| The paper re-thinks theso-called‘punitive penal clause' in Chinese legal theory, and points out that this kind of penal clause can be agreed upon for any kind of breach, not limited to the delay of performance. Although article 114 of PRC contract Law 1999 is mainly on the compensative penal clauses, as a natural conclusion of freedom of contract, the parties of a contract are free to make an agreement on a punitive penal clause. In order to claim a penal clause, there is no need to prove the existence and amount of lossessuffered by the plaintiff; as to the‘fault' of the breaching party to be proved or not, it depends on the different types of breaches of contract. As to the decided amount to be paid by the defendant for his breach, the court or arbitral organizationshould only have limited power, among which to the punitive penal clause, the only to be cont rolled is the unfair terms. |
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