Study On The Legal Application Of Discretionary Reduction For Liquidated Damages

The judicial adjustment of liquidated damages is a very important and noteworthy problem in both theory and practice.In order to guarantee the performance of the contract and reduce the transaction risk,most economic contracts include liquidated damages.Although freedom of contract and autonomy of will are basic principles in the field of private law,freedom cannot be at the cost of justice.If the interests between the parties are unbalanced,public power is needed to intervene.However,the judicial organ is not a party to the contract after all,so it is difficult to make the optimal arrangement for the interests of the parties.Therefore,it is particularly important to design and reasonably structure the liquidated damages adjustment system.Although China has some provisions on the liquidated damages adjustment system,it is still relatively general,which leads to the prominent phenomenon of different judgments in the same case in judicial practice.Taking the open judicial cases as the object of analysis,it is found that in the trial practice,there are still large differences in how to identify the loss and how to distribute the burden of proof,and there are still many problems that need to be discussed and unified.China’s current laws,judicial interpretations and the Supreme People’s Court’s judgment guidance have made provisions on the adjustment of liquidated damages.According to the existing regulations,the system design of liquidated damages in China is based on the recognition of "compensatory nature and punitive nature",and takes the degree of contract performance,the fault of the parties,the expected interests and the strength of the contracting status of the parties as the factors to consider the judicial adjustment of liquidated damages.In addition to the flexible system,the amount of liquidated damages can not exceed the actual loss of 30% of the rigid rules.On the basis of the theory of liquidated damages adjustment,the nature of liquidated damages,the mode of liquidated damages adjustment and the object of liquidated damages adjustment are important theoretical issues affecting the practice of liquidated damages adjustment.In theory,there are divergences between single attribute and double attribute on the nature of liquidated damages,and there are different views on the distinguishing standard of liquidated damages in the theory of double attribute.However,the dual attribute theory violates the basic principles of civil law and can not reasonably explain the practical problems,so we should do further research on the basis of the single attribute theory.The different nature of liquidated damages determines their different functions.Punitive liquidated damages and compensatory liquidated damages should be distinguished according to the purpose of liquidated damages,which can not only distinguish the two kinds of liquidated damages in theory,but also has considerable advantages in practice.After the study of judicial cases,it is found that the problems of judicial discretion of liquidated damages in the trial practice in China include that the expected loss of interests is not fully considered,the loss presupposition of liquidated damages and the punishment function are not fully embodied,the adjustment of liquidated damages is not fully considered,and the distribution of the burden of proof is not unified when the liquidated damages are too high.After further analysis,the reasons for the above problems in practice include the lack of maneuverability of legal provisions,fundamental errors in basic theories,rigid rules excluding the application of elastic rules,and conservative handling of the amount of liquidated damages.In order to solve the problems in practice,we should first explore the true intention of the parties,distinguish the agreed purpose of liquidated damages,and determine the principle of liquidated damages adjustment after determining the nature of liquidated damages.In addition,the obtainable interest should be included in the scope of loss,but the existing obtainable interest loss identification standard is too strict,and the non-breaching party should reduce the difficulty of proving the loss.In the adjustment of liquidated damages,various factors should be considered comprehensively.The adjustment of liquidated damages should vary according to the nature of the subject.In a commercial contract,the court should fully respect the autonomy of the parties and not easily interfere with the arrangement of the rights and obligations of the parties by judicial means.The degree of performance of the contract should also be considered as a factor in the range of liquidated damages adjustment.In addition,the fault of the parties should also be taken into account in the adjustment of punitive liquidated damages.