The breach of contract clause is an important clause in a contract. It is an important measure to ensure the smooth performance of the contract, compensate the losses of the party that complies with the contract, and punish the breaching party for breaching the contract. E-commerce companies and suppliers can negotiate the specific content of the breach of contract clause before signing the contract, and write it into the formal contract after reaching a consensus.
If one party breaches the contract, the other party can demand compensation according to the terms of the contract. If one party seriously breaches the contract and causes great losses to the other party, the breaching party is likely to bear civil liability. Generally speaking, breach of contract can be divided into three types: one is the act of not performing or not fully performing the contract, the second is the act of causing damage to the other party; and the third is the act that has a causal relationship with the damage result.
When setting the breach of contract clause, the liability for breach of contract is a relatively important content. Of course, there are some other contents in the breach of contract clause that cannot be ignored.
(1) The way of bearing the liability for breach of contract
If one party fails to perform the contract or performs the contract inconsistent with the agreement, it should bear the liability for breach of contract such as continuing to perform, taking remedial measures, and compensating for losses.
(2) Agreement on liability for breach of contract
The liability for breach of contract can be written into the contract after the two parties reach a consensus and make an agreement. For example, “If any party breaches this contract and makes it impossible to continue to perform this contract, it shall be required to pay liquidated damages of RMB xxx million to the non-breaching party. If the liquidated damages are not sufficient to compensate the actual losses of the non-breaching party, the breaching party shall compensate the non-breaching party for all actual losses.”
(3) Scope of damages
If one party fails to perform the contract or performs the contract inconsistent with the agreement, causing losses to the other party, then the amount of compensation should be equal to the losses caused by the breach, including the benefits that can be obtained after the performance of the contract. In addition, if the supplier commits fraud in the process of providing goods or services to the e-commerce company, the e-commerce company may require the supplier to bear compensation liability in accordance with the relevant provisions of the Consumer Protection Law of the People’s Republic of China
(4) Liquidated damages
The supplier and the e-commerce company may agree that if one party breaches the contract, it shall be required to pay the liquidated damages in accordance with the relevant provisions of the Consumer Protection Law of the People’s Republic of China. In the event of a breach of contract, the party must pay a certain amount of liquidated damages to the other party. If the liquidated damages are lower than the losses suffered by the abiding party, the abiding party may request the People’s Court or arbitration institution to increase them; if the liquidated damages are higher than the losses suffered by the abiding party, the breaching party may request the People’s Court or arbitration institution to reduce them.
The breach of contract clause is a preliminary agreement on possible breach of contract by either party to clarify the breach of contract liability of both parties. The breaching party should bear the liability for breach of contract and compensate the losses suffered by the abiding party. Therefore, in order to avoid paying liquidated damages, e-commerce companies must strictly perform the contract according to the agreement.
Tips
The breach of contract clause mainly focuses on continued performance, compensation for losses, etc., supplemented by prevention and remedial measures.
When setting the breach of contract clause, the interests of both parties to the contract should be protected.