Study On Judicial Reduction Of Liquidated Damages

The liquidated damages originated from Roman law and is an ancient legal system in civil law.With the continuous development of the economy,various complicated transaction types have appeared.In order to avoid the losses and risks brought by the breach of contract,the two parties of the transaction mostly choose to agree on a penalty clause when entering into the contract.The liquidated damages clause has significant institutional value as a pre-determined party's compensation for damages and a guarantee for performance as promised.But the history of liquidated damages is also the history of liquidated damages limitation,because absolute freedom means absolute no freedom.Full compliance with the freedom of contract without the necessary restrictions may cause greater injustice,based on which the judicial reduction of liquidated damages arise.At present,China has made a series of regulations on judicial reduction of liquidated damages,but the weakness of the basic theory has led to a lot of controversy in the practical and theoretical circles on the related issues of judicial reduction of liquidated damages.The nature and classification of liquidated damages,the applicable objects of judicial reduction of liquidated damages,and comprehensive consideration of various factors during discretionary reduction have always been the focus of controversy in theoretical circles.In trial practice,either due to ambiguity in understanding or gaps in the law,different court practices have resulted in different adjudication results in similar cases.Aiming at the various problems in the judicial reduction of liquidated damages,this article starts from the basic theory of liquidated damages,explores the history and basic legalprinciples of liquidated damages,clarifies the nature and classification of liquidated damages,and analyzes the judicial reduction of liquidated damages in-depth.This article is divided into five parts:This article raises questions,analyzes the research value and significance of this article,makes a literature review of the issues to be studied,introduces research methods and article conclusions,and points out the main innovations and deficiencies of the paper in the introduction section.The first chapter of the text focuses on the basic theory of liquidated damages.Firstly,according to the legislative changes of the two major legal systems,the history of liquidated damages system are introduced.Afterwards,this article returns to the legal context of our country,and introduces the development of the legislation related to the liquidated damages system in China,as well as the disputes over the nature of liquidated damages in the theoretical and practical circles in China.On this basis,I put forward my own opinions on the nature and classification of liquidated damages,and advocate to explore the inner meaning of the parties to the contract,starting from the functional purpose of liquidated damages,distinguish between punitive liquidated damages and compensatory liquidated damages,and emphasize the performance guarantee function of punitive liquidated damages.The second chapter of the text studies the applicable objects of judicial reduction of liquidated damages.As the existing laws in our country do not specify the applicable objects of judicial reduction,there are still some disputes in theory and practice.The author focus on the analysis and discussion of the method of calculating damages,the liquidated damages voluntarily paid,and the liquidated damages agreed between commercial entities and systematically explain the Article 114 of the Contract Law of the People's Republic of China.The third chapter of the text discusses the measurement factors in the process of judicial reduction.Before discussing the measurement factors,the time point for judging that the liquidated damages were too high was clearly identified.In accordance with Article 29 of the Judicial Interpretation of the Contract Law of the People's Republic of China(II),with the current problems in judicial practice as theguide,discuss the specific measurement elements in the process of judicial reduction of liquidated damages and the role of the principle of fairness and good faith.The fourth chapter of the text starts from the procedural problems encountered in specific practice,and discusses the relevant procedural issues in the process of judicial reduction of liquidated damages,mainly including the launch of judicial reduction of liquidated damages and the burden of proof.In part of the initiation of judicial reduction of liquidated damages,the focus is on whether the court can take the initiative to initiate judicial reduction procedures and the right of the judge to explain.In addition,this chapter explores the burden of proof in judicial reduction of liquidated damages and provides insights into the different practices of courts in current practice.