Discretionary Rules For Liquidated Damages

The fixed sum compensation system is part of the content of the contract.The discretionary rules for liquidated damages are essentially the embodiment of public law interfering with private law,and there are certain controversies in China’s theoretical circles and practical operations regarding the discretionary reduction of liquidated damages,and the main controversies exist in the specific application of the discretionary rules for liquidated damages,including the initiation of the application for the discretionary reduction of liquidated damages,the determination of the amount of losses after the start and the factors of the court’s discretionary reduction,etc.China’s provisions on the discretionary rules for liquidated damages are general in general,and the existing judicial interpretations cannot fully deal with various disputes in practice.Therefore,this article will combine typical judicial precedents to sort out the theoretical disputes and specific application of the discretionary rules for liquidated damages,and put forward a brief view,with the intention of clarifying the discretionary rules for liquidated damages in this article.Liquidated damages system originated from the early Roman law,and the liquidated damages discretionary system can be traced back to the early canon law,the discretionary rules derived from the liquidated damages system have an important internal connection with the function of liquidated damages,the liquidated damages system has the dual function of compensation and performance of security,and because of the balance between the two functions,there is a discretionary reduction of liquidated damages,liquidated damages reflect a double function under the laws of our country,liquidated damages also have a dual nature,that is,compensation and punitive,liquidated damages should be compensatory,Punitive is supplemented by fairness and justice of the law,which is actually the value basis of the discretionary rule of liquidated damages.Although the discretionary reduction of liquidated damages has a legal basis,it cannot be applied arbitrarily.Depending on the different functions of lump-sum compensation,it can be divided into lump-sum damages and lump-sum punitive damages,China does not clearly distinguish between the two types of liquidated damages,according to the actual situation of China’s legislation and the judiciary,the applicable objects of the discretionary rules for liquidated damages should include the above two kinds of liquidated damages,and the discretionary rules for liquidated damages have certain applicable conditions,including important conditions for the effective force of the lump-compensation clause and for the application of the conditions for filing the claim by the parties,and for the purpose of respecting the autonomy of the parties,the application of the rule of contractual exclusion is supported by the People’s Court.In the judicial application of the liquidated damages discretionary rule,the core is the problem of loss determination,the Civil Code does not clearly how to calculate the loss,the original "Contract Law Judicial Interpretation(II)" article 29 stipulates that the actual loss should be based on the actual loss,taking into account some comprehensive considerations including expected benefits,etc.to calculate the loss caused by the default,in practice,the loss caused by the breach is more difficult to calculate,on the premise of the actual loss,the loss caused by the breach should include the loss of available benefits,When determining the loss of available benefits,it should be flexibly grasped according to the actual situation and the nature of different contracts,etc.The author believes that on the basis of calculating the loss,it is not necessary to fully mechanically determine that the liquidated damages are too high according to the standard of more than 30% of the losses,Secondly,The court should examine the scope of the restriction of confidentiality,taking into account the extent to which the parties are indicted and how it is possible to implement the agreement.At present,there are still some deficiencies in the judicial application of the discretionary rules for liquidated damages,once the parties apply for the discretionary reduction of liquidated damages,the court will most likely reduce the liquidated damages,the people’s court’s reduction of liquidated damages must be to maintain fairness and justice,but it should also respect the autonomy of intention,the content of the contract does not violate the mandatory legal provisions,the contract is valid for both parties,the court’s discretionary reduction of liquidated damages is an exception to the public law interference in private law,so the people’s court should clarify the principle that the liquidated damages should not be reduced as much as possible.Estimate the loss to the greatest extent reasonableness to make a judgment;comprehensively measure the dual nature of the liquidated damages,balance the compensatory and punitive nature of the liquidated damages in light of the actual situation;and list some circumstances that limit or exclude the discretionary reduction of liquidated damages.