The upper limit of liquidated damages in law is mainly negotiated. Generally, the upper limit of contractual liquidated damages is not more than 30% of the actual loss. But if it is too high or too low, you can request the court to reduce or increase it. As for the liquidated damages, the parties may agree that when one party breaches the contract, it shall pay a certain amount of liquidated damages to the other party according to the situation of breach of contract, and may also agree on the calculation method of the amount of compensation for losses arising from breach of contract. If the parties agree on the liquidated damages for delay in performance, the defaulting party shall also perform its obligations after paying the liquidated damages. It should also be noted that the people's court or arbitration institution can increase the amount of liquidated damages at the request of the parties, and if the agreed liquidated damages are too high than the losses caused, the people's court or arbitration institution can appropriately reduce the amount of liquidated damages at the request of the parties.
 Legal basis
 Article 585 [Liquidated Damages] of the Civil Code of the People's Republic of China [Liquidated Damages] The parties may agree that when one party breaches the contract, it shall pay a certain amount of liquidated damages to the other party according to the circumstances of the breach, or they may agree on the calculation method of the amount of compensation for losses arising from the breach.
 If the agreed liquidated damages are lower than the losses caused, the people's court or arbitration institution may increase them at the request of the parties; If the agreed liquidated damages are too high than the losses caused, the people's court or arbitration institution may, at the request of the parties, appropriately reduce them.
 If the parties agree on liquidated damages for delay in performance, the defaulting party shall perform its obligations after paying the liquidated damages.