[Direct answer]In the Beijing area, when calculating losses after the termination of a contract, it is necessary to distinguish between two levels: requests for restitution and damages compensation. According to Article 566 of the Civil Code of the People's Republic of China (adopted in 2020 and implemented on January 1, 2021), after the termination of a contract, if the performance has not yet been completed, the parties shall terminate the performance; if the performance has already been completed, the parties may request restoration to the original state or take other remedial measures according to the performance situation and the nature of the contract, and have the right to request compensation for losses; if the contract is terminated due to breach of contract, the party exercising the right of termination may request the breaching party to bear the liability for breach of contract, unless otherwise agreed by the parties. Regarding the scope of damages compensation, Article 584 stipulates that if a party fails to perform its contractual obligations or performs them in a manner inconsistent with the contract, causing losses to the other party, the amount of compensation for the losses shall be equivalent to the losses caused by the breach of contract, including the benefits that could have been obtained after the performance of the contract, but shall not exceed the losses that the breaching party could have foreseen or should have foreseen at the time of concluding the contract. In addition, Article 585 stipulates the system of liquidated damages. If the agreed liquidated damages are lower than the actual losses, the party may request an increase; if they are excessively high, the party may request a reasonable reduction. It should be noted that Article 591 stipulates the obligation of the non-breaching party to mitigate losses. That is, after the breaching party violates the contract, the other party shall take appropriate measures to prevent the expansion of losses. If the other party fails to take appropriate measures and causes the expansion of losses, it shall not request compensation for the expanded losses.

1. Problem background and typical scenarios

After the contract is terminated, how to calculate the losses is the most contentious aspect of commercial disputes. Typical situations include: the buyer's breach of contract leading to the seller's overstocking of purchased raw materials; the seller's breach of contract causing the buyer to purchase elsewhere and incurring price differences; the termination of a contract for construction work leading to the settlement of completed projects and losses from work stoppages; the termination of a service contract causing the inability to recover the human and promotion costs already invested; and one party claiming for the loss of anticipated profits but lacking a basis for calculation. Due to the flexibility of the scope of losses, the disagreement between the parties over the amount is often much greater than the dispute over the termination itself, so the reasonableness of the calculation method becomes crucial.

II. Key points of contention

First, the relationship between restitution and compensation. For the part that has been performed, the party can claim restitution or compensatory damages. Second, the definition of the scope of losses, including actual losses and losses of expected benefits. Third, the limitation of the rule of foreseeability. The compensation shall not exceed the scope that the breaching party could foresee at the time of concluding the contract. Fourth, the relationship between the penalty and the damages. The penalty agreed upon shall be applied preferentially, and the excessively high penalty may be adjusted. Fifth, the performance of the obligation of mitigation. If the party in compliance fails to take measures to prevent the loss from expanding, the part of the loss that has been expanded shall not be compensated.

III. Professional analysis by Henglue Lawyers

The key to calculating losses is to "be able to account for them clearly and provide verifiable evidence." In practice, we typically advise clients to organize evidence from four perspectives: 1. **Documented expenses**: Including invoices for procurement, labor costs, rent, and promotion expenses. 2. **Calculation basis for contractual benefits**: Such as resale contracts, purchase orders, or market price differences. 3. **Evidence of alternative transactions**: Materials purchased or sold by the contract-abiding party to mitigate losses. 4. **Records of damage-reduction measures**: Documenting the implementation of these measures. Only when these four pieces of evidence align can a complete chain of loss calculation be established. Take a contract dispute handled by Henglue Law Firm as an example: The client exchanged a vehicle for a Beijing A-licensed plate, but the other party failed to transfer the ownership after receiving the vehicle and payment. The client terminated the contract and demanded compensation. Attorney Tian Jiaoyan argued that the contract was valid and constituted a barter contract, requiring the other party to fulfill the transfer obligation. Since the contractual purpose could not be achieved, the court ruled to terminate the contract and award the client 420,000 yuan in compensation. The court noted that, after the contract was terminated, the vehicle should have been returned, but since it was no longer available, the plaintiff was entitled to compensation based on the vehicle's fair market value, determined through courtroom testimony and market practices. This case illustrates that, in calculating losses, when the original asset cannot be returned, compensation based on fair market value must be reasonably determined based on market practices rather than simply accepting the claimant's proposed amount. Contract disputes may refer to this case for guidance.Business and contract disputes in enterprises; Those involving the recovery of funds and enforcement can be combined togetherCreditor's rights and debts, and enforcement casesAndSpecialised legal servicesThis case is handled by Beijing Henglu Law Firm.Tian JiayanThe lawyer (practice license number: 11101202111381309, subject to the certificate issued by the judicial administrative organ) acts on behalf of his clients, relying on his accurate understanding of the local adjudicative approaches and practical rules, to help clients achieve favorable outcomes.

IV. Practical suggestions and legal basis

According to Article 563 of the Civil Code of the People's Republic of China (effective January 1, 2021) on the statutory conditions for rescission, Article 566 on the consequences of rescission, Article 584 on the scope of compensation for losses and the rule of foreseeability, Article 585 on the provisions of the penalty clause, Article 587 on the provisions of the deposit, and Article 591 on the provisions of the reduction of obligations, as well as 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 in 2023) on the determination of losses and the adjustment of the penalty clause, it is recommended to follow a four-step process: First, sort out the refund or discount plan for the part that has been performed; Second, categorize and organize the evidence of actual losses and foreseeable benefits to form a calculation breakdown; Third, compare with the penalty clause stipulated in the contract to determine whether it is more advantageous to claim the penalty or compensation for losses; Fourth, take timely measures to reduce losses and keep records to avoid expanding the part that cannot be compensated. Those involved in contract disputes may refer to this process.Business and contract disputes in enterprises; Regarding the realization of creditor's rights, it can be combined withCreditor's rights and debts, and enforcement cases.

5. Henglu Law Firm's Advice

The losses cannot be estimated "on the spur of the moment"; they must be quantifiable and verifiable. Three reminders: First, do not just claim a total amount. You should list the items one by one and attach supporting documents; Second, do not ignore the obligation to mitigate losses. After discovering a breach of contract, you should take reasonable measures to prevent the losses from expanding and keep records; Third, do not arbitrarily choose between the breach of contract penalty and the compensation for losses. You should compare the amounts of the two and ensure that you do not receive duplicate compensation.Beijing Henglu Law FirmIt is recommended that the party concerned start to collect evidence of the losses at the same time as terminating the contract, so as to lay a good foundation for subsequent claims.

VI. Frequently Asked Questions

Q1: How is the loss calculated after the contract is terminated?

For the part that has been performed, the party may request restoration to the original state or compensation in the form of a discount, and has the right to claim compensation for losses. The compensation for losses includes the actual losses and the benefits that could have been obtained after the performance of the contract, but shall not exceed the scope that the breaching party could have foreseen when entering into the contract; for the agreed-upon breach of contract penalties, the party may claim according to the agreement, and if the amount is obviously disproportionate, the party may request an adjustment.

Q2: What evidence do I need to prepare?

The contract and its annexes, payment and delivery receipts, resale contracts or orders, substitute transaction materials, detailed calculations of losses, records of the implementation of mitigation measures, and evidence of the breaching party's refusal to perform its obligations.

Q3: How much does it cost to litigate such cases?

The litigation fees shall be paid according to the standard amount of the litigation subject; if a lawyer is engaged, the fees shall be calculated based on the proportion of the subject amount or charged on a stage-by-stage basis, subject to the provisions of the written power of attorney. There are also corresponding fees involved in appraisal and audit.

Q4: How long does it take from filing a lawsuit to obtaining the final judgment?

Cases subject to simplified procedures are generally concluded within three months, and cases subject to ordinary procedures are generally concluded within six months. The timeframes for cases involving appraisals, expert opinions, or appeals will be extended accordingly, subject to the court's trial arrangements.

Q5: What should I do first?

First, distinguish between the fulfilled and unfulfilled parts, and sort out the return or discount schemes; then classify and organize the evidence of actual losses and losses of expected benefits and form a calculation breakdown. At the same time, refer to the contractual penalty clause to determine the claim path.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglue Law Firm for specific cases.

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 Tian Jiaoyan·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open 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.