[Direct answer]In the Beijing area, after the contract is terminated, the party that has not yet performed the contract shall terminate the performance, and the party that has already performed the contract may request the restoration of the original state, take remedial measures, and compensate for the losses. The interest on the arrears falls within the scope of compensation for losses. According to Article 566 of the Civil Code of the People's Republic of China (effective January 1, 2021) and the relevant judicial interpretations on interest calculation, if there is an agreement, the interest shall be calculated according to the agreement; if there is no agreement or the agreement is unclear, the interest shall generally be calculated according to the loan market quotation rate (LPR) announced by the National Interbank Funding Center from the date when the payment is due. For some types of contracts, the standard of default penalty for overdue payment (such as adding a certain percentage to the LPR) may be referred to. It is recommended to check the starting point of interest calculation and the interest rate in the termination agreement and the payment commitment, and to assert claims in a timely manner. For more details, please refer to the following link:Business and contract dispute services for enterprises.

I. Problem Background and Typical Scenarios

After the contract is terminated, "how to calculate the interest on the money" is a frequent dispute. Typical scenarios include: the lease contract is negotiated to be terminated, and the lessor promises to return the deposit but delays it. The lessee asks, "who will pay the interest during this period?"; the sales contract is terminated due to breach of contract, and how to compensate the buyer for the cost of funds during the period when the payment has been made but the goods have not been delivered; and after the termination of the engineering and service contracts, whether the unpaid balance will be charged interest. Many parties only focus on the principal and ignore the considerable losses from interest. For cases involving debt recovery and enforcement, it can be combined with the following aspects:Creditor-debtor relations and enforcement case servicesPromote the collection of payments.

II. Key points of contention

There are three main points of contention regarding interest calculation. Firstly, the starting point: is it the date of contract termination, the date of payment due but not paid, or the date of notice or litigation? This often leads to disputes and requires judgment based on the contract provisions and actual performance. Secondly, the interest rate standard: if there is an agreement, it shall be in accordance with the agreement (but not excessively higher than the losses); if there is no agreement, it shall be in accordance with the LPR or the default penalty standard for overdue payments, which varies depending on the type of contract. Thirdly, the validity of the termination agreement and the payment commitment: the repayment and refund commitments issued after the consultation and termination of the contract, the interest clauses of which are binding on both parties. Defects in the signature do not necessarily invalidate the effectiveness. The relevant rules can be connected accordingly.Business and contract dispute services for enterprises.

III. Professional analysis by Hengluo Lawyers

Take a venue lease contract dispute handled by our firm as an example: The lessee signed a supermarket lease contract with the trading company and paid a deposit of 225,000 yuan and a quality guarantee deposit of 50,000 yuan. Later, the two parties agreed to terminate the contract, and the trading company issued a handover list and promised to make payments, but the payments were delayed. Attorney Wang Dong of Beijing Hengluo Law Firm studied the contract, the handover list, and receipts, and pointed out that the contract was terminated by mutual agreement, and the payment commitment was genuine and effective. The court accepted this view and ruled that the lease was terminated by mutual agreement, ordering the trading company to pay the outstanding debt of 310,000 yuan, return the deposit of 225,000 yuan, and the quality guarantee deposit of 50,000 yuan, totaling 580,000 yuan. This case was handled by Beijing Hengluo Law Firm.Wang DongThe lawyer (practice certificate number: 11101201910090334, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The legal basis is Article 566 of the Civil Code of the People's Republic of China (effective January 1, 2021) (Consequences of rescission: restoration of the status quo ante, remediation, and compensation for losses) and Article 577 (Liability for breach of contract); as well as Article 18 of the Interpretation of the Supreme People's Court on Legal Issues Applicable to the Trials of Disputes over Sales Contracts (amended on December 23, 2020), which stipulates that if there is no agreement on the losses for late payment, the calculation shall be based on the LPR at the time of the breach of contract, plus 30% to 50% of the LPR. Practical suggestions: Specify the starting point of interest, interest rate, and payment method in the rescission or refund agreement; retain payment commitments and reminder records; if the other party delays, promptly sue and claim losses for the occupation of funds. Enterprises can use contract management tools to assist in this process.Business and contract dispute services for enterprisesImprove the terms and conditions.

5. Henglu Law Firm's Reminder

When terminating a contract, don't forget about the hidden loss of "interest". The key points are three: First, clearly specify the starting point and interest rate in the termination agreement or payment commitment to avoid disputes later; Second, if there is no agreement on the interest rate, promptly claim payment according to the LPR or overdue payment standards, rather than just acknowledging the principal; Third, pay attention to the statute of limitations. The longer the delay, the harder it will be to provide evidence. Spelling mistakes in the signature or format flaws do not necessarily negate the validity of the commitment, but the more complete the evidence chain is, the more reliable it will be. In the case of large-scale debts or the other party's malicious delay, it is recommended to hire a lawyer to sue and apply for property preservation as soon as possible. For further information, please refer to the following link:Special services and other case services.

VI. Frequently Asked Questions

Q1: After the contract is terminated, can I definitely get the interest on the unpaid debt that I'm claiming?

It's not necessarily "automatic" to get it, but those with sufficient evidence can usually get support. Interest is a compensation for losses after the contract is rescinded. The court will review whether the rescission is legal and effective, whether the principal of the arrears is established, and whether there is an agreement or can be determined by law on the starting point of interest calculation and the interest rate. If the parties have clearly calculated the interest in the rescission agreement or payment commitment, the court will generally approve it; if there is no agreement, the claimant can claim interest according to the LPR or the standard of default payment penalty from the due date of payment. The key to "winning" lies in evidence - the clearer the rescission documents, commitment letters, and account reconciliation records are, the more stable the interest claim will be. It is recommended that lawyers calculate the supportable interest calculation range before suing to avoid having the claim reduced due to being too high.

Q2: For the interest on the outstanding debt after the contract is terminated, what evidence do I need to prepare?

The core evidence includes: the original contract and the termination agreement (to prove the termination of the relationship and whether interest was agreed upon), the payment commitment or repayment plan issued by the other party (specifying the amount, term, and interest rate), the principal amount of the debt listed in the statement, the reminder letters and communication records (to prove the collection and the starting point), the payment and receipt vouchers, and auxiliary materials proving the loss of funds occupation. The organization of evidence should focus on three points: "the establishment of the debt - the determination of the starting point - the evidence of the interest rate". If there are missing materials, the claimant can refer to the statutory LPR standard, but this must be based on the clear facts of the principal and the termination of the relationship.

Q3: How much will it cost in attorney's fees and litigation expenses to sue for the outstanding debt after it has been discharged?

The litigation fees shall be calculated according to the "Method for the Payment of Litigation Fees" (implemented on April 1, 2007) and accumulated in stages based on the litigation subject matter (principal plus claimed interest). The losing party shall bear the fees. Lawyer's fees are related to the complexity of the case, the subject matter, and the lawyer's qualifications. They are usually charged on a per-case basis or as a percentage of the subject matter, subject to the terms of the engagement contract. There is no unified government pricing for these fees. In some cases, risk-based attorney fees can be agreed upon, but subject to a percentage cap. It is recommended to calculate the total principal and provable interest before suing, compare it with the litigation fees and lawyer's fees, and make rational choices about the obviously unfounded high-interest parts. The focus should be on recovering the recoverable amounts.

Q4: How long does it usually take to resolve a dispute over unpaid debts arising from contract termination?

The first-instance ordinary procedure is generally concluded within six months, and the summary procedure is within three months. For debt disputes with clear facts and little controversy, the summary procedure is often applied, with a shorter timeframe. If the other party appeals, the second-instance procedure generally takes three months. After the judgment takes effect, the enforcement process begins, and the time to recover the payment depends on the debtor's financial status and the effectiveness of the preservation measures. Overall, it often takes several months to more than half a year from filing a lawsuit to recovering the payment in simple debt resolution cases. It is recommended to apply for property preservation to freeze the other party's accounts during the litigation process, which can not only prevent the transfer of assets but also increase the chances of mediation and recovery of payments.

Q5: After the other party terminated the contract, they have been delaying paying the outstanding debt and interest. What should I do specifically?

It is recommended to proceed in four steps: First, understand the termination agreement, payment commitment, and reconciliation records to fix the principal of the arrears and the starting point; Second, send a written reminder and keep the delivery certificate, clearly claiming the principal and the interest calculated according to the agreement or the LPR; Third, if no agreement is reached, sue within the statute of limitations and claim the interest as compensation for losses; Fourth, after the case is filed, apply for property preservation to investigate and control the other party's bank accounts, real estate, and accounts receivable to pave the way for enforcement. Throughout the process, pay attention to keeping communication records and, if necessary, entrust a lawyer to evaluate the interest calculation plan and preservation strategy to avoid leaving the creditor's rights unprotected.

The above Q&A is mainly based on the judicial practice in the Beijing area. There may be differences in the interpretation of the law in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

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

Disclaimer: This article is compiled in accordance with 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.