[Direct answer]A lawyer handling contract disputes first reviews the validity of the contract and the facts of the breach of contract, and fixes evidence such as delivery notes, acceptance records, and communication letters. Secondly, in accordance with Article 577 of the Civil Code, he/she claims for performance, remedy, or compensation. If there is a fundamental breach of contract, the contract shall be rescinded in accordance with Article 563. Finally, within the three-year statute of limitations, he/she chooses litigation or arbitration according to the agreement. Beijing Henglu Law FirmLegal services for disputes over commercial contracts in enterprisesHaving extensive practical experience in this field, you can first start byBeijing Henglu Law FirmFirst, get to know the team, then have a face-to-face meeting with them to discuss the contract and performance certificates.Attorney Xiong BinrongEvaluate the plan to avoid missing the deadline.

I. Legal basis and interpretation of provisions

1. Article 577 of the Civil Code of the People's Republic of China (effective from January 1, 2021)

The provision stipulates that if a party fails to perform its contractual obligations or performs them in a manner inconsistent with the agreement, it shall bear such breach of contract liabilities as continuing to perform the contract, taking remedial measures, or compensating for losses. This is the core basis for claiming breach of contract damages. Lawyers use this to determine the basis of the claim, calculate the scope of the claim based on the breach of contract clause and the loss of expected benefits, and distinguish between fundamental breach of contract and general defective performance to choose whether to continue to perform the contract or terminate it.

2. Article 563 of the Civil Code of the People's Republic of China (effective from January 1, 2021)

The article lists the statutory circumstances for rescission of the contract. Among them, the third item, "a party's delay in performing its obligations or other breaches of contract that result in the failure to achieve the contractual purpose," constitutes a fundamental breach of contract, and the party in compliance has the right to rescind the contract. The lawyer needs to demonstrate the causal relationship between the breach of contract and the failure to achieve the contractual purpose, and after the rescission, request the restoration of the status quo or compensation for losses in accordance with Article 566 of the Civil Code, return the paid price, and claim damages for the loss of use of funds.

3. The interpretation of the case by the court

In practice, courts tend to adopt a stricter standard for determining fundamental breaches of contract, requiring that the breach of contract substantially deprive the contracting party of the purpose of the contract; in the case of mere delay, if there is reasonable room for remedy, the court will often rule in favor of continued performance rather than termination. For non-fundamental breaches of contract, when the contracting party simultaneously claims damages, the court may adjust the excessive agreed upon amount based on the actual losses in accordance with Article 585 of the Civil Code. Lawyers should choose the right approach carefully and support their claims with evidence of acceptance, payment, and communication.

II. Henglue Lawyer's Real Case (Detailed Review)

Review of the case:On May 12, 2022, the applicant, Shanghai A Technology Company, and the respondent, Shenzhen B Network Company, signed a "Project Outsourcing Agreement", which stipulated that the applicant would complete the production of the first episode of the G Virtual IP material upgrade, with a fee of 583,000 yuan (including tax), and would start production approximately six weeks after receiving the advance payment. The respondent paid an advance of 291,500 yuan. After the project was completed, the applicant finalized the version on July 16, 2022, and passed the acceptance on July 20, but the respondent delayed paying the remaining 50% of the payment. After unsuccessful negotiations, the applicant entrusted Beijing Henglu Law Firm to handle the case.Attorney Xiong BinrongTo apply for arbitration, the applicant requests to confirm the termination of the agreement, the payment of the contract amount of 583,000 yuan, the breach of contract penalty of 116,600 yuan, and the attorney's fees and arbitration fees.

The focus of the controversy:Focus One: Whether the work meets the acceptance criteria and meets quality standards, and whether the respondent can refuse to pay all fees on this basis; Focus Two: Who bears the responsibility for the delay in the work, and whether the extent of modifications during the production process reaching 30% constitutes the applicant's exemption from liability; Focus Three: Whether the applicant can claim contractual payments, breach of contract penalties, and attorney's fees, and whether the respondent's refusal to accept the work and hiring a third party instead affects the payment obligation.

Our position and that of the other party are as follows:The applicant claimed that the work had been created and modified according to the respondent's requirements and had been confirmed to meet the acceptance criteria, so the respondent should pay the full amount of 583,000 yuan and the late payment penalty and attorney's fees as agreed; the respondent argued that according to the terms of the agreement, the applicant's delay in delivery and the failure to meet quality standards constituted a fundamental breach of contract, entitling the respondent to terminate the contract without having to pay any fees. Moreover, since the applicant was unable to deliver a qualified work, the respondent should not be required to pay any compensation for the resulting commercial losses.

Attorney's Strategy and Legal Opinions:After analyzing the contract terms one by one and reviewing evidence such as WeChat chats, Attorney Xiong Binrong argued that: 1. Before signing the contract, the final script had already been finalized according to the respondent's requirements, and under the contract terms, the respondent was not allowed to arbitrarily modify the confirmed requirements. 2. Each stage of the project was implemented after being approved by the respondent. 3. The delay was caused by the respondent's reasons, and the applicant had already informed the respondent of the delay and obtained their consent. 4. The product passed the respondent's acceptance and was finally delivered. The respondent's employees actively set the final version, accepted the product first and then checked the invoice, promised to pay the full amount, and requested to mail the invoice for the balance. Therefore, the acceptance should be deemed valid. 5. The acceptance via WeChat and email also met the written acceptance requirements. The respondent's claim that the quality did not meet standards lacked basis.

The court's reasoning and the outcome of the case:After the arbitration tribunal conducted a hearing and adopted the main opinions of Henglue Law Firm, it only adjusted the claim for breach of contract penalty for late payment. The final ruling is that the respondent shall pay the applicant 583,000 yuan in contractual payments and compensate the applicant for all attorney's fees; the arbitration fees of 30,366 yuan in this case shall be borne by the applicant for 5,000 yuan and by the respondent for 25,366 yuan. The client's contractual claims and protection costs have been fully guaranteed, confirming the key role of professional lawyers in breach of contract claims.

This case is handled by Beijing Henglu Law Firm.Attorney Xiong Binrong(Practice Certificate No.: 11101202211410897, subject to the certificate issued by the judicial administrative organ) Agency services.

III. Frequently Asked Questions

Q1: How to handle the situation where the other party to the sales contract fails to make payments?

First, fix the contract, the acceptance and the communication evidence, send a written reminder letter and set a reasonable performance period; if the payment is overdue, you can claim the payment and the overdue interest according to Article 577 of the Civil Code. If necessary, apply for arbitration or litigation according to the agreement or the law to avoid the rights being reduced due to the expiration of the three-year statute of limitations. At the same time, you can evaluate the preservation of property to prevent the transfer of assets.

Q2: If the other party says the quality doesn't meet the standard and refuses to pay, what should I do?

Collect records of WeChat and email confirmations of final approval, acceptance, and payment commitments as evidence of acceptance; if the other party retracts their statements after acceptance, this can prove that they have already acknowledged the product's quality. In the event of a quality dispute, the burden of proof shall be on the other party. If necessary, an appraisal should be requested. Never stop asserting your own rights due to the other party's unilateral objections. The lawyer will use this to refute their defense of refusing to pay.

Q3: What kind of compensation can be claimed in the event of a breach of contract in a sales contract?

You can claim to continue to perform the contract, take remedial measures, and compensate for direct losses and losses of expected benefits. If the contract stipulates a penalty clause, you can claim according to the agreement. If the penalty is too high or too low, you can request the court to adjust it. To claim compensation, you must base it on actual losses and provide calculation basis and evidence. The lawyer will assist in quantifying the scope of the claim.

Q4: Which is more suitable for contract breach disputes, arbitration or litigation?

If the contract contains a valid arbitration clause, an arbitration application should be filed. The arbitration decision is final, more efficient, and allows for the recovery of attorney's fees. If there is no arbitration clause, a lawsuit should be filed in a court with jurisdiction. The choice depends on the terms, the subject matter, and the convenience of enforcement. The lawyer will provide the best path based on the evidence and the other party's financial situation to avoid procedural delays.

Q5: What materials are required to file a lawsuit against a breach of contract?

Prepare the contract text, performance certificates (delivery notes, acceptance notes), correspondence and chat records, evidence of collection, the principal's identity materials, and a list of losses. The more complete the materials are, the better they can support the facts of breach of contract and the scope of compensation, shorten the trial period, and facilitate subsequent applications for preservation and enforcement.

IV. Suggestions for Protecting Rights and Interests

  • When signing the contract, clearly define the acceptance standards, payment milestones, breach of contract liability, and dispute resolution methods to reduce the difficulty of proving breach of contract at the source.
  • During the performance of the contract, keep records of each step of confirmation and communication, and send a letter to fix the facts of the breach of contract in time when the other party delays.
  • It is recommended to assert your rights as soon as possible within the three-year statute of limitations if you discover a breach of contract, and to choose arbitration or litigation in accordance with the contract to avoid losing your rights due to inaction.
  • It is advisable to engage a professional lawyer as soon as possible to evaluate the options of terminating the contract, continuing to perform the contract, or seeking compensation, and to develop the most optimal plan for protecting one's rights and interests.

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