The contract stipulates that the construction period is delayed by more than three months and fined 1.2 million yuan, and the actual delay is more than one year and the compensation is more than 6 million Author: Wang Daoyong Lawyer Arbitrator Partner Senior Engineer Cost Engineer

<h1 class="pgc-h-arrow-right" data-track="1" >Author: Wang Daoyong Lawyer Arbitrator Partner Senior Engineer Cost Engineer</h1>

1. Case index

1. Zhejiang Higher People's Court "Civil Judgment on the Retrial of Construction Contract Disputes between Haishun Construction Group Co., Ltd. and Ningbo Aolida Mechanical and Electrical Co., Ltd.", Case No. (2017) Zhejiang Minzai No. 185, adjudicators Lu Shichang, Su Hong, and Sun Yi, the judgment date was December 25, 2017. Case release date 2018-12-31

2. Ningbo Intermediate People's Court "Second Instance Civil Judgment on the Construction Contract Dispute between Ningbo Aolida Electromechanical Co., Ltd. and Haishun Construction Group Co., Ltd.", Case No. (2015) Zhejiang Yongmin Er zhong zi No. 566, adjudicators Huang Yongsen, Zhu Yajun and Zhao Baofa, judgment date December 8, 2015, case date 2016-03-09

3. Civil Judgment of the First Instance of the Construction Contract Dispute between Ningbo Aolida Electromechanical Co., Ltd. and Haishun Construction Group Co., Ltd. of the Beilun Court, Case No. (2012) Yonglun Min Chuzi No. 1285, adjudicators Chen Wenjing, Hu Bo and Cao Jinfeng, the judgment date was July 8, 2015, and the case date was 2015-09-07

II. Brief Introduction of the Case

Contracting party: Ningbo Orida Electromechanical Co., Ltd. (hereinafter referred to as Orida Company)

Contractor: Haishun Construction Group Co., Ltd. (hereinafter referred to as Haishun Company)

The project involved the no. 2 plant project of Longtanshan Road, Beilun District, Ningbo City (including 1 lot and 2 lots). Construction area: 63,952 square meters; the total contract price of a one-time dry amount of 43.06 million yuan; the start date: September 28, 2007 (the specific construction report confirmed by the three parties shall prevail). Completion date: September 20, 2008, the total calendar days of the contract period are 360 days. For each day of extension, the corresponding penalty is 3,000 yuan, and after 30 days of postponement, it is punished at 5,000 yuan per day. If the construction period is extended for more than three months, the penalty forfeiture of the performance bond (1.2 million yuan) is imposed. The actual delay was 495 days.

The contract issuer demanded compensation of 6.615 million yuan, and the contractor was willing to pay 1.2 million yuan in accordance with the contract.

The Ningbo Intermediate Court of the Second Instance held that in the first instance, Orida Company provided the "Factory Rental Contract" signed on May 1, 2011 with the lessee Zhang Yexing for the lease of the house at No. 2 Longtanshan Road, Beilun District, to prove the fact that the rent of the plant around the factory building involved in the case was 10 yuan per square meter per month, and the court of first instance found this and calculated the rent of the factory building involved in the case according to the rent standard, which was not improper. Haishun Company believes that the simultaneous rent of similar factories in the same lot is less than 8 yuan per square meter per month, but the basis is insufficient, and the hospital is difficult to accept. The two sides agreed that "for each day of advance or extension of the construction period, the corresponding reward or penalty will be 3,000 yuan, and after the project is postponed for 30 days, it will be punished by 5,000 yuan per day." If the construction period is extended for more than three months, the penalty forfeited the performance bond of the construction period. "Because the construction period of Haishun Company is delayed by more than three months, Orida Company has the right not to return the 1.2 million yuan of the construction period performance bond." Article 28 of the Interpretation of the Supreme People's Court on Several Issues Concerning> the Application of the < of the Contract Law of the People's Republic of China (II) stipulates: "Where a party requests the people's court to increase the liquidated damages in accordance with the provisions of the second paragraph of Article 114 of the Contract Law of the People's Republic of China, the amount of the increased liquidated damages shall not exceed the actual amount of losses." "Because the project involved in the case caused the loss of supervision fees and the loss of plant rent to Orida Company, the amount of these two losses significantly exceeded the amount of the performance bond during the construction period, so Olida Company could request Compensation from Haishun Company in addition to not returning the performance bond." The court of first instance did not improperly treat the loss of supervision fees caused by the delay in the construction period of Orida Company, as well as the loss of rent calculated based on the plant area recorded in the completion report. Since the sum of the above two losses exceeded the amount of 6.615 million yuan claimed by Orida Company, it was basically appropriate for the court of first instance to support Orida Company's claim.

Focus of the dispute: How to compensate for the actual delay of 495 days?

3. Summary of the judgment

(1) Beilun Court

The Beilun court of first instance held that Aolida Company provided a total of 1,165,900 yuan in invoices for supervision fees issued by the supervision company, so the loss of Orida Company existed, but it should be calculated from January 21, 2009 to August 23, 2010, and deducted the 109-day extension period, and calculated at 33,300 yuan per month for a total of 532,800 yuan for 16 months. Regarding the rent loss claimed by Orida Company, Orida Company claimed that the rental standard of the plant building involved in the project should be calculated at 10 yuan per square meter per month, and provided the basis for the rental contract of the factory building involved in the case in May 2011, which should be determined. According to the completion acceptance report, the total area of the 1#-6# plant is 66230 square meters, and the plant area claimed by Orida Company to generate rent losses is 63952 square meters, so combined with the delay time of the construction period, the expected rental loss of Orida Company exceeds the total amount of liquidated damages claimed by Orida Company.

(2) Ningbo Intermediate Court

(3) Zhejiang High Court

The Zhejiang Higher People's Court held that according to the Construction Contract, if the construction period is extended for more than three months, the penalty and forfeiture period performance deposit of 1.2 million yuan will be imposed. In this case, Haishun Company agreed to bear a liquidated damages of 1.2 million yuan for the delay of the construction period, while Orida Company claimed that it had caused losses of more than 10 million yuan to Olida Company due to the delay in the construction period and other reasons, so the lawsuit demanded that Haishun Company pay a liquidated damages of 6.615 million yuan for the delay of the construction period. This court held that, according to the second paragraph of article 114 of the Contract Law of the People's Republic of China of the People's Republic of China, if the agreed liquidated damages are lower than the losses caused, the parties may request the people's court or arbitration institution to increase them; if the agreed liquidated damages are excessively higher than the losses caused, the parties may request the people's court or arbitration institution to appropriately reduce them. Article 28 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the &lt; contract &gt; of the People's Republic of China (II) stipulates that if a party requests the people's court to increase the liquidated damages in accordance with the provisions of the second paragraph of article 114 of the Contract Law of the People's Republic of China, the amount of the increased liquidated damages shall not exceed the actual losses. Therefore, Orida may request the court to increase the agreed liquidated damages, but not exceed its actual losses. The project involved in the case was a plant project, including the 1#-6# workshop and the janitor's house, and Orida Company claimed that the expected rent loss of the 1#-6# workshop was caused by the delay in the construction period, which was based on the law. The total construction area of the 1#-6# workshop in the project involved in the case was 66,230 square meters, and the original trial of Orida Company calculated the loss of plant rent according to 63,952 square meters, which did not harm the interests of Haishun Company. According to the "Factory Leasing Contract" signed with Zhang Yexing, an outsider in the case, provided by orida Company on May 1, 2011, the rent of the plant involved in the case was 10 yuan per square meter per month, and the authenticity and legality of the lease contract can be determined, and the original judgment should be reasonable as the basis for calculating the loss of the plant rent in this case. Even at the rate of $8 per square meter per month that Haishun Company claimed, the loss of rent exceeded the amount of 6.651 million yuan sued by Orida Company. At the same time, according to the supervision contract provided by Orida Company, Orida Company still has a loss of 532,800 yuan in supervision fees due to the delay of the construction period (calculated for 16 months based on 33,300 yuan per month). It can be seen from this that the sum of the expected plant rent and supervision fee caused by the delay in the construction period of Orida Company has clearly exceeded the liquidated damages of 6.651 million yuan claimed by Orida Company, so the original judgment supported orida Company's claim of liquidated damages of 6.651 million yuan for delay in construction period, which was not improper.

4. Enlightenment and Summary

Although the construction contract in this case stipulates that the construction period of the plant involved in the case was delayed by more than three months and fined 1.2 million yuan, but the actual project was delayed by 495 days, the contract issuer provided a supervision contract, an invoice for overdue supervision fees, and a lease contract (proving that the rent standard of the same lot is 10 yuan per square meter per square) to prove that the actual loss was greater than 6.615 million yuan, and the three levels of courts in this case all supported the contracting party's claim, and its legal basis was the second paragraph of article 114 of the Contract Law of the People's Republic of China of the People's Republic of China" Where the agreed liquidated damages are lower than the losses caused, the parties may request the people's court or arbitration institution to increase them; if the agreed liquidated damages are excessively higher than the losses caused, the parties may request the people's court or arbitration institution to appropriately reduce them."

At present, this case is a relatively successful case of the contracting party in Zhejiang, with a claim amount of up to 6.615 million yuan, while the contract price of the project involved in the case is 43.06 million yuan (the contractor Haishun Company claims that the total settlement price is 51.48 million yuan), and the claim amount accounts for 15.36% of the project contract price and 12.85% of the total settlement price.

The core issue in this case is whether the contractor's delay in construction constitutes a breach of contract, and whether the rent as an expected benefit should be supported? The reason for the non-support is nothing more than "did not actually occur, more than the contractor foresees", etc., and I think that the above reasons for not supporting it are obviously wrong, because the expected rent belongs to the available interest and should be supported, and article 113 of the Contract Law clearly stipulates. Article 113 of the Contract Law stipulates that losses are simply two situations of "more expenditure" and "less income", which are "more expenditure" as far as the deferred supervision fee in this case is concerned, and the rent is "less income", that is, the plant is completed on schedule according to the contract, and whether the contract issuing party can make income as scheduled. As for foresight, it is well known that the house can be rented, and the contractor, as a well-established construction enterprise, has many economic, technical and legal talents, not ordinary contractors, and has a high understanding and strong predictive ability of the current social and economic situation and trading habits. Admittedly, there are also cases in judicial practice that do not support the expected rent, but as a case by case, I think the application of the law is wrong. But it is incomprehensible that the same court, the same collegial panel, and the same presiding judge have rendered diametrically opposed judgments in the same period of time. If such a situation occurs, I suggest that two diametrically opposed judgments be applied to the procuratorate for procuratorial supervision or reflected to other relevant departments, so we will ask which judgment is correct?

This case has been tried by three levels of courts, took 6 years, and finally has a conclusion, share with you, and hope to judge the same case, so that the people can feel fairness and justice in each case!

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