[Direct answer]In the Beijing area, the breach of contract clauses should clearly stipulate "what constitutes a breach of contract, how much compensation will be paid for a breach of contract, how to terminate the contract, and who will provide evidence". 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 for the breach of contract penalty or the amount of compensation for losses. If the agreed amount is excessively high compared to the actual losses, the court may appropriately reduce it. Articles 86 and 87 establish the penalty clauses for deposits. For second-hand housing transactions, it is recommended to at least stipulate the daily breach of contract penalty standards for late payment and late delivery and transfer of ownership, the right to terminate the contract if the breach continues for a certain period, the obligation to move out of the household registration and hand over the property, the responsibility for taxes, and the burden of legal fees and litigation costs for realizing the creditor's rights. The design of the clauses can be referred to for reference.Property transactions and construction projectsColumn.

I. Problem Background and Typical Scenarios

Such problems often arise in several situations: Firstly, the seller breaches the contract by refusing to sell the house when the housing prices rise, or even selling the same house to two different buyers; Secondly, the buyer fails to obtain the loan approval or makes late payments, and the seller claims to terminate the contract and withhold the deposit; Thirdly, how to calculate the daily accrual of the breach of contract penalty when the seller fails to deliver the house or transfer the household registration on time; Fourthly, disputes over the quality of the house and the delivery conditions; Fifthly, disputes over the breach of contract caused by unclear agreements on who should bear the agency fees and taxes. In Beijing, the transaction volume and amount of second-hand houses are large, and the precision of the breach of contract clauses often directly determines whether the claim can be successfully implemented.

II. Key points of dispute

Focus One: The amount of the penalty: The court usually determines it based on the actual losses, taking into account the performance of the contract and the degree of fault, rather than awarding higher compensation based on a higher written amount. Focus Two: The use of the deposit and the penalty: According to the Civil Code, only one of the two can be claimed for the same breach of contract. Focus Three: The determination of the exercise of the right to rescind the contract: The agreed upon conditions for rescinding the contract must clearly specify the triggering criteria and the notification procedure. Focus Four: Whether performance of the contract and compensation can proceed concurrently. Focus Five: The scope of losses: Whether the housing price difference, agency fees, and loan costs can be included in the compensation. For specific matters, please refer to the currently effective laws and regulations and judicial rulings. For common issues in similar contract disputes, please refer to relevant cases for reference.Business and contract disputes in enterprisesColumn.

III. Professional analysis by Henglue Law Firm

Taking the contract dispute arbitration case handled by our firm as an example, it can be verified that "the more detailed the terms are written, the more solid the basis for claiming compensation will be". On May 12, 2022, a Shanghai-based technology company and a Shenzhen-based online company signed a "Project Outsourcing Agreement", which stipulated a fee of 583,000 yuan and a completion period of about six weeks after the advance payment was received. The other party paid an advance of 291,500 yuan, and the project was accepted on July 20, 2022. However, the remaining 50% of the payment was delayed, and the other party used excuses such as "non-compliance with quality standards" and "delays in delivery" to refuse to pay. Our lawyer Xiong Binrong represented the applicant in the arbitration. Relying on the clear acceptance standards in the contract, the clause attributing responsibility for the delay caused by modifications (the other party made changes amounting to 30% during the production process, and the client was not responsible according to the contract), and the WeChat and email records confirmed at each stage, the lawyer proved that the project was accepted and the responsibility for the delay lay with the other party. The arbitration tribunal adopted the main arguments and ruled that the other party should pay the contract amount of 583,000 yuan and compensate for all legal fees. This case demonstrates that the more specific the provisions on acceptance standards, responsibility for delays, payment deadlines, and cost sharing are, the less disputes there will be when claiming breach of contract liability. In another case handled by our lawyer Zhu Guiying, the court awarded 365,000 yuan in decoration fees based on the confirmation clause stipulating that "if the other party fails to lease for reasons attributable to it, it shall compensate the client for the decoration costs". This also demonstrates the value of clear breach of contract compensation clauses. This case was handled by Beijing Henglu Law Firm.Xiong BinrongThe attorney (practice license number: 11101202211410897, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Action suggestions: First, list all breach of contract scenarios in detail, with penalty standards set for each violation, such as late payment, delayed handover of the property, failure to transfer household registration, and refusal to cooperate with loan signing. Second, match the daily penalty rate with the actual level of losses to avoid exorbitantly high penalties being reduced. Third, set triggering conditions for contract termination, such as exceeding the 30-day deadline or reaching a certain percentage of the total contract price in cumulative penalties, giving the compliant party the right to terminate the contract. Fourth, specify in the deposit clause the applicable circumstances, and stipulate that either the deposit or the penalty clause can be applied. Fifth, agree that the lawyer's fees, litigation costs, and preservation fees will be borne by the breaching party. Sixth, retain payment receipts, reminder letters, and communication records. Legal basis: Article 577 of the Civil Code of the People's Republic of China (effective January 1, 2021) stipulates the forms of breach of contract liability, Article 585 regulates penalties and their judicial adjustment, Articles 586 and 587 set out the rules on deposits, and Article 563 stipulates statutory grounds for termination. Relevant template highlights can be referenced.Special services and other casesColumn.

5. Henglu Law Firm's Advice

Risk Alert: Firstly, the penalty for breach of contract is not necessarily higher the better. If it is excessively higher than the actual losses, the court may reduce it, so you need to prepare evidence of the losses when claiming; Secondly, the notice of termination must be delivered and documented in accordance with the contract, otherwise the effectiveness of the termination will easily lead to disputes; Thirdly, in periods of significant fluctuations in housing prices, it is particularly important to specify the calculation method for the loss of price difference; Fourthly, check the consistency of the online signing version with the supplementary agreement item by item. If you need an assessment of the effectiveness of the clauses in a specific case, you can consult a professional for advice.Beijing Henglu Law FirmIt's a similar column on the official website.

VI. Frequently Asked Questions

Q1: If the seller breaches the contract and refuses to sell the house, can we demand that they continue to fulfill their obligations?

Yes. According to Article 577 of the Civil Code, the party in breach may request the other party to continue to perform the contract, take remedial measures, or compensate for losses. If the house meets the conditions for transfer of ownership and the buyer has paid or is able to pay the purchase price, the court may order the other party to continue to perform the contract and assist in handling the transfer of ownership. If it is impossible to perform the contract or the cost of performance is too high, the court will proceed to rescind the contract, return the deposit, and compensate for losses such as the difference in the value of the house. Before choosing a path, the party should assess the current condition of the house and their own ability to make payments.

Q2: What evidence should be prepared to prove the breach of contract liability for second-hand houses?

The following documents should be prepared: the sales contract and supplementary agreement, online signing information; payment receipts and loan approval materials; reminder letters and delivery records; proof of the other party's breach of contract, such as registration information of one house sold to two buyers, and notification records of delayed delivery; evidence of losses, such as real estate price evaluations in the same period and area, agency fees invoices, and actual loan costs incurred. The more complete the evidence is, the higher the support range for the breach of contract penalty and compensation for losses will be.

Q3: How much does it cost to file a lawsuit against a breach of contract in the second-hand housing market?

The litigation fees are paid in stages according to the amount of the claim. If the claim for compensation for the housing price difference is made, the fees will be correspondingly increased. After winning the case, the losing party will bear the fees or share them proportionally. The attorney's fees are negotiated according to the complexity of the case. If the breaching party is required to bear the fees according to the contract, they can also claim them. If an application is made for property preservation to seize the house, additional preservation fees and guarantee fees will be incurred. It is recommended to make a budget based on the value of the house and the target of the claim first.

Q4: How long does it usually take to resolve a breach of contract dispute involving second-hand housing?

The first-instance ordinary procedure generally lasts no more than six months, and the summary procedure is concluded within three months; those involving appraisal and authentication, and public announcement and service will be extended, and the second-instance procedure takes about three months. For those who claim to continue the performance of the contract, additional time is needed for the transfer of ownership. The key is to apply for preservation of the house status as soon as possible, serve the notices of reminder and termination of the contract according to the agreement, and avoid the repetitive and prolonged procedures.

Q5: How should the breach of contract clauses be stipulated when signing a contract?

It is recommended to grasp the following five points: list the breach of contract situations item by item; use calculable standards such as "a few thousandths of the total price per day" for the breach of contract penalty; set the right of rescission when the cumulative breach of contract reaches a certain limit; stipulate that either the deposit or the breach of contract penalty shall be applied, and specify that the breaching party shall bear the attorney's fees and litigation costs for realizing the creditor's rights. You can add exclusive obligations such as household registration removal and property handover in accordance with the transaction practices, and refer to the relevant key points for more details.Real estate transactions and construction projectsColumn.

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

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Business and commercial legal services·Attorney Xiong Binrong·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.