How to compensate for breach of contract?

1、 How to compensate for breach of contract?

Compensable Liquidated damages As well as losses, 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, and may also agree on the calculation method of the amount of compensation for losses arising from the breach. Therefore, the penalty is punitive, and it does not presuppose that the non defaulting party suffers losses. generally speaking Contract liquidated damages The upper limit is no 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.

If the agreed liquidated damages are lower than the losses caused, the parties may request the court to increase them; If the agreed liquidated damages are too high than the losses caused, the parties may request the court to reduce them appropriately. However, the liquidated damages are a kind of pre estimate of the possible losses caused by one party's breach of contract by both parties at the time of signing the contract, which cannot be completely consistent with the actual losses of the observant party after the breach of contract.

2、 Difference between punitive and compensatory liquidated damages

Punitive liquidated damages. Punitive liquidated damages are inherently liquidated damages, also known as penalty for breach of contract. Such liquidated damages shall, obligor Except for the payment of liquidated damages, all other liabilities due to debt shall not be affected. creditor In addition to asking for liquidated damages, you can also ask for debt Compensation for damages arising from performance or non performance.

Compensatory liquidated damages. The compensatory liquidated damages are the total amount of damages estimated by both parties in advance, also called the predetermined amount of damages. When the creditor claims for damages due to the other party's breach of contract, it must prove the damage and causality. This kind of proof is not only difficult, but also prone to disputes. Therefore, in order to avoid the above difficulties and disputes, it is a good policy for the parties to agree on the amount of damages or its calculation method in advance. On the one hand, it can encourage the debtor to perform the debt; on the other hand, in case of default, its responsibility is simple and clear. The reservation of such damages is also a kind of liquidated damages. If such liquidated damages are equivalent to the replacement of performance, after the claim for such liquidated damages, no further claim for damages for debt performance or non performance can be made.

China《 contract law 》The liquidated damages specified in Article 114 are compensatory liquidated damages. Such interpretation does not mean denying the status of punitive liquidated damages in China's law. Since the Contract Law pursues the principle of voluntariness (Article 4), the parties can still clearly agree on punitive liquidated damages, which will remain valid as long as such terms do not violate the mandatory provisions of the law. Of course, if the agreement of the parties is not clear, it is presumed to be compensatory liquidated damages in principle.

Engineering contract After signing, both parties need to jointly perform their respective legal obligations. If one party breaches the contract, it must cause Tortious conduct You can legally safeguard your rights and interests through judicial procedures. If you are not clear about the handling of relevant situations, you can consult the judicial authorities to handle them.