[Direct answer]In the Beijing area, it generally includes actual losses and losses of foreseeable benefits, but is subject to restrictions such as foreseeable rules. According to Articles 577 and 584 of the Civil Code of the People's Republic of China (effective January 1, 2021), if a party fails to perform its contractual obligations or performs them in a manner inconsistent with the contract, causing losses to the other party, the amount of compensation for the losses shall be equivalent to the losses caused by the breach of contract, including the benefits that could have been obtained after the performance of the contract; however, it shall not exceed the losses that the breaching party could have foreseen or should have foreseen when entering into the contract. In addition, after a party breaches the contract, the other party shall take appropriate measures to prevent the expansion of losses. If the other party fails to take measures and causes the expansion of losses, it shall not request compensation for the expanded losses. Therefore, the compensation for losses generally includes actual losses and foreseeable benefits, and is subject to the rules of mitigation and causality.

I. Problem background and typical scenarios

The scope of compensation for breach of contract is a core dispute in contract disputes. In practice, the party in compliance often claims to include direct losses, expected benefits, and expenses incurred in protecting their rights, while the party in breach claims that the losses are excessive, unforeseeable, or unrelated to the breach of contract. When handling contract disputes in Beijing, the court will review the composition, amount, and causality of the losses, and determine the scope of compensation in accordance with the rules of foreseeability and mitigation to avoid excessive or insufficient compensation. Distinguishing between actual losses and expected benefits is the basis of the claim, and the adequacy of the evidence directly affects the determination of the losses.

II. Key points of contention

There are four points that need to be clarified: firstly, what items constitute actual losses; secondly, the criteria for determining the loss of anticipated benefits; thirdly, the application of foreseeable rules; and fourthly, the impact of the mitigation rule and the offsetting of negligence. Generally, compensation is limited to actual losses and anticipated benefits, subject to the constraints of causality, foreseeability, and the obligation to mitigate losses. When making a claim, evidence should be provided item by item. Whether the evidence is sufficient directly affects the determination of the scope of losses. Parties should provide evidence regarding the composition of losses and causality, and may apply for an assessment or audit if necessary.

III. Professional analysis by Henglue Lawyers

When handling breach of contract compensation cases, Henglue Lawyers typically analyze losses from four aspects. First, actual losses: including expenses incurred in performing or preparing to perform the contract, damage to or reduction in the value of the subject matter, reasonable expenses incurred to mitigate losses, and compensation liabilities assumed to third parties due to the breach of contract, which must be supported by invoices and contracts. Second, expected benefits: referring to the benefits that could have been obtained if the contract had been performed, such as resale price differences and operating profits, typically requiring proof of their certainty, predictability, and causality, with the assistance of appraisals or audits when necessary. Third, limitation rules: reviewing whether the breaching party could have foreseen the scope and type of losses when entering into the contract, and whether the contract-abiding party fulfilled its obligation to prevent the expansion of losses. Fourth, amount determination: determining the amount based on evidence and reasonable calculation methods to avoid claiming based on unilateral estimates. In practice, the completeness of the loss composition and causality are key to compensation.

IV. Practical Suggestions and Legal Basis

Action recommendations: First, distinguish between actual losses and losses of potential benefits, list them item by item and prepare evidence; Second, keep expense receipts, contracts, transaction records, and evaluation reports; Third, pay attention to foreseeable rules, and the claimed losses should be causally related to the breach of contract; Fourth, fulfill the obligation of mitigation of damages to avoid the enlargement of losses not being supported due to the failure to take measures. For contract disputes, you can refer to the relevant provisions of the Contract Law of the People's Republic of China.Business and contract disputes in enterprisesFor matters involving creditor's rights, debts, and enforcement, you can refer to the following resources for more information:Creditor's rights and debts, and enforcementLegal basis: Articles 577, 584, and 591 of the Civil Code of the People's Republic of China (effective as of January 1, 2021) and related provisions. The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

Firstly, compensation for losses generally includes actual losses and losses of potential benefits. Secondly, the compensation shall not exceed the scope that the breaching party could foresee when entering into the contract. Thirdly, the party in compliance with the contract shall take measures to prevent the losses from expanding. Fourthly, the party claiming compensation shall provide evidence for each item and explain the causal relationship. In the case of contract disputes, the parties may resolve the disputes through negotiation or arbitration.Business and contract disputes in enterprisesThe service is supported, and those who have questions about creditor's rights enforcement can refer to it for referenceCreditor's rights and debts, and enforcementColumn.

VI. Frequently Asked Questions

Q1: What exactly does the compensation for losses cover?

It generally includes actual losses and losses of potential benefits. Actual losses include the expenses incurred in performance, the reduction in the value of the subject matter, and the reasonable expenses incurred to mitigate losses; potential benefits refer to the benefits that could have been obtained after the performance of the contract. The total amount of compensation shall not exceed the losses that the breaching party could have foreseen or should have foreseen at the time of entering into the contract.

Q2: How is the expected profit calculated?

The anticipated benefits generally refer to the benefits that could have been obtained if the contract had been performed, such as the resale profit margin, operating profits, etc. When claiming these benefits, it is necessary to prove their certainty, predictability, and causality. This can be supported by evaluations, audits, or the profit margins of similar transactions. The calculation method should be reasonable and avoid relying solely on unilateral estimates.

Q3: What are predictable rules?

The foreseeable rule stipulates that the compensation shall not exceed the losses that the breaching party could or should have foreseen at the time of entering into the contract due to the possible breach of contract. The scope and type of losses should be within the foreseeable range. If the losses are special and the breaching party cannot foresee them, the claim may not be supported. When making a claim, the relationship between the losses and the content of the contract and the transaction background should be explained.

Q4: What is the obligation to mitigate damages?

After the breach of contract occurs, the party in compliance shall take appropriate measures to prevent the loss from expanding; if the party fails to take appropriate measures and causes the loss to expand, it shall not request compensation for the expanded loss. The reasonable expenses incurred by the party in compliance for mitigating the loss shall be borne by the party in breach of contract. Therefore, after the breach of contract occurs, the party in compliance should take remedial and loss-prevention measures in a timely manner and keep records of them.

Q5: Can I ask for the lawyer's fees?

Generally, there needs to be a contractual agreement or legal basis. If the contract explicitly stipulates that the defaulting party shall bear the costs of protecting rights, or if the law allows such a claim, it can be requested together with the need to provide proofs such as the service contract and invoices. Without such an agreement, it is usually difficult to obtain support for the losses caused by the breach of contract, so it is recommended to explicitly stipulate it in the contract when signing it.

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 limits. →Corporate commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public 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.