The Abandonment Effect Of Right Of Discretionary Reduction Of Liquidated Damages

Paragraph 2,Article 585 of the Civil Code provides for the "rules on judicial discretion for the reduction of liquidated damages".When the liquidated damages are too high,the parties may request the people’s court or an arbitration institution to reduce them at discretion.However,in practice,in order to avoid judicial intervention,the parties of a contract usually agree in advance to abandon the right of discretionary reduction of liquidated damages in order to avoid judicial intervention.As to the validity of such abandonment of discretion of liquidated damages,there are no clear provisions in the current laws of our country.In practice,cases hold different opinions and academic opinions are also controversial.The basic issues to judge the abandonment effect of right of discretionary reduction of liquidated damages are the nature of right of discretionary reduction of liquidated damages and the nature of judicial discretion rules on liquidated damages.On this basis,it is necessary to consider whether there are different discussions on the effect of judicial discretion rules on liquidated damages.The outline of this paper is as follows: The first chapter discusses the status quo of the prior abandonment clause in the judicial discretion of liquidated damages,combing the representative opinions of the cases and scholars.The second chapter discusses the nature of right of discretionary reduction of liquidated damages.This article refutes the viewpoint that the prior renunciation of the right of discretionary reduction of liquidated damages is invalid by the action right and anticipatory right in public law.This paper holds that the right of discretionary reduction of liquidated damages is a suit right of action and anticipatory right,neither of which constitutes an obstacle to the validity of the abandonment of right of discretionary reduction of liquidated damages.We need to further explore its normative attributes,judge its normative intent.The third chapter discusses the nature of the norms of judicial discretion on the penalty for breach of contract.First of all,the author denies the practice of judging the effect of prior abandonment of the penalty for breach of contract based on Paragraph 1 of Article 153 of Civil Code,and thinks that Paragraph1 of Article 153 of Civil Code is not the basis of judging the effect of the agreement.The meaning of Paragraph 1 of Article 153 of Civil Code is to bring the mandatory rules outside private law into the evaluation system of private law,and the policy basis of judicial deduction of liquidated damages is contained in the system of private law,while the policy basis of judicial discretionary deduction of liquidated damages is contained in the system of private law,so Paragraph 1 of Article 153 of Civil Code is not the basis to judge the validity of the agreement.The second section discusses the identification methods of the arbitrary norms and the mandatory norms.There are two kinds of methods: one is the formal method,the other is the essential method.The formal identification needs to examine the language expression of the regulation,the essential identification needs to examine the interest conflict behind the regulation and the purpose of the regulation.The third section unifies the formal and the substantive two recognition methods,inspects the attribute of the judicial discretionary derogation norms.In terms of the expression of the norms,discretionary judicial reduction of liquidated damages for breach of contract is an empowerment norm and shall not be considered as arbitrary only due to the expression of "can".A further distinction shall be made in combination with the substantive identification methods.From the perspective of conflict of interest,the norms for judicial discretionary reduction of liquidated damages embody the basic idea of social fairness and justice.The ex-ante abandonment of the right of discretionary reduction of liquidated damages will easily cause significant imbalance of the interests of both parties,excessively restrict the freedom of the parties,and violate the basic principles of fairness,public order and good morals;From the perspective of the purpose of regulation,the existence of discretionary reduction of liquidated damages can realize the functional positioning of liquidated damages in China as "the main function is compensation and the supporting function is pressure".If the ex ante abandonment clause on discretionary reduction of liquidated damages is allowed to be effective,then the regulation on discretionary reduction of liquidated damages may be "overridden" due to its exclusion from application,which goes against the legislative intent.To sum up,the default penalty judicial discretionary norm tends to be regarded as a mandatory norm that cannot be excluded from application.The fourth section discusses whether prior abandonment of discretionary right of liquidated damages should be exceptionally effective in commercial transactions.This paper argues that although commercial subjects have stronger risk prediction ability than ordinary civil subjects,they still cannot avoid conflicts of interest and failure of normative purposes in the provisions of prior abandonment of right of discretionary reduction of liquidated damages.Therefore,the validity of the clause of abandoning the right of discretionary reduction of liquidated damages in advance should not be acknowledged,but the commercial subject can be taken into consideration.