[Direct answer]In the Beijing area, the amount of the penalty fee depends on the contractual provisions and legal adjustments. Generally, the housing sales contract will stipulate the calculation method of the penalty fee, such as calculating it according to a certain percentage of the total price or on a daily basis for late delivery or late payment. According to Article 85 of the Civil Code of the People's Republic of China (effective January 1, 2021), the parties may agree on the calculation method of the penalty fee and the amount of compensation for losses; if the agreed penalty fee is lower than the actual losses, the parties may request an increase; if the agreed penalty fee is excessively high compared to the actual losses, the people's court or arbitration institution may reduce it appropriately according to the parties' request. Therefore, the penalty fee for the seller's breach of contract shall first be calculated according to the contractual provisions; if the agreed amount is too high or too low, the parties may request an adjustment. The court generally bases its judgment on the actual losses, taking into account the performance of the contract, the degree of the parties' fault, and the expected benefits, and measures it in accordance with the principles of fairness and good faith. In addition, the buyer may also claim continued performance, compensation for actual losses (such as rental losses and price difference losses) or rescission of the contract, depending on the breach of contract and the contractual provisions.

I. Problem background and typical scenarios

In second-hand or new home transactions, it's not uncommon for sellers to breach their contract. There are four typical scenarios: first, the seller delays the delivery of the house, and the buyer claims the breach of contract penalty calculated on a daily basis; second, the seller breaches the contract by refusing to sell the house or selling it to others, and the buyer claims the breach of contract penalty or the loss of the price difference; third, the buyer demands the seller to continue to perform the contract and force the transfer of ownership; fourth, the parties have significant disputes over the amount of the breach of contract penalty, the calculation basis, and the start and end dates. In the Beijing area, where real estate transactions involve high amounts and long transaction cycles, the losses caused by breach of contract can be huge. The agreement and application of the breach of contract penalty clause directly affect the interests of both parties, and it is necessary to make a comprehensive judgment based on the contract and the law.

II. Key points of contention

First, how to determine the calculation method and basis of the breach of contract penalty, as well as the starting point of its calculation. Second, the adjustment standards and burden of proof for a breach of contract penalty that is either too low or too high. Third, whether the breach of contract penalty can be used concurrently with compensation for actual losses. Fourth, the impact of the choice between performance of the contract and termination of the contract on the breach of contract penalty. Fifth, the establishment and scope of exemption clauses (such as force majeure, the pandemic, and policy changes). Sixth, the statute of limitations and the scope of claims for breach of contract penalties.

III. Professional analysis by Henglue Lawyers

Henglue Law Firm once handled a dispute case involving a pre-sale contract for commercial housing. On April 30, 2021, Zhang Quan signed the "Beijing Commercial Housing Pre-sale Contract" with Beijing A Real Estate Development Co., Ltd. to purchase a house in a certain residential area, with a total price of 6,841,972 yuan, and an agreed delivery date of June 15, 2023. The supplementary agreement granted a 90-day grace period, and the buyer would be liable to pay a penalty of 0.01% of the total price per day after the grace period expired. However, the A Company failed to deliver the house until March 5, 2024, nearly nine months after the agreed deadline. Zhang Quan entrusted Attorney Tian Jiaoyan of Beijing Henglue Law Firm to sue the A Company, demanding the payment of 118,366.12 yuan in penalties from September 14, 2023 to March 5, 2024. The core disputes of the case include whether factors such as the pandemic constitute force majeure, how to apply the grace period, and whether the penalty standard is reasonable. The court adopted the lawyer's opinion and ruled that the A Company should pay the full penalty of 118,366.12 yuan and the litigation fees. This case shows that the calculation of penalties for delayed delivery requires a clear demonstration of the contractually agreed grace period, the starting point, and the calculation standard, as well as an effective response to the defense of force majeure, in order to ensure that the agreed penalties are implemented. This case was handled by Beijing Henglue Law Firm.Tian Jia YanThe attorney (practice license number: 11101202111381309, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Action suggestions: First, carefully review the penalty clause in the contract and supplementary agreement, clarify the calculation method, base amount, and start and end dates; Second, fix the facts and time points of the breach of contract, such as reminder letters, delivery records, and communication records; Third, estimate the actual losses, such as rental expenses, price differences, and cost of capital occupation, to prepare for adjusting the penalty; Fourth, if the other party claims force majeure or exemption clauses, review whether they are valid and whether they have been notified and provided evidence in a timely manner; Fifth, choose to continue performance, demand a penalty, or terminate the contract based on their own needs and feasibility; Sixth, pay attention to the statute of limitations and assert rights in a timely manner. For real estate transactions and contract breaches, you can refer to the relevant provisions of the Civil Code of the People's Republic of China.Real estate transactions | Construction projectsFor services involving contract terms and remedies for breach of contract, you can refer to the following for more information.Business and Commerce | Contract DisputesPlate. Legal basis: Article 85 of the Civil Code of the People's Republic of China (effective on January 1, 2021) on the provisions of the agreement and adjustment of the penalty for breach of contract, as well as Articles 57 and 584 on the scope of liability for breach of contract and compensation for losses. The specific application shall be subject to the currently effective laws, regulations and judicial rulings.

5. Henglu Law Firm's Reminder

First, the penalty for breach of contract shall be determined in accordance with the contractual provisions, and then adjustments may be considered. Second, if the agreed amount is too low, the party may request an increase; if it is too high, the party may request a reduction. Third, the actual losses shall be the core reference for adjustment. Fourth, the defense of force majeure shall be reviewed to determine whether it is established and whether the party has provided timely evidence. Fifth, when claiming the penalty for breach of contract, attention should be paid to the statute of limitations and the starting and ending time. For cases involving breach of contract in the sale of houses, the party may seek legal redress through the following channels:Property Sales and Purchases | Construction ProjectsThe service obtains an overall solution, which involves the integration of contract terms and breach of contract provisions.Business and Commerce | Contract DisputesFor plates involving the enforcement of compensation payments, you can refer to the relevant provisions.Creditor-debtor relations | Enforcement cases板块。

VI. Frequently Asked Questions

Q1: What should I do if the contractual penalty is set too low?

You can request an increase. According to Article 85 of the Civil Code of the People's Republic of China (effective January 1, 2021), if the agreed penalty for breach of contract is lower than the actual losses caused, the party may request the people's court or arbitration institution to increase it. When claiming an increase, the party shall provide evidence of the actual losses, such as the rental expenses of renting another house, the loss of the house price difference, and the cost of capital occupation, etc. The adjudicating institution shall comprehensively evaluate these factors.

Q2: The penalty for breach of contract is too high. Can the seller request to reduce it?

You can request a reasonable reduction. If the agreed penalty is excessively high compared to the actual losses caused, the seller may request the court or arbitration institution to reduce it appropriately. The adjudicating institution generally bases its decision on the actual losses, taking into account factors such as the performance of the contract, the degree of fault of the parties, and the expected benefits, and follows the principles of fairness and good faith to determine a reasonable amount of the penalty.

Q3: Can I claim both the penalty fee and the actual losses at the same time?

It should be noted that the breach of contract penalty should not be calculated twice. The breach of contract penalty itself has the function of compensation and punishment. If the breach of contract penalty is sufficient to compensate for the losses, it is generally not necessary to claim the same part of the losses separately; if the breach of contract penalty is lower than the actual losses, it can be requested to increase to the level of losses. Whether they can be used together depends on the content of the agreement and the nature of the losses, so as to avoid making repeated claims for the same losses.

Q4: If the seller refuses to sell, can I demand that they continue to fulfill their obligations?

This can be claimed, but certain conditions must be met. The buyer may request the seller to continue to perform the contract and assist in handling the transfer of ownership. If the house has been sold to a bona fide third party and the registration has been completed, or if there are other obstacles to performance, it may be difficult to enforce the contract. In this case, the buyer can instead claim damages for breach of contract and compensation for losses. The choice of which request to make should be based on the ownership status of the house and practical feasibility.

Q5: Is the pandemic considered an act of force majeure?

Not necessarily. It depends on a case-by-case analysis. Whether the epidemic or control measures constitute force majeure and whether exemption from liability is possible depends on the causal relationship between them and the breach of contract, the extent and duration of the impact, and whether the obligated party promptly notified and provided evidence. In practice, courts will review whether the actual impact of the epidemic on construction and delivery results in an inability to perform, rather than granting exemption from liability without exception. Therefore, claiming force majeure requires sufficient evidence.

The above answer is based on the judicial practice in Beijing. The judicial interpretations in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials to avoid missing the statutory time limit.Legal services for real estate transactions·Attorney Tian Jiayan·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.