain malicious breach.we can give an explanation for the necessity of punitive damages from these sides. After determining its position, in order to better apply, we need the analysis of existing three criteria for the classification between liquidated damages and punitive damages, and noted these standards have their lack of convincing.at the same time, learn from the case of common law and conclusion of the study, from the side to provide a reference for the problem I study, in order to propose criteria for the basis of the author; Then elaborated liquidated damages liability Elements, highlighting the difference between two different kinds of liquidated damages at fault and other subjective elements and objective elements of damage; and then explain the scope of punitive damages is not limited to delay in performance, the last of China’s Contract Law qualitative description of the relevant statute, section114confirm the provisions of paragraph3of the "Contract Law" liquidated damages are damages in nature.Part Ⅱ:The application of rules on the adjustment of the amount of liquidated damages. Our compensation is determined based on the main character, supplemented punitive penalty system, adjustment of the amount of liquidated damages for articles of law must be further analyzed. Our discussion based on the nature. The first is to increase or reduce the compensation amount of liquidated damages. The provisions of Section114on "contract law" detailed explanation, combined with clear rules of relevant judicial interpretations of standards, rights of the parties, to reduce the amount of liquidated damages and ruled that the right to limit other related attention problems; Followed by the adjustment of amount of punitive damages. Through analysis about the difference between the deposit and liquidated damages and the interpretation of the case can give us better analysis about applicable rules. Punitive damages are clearly need comprehensive consideration of all factors, is not directly applicable to20%of the deposit requirements.Part Ⅲ:Relationship between the liquidated damages and others for breach of contract. On the basis of the classification between the compensatory and punitive, we focus on the relationship between liquidated damages and other breach of responsibility. Described as one way, we will discuss the relationship between liquidated damages and specific performance, damages compensation and deposit. Liquidated damages do not necessarily exclude specific performance or damages compensation. And the interpretation of Article116of the "Contract Law" do not arrested in the statute itself. Relationship for liquidated damages and the deposit is not only the alternative, some claims under certain circumstances may be used together, it also has judicial decision support. Through the above analysis, we can have an overall understanding about the framework of the Liability for breach.Part Ⅳ:The conclusion. The last part is the full text of the conclusions, By combing the full text of the argument to further illustrate that the necessity of the existence of punitive damages, distinguish standard need comprehensive consideration, the adjustment of the amount of liquidated damages shall not be just a single proportion. Whether other remedies may be used depends on the specific circumstances.