[Direct answer]Even if the contract does not stipulate a penalty for breach of contract, you can still claim compensation: According to Articles 577 and 584 of the Civil Code (effective January 1, 2021), the breaching party shall compensate for the losses, and the amount of compensation shall include the benefits that can be obtained after the performance of the contract, but shall not exceed the scope that can be foreseen at the time of signing the contract; for monetary debts that are overdue, you can claim interest losses calculated according to the LPR at the same period; for sales contracts that do not stipulate a penalty for late payment, according to Article 18 of the Interpretation of the Supreme People's Court on the Application of Law in the Trials of Disputes over Sales Contracts (effective July 1, 2012, amended in 2020), you can claim losses for late payment at the LPR plus 30% to 50%. Action points: Fix the evidence of losses, claim within three years, and consult first if necessary.Legal services for corporate commercial and contract disputes.

I. Problem Background and Typical Scenarios

The template contract fails to specify the liability for breach of contract, there are no written clauses for oral transactions, and the other party insists on using its standard contract with blank provisions for breach of contract – after an incident occurs, the other party often dismisses it with the statement "the contract doesn't specify the breach of contract penalty, so there's no need to compensate". In fact, the breach of contract penalty is just a contractual form of liability for breach of contract. If there's no agreement, the law directly provides rules for compensation: compensate for the actual losses. However, the breach of contract penalty requires the party in breach to provide evidence. This is different from the convenience of agreeing on a fixed breach of contract penalty, and it's also the real point of contention in such cases: how to calculate the losses, how to present the evidence, and from which date should the interest be calculated.

II. Key points of contention

  • Range of losses and evidence: In addition to the principal, whether the loss of profits, the difference in price of alternative transactions, and financing costs can be supported depends on the completeness and predictability of the evidence. The evidence of losses should lay a foundation for subsequent collection of payments, which can be referred to for reference.Legal services for creditor-debtor relations and enforcement cases.
  • The calculation and standard of interest: For those with clear payment deadlines, the interest shall be calculated from the expiration of the deadline; for those without clear deadlines, the interest shall be calculated from the expiration of a reasonable period after being reminded; and whether to use the LPR or add a surcharge will vary according to the different types of cases.
  • The boundaries of reduction and compensation: For cases where the agreed penalty is too high, the reduction shall be based on the actual losses; for cases where there is no agreed penalty, the compensation shall be based on the actual losses. These two sets of rules cannot be used interchangeably.

III. Professional analysis by Henglue Lawyers

A second-instance case involving a network service contract dispute fully demonstrated the pros and cons of the "no penalty clause" provision. On November 18, 2021, Wang Li signed the "Network Information Service Contract" and "Technical Service Contract" with a certain company, with a total contract price of 110,500 yuan and a payment of 50,000 yuan as equipment deposit. During the performance of the contract, the two parties agreed to terminate the contract, but the company failed to refund the deposit as promised. Wang Li sued for the return of 34,433 yuan in service fees, 3,000 yuan in attorney's fees, and interest; the company counter-sued, claiming that Wang Li's failure to pay the remaining 60,500 yuan constituted a breach of contract and seeking 33,150 yuan in penalty. The first-instance court supported Wang Li's claims and dismissed all counter-claims. After the company appealed, attorney Xue Suhua argued in the second-instance defense that: the contract details stated that the equipment was provided by the company and labeled as a "one-time fee"; the "phone damage deduction" clause in the refund application form also confirmed that the ownership of the equipment belonged to the company; the two parties negotiated the termination of the contract via WeChat, and the company-stamped refund application form specified the refund amount; the contract did not contain a penalty clause, so the company's penalty claim lacked legal basis. The second-instance court determined that the evidence formed a closed loop, dismissed the appeal, and upheld the original judgment: the company should refund 34,433 yuan in service fees, 3,000 yuan in attorney's fees, and interest, and all counter-claims should be rejected. This case demonstrates that: when there is no penalty clause, the other party's penalty claim will be directly dismissed; on the other hand, the breaching party's refund and interest losses will not be affected by the absence of a penalty clause. In contrast, in a commissioned creation contract arbitration case (represented by attorney Xiong Binrong), the arbitral tribunal ordered the payment of 583,000 yuan in contract fees and compensation for all attorney's fees, but adjusted the claimed penalty for late payment. Whether there is a penalty clause determines the legal path, and losses are always the anchor for compensation.

IV. Practical suggestions and legal basis

Legal basis: Article 577 of the Civil Code (effective from January 1, 2021) on liability for breach of contract, Article 579 on requests for payment of monetary debts, Article 584 on the scope of compensation for losses and the principle of foreseeability, Article 585 Paragraph 2 on the rule of reducing the penalty for excessive damages, and Article 588 on the application of either the deposit or the penalty for breach of contract; Article 65 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the General Provisions of the Contract Chapter of the Civil Code of the People's Republic of China (effective from December 5, 2023) clarifies that the penalty for breach of contract exceeding 30% of the losses can generally be deemed excessive; Article 18 of the Interpretation of the Supreme People's Court on Legal Issues Concerning the Trial of Disputes over Sales Contracts (effective from December 5, 2023) stipulates the same. Practical suggestions: If you find that the other party breaches the contract, first send a reminder letter and specify a reasonable payment period to preserve evidence for the calculation of interest; specify the amount of the arrears and the overdue interest in the statement of accounts; collect the evidence of losses into three columns: "direct expenses", "loss of profits", and "alternative costs"; subsequently, supplement the transaction with a clause stating that "the expenses for realizing the creditor's rights (including attorney's fees) shall be borne by the party in breach of contract", and seek legal advice when necessary.Beijing Henglue Law FirmEvaluate the claim settlement plan.

5. Henglue Law Firm's Advice

The fact that no penalty for breach of contract is specified does not mean that there's no way to protect one's rights, but that the method of protecting rights has switched from "claiming compensation according to the contract" to "claiming compensation according to the actual losses", and the burden of proof now lies with the party fulfilling the contract. This is precisely the stage when a lawyer's involvement is most needed: how to calculate the losses, how to gather evidence, and from which date the interest will be calculated all directly affect the amount of the recovery. The above-mentioned online service contract dispute case was handled by Beijing Henglu Law Firm.Xue SuhuaThe attorney (practice certificate number: 11101201211769926, subject to the certificate issued by the judicial administrative organ) acts as an agent. The second-instance court rejected the other party's appeal and upheld the original judgment on the refund. If your contract is currently in a deadlock due to a breach of contract, it is recommended that you bring the contract and the accounting vouchers to evaluate the claim plan as soon as possible.

Q1: If the contract doesn't specify a penalty for breach of contract, can I still claim interest?

Yes. If the debtor fails to perform the monetary obligation on time, the party in compliance may claim the interest loss calculated according to the LPR of the same period; if the sales contract does not stipulate the penalty for late payment, according to Article 18 of the Interpretation of the Supreme People's Court on the Application of Law in the Trials of Disputes over Sales Contracts, the loss of late payment may be calculated on the basis of the LPR plus 30% to 50%. As for the starting point, if there is a clear payment deadline, it shall be calculated from the date of expiration of the deadline; if there is no clear deadline, it shall be calculated from the expiration of a reasonable period after the reminder. When claiming interest, the plaintiff should keep the account statement and the reminder letter to prove the amount of the debt and the time of the reminder.

Q2: If the agreed penalty for breach of contract is too high, will the court reduce it?

Yes. According to Article 585 Paragraph 2 of the Civil Code, if the agreed penalty for breach of contract is excessively higher than the losses caused, the court may, upon the request of the parties, reduce it appropriately; Article 65 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the General Provisions of the Contract Chapter of the Civil Code of the People's Republic of China (effective as of December 5, 2023) stipulates that if the penalty for breach of contract exceeds 30% of the losses determined in accordance with Article 584, it can generally be deemed excessive in relation to the losses. The party claiming a reduction shall provide evidence of the excessive amount, and the court shall comprehensively assess the performance of the contract, the degree of fault, and the expected benefits; if the penalty for breach of contract is lower than the losses, the party may also request an increase.

Q3: Can the breach of contract penalty and the deposit be claimed at the same time?

They cannot be applied simultaneously. According to Article 588 of the Civil Code, if both a penalty clause and a deposit clause are agreed upon, the other party may choose to apply either the penalty clause or the deposit clause when one party breaches the contract, but only one can be chosen. If the deposit is insufficient to compensate for the losses, the party may request compensation for the losses exceeding the amount of the deposit. Before making a choice, the party should compare the amounts and the difficulty of providing evidence of the two clauses: the penalty clause is calculated according to the agreed amount but may be reduced, while the deposit applies to the penalty clause but is subject to a maximum limit of 20% of the subject matter of the main contract. The party should choose the path that is more favorable to itself rather than superimposing claims.

Q4: Can the attorney's fees for filing a lawsuit and making a claim be charged to the other party?

It depends on the specific circumstances. If the contract clearly stipulates that "the costs of realizing the creditor's rights, including attorney's fees, shall be borne by the defaulting party", the court will generally support this; if the contract stipulates arbitration and the claim is made in accordance with the arbitration rules, the arbitral tribunal will often rule that the losing party shall compensate. In the absence of such stipulations, except for special cases such as intellectual property disputes, the court will generally require each party to bear its own attorney's fees. Therefore, it is recommended that enterprises include provisions on the bearing of attorney's fees in their contracts in advance; when entrusting lawyers to send letters or file lawsuits after a dispute arises, they should simultaneously include the attorney's fees in the litigation claims and provide the entrustment contracts and receipts as evidence.

Q5: Within what timeframe must a lawsuit be filed to claim breach of contract damages?

According to Article 188 of the Civil Code, the statute of limitations for bringing a lawsuit to protect civil rights before the court is three years, calculated from the date when the right holder knows or should have known that his rights have been infringed and the date when the obligee knows or should have known that his obligations have been breached; for the performance of the same debt in installments, the statute of limitations shall be calculated from the date when the deadline for the last installment expires (Article 189). Collection, reconciliation, and partial repayment by the other party may interrupt the statute of limitations and restart the calculation; if a lawsuit is filed beyond the statute of limitations, once the other party raises a defense, the plaintiff will lose the right to win the case. Therefore, if you find that the other party has breached the contract, you should assert your rights as soon as possible within the statute of limitations and keep the evidence of each time you assert your rights.

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 limit. →Business and commercial legal services·Attorney Xue Suhua·Beijing Henglu Law Firm