[Direct answer]Contract disputes can be reported and protected through five steps: 1. Send a written notice to the other party demanding performance within a specified time limit and retain the relevant evidence. 2. Engage in negotiation or apply for people's mediation or industry mediation. 3. File a complaint or report with the market supervision and management department (12315) or the industry regulatory authority. 4. If the contract contains an arbitration clause, apply for arbitration with the designated arbitration commission, with the arbitral award being final and binding. 5. File a lawsuit with the court located in the defendant's domicile or the place of contract performance. According to Article 577 of the Civil Code of the People's Republic of China, the defaulting party shall bear responsibilities such as continuing performance, taking remedial measures, or compensating for losses. The statute of limitations for civil rights protection is three years (Article 188). Lawsuits must meet the conditions stipulated in Article 122 of the Civil Procedure Law of the People's Republic of China. For more solutions, please refer toBusiness Services｜Contract Dispute Resolution ServicesAndBeijing Henglu Law Firm.

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)

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, taking remedial measures, or compensating for losses. This is the substantive basis for contract complaints and claims: whether lodging a complaint with an administrative authority or suing in court, the core is to prove the other party's breach of contract and quantify the losses. The key evidence includes the contract text, performance documents such as delivery notes, acceptance notes, and transfer records, as well as reminder letters and chat records; the other party often defends itself by claiming force majeure or that the plaintiff breached the contract first. Therefore, it is necessary to fix the counter-evidence in advance and form a complete chain of evidence before lodging a complaint or suing for damages.

2. Article 122 of the Civil Procedure Law of the People's Republic of China (amended on September 1, 2023)

The lawsuit must meet four conditions: the plaintiff is a citizen, legal person or other organization with a direct interest in the case; there is a clear defendant; there are specific litigation requests and facts and reasons; and it falls within the scope of civil litigation accepted by the court and within the jurisdiction of the sued court. Contract disputes are subject to the jurisdiction of the court at the defendant's residence or the place of performance of the contract. When the complaint fails and the case is transferred to litigation, the subject and jurisdiction are the focus of the case filing review: if the subject of the complaint is inconsistent with the contractual counterparty, or the jurisdiction agreement is unclear, it will slow down the progress. Before suing, the lawyer should check the validity of the subject information and the dispute resolution clauses.

3. Practical adjudication guidelines

The administrative authorities mainly handle contract-related complaints through mediation and investigating and punishing illegal acts, and cannot directly order payment. Mediation agreements can be applied for judicial confirmation to grant compulsory enforcement power. The court's approach is as follows: claims of breach of contract with a complete chain of written evidence have a high success rate; for those with only oral agreements and scattered WeChat records, it is necessary to supplement with account verification or performance certificates. For cases with relatively small subject matters, small claims litigation or simplified procedures are applicable, with a significantly shorter timeframe; for cases involving malicious default or where the debtor's whereabouts are unknown, timely applying for property preservation measures is more effective in deterring them. Most cases result in voluntary settlements after the debtor's accounts are frozen.

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

Review of the case:From 2021 onwards, XX Decoration Co., Ltd., a sole proprietorship, contracted renovation projects and assigned part of the labor services to Lu * for completion, establishing a labor contract relationship between the two parties. On January 19, 2022, the two parties signed the "Payment Details for Project Funds", confirming the total settlement amount for the three projects at 200,000 yuan, with an agreement to pay 100,000 yuan before January 26, 2022 and to settle the remaining balance of 100,000 yuan before April 30, 2022. If the payment was not made on time, interest would be calculated at an annual rate of 24%. Lin * was the legal representative and sole shareholder of the company. On January 26, 2022, Lin * paid 100,000 yuan to Lu * from his personal account, but the remaining 100,000 yuan was not paid despite repeated demands. Lu * entrusted Attorney Qiu Juan of Beijing Henglu Law Firm to file a lawsuit in court, requesting an order to pay the labor fees of 100,000 yuan and the overdue interest.

The focus of the controversy:Firstly, the defendant claimed that he had already paid 62,600 yuan to the third party, Yang Mou, on behalf of Lu Mou. Should this amount be deducted? Secondly, should Lin Mou, the sole shareholder of the company, bear responsibility? Thirdly, is the agreed overdue interest rate of 24% per annum too high?

Our position and that of the other party are as follows:Lu * claimed that the company should pay the remaining labor fees of 100,000 yuan and interest; the company and Lin * argued that the 62,600 yuan paid on behalf of him should be deducted, and only agreed to pay 37,400 yuan. They also argued that the annual interest rate of 24% was too high, and that Lin *'s signature was an act of performing his duties, so he should not be held personally responsible.

Attorney's Strategy and Legal Opinion:Attorney Qiu Juan pointed out that the labor relationship and settlement agreement between the two parties are legal and valid; as for the so-called payment on behalf of others, Lu * was unaware of and did not approve of it. The defendant has no evidence to prove that there is a creditor-debtor relationship between Lu * and Yang *. Moreover, the payment was made earlier than the maturity of the creditor's rights, and there is no evidence of subrogation rights. Therefore, the deduction should not be made. The court called the witness Xie * to testify that Yang * only appeared at the construction site in the capacity of a supervisor. As for the interest, the parties expressly agreed that the overdue payment would be settled at an annual interest rate of 24%, and this claim is legally justified.

The court's reasoning and case handling results:The court adopted the lawyer's opinion and determined that the defendant's claim for the payment on behalf of others lacked basis and should not be deducted. The court ruled that XX Decoration Co., Ltd. should pay Lu * a labor fee of 100,000 yuan and interest (calculated at an annual interest rate of 24% based on 100,000 yuan). This case illustrates the probative force of written settlement agreements and payment deadlines, and also highlights the supporting role of overdue interest clauses in debt recovery. Signing settlement documents is the best preparation for filing complaints and lawsuits.

This case is handled by Beijing Henglu Law Firm.Qiu JuanThe attorney (practice license number: 11101201811026953, subject to the document issued by the judicial administrative organ) acts as the agent.

III. Frequently Asked Questions

Q1: After filing a complaint, the other party still refuses to pay. What should I do next?

Administrative complaints and mediation do not have compulsory enforcement force. If the other party still fails to perform its obligations, the case should be transferred to litigation or arbitration as soon as possible. For applications with arbitration clauses, the case should be submitted to the arbitration institution; for those without such clauses, the case should be filed with the court at the defendant's domicile or the place of performance of the contract. When filing the lawsuit, the plaintiff can simultaneously apply for property preservation to freeze the other party's accounts. In many cases, the other party will voluntarily reach a settlement under the pressure of property preservation. If the other party refuses to perform its obligations after winning the lawsuit, the plaintiff can apply for compulsory enforcement. For example, in the above-mentioned case, after the court ruled that the company should pay 100,000 yuan and interest, the plaintiff could apply for enforcement according to law to recover the money.

Q2: Can I still file a complaint and initiate legal action even without a written contract?

Yes. A contract can be concluded in writing, orally, or in other forms. The key is to form a chain of evidence: delivery notes, receipt notes, transfer records, WeChat chats, reconciliation statements, audio recordings, and witness testimonies can all prove the contractual relationship and the performance of the contract. It is recommended to first send a written reminder or a reconciliation letter to the other party for a response. The other party's confirmatory reply itself is strong evidence. When there is insufficient evidence, it is better to entrust a lawyer to sort out and strengthen the evidence before filing a complaint or lawsuit, which is more effective than being passive about collecting evidence after hastily filing a case.

Q3: How much does it cost to file a complaint or lawsuit for a contract dispute?

Complaining to channels such as 12315 is free of charge. Court litigation fees are charged in stages based on the amount of the claim: for claims under 10,000 yuan, the fee is 50 yuan per case; the fee decreases as the amount of the claim increases; and the fee is halved for cases applying the simplified procedure. After winning the case, the successful party can claim that the losing party bear the costs. Arbitration fees and attorney fees are determined through negotiation between the institution and the individual case; if the contract stipulates that the defaulting party shall bear the attorney fees and preservation fees, these fees can also be claimed together. Generally speaking, for cases with clear objectives and complete evidence, the cost of protecting rights is manageable. However, delaying the process will only result in increasing losses and costs simultaneously.

Q4: How long does it usually take to resolve a contract dispute?

There are significant differences in the litigation process: the negotiation and mediation process can take anywhere from a few days to a few weeks; the small claims procedure is a one-time trial, usually concluded within one to two months; the summary procedure has a three-month time limit, and the ordinary procedure has a six-month time limit, which can be extended according to the law; if the other party appeals, the second-instance trial period will be extended, and the second-instance trial will generally be concluded within three months. Proper use of procedures such as property preservation and judicial confirmation can significantly speed up the process. The specific timeframe depends on the complexity of the case and the cooperation of the other party. The earlier the procedures are initiated, the more proactive the response will be.

Q5: How to prevent the other party from transferring assets during a dispute?

It is possible to apply for property preservation before or during litigation: Pre-litigation preservation requires an urgent situation and irreparable damage if not preserved. After providing a guarantee, the court will make a ruling within 48 hours, and the litigation must be initiated within 30 days after the preservation. Litigation preservation can be applied for after the case is registered. The scope of preservation is limited to the amount of the claim. After the accounts, real estate, and vehicles are sealed, the other party's path of transferring assets is cut off, which also lays the foundation for subsequent enforcement. If there are preservation errors, the applicant needs to compensate the defendant for the losses, so it should be handled by a lawyer after assessment.

IV. Suggestions for Protecting Rights

  • If you discover that the other party has breached the contract, you should promptly send a written reminder and keep the records of express delivery, emails, and WeChat messages. This will not only interrupt the statute of limitations but also establish the fact of the breach of contract.
  • There is a priority in choosing channels: for cases with small amounts and clear disputes, mediation or small claims litigation should be attempted first; for cases with large amounts and the other party having assets, it is advisable to file a lawsuit and apply for preservation of evidence at the same time.
  • The defendant should ensure that all relevant parties, including the contractual counterpart, the guarantor, and the sole shareholder of the company, are thoroughly verified and listed in the lawsuit, in order to avoid the defendant being sued separately in the future.
  • Please note that the statute of limitations for litigation is three years, starting from the date when you become aware of the infringement of your rights and the obligations of the other party. Both the reminder and the lawsuit can interrupt the statute of limitations. If the statute of limitations expires, you will lose the right to win the case. For recovery and enforcement, you can refer to the relevant provisions.Creditor-debtor relations | Enforcement case services.

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 Qiu Juan·Beijing Henglu Law Firm