The penalty interest in this contract shall be calculated according to the agreement of both parties. If there is no agreement, it shall be calculated according to its loss. Article 584 of the Civil Code stipulates: "If one party fails to perform its contractual obligations or fails to perform its contractual obligations as agreed, causing losses to the other party, the amount of damages shall be equivalent to the losses caused by the breach of contract, including the benefits that can be obtained after the performance of the contract; However, it shall not exceed the losses foreseen or should be foreseen by the breaching party when concluding the contract. "
When signing the contract, both parties agreed on the calculation method of penalty interest. When one party breaches the contract, the penalty interest shall be calculated as agreed by both parties. If there is no agreement between the two parties, it shall be calculated according to the loss caused by one party's breach of contract to the other party. The amount of damages shall be equivalent to the losses caused by the breach of contract, including the benefits that can be obtained after the performance of the contract, but shall not exceed the losses that the breaching party foresaw or should have foreseen when concluding the contract.
What are the ways to bear the liability for breach of contract?
(1) Continue execution
Refers to the non-performance of contractual obligations or non-compliance with the contract, and the observant party may require the defaulting party to continue to perform in accordance with the contract until the purpose of the contract is achieved. This situation is mostly applicable to situations where the subject matter is specific and must be executed, such as entrusting to process specific semi-finished products and parts with special models or specifications.
(2) Take remedial measures
It means that the quality of the subject matter of debt performance does not meet the conditions agreed in the contract. Without further performance, only appropriate remedial measures can be taken to achieve the purpose of the contract or the purpose that the observant party considers satisfactory. For example, if the quality of the delivered product does not conform to the agreement, the injured party may reasonably choose to ask the other party to bear the liabilities for breach of contract such as repair, replacement, rework, return, price reduction or remuneration according to the nature of the subject matter and the size of the loss.
(3) liquidated damages
It refers to the way of liability for breach of contract that when one or all parties breach the contract, the breaching party must pay a certain amount of money to the observant party to compensate the losses of the observant party and punish the breach. After assuming the liability for breach of contract, whether to continue to perform or take remedial measures can be determined by the parties to the contract through consultation. However, if the parties agree to delay the performance of the liquidated damages, the breaching party shall still perform the debt after paying the liquidated damages.
(4) compensation
It means that the parties to a contract agree in the contract that if one party causes actual damage to the other party due to breach of contract, it shall pay compensation according to the actual amount of damage. After the parties perform their obligations or take remedial measures, if the other party has other losses, it shall compensate for the losses.
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Legal basis: Article 389 of the Civil Code of People's Republic of China (PRC) * * * The scope of security interest includes the principal creditor's right and its interest, liquidated damages, damages, expenses for keeping the security property and realizing the security interest. Unless otherwise agreed by the parties, such agreement shall prevail.