Research On The Rules For Discretionary Reduction Of Liquidated Damages

The rule of discretionary liquidated damages has a long history and is also provided for under Article 585(2)of our Civil Code.However,Article 585(2)of the Civil Code provides for compensatory liquidated damages,and there is no regulatory path for punitive liquidated damages under our law.Through the analysis of the doctrine and practice,the following problems exist in the application of the discretionary rules of liquidated damages,one is the misapplication of the discretionary rules of compensatory liquidated damages,the second is the lack of independent discretionary rules of punitive liquidated damages,and the third is the lack of legitimacy of the procedural rules of liquidated damages discretion.From the nature of compensatory liquidated damages,the loss of breach of contract consists of actual loss,loss of inherent interest(as the case may be)and loss of available interest limited to net profit,of which actual loss and loss of available interest are two different concepts and should not be confused,while the loss of breach of contract should be limited by the foreseeability rule,according to the "closeness of association" The impact of the foreseeability rule should be considered in relation to the amount of loss.The "1.3 times the loss" should be considered excessive,but the existence of "excessive circumstances" does not necessarily mean that it is discretionary,but should be combined with "the loss and the degree of performance of the contract".It should also take into account the factors of "fairness and good faith" to determine whether the amount should be reduced,and should at the same time correctly grasp the extent of the reduction,and limit the reduction to "1-1.3 times".Punitive damages are not subject to any reduction in principle,but are subject to an exception.In determining whether the punitive liquidated damages are abnormally high,it is necessary to detach from the standard of loss and construct a standard of discretionary abnormally high punitive liquidated damages based on the relationship between the "proportion of the amount of liquidated damages to the subject matter of the contract" and the "maximum value of public recognition",taking into account The discretionary amount of punitive liquidated damages shall be determined reasonably,taking into account the subjective intent and objective breach of contract by the breaching party,the cost and profit of the breach,the subject of the contract and the type of transaction,internal and external performance,etc.On the issue of discretionary liquidated damages procedure,it is more appropriate to adopt the way that the parties initiate the discretionary liquidated damages procedure on application.The judge’s exercise of the discretionary liquidated damages request is limited to the provisions of the law and should not expand the scope of the discretionary liquidated damages request without restriction;the discretionary liquidated damages request is,in principle,raised before the end of the court arguments in the first instance,exceptionally raised in the second instance,it should be rejected and the parties should be informed to sue separately,if There are circumstances stipulated by law,can be after informing the second trial for final judgment,the parties still apply for discretionary reduction of liquidated damages,together with the trial;parties can start the procedure of discretionary reduction of liquidated damages by way of counterclaim or defense,but should adopt strict standards for the determination of the defense;the defaulting party bears the burden of proof of discretionary reduction of liquidated damages,the defaulting party can put forward counter-evidence and challenge,in the event that the evidence of the defaulting party cannot meet the standard of proof and the defaulting party cannot The People’s Court may appropriately lower the standard of proof when the evidence of the defaulting party fails to meet the standard of proof and the defaulting party is unable to provide evidence.