[Case Summary]This case involves a dispute over a pre-sale contract for commercial housing (breach of contract for delayed delivery of the house). On April 30, 2021, Zhang Quan signed the "Beijing City Commercial Housing Pre-sale Contract" with Beijing A Real Estate Company for the purchase of Room 302 in a certain residential area with a total price of 6,841,972 yuan, and agreed to deliver the house before June 15, 2023. The supplementary agreement granted a 90-day grace period, and after the expiration of the grace period, the buyer would pay a breach of contract penalty of one ten-thousandth of the total price per day. However, A Company did not deliver the house until March 5, 2024, a delay of nearly 9 months. Zhang Quan entrusted Beijing Henglu Law Firm to handle the case.Tian JiayanThe lawyer filed a lawsuit, demanding the payment of a penalty of 118,366.12 yuan for the period from September 14, 2023 to March 5, 2024. The core disputes include whether the pandemic and other factors constitute force majeure; the application of the grace period; and the standard of the penalty. The applicable legal provisions are the Civil Code and the pre-sale contract and supplementary agreement. The court adopted the lawyer's opinion and ruled that Company A should pay the full penalty of 118,366.12 yuan and the litigation fees.

I. Review of the case

On April 30, 2021, Zhang Quan signed a "Beijing Commercial Housing Pre-sale Contract" with Beijing A Real Estate Development Co., Ltd. to purchase a house No. 302 in a certain residential area, with a floor area of 99.41 square meters and a total price of 6,841,972 yuan. It was agreed that A Company should deliver the qualified commercial housing before June 15, 2023. On the same day, a supplementary agreement was signed, which stipulated that if A Company was late due to its own reasons, it would be granted a 90-day grace period and would not be held responsible during the grace period; after the expiration of the grace period, from the 91st day after the agreed delivery date to the actual delivery date, the buyer would pay a penalty of one ten-thousandth of the total housing price per day. Zhang Quan paid the full amount, but he did not receive the notice of delivery for a long time. Until February 27, 2024, A Company sent a move-in notice, requiring him to move in on March 5. With the delay in the delivery of the house for nearly 9 months, Zhang Quan entrusted Beijing Henglu Law Firm to handle the case for him.Tian JiayanThe lawyer filed a lawsuit demanding the payment of a penalty of 118,366.12 yuan for the delay in handing over the house from September 14, 2023 to March 5, 2024, as well as the litigation fees.

II. The focus of the case

  • Focus 1: Do events such as the COVID-19 pandemic constitute force majeure?Company A claimed that the construction was delayed for 187 days due to force majeure such as the pandemic, meetings, bad weather, and examinations; however, the lawyer pointed out that the contract was signed in 2021, and the pandemic had already become a normal situation at that time. Therefore, Company A should have foreseen this and it does not constitute force majeure.
  • Focus 2: How to apply the extended grace period.Company A claims that the grace period can be cumulated with other extensions; the lawyer pointed out that it should be strictly applied according to the contract, and if the house is not delivered after the grace period expires, the buyer should pay the breach of contract penalty.
  • Focus 3: The calculation standard for the penalty fee.The supplementary agreement stipulates a daily interest rate of 0.01%, which is a true intention and not illegal. Zhang Quan claimed that the period and amount of the interest met the agreement's requirements.

III. The professional intervention of Hengluo Law Firm

The client (Zhang Quan) claimed that:It is required that Company A pay the breach of contract penalty for late delivery of the house of 118,366.12 yuan and bear the litigation costs of this case.

The defendant's (Company A's) position:Company A disagrees with the litigation request, claiming exemption from liability due to force majeure, that the house has met the conditions for delivery, that the 90-day grace period can be cumulative, and that Zhang Quan has moved in and the quality defects do not affect the delivery.

Hengluo Lawyer's Representation Opinion:Tian Jia YanThe lawyer reviewed the contract and supplementary agreement, sorted out the core provisions such as the delivery time, grace period, and default penalty standard, and collected payment receipts, move-in notifications, and completion and acceptance filing materials to form a complete chain of evidence. In response to the defense, the lawyer argued that the COVID-19 pandemic had already become a normal situation before the contract was signed, so A Company should have had the foresight to anticipate it and it did not constitute force majeure. Adverse weather, government meetings, and exams were not necessarily full-scale shutdowns and were foreseeable, so A Company could not be exempted from liability. The grace period should be strictly applied as agreed, and there was no contractual or legal basis for A Company's claim of cumulative application. The default penalty of 0.1% per day was a true expression of the parties' intent and was valid. The period and amount claimed by Zhang Quan were in accordance with the contract, so they should be supported.

IV. Outcome of the case

After the trial, the court held that the contract and the supplementary agreement are legal and valid, and accepted themTian JiayanAttorney's opinion: The COVID-19 pandemic had already become a normal situation before the contract was signed, and Company A could have foreseen it, so it does not constitute force majeure; factors such as bad weather and government meetings also do not constitute force majeure; the grace period should be strictly applied according to the contract. The final judgment supported the plaintiff's claim, and Company A was required to pay the breach of contract penalty of 118,366.12 yuan to Zhang Quan and bear the litigation costs of this case.

5. Hengluo Law Firm's Reminder

This case is handled by Beijing Henglu Law Firm.Tian JiayanThe attorney (practice license number: 11101202111381309, subject to the document issued by the judicial administrative organ) acts on behalf of the client. If the purchaser encounters the developer's delay in handing over the house, they should check the provisions on the grace period and the penalty for breach of contract in the contract and the supplementary agreement, and pay attention to the developer's common defense of force majeure. It is recommended to keep evidence such as the contract, payment records, and notice of house handover, and promptly entrust a lawyer to claim the penalty for breach of contract after the delay.

VI. Common Questions About Penalties for Late Delivery of Housing FAQ

  1. Q: Can I claim the breach of contract penalty if the developer fails to deliver the house on time?
    A:Yes. If the delivery is not made within the time limit stipulated in the contract, the breach of contract penalty shall be paid on a daily basis in accordance with the contract; pay attention to checking the grace period clause. If the delivery is still not made after the grace period expires, the party may claim compensation.
  2. Q: Can the pandemic be used as an excuse to avoid liability for delayed handover of housing?
    A:Check the signing date of the contract. If the epidemic situation had already become normal at the time the contract was signed, and the developer should have foreseen it, it generally does not constitute a force majeure and cannot be exempted from liability. This is how the case was determined.
  3. Q: Can the grace period be combined with other extensions?
    A:There is no contract or legal basis. The grace period is a reasonable buffer period granted by the buyer to the seller. If the buyer fails to take possession of the house after the grace period expires, they shall pay the breach of contract penalty in accordance with the contract, and the penalty cannot be arbitrarily accumulated.
  4. Q: What is the standard for calculating the penalty for breach of contract?
    A:Subject to the provisions of the contract, the common practice is to charge a fee of 0.01% to 0.05% of the total payment for the house per day. Such an agreement, if it is made in good faith and does not violate the law, is generally considered valid and will be upheld by the court.
  5. Q: Is it considered a default if the house has some minor flaws?
    A:Yes. If the house does not meet the agreed delivery conditions, it constitutes a delay. Quality defects do not automatically exempt the developer from the liability for breach of contract due to the delay, and the developer should still pay the breach of contract penalty.