Difference Between Late Payment And Interest Loss Of Liquidated Damages In Practice

Breach of contract, late fees and interest losses are frequently used terms in the process of civil and commercial disputes and the production of legal documents. Because of their inaccuracy in understanding and grasping their definitions, they often appear mixed and misused in practice. At the same time, in the production of judicial documents, there are also situations that can not be accurately described. Next, I will give a brief account of their respective definitions and their application in practice.

　　 First, the concept of liquidated damages, late fees and interest losses and the expression in the judicial documents.

Liquidated damages

The penalty for breach of contract refers to the amount of money or value that a party pays to the other party after a contract is signed or directly prescribed by the law when a party violates the contract (or breach of contract).

According to contract law The provision for breach of contract includes: continuing performance, compensation for damages, liquidated damages, penalties and other means. It can be seen that breach of contract is a way to bear responsibility for breach of contract. Liability for breach of contract refers to the legal liability of a party who fails to perform the obligations of the contract, and therefore the liability for breach of contract is a contractual liability. The 114th clause and first paragraph of the contract law stipulates: "the parties may stipulate that a party shall pay a certain amount of liquidated damages to the other party in breach of contract according to the breach of contract, or it can also stipulate the method of calculating the amount of compensation for losses arising from breach of contract."

China's contract law system considers that the penalty is the terms of the contract, and considers that the penalty is a form of security guaranteed by the parties. At the same time, the general principles of civil law and the contract law also stipulate that the penalty for breach of contract is a form of liability for breach of contract. Therefore, it regulates the civil legal relationship between equal subjects. There are two types of liquidated damages, one is statutory liquidated damages and the other is liquidated damages. Statutory liquidated damages refer to the liquidated damages payable to the other party in advance by the law when a party is in breach of a contract, according to a certain amount or a certain proportion. Statutory liquidated damages can be a certain amount or a certain proportion. The agreed liquidated damages refer to the liquidated damages stipulated by the parties in terms of the amount and terms of payment. Since the liquidated damages are regarded as the pre estimate of the losses suffered by the parties afterwards, the amount of the liquidated damages agreed may be somewhat different from the actual losses. This discrepancy should be allowed as long as it is not lower or higher than the actual loss. If the liquidated damages prescribed by the parties are below or exceeding the actual loss, the parties concerned may request the people's court or the arbitration agency to increase or reduce it in accordance with the provisions of the contract law.

If a liquidated penalty is required in a judgment document, if the penalty for breach of contract is calculated according to a certain proportion, it can be expressed as: the defendant shall pay the plaintiff * * payment (works, etc.) * * and liquidated damages within ten days after the judgment is effective. The penalty for breach of contract shall be calculated from * * (standard) to the end of the performance period determined by this judgment from * * * * date. In accordance with the provisions of the 232nd article of the civil procedure law, the debt interest of the period of delay in performance shall be doubled. It is stated that the defendant shall pay the plaintiff * * * (or other money) * * and liquidated damages, and the liquidated damages shall be calculated from * * (standard) to the end of the performance period determined by this judgment from * * * * date. The above amount is paid within ten days after the conclusion of this judgment, and the interest on the debt during the delay is overdue. If the agreement for liquidated damages has a definite amount, it can be directly identified. If the party considers that the default penalty is lower or higher than the actual loss, it may ask for an increase or decrease, but the expression of this part should be clearly stated in the "hospital's opinion".

The above is the concept and connotation of liquidated damages. Only when we define its concept and connotation, can we not use it in a wrong way.

2. Late fees

Late payment refers to the payment by tax authorities to the time limit. remit tax payments The amount added by the unit or individual from the date of overdue payment. This is the original source of the concept of overdue payment. After that, it refers to an administrative organ with administrative expropriation function. In the process of collecting fees, it is regarded as an administrative penalty because of the extra payment paid by the obligor. The legal status of the two parties involved is not equal. They are a kind of relationship between management and management. If the tax collection and management law stipulates that taxpayers do not pay taxes in accordance with the prescribed time limit, the withholding agent fails to pay taxes in accordance with the prescribed time limit, the tax authorities, except for ordering the payment within a prescribed time limit, shall pay 5/1000 of the late fee of the late tax on the date of the late tax payment. In addition, there are similar provisions in the collection of water resources fees.

Because the concept of late fee is a category of administrative regulations, therefore, it should not be used when civil liability is involved in civil and commercial judicial documents.

Interest loss

Interest is the cost of borrowing by a borrower in a paid loan contract, so the main obligation of the borrower is to pay interest to the lender. The borrower shall not only pay the interest according to the agreed amount, but also pay the interest at the agreed time limit. If the borrower fails to pay interest in accordance with the agreement, the loss to the loan is a loss of interest. The 205th provision of the contract law stipulates that the borrower shall pay interest within the agreed time limit. The time limit for the payment of interest is not agreed or not specified, and it is still not determined according to the sixty-first provision of this law. If the loan period is less than one year, it shall be paid at the time of repayment of the loan. If the loan period is more than one year, it shall be paid at the expiration of one year, and the remaining period is less than one year, and it shall be paid at the same time when the loan is returned. If the borrower fails to pay interest in accordance with the prescribed time limit, he shall be liable for breach of contract.

Interest (or interest loss) is similar to the expression of liquidated damages in the award document. The judgment can be expressed as follows: the defendant shall pay the plaintiff * * * * * interest and interest within ten days after the entry into force of this judgment. The interest shall be calculated from * * (interest rate standard) to the end of the performance period determined by this judgment from * * * * date. Overdue interest paid by the plaintiff during the delay in performance. Or stated as: the defendant shall pay the plaintiff * * * * * * interest and interest from * * * (interest rate standard) from the date of * * * * date to the expiration of the performance period determined by this judgment. The above amount is paid within ten days after the entry into force of the judgment, and the debt interest of the plaintiff during the late performance is doubled.

The author thinks that this statement is more scientific, reasonable and legal than the previous judgment of calculating interest or liquidated damages to the day of paying off the debt, and also facilitates the calculation of the target in the execution of the case, and earnestly protects the legitimate rights and interests of the parties concerned.

　　 Two. Penalty for breach of contract The misuse of late fees and interest in practice.

1, the penalty for liquidated damages and late fees.

In the case of a contract for sale and purchase, if a party requests the other party to pay the goods, the buyer's delay in payment of the goods is a breach of contract. When the liability for breach of contract is paid, the liquidated damages shall be paid. However, when a party is in litigation, he often appears to ask for payment of the goods and the late fee. After clarified the concept of the penalty and the late fee, we will see clearly that the request should be a penalty instead of a late payment. At the same time, when judging a case, the judge is not sure about the definition of the two party. It also has such misuse, which should be paid special attention in the process of making legal documents. The misuse of liquidated damages and late fees is not only prevalent in our civil and commercial trial process, but also in the judicial interpretation of the Supreme People's court. The Supreme People's Court released (1998) 31 reply to the reply issued on the basis of the standard of calculating telephone charges and late fees. The notice issued by the Ministry of Posts and telecommunications on March 12, 1998 (1998) 125 on the adjustment of the standard of late fees for telecommunication charges stipulates that since April 1, 1998, when users fail to pay telecommunications charges beyond the prescribed period, the telecommunications enterprises will collect arrears of fees per day from the date of overdue date to the actual repayment period, at 3 per cent of the amount owed by users. Therefore, any late payment of telephone charges occurring before April 1, 1998 will be carried out according to the late payment standard set by our hospital law (1998) 14, and the late fee for telephone charges after April 1, 1998 can be determined according to the proportion stipulated in the Notice No. 125 of the Ministry of Posts and Telecommunications (1998). Obviously, users and telecommunications departments have established a contractual relationship. Users' delay in payment of telecommunications charges is a breach of contract. They should pay a penalty instead of a late fee, because there is an equal civil subject between the telecommunications department and users, and there is no administrative collection function in the telecommunications sector. The post and Telecommunications Department has wrongly used the concept of late fees, and the judicial interpretation has been misquoted. This error has been corrected in the People's Republic of China Telecommunications Ordinance of 2000. The thirty-fifth provision of the regulation stipulates that "telecom users should pay the telecommunications costs to the telecom operators in a timely and full manner in accordance with the agreed time and manner. If the telecommunications users fail to pay the cost of the telecommunications service, the telecom operators shall have the right to request the payment of the telecommunications costs, and they can add a penalty of 3 per cent per day according to the cost owed."

2, the penalty for breach of contract and interest.

Similarly, in the case of a contract for sale and dispute, the parties' requests for payment of goods and interest often appear as a result of the blurring of the scope of the concept of liquidated damages and interest. In the case of construction contract disputes, the parties often request for payment of construction works and interest. Obviously, the parties also misuse the concept of breach of contract and interest. This misuse phenomenon also exists in other contract disputes. Of course, there is a crossover phenomenon between the liquidated damages and interest claims. For example, in the above construction contract dispute, the liquidated damages paid by the parties may include the loss of interest on the Bank of the project, and the parties should bear the burden of proof for the loan.

Where the interest is not specified in the loan contract between natural persons, it shall be regarded as non payment of interest in accordance with the 211st provision of the contract law. The purpose of such regulations is to more clearly distinguish commercial and civil actions. When interest free loans are made, the borrower has no obligation to pay interest. For private lending, there is a time limit for repayment, but no interest is agreed. The borrower's overdue payment shall be liable for breach of contract, and the payment of liquidated damages shall not be regarded as interest loss. The penalty for breach of contract shall be stipulated in accordance with the contract, and no penalty shall be paid according to the method of default payment by the people's Bank of China for overdue payment.

3. The mixture of late fees and interest.

In the civil and commercial trial, the interest is often wrongly written as a late fee, and there will not be any case where the late fee is written as interest or the late fee is written as a penalty for breach of contract. Because the concept of late payment is a concept used in the field of administrative litigation, and the assumption of civil liability in civil and commercial judgments will not directly relate to the concept of arrears of taxes, water resources fees and administrative enforcement of late fees. In the civil and commercial judgments, the interest payable should be wrongly written as a late fee, or a wrong understanding of the concept of late payment.

There are differences and connections between the concepts of liquidated damages, late fees and interest losses. When we use these concepts to write legal documents, we must distinguish the differences between their conceptual connotations. We must not distinguish each other from each other and use them. We should guide the judges in time and make them exercise their right of action in the right form of responsibility.

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