On Judicial Adjustment And Reduction Of Damages For Breach Of Contract

The judicial adjustment and reduction system of damages for breach of contract refers to the system in which one party requests a reduction in the amount of such damages when such damages agreed upon by both parties in the contract are too high.The second half of Paragraph 2 of Article 114 under the Contract Law of the People’s Republic of China stipulates the judicial adjustment and reduction of such damages.However,the lack of in-depth study on the nature of such damages at the legislative level and the neglect of the function of such damages in guaranteeing the performance seriously weaken the functional value of such damages in judicial practice.Although the Supreme People’s Court has issued a series of judicial interpretations and guidelines to refine the nature of such damages and the regulation on the adjustment and reduction of such damages,there are still many problems in judicial practice on the judicial adjustment and reduction of such damages.Based on the study of judicial practice,this thesis analyses the existing problems and their causes of judicial adjustment and reduction of such damages in China,makes a theoretically dialectical analysis of the normative composition of judicial adjustment and reduction of such damages,and proposes some suggestions for improving the legal application of judicial adjustment and reduction of such damages.Apart from introduction and conclusion,this thesis consists of three parts:Part One mainly discusses the problems existing in the judicial adjustment and reduction system of damages for breach of contract in China.Through the empirical analysis of the specific cases related to the adjustment and reduction of such damages collected on the China Judicial Documents Network,this thesis concludes that there are many problems in the operation of the judicial adjustment and reduction system of such damages,such as the lack of distinction between the nature of such damages,incomplete procedural provisions,the determination of excessive damages for breach of contract and various modes of adjustment and reduction standards.Part Two mainly analyses and demonstrates the causes of the problems existing in the judicial adjustment and reduction system of damages for breach of contract in our country,and through analysis finds that the main reasons are the confusion of the judicial rules system of the judicial adjustment and reduction of such damages and the abuse of the judge’s interpretation power.Part Three is the focus of this thesis.This part mainly studies the normative composition of the judicial regulation on adjustment and reduction of damages for breach of contract in China,and proposes some suggestions for its improvement.Firstly,this part indicates the object of application of the rule of judicial adjustment and reduction of such damages,and holds that the same over-high judgment standard and reference factors should be applied to compensatory damages for breach of contract and punitive damages for breach of contract,but there should be different emphasis in the determination.Secondly,this part analyses the considerations of judicial adjustment and reduction of damages for breach of contract one by one,and holds that in the aspect of actual loss,it is required to take the annual interest rate of 24% as the relative fixed standard to measure whether damages for breach of contract in monetary debt are too high,and then make considerations according to the performance of the contract and the parties’ performance process.Thirdly,it is required to clarify the exercising subject,the starting method of the application,the exercise time and the distribution of the burden of proof of the judicial adjustment and reduction of damages for breach of contract,and holds that the court should be given the right to reduce damages for breach of contract according to its authority under certain circumstances and reasonably allocate the burden of proof,in which the party in breach of contract shows evidence sufficient for the judge to doubt the fairness of the agreed damages for breach of contract according to the principle of proof in civil litigation and then distributes the burden of proof to the party who abides by the contract.Finally,this part analyses the elimination of judicial adjustment and reduction of damages for breach of contract from the aspects of the parties’ promise to give up,no reduction of damages for breach of contract paid,and no reduction of damages for breach of contract paid by the party in breach of contract providing the format clause.