Study On The Appropriate Reduction Of Liquidated Damages

Article 114(2)of the Contract Law of our country stipulates the discretionary rule of liquidated damages.Although the relevant judicial interpretation has been issued afterwards,there are still some problems in the application of the discretionary rule,such as the measurement criteria,considerations and inconsistencies in the procedural operation of the discretionary rule of liquidated damages.The purpose of this paper is to clarify the disputes related to the discretionary rules of liquidated damages,so as to guide the judicial practice of the discretionary rules of liquidated damages.For the measurement of discretionary liquidated damages,we should clearly consider the creditor's loss,contract performance,party's fault and other comprehensive criteria,and take more than 30% of creditor's loss as auxiliary criteria.We should not reverse the order of inspection of the two criteria.Moreover,in disputes involving non-governmental money and debt,we should use liquidated damages not exceeding 24% of annual interest rate as a measure of whether liquidated damages are too high.The criteria are appropriate.On the consideration factors of adjusting and reducing liquidated damages,through the investigation of practical cases,it is found that,on the one hand,the status of each consideration factor is different,and the comprehensive measurement standard should be clearly defined with actual loss as the main consideration factor and other factors as the supplement.In order to judge whether liquidated damages should be reduced or not,we should use the method of "dynamic system theory" to dynamically measure the effect of each factor,and treat the factors differently according to different types of contracts,with different emphasis.On the other hand,the considerations of liquidated damages stipulated in the current law can not fully meet the practical needs.Social and economic conditions and the identity of the subject of the contract are also important considerations when judges consider whether to reduce liquidated damages.Therefore,the scope of considerations of liquidated damages should be expanded to include social and economic conditions and the identity of the subject of the contract.On the application of the procedure of liquidated damages reduction,firstly,for the initiation of liquidated damages reduction,the main body of initiation should be the debtor's application for initiation.In practice,the court's initiative to reduce liquidated damages according to its authority is neither sufficient theoretical support nor contrary to the current law,so it is not advisable;in the way of initiation,it is inappropriate for the debtor to simply deny its default.As one of the ways to start the discretionary reduction of liquidated damages,the case of the debtor denying the breach of contract can be regulated by the interpretation rules of the court.Secondly,With regard to the interpretation of the discretionary reduction of the liquidated damage s,the interpretation reduction of liquidated damages by the court is reasonable on the premise of satisfying the conditions for the exercise of the right of interpretation.Court's elucidation does not violate the principle of judge's neutral judgment,but also helps to fully protect the litigant's litigation rights and promote the settlement of disputes involved in the case.Although the interpretation of the discretionary reduction of liquidated damages is reasonable,judges should exercise the right of interpretation carefully,and explain it in an appropriate way according to the conditions of exercising the right of interpretation prescribed by law,so as to prevent the occurrence of inappropriate interpretation.Finally,the burden of proof for discretionary reduction of liquidated damages should be clearly allocated.In practice,three different ways of allocation of burden of proof are not conducive to solving practical disputes.The debtor should be clearly regarded as the subject of burden of proof.When the debtor can not prove that the reduction of liquidated damages has sufficient reasons,he should bear the risk of failure to prove.