[Direct answer]In the Beijing area, if both parties violate the contract, the losses will not be shared equally, but will be apportioned according to their respective faults and causalities. According to Article 592 of the Civil Code, if both parties violate the contract, they shall bear corresponding responsibilities; if one party suffers losses due to the other party's breach of contract and the other party is at fault for the occurrence of the losses, the corresponding compensation amount may be reduced. Whether the liability can be mitigated depends on the degree of breach of contract by both parties, the causality and the mitigation of losses. The key is to provide evidence that the party's breach of contract is minor and the other party's fault is greater. It is recommended to fix the evidence of both parties' breach of contract, clarify the causality, and then negotiate or litigate the apportionment. For more details, please refer to the following link:Business and contract dispute resolution services for enterprises.

I. Problem Background and Typical Scenarios

It is not uncommon for both parties to breach the contract during its performance, especially in the case of long-term contracts that rely on mutual cooperation. Typical scenarios include: the buyer delaying payment, the seller simultaneously delaying delivery, and both parties blaming each other; the project employer failing to provide the site on time, and the contractor suspending work, resulting in mutual losses; and in sales contracts, the seller delivering substandard goods and the buyer refusing to pay the full amount. Many parties mistakenly believe that "if I also breach the contract, I have no right to claim compensation," or that "the other party should compensate for all losses if they are at fault first." In fact, under the circumstances of both parties' breach of contract, each party can still claim for their own losses, but the compensation will be apportioned according to the degree of fault, rather than a lump sum. Relevant engineering and sales disputes can be combined together for settlement.Creditor-debtor relations and enforcement case servicesEvaluation.

II. Key points of dispute

There are three focal points of the dispute. Firstly, determination of breach of contract: whether both parties have breached the contract, and the form and severity of each party's breach of contract, which need to be proved separately. Secondly, causality and proportion of fault: who caused the loss and the degree of causality determine the apportionment of compensation. Thirdly, the obligation of mitigation: whether the injured party took timely measures to mitigate the loss, and the unmitigated part cannot be claimed. For the determination of complex performance nodes, reference can be made to the relevant provisions of the contract.Special services and other case services.

III. Professional analysis by Hengluo Law Firm

The arbitration case of the commissioned creation contract dispute handled by Beijing Henglu Law Firm sheds light on the practical logic of breach of contract and liability determination between the two parties. In May 2022, Shanghai A Technology Company and Shenzhen B Network Company signed the "Project Outsourcing Agreement", which stipulated the production of G virtual IP materials for upgrading, with a cost of 583,000 yuan. After the work was accepted and qualified in July 2022, the respondent delayed paying the remaining amount. The applicant entrusted Attorney Xiong Binrong of Beijing Henglu Law Firm to apply for arbitration, requesting the confirmation of the termination of the agreement, the payment of the contract amount of 583,000 yuan, the penalty of 116,600 yuan, and the attorney fees and arbitration fees. The focus of this case lies in whether the work was accepted and qualified, the attribution of the responsibility for the delay, and whether the respondent could refuse to pay. Based on the contract terms and WeChat chat records, Attorney Xiong Binrong argued that the work was gradually confirmed and accepted, and the delay was caused by the respondent's modification, so the respondent should pay the full amount. The arbitration tribunal adopted the main opinion and ruled that the respondent should pay the contract amount of 583,000 yuan and compensate all the attorney fees. The arbitration fees of 30,366 yuan would be shared by both parties (the applicant would bear 5,000 yuan and the respondent would bear 25,366 yuan). This case reminds us that when there are disputes over the performance of the contract, both parties should fix the evidence around the acceptance, modification, and payment milestones to clarify their respective responsibilities. This case was handled by Beijing Henglu Law Firm.Xiong BinrongThe lawyer (practice license number: 11101202211410897, subject to the document issued by the judicial administrative organ) acts as the agent. For matters involving contract negotiations and remedies for breach of contract, a follow-up service can be providedSpecial services and other case services.

IV. Practical Suggestions and Legal Basis

The legal basis is Article 592 of the Civil Code of the People's Republic of China (effective January 1, 2021) (both parties shall be responsible for their respective breaches of contract and the faults shall be offset against each other), Article 591 (rule of mitigation) and the general provisions on breach of contract liability. Practical suggestions: During the performance of the contract, separately fix the evidence of the facts and the degree of breach of contract by both parties; make corrections and keep evidence for the breach of contract by oneself as much as possible, and send a letter to claim compensation for the breach of contract by the other party in time; mitigate the losses immediately to avoid the unsupported part of the losses being expanded; if the parties cannot reach an agreement on sharing the losses, they shall litigate according to the proportion of fault. For matters related to the management of contract performance, they can be combined with other relevant provisions of the Civil Code of the People's Republic of China.Business and contract dispute resolution services for enterprisesAdvance.

5. Henglu Law Firm's Reminder

The breach of contract by either party does not mean that "both sides cancel each other out and accept their losses". The first step is to sort out the facts and time points of the breach of contract by both parties and fix the evidence; the second step is to evaluate the proportion of each party's fault and the causality, and clarify the scope of losses that can be claimed; the third step is to fulfill the obligation of mitigation of losses to prevent the expansion of losses and counterattacks by the other party; the fourth step is to claim compensation according to the proportion of fault in accordance with Article 592 of the Civil Code, rather than a simple 50-50 split. Never give up on claiming compensation just because the other party also breached the contract, nor claim full compensation just because the other party made the mistake first. When the dispute is complex, it is recommended to consult a professional lawyer as soon as possible to clarify the proportion of responsibility and the strategy of evidence collection, and, if necessary, seek assistance through specialized services and other case services.

VI. Frequently Asked Questions

Q1: If both parties breach the contract, can I still demand compensation from the other party?

Yes, but not in full. According to Article 592 of the Civil Code, if both parties breach the contract, each party shall bear corresponding responsibilities; if the other party is also at fault for your losses, the amount of its compensation may be reduced accordingly. In other words, even if you breach the contract yourself, you can still claim compensation for the part of the losses caused by the other party, but your breach of contract will offset the other party's compensation to you. Whether your claim will be supported depends on the degree of breach of contract by both parties, the causal relationship between their actions and the losses, and whether you have fulfilled your obligation to mitigate losses. It is recommended to quantify the proportion of each party's fault before making a claim, rather than giving up just because you are at fault.

Q2: Regarding the allocation of losses for breach of contract between the two parties, what evidence do I need to prepare?

The core evidence includes: contracts and agreed upon performance milestones, evidence of the parties' breach of contract (late notice, records of non-delivery or non-payment), communication letters and meeting minutes, basis for calculating losses and supporting documents, as well as records of mitigation measures. The evidence should be organized around "who breached the contract—the extent of the breach—who caused the losses—whether there was mitigation." It is particularly important to prove that the party's breach of contract was minor, the other party's fault was greater, or the other party's losses were more related to their own actions. The more detailed the materials are, the more favorable the proportion of fault will be; it is crucial not to only prove the other party's mistakes and ignore the party's own breach of contract.

Q3: How much will the attorney fees and litigation costs be for a breach of contract dispute between the two parties?

The litigation fees shall be calculated in accordance with the "Measures for the Payment of Litigation Costs" based on the amount of the litigation request and accumulated in stages. The losing party shall bear the fees in proportion to its liability. The attorney's fees shall be charged per case or based on a percentage of the litigation amount, subject to the specific provisions of the entrustment contract. In cases involving breach of contract, it is often necessary to provide detailed evidence and expert opinions. It is recommended to first estimate the net loss that can be claimed (after deducting the party's own liability) and then compare it with the cost of protecting rights. In property-related civil and commercial cases, contingency fees are subject to a percentage cap. It is essential to clarify the fees in writing before entrusting the attorney to avoid a cost inversion that could affect the decision to protect rights.

Q4: How long does it usually take for litigation over breach of contract between the two parties to reach a conclusion?

The first-instance ordinary procedure shall be concluded within six months, and the summary procedure within three months; if the facts of the breach of contract between the parties are intertwined and require appraisal, the process will be longer. If an appeal is filed, the second-instance procedure generally takes three months. Overall, it often takes more than half a year to a year from the filing of a lawsuit to the issuance of a judgment. It is recommended to apply for property preservation and evidence preservation simultaneously during the litigation to fix the performance milestones and losses and shorten the evidence-gathering period. There is a large room for mediation. Negotiating according to the proportion of faults is often more efficient than a judgment, and it can be tried first. It can be combined with other methods.Business and contract dispute resolution services for enterprisesPromote mediation.

Q5: If I get into a dispute over a breach of contract between the two parties, what should I do first?

It is recommended to follow four steps: First, immediately sort out the contract performance timeline and list the facts and key points of the breach of contract by both parties; Second, fix the evidence - notifications, letters, delivery and payment records, and loss certificates, and prove that the party has mitigated its losses; Third, assess the proportion of each party's fault and the net losses that can be claimed, to avoid blindly demanding full compensation; Fourth, first negotiate the apportionment of responsibilities according to the proportion of fault, and if no agreement is reached, sue and let the court make a judgment. It is recommended to consult a lawyer throughout the process to clarify the boundaries of responsibilities and the focus of evidence collection, and to prevent being completely passive due to the lack of evidence of the party's breach of contract.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Hengluo Law Firm for specific cases.

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 current effective laws and regulations and publicly available 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. In the event of a dispute, please consult a practicing lawyer in a timely manner.