The Study Of The Judicial Adjustment Of Liquidated Damages

Where as set forth in paragraph 2 of article 144 of the contract law: Where the amount of liquidated damages prescribed is below the loss resulting from the breach,a party may petition the People’s Court or an arbitration institution to increase the amount;where the amount of liquidated damages prescribed exceeds the loss resulting from the breach,a party may petition the People’s Court or an arbitration institution to decrease the amount as appropriate." That is considered as the judicial adjustment of liquidated damages clause.However,how to determine the amount of liquidated damages prescribed resulting from the breach “over exceed” and how to “adjust properly”? That is not clearly described in the contract law,just given to the Judge’s power of discretion,and different interpretations of the judge’s cause different results of cases.From the perspective of norm analysis,this article focuses on the legitimacy,operational effectiveness,and Substantial content of paragraph II of Article 114 of the "Contract Law," and examines the elements of the system from all its aspects.This article is divided into four parts.The first part begins with the theory,to clarify the wrong interpretation of the nature of paragraph 2 of article 144,then demonstrates that it is justified to sacrifice certain freedom of contract parties to achieve substantial fairness and justice from the perspective of value demonstration,last examines our country’s legislation by comparative law.The second part of amount adjustment of the liquidated damages is the most important part of this article.It explains the operation path from the legal normative facts to the social facts of paragraph II of Article 114 o and the problems that arise in this process,then give some proposal for the correct application of Article 29 of the Judicial Interpretation of the Contract Law(part two),and the criticism based on the actual loss as the basis for the “loss”,etc.The third part studies the procedural issues of the judicial adjustment of liquidated damages,and I think everybody should have clear idea: The commencement of judicial adjustment of the liquidated damages is the debtor’s right,and the right of judge’s interpretation shall not be abused,The defaulting party bear the burden of proving that the liquidated damages is “over exceed” the loss(the degree of proof is enough for the judge to believe).The last part is some suggestions on perfecting judicial adjustment of liquidated damages system.The legal norms involved in the system should be applied correctly,and the use of the rule should be restricted and excluded under certain conditions.