Liquidated Damages

As a remedy for the breach of contract,liquidated damages are widely used in practice because of its convenience and shortcut.However,in China's "contract law",article 114th is about liquidated damages.It take "losses" as the starting point for the regulation of the amount of liquidated damages,although the relevant judicial interpretation created a series of factors to adjust the amount of liquidated damages,its essence is derived from the "losses".That is to say,our country follows the principle of"compensation for compensation,punishment as supplement".It makes the "punitive nature "can't work in the rules of liquidated damages.This article writes all for these problem:first of all,through the study of the two legal legislation of punitive damages,civil law system sustains the punitive nature,as to the common law system,the most important reason for them to refuse the penalty is the theory of efficient breach.However,it doesn't apply in our country.Punitive nature has its necessity and legitimacy.Secondly,the essential function of the liquidated damages is the guarantee of the performance,under the coverage of this function,it also achieve the function of compensation for damages.The most important conclusion is that there is no necessary to distinguish the "punishment" and "compensation".On the basis of the above discussion,this article has made the necessary amendments to the system of liquidated damages,defined the constitutive requirements of the liability for breach of contract,and combed the factors that should be taken into account when adjusting the amount of liquidated damages.This paper consists of four parts.The first part focuses on the relevant provisions of the existing law on liquidated damages and try to found the main problems.That is,our liquidated damages undermines the autonomy of the parties,has a large number of coincidence with compensation rules,and it can't conducive to guiding the judicial practice.The second part starts from the first part,exploring the historical roots of the system of liquidated damages,trying to explore the basis for amending the system of liquidated damages.Through the study of foreign legislation and the essential nature of liquidated damages,the article draw a conclusion that the punitive nature is the centre nature of the liquidated damages,and through the specific institutional arrangements,the punishment and compensation for breach of contract can be unified.The third part is about the necessary amendments of the current system of liquidated damages.We must abandoned the limit of "losses",and start from the punitive nature,building a system that can cover the core functions of the rules.This part also discusses the constitutive requirements of the liability for breach of contract:there is no need for the actual losses;and the maximum limit of the adjustment rule of the liquidated damages is abandoned.The fourth part is the application of the liquidated damages system,the adjustment of the liquidated damages should start from the application of the parties because of the doctrine of disposition.The judge should not intervene too much,adjusting liquidated damages should fully respect the autonomy arrangement of the parties.