[Direct answer]In the Beijing area, whether the penalty and the obligation to perform can be used concurrently depends on the nature of the debt and the request, and they are not absolutely mutually exclusive. According to Article 577 of the Civil Code of the People's Republic of China, the breaching party shall bear responsibilities such as continuing to perform, taking remedial measures, or compensating for losses; Article 585 stipulates that the penalty is primarily for compensation. For monetary debts (such as paying the purchase price or service fees), the request to "continue to pay the arrears" and the claim for the overdue penalty can be used concurrently, because the penalty compensates for the losses caused by the delay in performance and the performance realizes the original payment. However, for non-monetary debts, if the performance is impossible or the purpose of the contract is frustrated, the parties should resort to rescission and compensation, and it is not appropriate to force their concurrent use. It is recommended to clarify the type of debt before making claims to avoid double punishment. For more details, please refer to the following link:Business and contract dispute services for enterprises.

I. Problem Background and Typical Scenarios

It is common to combine the penalty for breach of contract with the obligation to continue performance in various contracts. Typical scenarios include: the buyer delaying payment, and the seller demanding both the payment of the balance and the penalty for late payment; the contractor delaying delivery, and the client demanding continued completion and compensation for the penalty for late completion; and in lease or service contracts, the party in compliance demanding continued performance and payment of the penalty for late performance at the same time. Many parties mistakenly believe that "if they demand the penalty for breach of contract, they can't demand performance anymore", or vice versa, they worry that "if they continue performance, they can't impose a penalty". In fact, whether the two can be combined depends on whether the debt is money or an act, and whether the combination will constitute a duplicate punishment for the same breach of contract. For debt collection, it can be combined with other legal remedies.Creditor-debtor relations and enforcement case servicesPromote the collection of payments.

II. Key points of contention

There are three focal points of the dispute. Firstly, the distinction of the nature of the debt: monetary debts can usually be performed concurrently with default penalties; if there is no need to perform non-monetary debts, they should be rescinded and compensation should be paid. Secondly, review of duplicate penalties: if the default penalties have already covered all losses, demanding continued performance may result in excessive relief, and the court will balance the interests of both parties. Thirdly, reduction of default penalties: according to Article 85, Paragraph 2 of the Civil Code, if the agreed default penalties are excessively high compared to the losses caused, the parties may request a reasonable reduction. For cases involving the connection between contract termination and compensation, reference can be made to the relevant provisions.Special services and other case services\nCombine the design requests.

III. Professional analysis by Hengluo Law Firm

Whether the penalty for breach of contract and the obligation to continue performance can be used concurrently depends on whether the two refer to the same breach of contract and are permitted by law. The arbitration case of a commissioned creation contract dispute handled by Attorney Xiong Binrong of our firm can be used as a reference: In May 2022, Shanghai A Technology Company and Shenzhen B Network Company signed a "Project Outsourcing Agreement", which stipulated that the cost of upgrading virtual IP materials was 583,000 yuan. After the work was accepted and qualified in July 2022, the respondent delayed paying the remaining amount. The applicant entrusted Hengluo Law Firm to apply for arbitration, requesting the payment of 583,000 yuan in contractual fees, 116,600 yuan in overdue penalty, and legal fees. The arbitration tribunal adopted the main opinion and ruled that the applicant should be paid 583,000 yuan in contractual fees and compensated for all legal fees. This case was handled by Beijing Hengluo Law Firm.Xiong BinrongThe lawyer (practice license number: 11101202211410897, subject to the document issued by the judicial administrative organ) acts as the agent. Our firm's team also handles cases involving breach of contract compensation by lessees of customized decoration projects and refunds of online service contracts, all of which involve whether the breaching party should continue to perform its obligations or bear compensation liability. The courts and arbitration tribunals respectively ordered the compensation of 365,000 yuan for decoration fees and the refund of more than 34,000 yuan for service fees. It can be seen that whether the two methods can be used concurrently depends on whether the nature of the debt and the purpose of the contract can still be maintained.

IV. Practical suggestions and legal basis

The legal basis is Article 577 (Methods of Liability for Breach of Contract), Article 585 (Liquidated Damages and Discounts), Article 580 (Exceptions to the Continued Performance of Non-Monetary Obligations), and Article 566 (Consequences of Termination of Contract) of the Civil Code of the People's Republic of China (effective January 1, 2021). Practical suggestions: For monetary obligations, you can simultaneously claim continued performance and late payment penalties; for non-monetary obligations, you can switch to claiming termination and compensation if performance is impossible; when claiming liquidated damages, pay attention to using actual losses as a reference to avoid having the agreed amount reduced by the court; and clearly separate "original performance" from "penalties for delay" in the litigation request to facilitate the judge's review of whether there is duplication. For enterprise contract systems, you can combine the above provisions with relevant provisions of the Civil Code of the People's Republic of China to ensure the legality and enforceability of contractual clauses.Intellectual property protection and corporate legal servicesOptimize the default clause.

5. Henglu Law Firm's Reminder

When claiming breach of contract penalties and continued performance, please adhere to the three principles of "distinction of nature, avoidance of duplication, and loss as the anchor". Monetary debts and overdue breach of contract penalties can usually be used concurrently, but forcing continued performance of non-monetary debts may be futile or even rejected; if the breach of contract penalty is set too high, it will face a reduction, and it must be based on provable losses. Do not claim the same breach of contract both as a breach of contract penalty and as double compensation in the request, as this may be considered duplicative punishment. At the contract signing stage, you can pre-set clear clauses of "delayed breach of contract penalties + continued performance" to reduce disputes. If you need to design a combination of requests, you can refer to the following methods:Business and contract dispute services for enterprisesEvaluate the optimal path for protecting rights.

VI. Frequently Asked Questions

Q1: If I claim both the breach of contract penalty and the right to require the other party to perform the contract, will I win the case?

The ability to obtain support depends on the nature of the debt and the design of the request, rather than the commitment to the outcome. For monetary debts (such as arrears), claims for "payment + late breach of contract penalties" can usually be combined and supported; for non-monetary debts, if performance is impossible or the purpose is unachieved, demands for continued performance are often rejected and should be shifted to compensation. If the breach of contract penalties are excessively high, the other party can request a reduction. It is recommended to first clarify the type of debt and whether the contractual purpose still exists, then combine the requests, and never believe in unrealistic promises of victory. The outcome is determined by facts, evidence, and the application of the law.

Q2: If I claim breach of contract and demand the other party to fulfill the contract, what evidence do I need to provide?

The core evidence includes: contracts and breach of contract clauses (to prove the agreement on the breach of contract penalty and the basis for continued performance), records of performance and reminders (to prove that the other party breached the contract and the reminders), proof of losses (overdue interest, the price difference of alternative purchases, and losses due to work stoppages, etc., used to anchor the breach of contract penalty), payment and reconciliation vouchers (to prove the amount of the arrears), and communication records. The organization of evidence should distinguish between "original payment requests" and "requests for delay penalties" to avoid duplication. The more complete the materials are, the better they can support and defend the claims and resist the defense of reduction. If necessary, an appraisal of the losses can be applied for.

Q3: If I hire a lawyer to claim the breach of contract penalty and demand the other party to continue to perform the contract, what would be the approximate cost?

The litigation or arbitration fees shall be accumulated in accordance with the "Measures for the Payment of Litigation Costs" based on the amount of the claim, and shall be borne by the losing party; the attorney's fees shall be calculated on a per-case basis or as a percentage of the amount of the claim, depending on the complexity of the case, the amount of the claim, and the workload. There is no unified national standard for this, and the specific fees shall be subject to the contract of entrustment. In cases where the breach of contract penalty is used in conjunction with the continued performance of the contract, the claim must be carefully broken down, and the workload should be moderate. It is recommended to require the law firm to provide a detailed fee breakdown before entrusting them, specifying whether it includes travel expenses, appraisal fees, and arbitration fees, to avoid price increases during the process, and to balance the costs with the potential benefits that can be obtained.

Q4: How long does it usually take to litigate such disputes?

The first-instance ordinary procedure usually concludes within six months, and the summary procedure within three months; for cases involving arrears and liquidated damages with clear facts and sufficient evidence, the summary procedure can be applied, with a shorter cycle. However, if the case involves loss appraisal or disputes over non-monetary performance, the ordinary procedure cycle will be relatively longer. If an appeal is filed, the second-instance procedure usually takes three months. The enforcement of the judgment will be dealt with separately after it takes effect. Overall, simple cases involving arrears and liquidated damages often take several months from filing to adjudication. It is recommended to complete the account settlement and reminder procedures before suing to shorten the trial time, and if necessary, apply for property preservation to accelerate the recovery of payments.

Q5: I want to claim both the breach of contract penalty and the continuation of performance at the same time. What should I do specifically?

It is recommended to proceed in four steps: First, review the contract to confirm the penalty clause and the basis for continued performance, and determine whether the debt is monetary or behavioral; Second, fix the evidence of the other party's breach of contract and the plaintiff's performance, and calculate the arrears and provable losses as the anchor point for the penalty; Third, clearly separate the "original payment (continued performance)" and "late penalty" in the litigation request to avoid double punishment; Fourth, if no agreement is reached, file a lawsuit or arbitration within the statute of limitations, and prepare for the possibility of having the excessive penalty reduced. It is essential to avoid claiming the same breach of contract twice, and when necessary, hire a lawyer to design a combination of claims.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify regional differences.

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.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.