Judicial Application Of The Rules Of Liquidated Damages

The liquidated damages are based on the agreement of the parties to the contract and are the pre-determined payments of the parties.Based on the principle of private law autonomy,it is reasonable to respect the parties' agreement on liquidated damages.The liquidated damages rule is a rule for the excessive amount of liquidated damages.The essence is that the judge intervenes in the freedom of contract.It is the measure of the substantive fairness between the creditor and the debtor based on the equivalent paid rules.China's "Contract Law" Article 114,paragraph 2,establishes a uniform discretionary penalty rule,allowing the parties to request the people's court or arbitration institution to reduce it appropriately if the agreed liquidated damage is excessively higher than the damage caused.The Supreme People's Court also refined the liquidated damages in 2009 with Articles 27 and 29 of the Interpretation of Certain Issues Concerning the Application of the Contract Law of the People's Republic of China(II)(hereinafter referred to as "Explanation of Contract Law(II)").Discretionary applicable rules.This is also the main refereeing rule system for the current discretionary reduction of China's liquidated damages.However,due to the lack of partial rules for the reduction of liquidated damages,the legislation does not clearly stipulate the applicable object of the discretionary reduction rule.In the judicial practice,the discretionary measurement factor is unclear and the procedural confusion is reduced.First,it affects the credibility of the judiciary.Therefore,this paper aims to explore the rules for discretionary damages and their judicial application,and combine the case to sort out and explain the controversial issues.In addition to the introduction,this article is divided into the following parts: Firstly,it analyzes the legitimacy of discretionary liquidated damages and the basic situation of discretionary rules in judicial application.Discussed the legitimacy disputes in the current rules of liquidated damages,and proved that although it is necessary to respect the autonomy of the parties and respect the clauses of breach of contract,the discretionary reduction of excessive liquidated damages is necessary and justified.of.At the same time,through the study of selected sample cases,the paper analyzes the basic situation of judicial application of the discretionary penalty rule in China and the problems in judicial application.Secondly,it analyzes the application object of the penalty reduction rule.By combing the doctrine of the distinction between punitive liquidated damages and compensatory liquidated damages and the views of the Supreme Law on "compensatory nature and punitiveness as the supplement",combined with case analysis,it is considered that the nature of liquidated damages in China should follow a single attribute.It is said that compensation-based liquidated damages are the mainstay,supplemented by punitiveness,and the liquidated damages reduction rules apply to both compensatory liquidated damages and punitive liquidated damages.Thirdly,an analysis is made of the measurement factors in the application of the liquidated damages rule.Combined with the case,it analyzes the entity measurement factors in the discretionary penalty rule.In practice,the factors that determine whether the liquidated damages are too high have basic factors and other supplementary factors,including actual loss,contract performance,party fault level,etc.How these factors are specifically applied in practice.Finally,the procedural issues of the discretionary penalty rule in judicial application are analyzed.Specifically,it includes the initiation of the discretionary procedure and the allocation of the burden of proof.By analyzing the case,it is clarified that the discretionary reduction of the liquidated damages should be initiated by the parties.The judges are not allowed to actively adjust the liquidated damages according to their duties,but the court has the right to interpret the court.The right of interpretation should be exercised with caution.The burden of proof is usually borne by the debtor who claims that the liquidated damages are too high.At the same time,in order to make up for the inadequacy of who advocates the evidence,the burden of proof can be transferred to the creditor after the debtor has provided prima facie evidence that the judge has doubts about the reasonableness of the liquidated damages.