[Direct answer]If the other party breaches the contract and refuses to compensate, you should first send a written reminder letter to fix the facts of the breach of contract, and then claim compensation for losses or breach of contract in accordance with Articles 577 and 585 of the Civil Code; when suing or arbitrating, you can apply for property preservation to prevent the transfer of property; if the other party still fails to perform after winning the lawsuit, you can apply for compulsory enforcement within two years. The key is to organize a complete chain of evidence around the facts of the breach of contract and the amount of losses.

1. Problem background and typical scenarios

"The other party breaches the contract but refuses to compensate, and delays making a statement" is the most common contractual deadlock faced by businesses: the party in arrears goes missing, tenants who have completed renovations directly breach the contract and "disappear", and the ordering party refuses to pay after receiving the goods. Most parties go through three stages — verbal demands yield no results, messages are met with evasive responses, and when they finally decide to pursue compensation, they find that the other party has transferred assets or shut down the project. Pursuing compensation for breach of contract is a race against evidence and time. The earlier the legal process is initiated, the greater the controllability of assets will be.

II. Key points of contention

  • The facts of breach of contract and the causal relationship: whether the delivered goods passed the acceptance inspection, who was responsible for the failure to conclude the contract, and whether there is a causal chain between the losses and the breach of contract.
  • The scope and amount of compensation: how to claim actual losses, potential profits, and agreed-upon breach of contract penalties, and whether compensation can be granted for parts that are not agreed upon or lack sufficient evidence.
  • The other party's solvency: whether there are enforceable assets, whether the assets have been transferred in advance, and whether it is necessary to apply for pre-litigation preservation or to add additional liable parties.

III. Professional analysis by Henglue Law Firm

A contract dispute case handled by Henglue Law Firm is highly referential: In June 2024, Beijing A Commercial Management Company and Zhang *hai signed a "House Lease Confirmation Letter", agreeing to lease a house in Dongcheng District, with a monthly rent of 83,333 yuan and a lease term of three years. A Company was required to customize the decoration according to its requirements. The confirmation letter clearly stated that "if the lessee fails to lease the house due to his own reasons, he shall compensate the lessor for the decoration expenses". After the decoration was completed and passed the inspection, Zhang *hai delayed signing the formal contract and explicitly stated that he would no longer lease the house.Zhu GuixinAfter the lawyer took over the case, he pointed out that although the confirmation letter was only signed by the defendant, the plaintiff had actually fulfilled the obligation of decoration. The defendant participated in the communication of the plan in the WeChat group several times without raising any objections, which was sufficient to determine that the preliminary contract was established. The defendant repeatedly delayed and refused to sign the contract with excuses such as "fund trusteeship" and "property ownership certificate", which was clearly a malicious breach of contract. The court determined that the preliminary contract relationship was established and the defendant failed to fulfill the preliminary contract obligation, and sentenced him to compensate for the loss of decoration fees of 365,000 yuan; but the expenses such as fire protection and furniture that were not agreed upon in the confirmation letter or lacked sufficient evidence were not supported. It can be seen that the scope of claims is limited by the agreement and evidence, rather than "asking for as much as you want".

IV. Practical Suggestions and Legal Basis

In terms of legal basis, Article 495 of the Civil Code confirms the validity of the reservation contract, and those who fail to fulfill the contractual obligations stipulated in the reservation contract shall bear breach of contract liability; Articles 577 and 585 are the basic basis for claims and breach of contract penalties; Article 188 stipulates a three-year statute of limitations. The operational path is as follows: first, send a notice of default and keep the evidence of delivery; at the same time, investigate the other party's property clues such as real estate, accounts, and equity; when suing or arbitrating, apply for property preservation, and within 30 days after pre-litigation preservation, the plaintiff must formally file a lawsuit, otherwise the preservation will be lifted; if the other party refuses to perform after the judgment takes effect, the plaintiff may apply for compulsory execution within two years, during which the court can investigate and control the other party's property, add them to the list of dishonest people, and restrict their high-consumption behavior. For related procedures, please refer to the relevant provisions.Creditor's rights and debts, and enforcementFor services involving real estate disputes such as leasing and renovation, you can refer to the following information for reference.Real estate transactions and construction projectsService.

5. Henglue Law Firm's Reminder

If you encounter a breach of contract and no compensation is provided, it's best not to wait and see. Both the transfer of property and the passage of time are irreversible. This case is handled byZhu GuiyingAttorney (Practice Certificate No.: 11101202011246828, subject to the certificate issued by the judicial administrative organ) acting on behalf of the client. If you need a customized recovery plan, please feel free to inquire about it.Business and contract disputes in enterprisesService or accessBeijing Henglue Law Firm.

Q1: The other party verbally agreed to compensate, but they've been delaying it. What should I do?

First, formalize the verbal promise in writing: clarify the amount of compensation, the time limit, and the method through letters or WeChat, and ask the other party to reply and confirm. This will form self-admitted evidence. Then, send a formal reminder letter, set a reasonable deadline, and keep the proof of delivery. If the other party still fails to perform, file a lawsuit directly according to Article 577 of the Civil Code or apply for arbitration as agreed. Don't let them keep putting you off with endless excuses like "we'll pay next week". The three-year statute of limitations starts from the date you become aware of the damage to your rights. The other party's financial situation may deteriorate at any time, so it's advisable to prepare for both negotiation and litigation simultaneously. If necessary, secure the assets first.

Q2: Can I freeze the other party's account before filing a lawsuit?

Yes. In urgent situations where failure to immediately apply for preservation of evidence will cause irreparable damage to their legitimate rights and interests, they may apply to the court for pre-litigation preservation before filing a lawsuit. Generally, they must provide a guarantee and file a lawsuit or apply for arbitration within 30 days after taking preservation measures, otherwise the court will lift the preservation order. They can also apply for preservation during the litigation process. Before applying, they should try to obtain clues about the other party's accounts, real estate, vehicles, equity, and other assets to ensure accurate seizure. If the preservation order results in losses for the other party, the applicant must also bear compensation liability. It is recommended to proceed after obtaining a lawyer's assessment.

Q3: Is it better to claim a higher amount of compensation?

No. The amount of the litigation request directly determines the amount of the case acceptance fee paid in advance. Any part that clearly exceeds the scope supported by law and evidence will be rejected, and the corresponding acceptance fee will be borne by the party itself. This may also reduce the room for mediation and damage the business reputation. A reasonable approach is to calculate the actual losses, the available benefits, and the agreed upon breach of contract penalties item by item, and to claim within the scope foreseeable by the breaching party at the time of contract conclusion in accordance with Article 584 of the Civil Code. Each request should be supported by evidence. If necessary, the party may reserve the right to claim for some losses in a separate case and settle the main dispute first.

Q4: What should I do if the other party still refuses to pay compensation after I win the lawsuit?

Within two years after the expiration of the performance period specified in the judgment, the court may freeze and deduct bank deposits and seize and auction property and vehicles through the online investigation and control system; if the other party refuses to declare his/her property or transfer his/her property, he/she may be included in the list of dishonest debtors, and his/her high-consumption behavior may be restricted. In serious cases, he/she may be convicted of refusing to enforce the judgment and ruling. If no property has been found yet, the party may apply to the court for resuming enforcement on a regular basis. Winning the lawsuit is just the starting point. It is the key to getting the money to find out the debtor's property before the lawsuit and to preserve the property in time during the lawsuit.

Q5: Can the deposit and the breach of contract penalty be claimed together?

This cannot be claimed simultaneously. According to Article 588 of the Civil Code, if the parties have agreed on both the penalty and the deposit, the other party may choose to apply either the penalty or the deposit clause when one party breaches the contract; if the deposit is insufficient to compensate for the losses caused by the breach of contract, the party may request compensation for the losses exceeding the amount of the deposit. Before making a choice, the parties should calculate separately: if the penalty is set higher or the losses are difficult to prove, they should choose the penalty; if the actual losses far exceed the amount of the deposit, they should choose the deposit and claim compensation for the excess separately. Among the two options, the party should choose the one that results in a higher recovery amount.

If you are 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 limit. →Business and commercial legal services·Attorney Zhu Guiying·Beijing Henglue Law Firm