Legal subjectivity:

1. Are there any limits on the amount of liquidated damages?

The Contract Law only provides for principle provisions on liquidated damages and does not specifically stipulate breach of contract. If the proportion or amount of liquidated damages is not clearly stipulated in the relevant laws, the general principles on liability for liquidated damages in the Civil Code may be followed. Generally speaking, the upper limit of liquidated damages in a contract is no more than 30% of the actual loss. However, if it is too high or too low, you can ask the court to reduce or increase it.

II. Relevant provisions on liquidated damages

If the party requests a reduction on the grounds that the agreed liquidated damages are too high, it shall be appropriately reduced based on the standard of 30% of the liquidated damages exceeding the loss caused; If a party requests an increase on the grounds that the agreed liquidated damages are lower than the losses caused, the amount of liquidated damages shall be determined based on the losses caused by the breach of contract. There is no agreement on the amount of liquidated damages or the calculation method for the amount of loss compensation in the sale of commercial housing. The amount of liquidated damages or the amount of loss compensation can be determined with reference to the following standards:

1. In the case of overdue payment, the total amount of the unpaid house purchase price shall be calculated with reference to the Chinese People's The standard calculation prescribed by the bank for financial institutions to charge interest on overdue loans.

2. If the house is delivered for use after the due date, the rent for similar houses in the same location will be determined according to the rent standard announced by the relevant competent authorities or assessed by a qualified real estate appraisal agency during the period when the house is delivered for use overdue.

If the buyer fails to obtain the house ownership certificate within the following period due to the seller's fault, the seller shall bear liability for breach of contract unless there is a special agreement between the parties:

(1) The time limit for house ownership registration stipulated in the commercial housing sales contract.

(2) If the subject matter of the commercial housing sales contract is a house that has not yet been built, 90 days will begin from the date the house is delivered for use.

(3) If the subject matter of the commercial housing sales contract is a completed house, 90 days will begin from the date of conclusion of the contract.

If the contract does not stipulate liquidated damages or the amount of loss is difficult to determine, it can be calculated based on the total purchase price paid and with reference to the standards for financial institutions to calculate and charge overdue loan interest stipulated by the People's Bank of China.

3. The nature of liquidated damages

The nature of liquidated damages in my country’s Civil Code is mainly compensatory and punitive to a limited extent.

The provisions of liquidated damages in my country's Civil Code emphasize the concept of compensatory damages, while at the same time recognizing the punitive nature of liquidated damages to a limited extent. On the one hand, the amount of liquidated damages is determined “according to the circumstances of the breach of contract”, that is, the agreement on liquidated damages should estimate the losses that may be caused to the other party due to one party’s breach of contract, and should not stipulate an amount of liquidated damages that is disproportionate to the original losses. On the other hand, if the amount of liquidated damages agreed by the parties is lower than the losses caused by the breach of contract, the parties may request the people's court or arbitration institution to increase it appropriately so that the liquidated damages are roughly equivalent to the actual losses. This clearly reflects the compensatory nature of liquidated damages. Liquidated damages are used as a remedy for breach of contract, which not only protects the interests of creditors, but also encourages parties to actively and boldly engage in trading activities and economic circulation. At the same time, the Civil Code also stipulates: "If the agreed liquidated damages are excessively higher than the actual losses, the parties may request the people's court or arbitration institution to appropriately reduce them." That is to say, if the damages are generally higher than the actual losses, they have no right to request a reduction. This aspect is for It saves the parties from the tedious process of providing evidence. On the other hand, it shows that the law allows liquidated damages to be greater than the losses to a certain extent. Obviously, the greater amount is punitive to the defaulting party.

Since liquidated damages are predetermined by the parties through agreement, and liquidated damages not only compensate for the losses of the defaulting party, they also have a punitive effect on the defaulting party. Therefore, the author agrees with the view that liquidated damages have the nature of a guarantee. . Liquidated damages are both a form of liability and a unique way of performing a guarantee contract. If liquidated damages are stipulated in the contract, then the party intending to breach the contract will weigh the consequences of its breach of contract. If a liquidated damages that is obviously punitive is agreed upon, especially if the liquidated damages exceed the benefits arising from the breach of contract, any reasonable person will Everyone will choose to continue to perform the contract after weighing the pros and cons. Therefore, liquidated damages have the property of guarantee, and the stronger the punitiveness, the stronger the guarantee effect.

According to legal provisions, it can be known that the Contract Law only provides for liquidated damages in principle and does not specifically stipulate the proportion or amount of liquidated damages, and the relevant laws do not clearly stipulate the proportion or amount of liquidated damages. .

Legal objectivity:

Article 585 of the People's Republic of China and Civil Code

The parties may agree that when one party breaches the contract, the parties shall agree on the basis of the breach of contract. In this case, the party may pay a certain amount of liquidated damages to the other party, and may also agree on a calculation method for the amount of compensation for losses due to breach of contract.

"Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Commercial Housing Sales Contract Disputes"

Article 12

The parties shall pay the agreed liquidated damages If a party requests a reduction on the grounds that the liquidated damages are too high, it shall be appropriately reduced on the basis that the liquidated damages exceed 30% of the losses caused;

If a party requests an increase on the grounds that the agreed liquidated damages are lower than the losses caused, it shall be based on the amount of liquidated damages caused by the breach of contract. The amount of liquidated damages is determined based on the loss.