How to Compensate for Breach Penalty in Used Car Transactions?
1 Answers
The compensation method for breach penalty in used car transactions: If the parties have agreed upon a penalty or a method for calculating breach compensation, the breaching party shall pay the penalty as stipulated in the contract. If no penalty or compensation calculation method has been agreed upon, the compensation amount for losses shall be equivalent to the losses caused by the breach, including the benefits that could have been obtained after the contract was performed, but shall not exceed the losses that the breaching party foresaw or should have foreseen at the time of contract conclusion. The following are relevant legal provisions: 1. The parties may agree that in case of breach by one party, a certain amount of penalty shall be paid to the other party based on the breach situation, or they may agree on a method for calculating the compensation amount for losses caused by the breach. 2. If the agreed penalty is lower than the losses incurred, the People's Court or arbitration institution may increase it upon the request of the parties; if the agreed penalty is excessively higher than the losses incurred, the People's Court or arbitration institution may appropriately reduce it upon the request of the parties. 3. If the parties agree on a penalty for delayed performance, the breaching party shall still perform the obligation after paying the penalty.
