On The Application Of Liquidated Damages Clause In Rescission Of Contract

The rescission of contract is not only the cause of the extinction of contract rights and obligations,but also an important way of remedy for breach of contract.As an important system in the Contract Law of our country,it plays an important role in perfecting contract relations and improving the efficiency of market transactions.A contract established and effective according to law shall be legally binding on both parties to the contract.Both parties to the contract shall strictly abide by the contract and shall not change or terminate it at will.Due to the complexity of social life,in the process of contract performance,it is very likely that some special circumstances will result in the contract unable to continue to perform or the purpose of concluding a contract.The law should allow the parties to get rid of the rigid contract as soon as possible in the case of the above-mentioned special reasons,so as to have more time to engage in new transactions.After the termination of the contract,the rights and obligations in the contract are attributed to the elimination,some of which are still valid as remedial rights and obligations.According to the current law of our country,the clause of liquidated damages does not belong to the contract clause which is still valid after the termination of the contract,so the reverse interpretation is carried out.After the termination of the contract,the clause of liquidated damages,like other contract clauses,belongs to the elimination and no longer has legal effect.This is obviously contrary to the principle of freedom of contract,and does not conform to the current judicial situation in China.Faced with the above problems in theory and judicial practice,one side holds that the existence of liquidated damages clause is premised on the existence of valid contract relationship.If the contract is terminated retrospectively,the liquidated damages clause also loses its existence basis because of the termination of the contract,and the right to claim liquidated damages is extinguished;the other side holds that the liquidated damages arising from the breach of contract are extinguished.Liability exists objectively and does not vanish as a result of the rescission of the contract.In this regard,liquidated damages of any nature should be the same.In order to take care of the liquidated damages,we need to take the existence of the contract relationship as the premise.When the contract termination has retroactive effect,we can make the contract relationship continue to exist within the scope of the liquidated damages.Different opinions of the two sides are also reflected in different judgment doctrines,and the phenomenon of "different judgments in the same case" appears in judicial practice,which makes the study of the problem of disparity.In the research process of this paper,according to the research idea of "raising questions,analyzing problems and solving problems",in the stage of raising questions,the author makes a detailed comparative analysis of two cases in which the liquidated damages clause can be applied and can not be applied when the contract is terminated due to breach of contract.In the stage of analyzing problems,the author compares whether the liquidated damages clause can be applied when the contract is terminated by extraterritorial law.Based on the framework of our legal system and the disputes of theory,this paper analyses the reasons for the above problems.In the stage of solving the problems,aiming at the shortcomings of the design of the current contract rescission system in China summarized above,it discusses the countermeasures and suggestions to improve the contract rescission system and the liquidated damages system,and then demonstrates the problems raised in this paper.This paper starts with the disputes in theory and judicial practice,studies the legal effect of rescission of contract and the different nature of liquidated damages,analyses the different effects of the two on the applicability of liquidated damages after rescission of contract,and then explores the convergence of the two systems and their improvement suggestions.Therefore,this study has a certain degree of innovation in the selection of topics and research perspectives.