Calculation Method Of Price Reduction In Contractual Liability

As a frequently used remedy for contract breach in practice,the relevant provisions of price reduction in Contract Law seems to be rather simple,“Interpretation of the Supreme People's Court on Issues Concerning the Application of Law for the Trial of Cases of Disputes over Sales Contracts” issued by the Supreme Court in 2012 provides the price reduction method.However,for price reduction there are still many problems in both theoretical interpretation and judicial practice.For the theoretical controversies and the practical issues about price reduction,this paper attempts to re-sort applicable rules of price reduction system in China with a respective of explanation,based on current laws,also with reference to extraterritorial legislation.The overall logic of this paper is,through sorting out domestic scholars' theoretical controversies and the main problems existing in judicial practice,on the basis of clarifying the nature of right to claim price reduction and its constituent elements,to further discuss the calculation method of price reduction.This paper is divided into four chapters.In the first chapter,the price reduction rules in history,a few theoretical disputes and problems in judicial practice discovered from cases review were briefly introduced.These disputes and problems can be roughly divided into three parts as the nature of right,constituent elements and calculation method.This paper will also elaborate all the issues one by one in accordance with this structure.The second chapter mainly analyzes some defects of domestic scholars' views about the nature of right to claim price reduction that the buyer can invoke the price reduction by a unilateral declaration.However,this interpretation could not adapt to Chinese contract law system.If view price reduction as a right of formation(Gestaltungsrecht),it would be free of any due limitation in Chinese contract law.Furthermore,the feature that liability for price-reduction focus on price reduction amount also decides that it shall be more rational to interpret the right to reduce price as claims.The third chapter analyzes parts of the constituent elements of price-reduction liability.The definition of “defect” shall include many “non-conformity” situations such as “defects of rights”.It's hard to explain out the priority of subsequent performance in German law from existing law system.We would rather in such a legal context adhere to the existing “choose reasonably” rule than make such explanation.Meanwhile,the court's power should be strictly limited in the exercise of “choose reasonably” review to avoid applying price-reduction responsibility initiatively.The fourth chapter discusses the defects of the current calculation method provided in judicial interpretation which do not reflect or even weaken the value of price-reduction rules,resulting in further confusion with the compensation of damage.In a legal system where price-reduction worked as a common remedy applicable for many contract types,application of uniform calculation method lacks rationality and operability.On the other side,it's quite unfair to decide the reduction amount by courts' discretion at a large amount.Faced with this dilemma,it is necessary to apply specific calculation method under different scenarios to minimize the situation where the reduction amount decided by the court at its discretion.The distinguishing criteria shall be the degree of difficulty for finding the value of defective subject matter,and the goal of such distinction is to limit the courts' discretion into a reasonable range,to maximize the value of price-reduction system.