Direct answer: A procurement liquidated-damages and deposit page is not "write 30% in the contract". The website page should state: which breaches (late delivery, late payment, quality nonconformity, non-performance, termination), how damages are calculated (base, rate/amount, period, cap), how excessive/low damages are adjusted, how a deposit is agreed (no more than 20% of the main contract amount, created only on actual payment, credited/returned, forfeiture/double return), how damages and deposit are chosen, how overdue interest is calculated, and how loss is proved. On the law: parties may agree liquidated damages or a method for calculating loss; if the agreed amount is lower than the loss, a court/arbitration may increase it on request; if excessively higher, it may be appropriately reduced; where damages are agreed for delayed performance, the breaching party must still perform after paying (Civil Code Article 585). A deposit contract is formed when the deposit is actually paid; the deposit may not exceed 20% of the main contract amount, and the excess has no deposit effect (Article 586); if the paying party fails to perform or its performance does not achieve the contract purpose, it may not demand return; if the receiving party fails, it must return double (Article 587); where both damages and a deposit are agreed, the non-breaching party may choose either, and if the deposit is insufficient to cover the loss, it may claim the excess (Article 588). Damages should equal the loss caused by the breach, including profits after performance, but may not exceed what the breaching party foresaw or should have foreseen at contract formation (Article 584). The Supreme People's Court interpretation on the Contract Part further provides: a breaching party seeking reduction bears the burden of proof; damages exceeding the loss by 30% are generally regarded as excessively high; a party in bad faith seeking reduction is generally not supported (Articles 64 and 65). Government bodies, public institutions and large enterprises that delay payment to small and medium-sized enterprises must pay overdue interest: an agreed rate may not be lower than the one-year LPR at contract formation; absent agreement, 0.05% per day applies (SME Payment Guarantee Regulation Article 17, in force 2025-06-01). Information is current to 2026-11-07. This is a review of public rules and page practice, not legal or contract advice; the contract, evidence and the court's finding control.
This guide is for procurement, legal, finance, sales and website teams at equipment, electronics/electrical, automotive, medical device, hardware, chemical, packaging and export manufacturers in Changzhou and nearby areas. This page most often misses base, period, adjustment, deposit cap, choice and evidence, ending up as "the breaching party pays 30%".
First define the breach and calculation base: delay, quality, non-performance and termination are different; then adjustment and cap: low may be increased, high may be reduced, 30% is only a reference; finally deposit and choice: no more than 20%, formed on actual payment, damages or deposit but not both. The website should state breach, base, rate, adjustment, deposit, choice and evidence—not "always 30%".
How does this page relate to contract signing, quality claims and payment pages?
The damages/deposit page answers "how to calculate a breach, whether it can be adjusted, how the deposit is forfeited and how to choose between damages and deposit"; the contract/technical and quality agreement signing page answers document precedence, deviations, seals and versions; the supplier quality claim/chargeback page answers liability, evidence, amount, set-off and disputes; the payment terms and settlement page answers prepayment, credit terms, acceptance bills and overdue handling. The damages page is the calculation rule for breach consequences; a claim or payment page cannot replace it.
Common breakpoints: only "30%" without base/period; a deposit written as "earnest money"; deposit over 20%; both damages and deposit agreed without knowing the choice; overdue interest using old rules; no loss evidence; treating damages as a "fine"; no settlement clause after termination. Separate "breach—base—rate—adjustment—deposit—choice—evidence"; then procurement, legal and finance share one playbook.
| Page | Answers | Key content | Cannot replace |
|---|---|---|---|
| Damages/deposit | How to calculate/adjust/forfeit | Breach, base, rate, adjustment, deposit, choice | Signing/claim/payment |
| Contract signing | Precedence/deviation/seals | Versions, clauses, seals | Damages calculation |
| Quality claim/chargeback | Liability/evidence/amount | Nonconformity, claim, set-off | Damages adjustment |
| Payment terms/settlement | Credit/bills/overdue | Payment period, instruments, interest | Deposit forfeiture |
| Termination | Trigger/transition | Notice, settlement, wind-down | Damages clause |
| Dispute resolution | Jurisdiction/arbitration | Litigation/arbitration, evidence | Calculation rules |
This page map is editorial; the contract, evidence and the court's finding control.
What types of damages are there and how are they calculated?
By breach: late delivery, late payment, quality nonconformity, partial/total non-performance and post-termination breach. For each, state the calculation base (contract total/delayed goods value/unpaid amount/loss), rate or fixed amount, period (per day/week/one-off), starting point (day after agreed delivery/date of failed acceptance/payment due date), cap (e.g., a percentage of contract value) and whether it runs with continued performance. Civil Code Article 585 allows agreed damages or a method for calculating loss; where damages are agreed for delayed performance, the breaching party must still perform after paying. Do not write only "30% of the contract total"; state "which base, which period, what cap".
Acceptance checks: breach; base; rate/amount; period; start; cap; concurrent performance; example. Common gaps: rate only; unclear base; unclear period; unclear start; no cap; conflict with continued performance; no example.
| Breach | Suggested wording | Evidence | Common gap |
|---|---|---|---|
| Late delivery | Delayed value × daily rate × days, capped | Order/delivery/receipt | Contract total |
| Late payment | Unpaid amount × rate × days | Invoice/due date | No start |
| Quality | Repair/replace/reduce price/loss + damages | Inspection/claim | Double count |
| Partial non-performance | Unperformed value × rate | Order/delivery | Full amount |
| Total non-performance | Contract value × rate or loss | Contract/notice | No cap |
| Termination | Settlement clause + damages | Notice | Termination = waiver |
| Continued performance | Damages + performance | Clause | Pay instead |
| Example | 1,000,000 × 0.05% × 10 days = 5,000 | Calculation | No example |
Calculation methods are editorial; the contract and Civil Code Article 585 control.
How are excessive or low damages adjusted?
If agreed damages are lower than the loss, a court/arbitration may increase them on request; if excessively higher, it may appropriately reduce them (Civil Code Article 585). The Supreme People's Court interpretation provides: a breaching party may request adjustment by counterclaim or defence; the breaching party seeking reduction for excessive damages bears the burden of proof; the non-breaching party claiming reasonableness must also provide evidence; an argument that the contract prohibits adjustment is not supported (Article 64). The assessment is based on the loss under Article 584, considering the parties, transaction type, performance, fault and background; damages exceeding the loss by 30% are generally regarded as excessively high; a bad-faith breaching party seeking reduction is generally not supported (Article 65). The page should state "adjustable + burden of proof + 30% reference", not "30% is always valid/invalid".
Acceptance checks: adjustment mechanism; burden; 30% reference; loss basis; bad faith; example; dispute route. Common gaps: "no adjustment"; treating 30% as hard rule; no loss evidence; unclear burden; bad faith still reduced; no example.
| Item | Key point | Basis | Common gap |
|---|---|---|---|
| Increase | On request | Civil Code 585 | Unaware |
| Reduce | Appropriately | Civil Code 585 | "No adjustment" |
| Burden | Each party proves | Interpretation 64 | No evidence |
| 30% reference | Over loss by 30% generally high | Interpretation 65 | Hard rule |
| Loss basis | Civil Code 584 | Interpretation 65 | No loss |
| Bad faith | Generally no reduction | Interpretation 65 | Still reduced |
| Dispute | Litigation/arbitration | Contract | No route |
Adjustment follows Civil Code Article 585 and Contract Part Interpretation Articles 64–65; the court's finding controls.
How should a deposit be agreed and forfeited?
A deposit contract is formed when the deposit is actually paid; the amount is agreed but may not exceed 20% of the main contract amount, and the excess has no deposit effect; if the amount actually paid is more or less than agreed, it is treated as a change (Civil Code Article 586). If the debtor performs, the deposit is credited to the price or returned; if the paying party fails to perform or its performance does not achieve the contract purpose, it may not demand return; if the receiving party fails, it must return double (Article 587). The page should state "deposit ≠ earnest money/advance payment", "20% cap", "actual payment", "forfeiture trigger", "credit/return".
Acceptance checks: nature; 20% cap; actual payment; credit/return; forfeiture; double return; distinction from advance payment; receipt. Common gaps: "earnest money"; over 20%; no actual payment but forfeiture clause; advance payment treated as deposit; unclear trigger; no receipt.
| Item | Key point | Basis | Common gap |
|---|---|---|---|
| Nature | Deposit/earnest money/advance | Contract | Mixed |
| Formation | Actual payment | Civil Code 586 | Signature only |
| Cap | ≤20% of main contract | Civil Code 586 | Over 20% |
| Credit/return | After performance | Civil Code 587 | No return |
| Payer breach | No return | Civil Code 587 | Still returns |
| Receiver breach | Double return | Civil Code 587 | Principal only |
| Receipt | Receipt/transfer | Record | None |
Deposit rules follow Civil Code Articles 586–587; the contract and payment evidence control.
How to choose between damages and deposit?
Where both damages and a deposit are agreed, the non-breaching party may choose either on breach; if the deposit is insufficient to cover the loss, it may claim the excess (Civil Code Article 588). The page should state "choice, not both", "the shortfall can still be claimed", "consider evidence and amount", and "do not write 'both apply'". If the loss clearly exceeds the deposit, damages plus loss may be better; if the loss is hard to prove and the deposit covers it, the deposit may be faster. The contract and evidence control.
Acceptance checks: choice rule; shortfall; strategy; contract wording; evidence; example. Common gaps: "both apply"; unaware of choice; no shortfall claim; no record of choice; no example.
| Item | Key point | Basis | Common gap |
|---|---|---|---|
| Choice | Damages or deposit | Civil Code 588 | Both |
| Shortfall | Excess over deposit | Civil Code 588 | No claim |
| Strategy | Amount/evidence/speed | Editorial | None |
| Contract wording | No "both apply" | Contract | Conflict |
| Evidence | Loss/deposit proof | Record | Missing |
| Record | Reason for choice | Internal | None |
| Example | Compare two calculations | Sheet | None |
Choice rule follows Civil Code Article 588; the choice depends on the contract, evidence and strategy.
How is overdue payment interest calculated?
Where government bodies, public institutions and large enterprises delay payment to small and medium-sized enterprises, they must pay overdue interest: if a rate is agreed, it may not be lower than the one-year LPR at contract formation; if not agreed, 0.05% per day applies (SME Payment Guarantee Regulation Article 17, in force 2025-06-01). Payment periods: government bodies/public institutions within 30 days of delivery, with a contractual maximum of 60 days; large enterprises within 60 days of delivery, with other agreements to be reasonable under industry practice and paid promptly (Article 9); where payment is conditional on inspection/acceptance, the period starts from passing inspection/acceptance, and delay in inspection starts from the agreed deadline (Article 10). The page should state "who is covered, period, start, rate, evidence", and not apply 0.05% per day to all parties/contracts.
Acceptance checks: covered parties; payment period; start; agreed rate; default rate; evidence; exceptions. Common gaps: 0.05% for all; ignoring LPR floor; wrong start; no acceptance record; party mismatch; no evidence.
| Item | Key point | Basis | Common gap |
|---|---|---|---|
| Covered parties | Government/public/large | Regulation 17 | All parties |
| Payment period | 30/60 days | Regulation 9 | Overdue |
| Start | Delivery/acceptance | Regulation 9/10 | Wrong start |
| Agreed rate | Not below LPR | Regulation 17 | Below LPR |
| Default | 0.05% per day | Regulation 17 | Ignored |
| Acceptance | Deadline/record | Regulation 10 | No record |
| Evidence | Invoice/statement/payment | Record | Missing |
Overdue interest follows SME Payment Guarantee Regulation Articles 9, 10 and 17; the contract and party status control.
How should loss and evidence be accepted?
Damages should equal the loss caused by the breach, including profits after performance, but may not exceed what the breaching party foresaw or should have foreseen at contract formation (Civil Code Article 584). Common losses: replacement-purchase difference, line-stop/production loss, rework/sorting/transport, customer claims and interest; legal/valuation fees follow the contract/law. Evidence should prove the breach, the amount, causation, mitigation and foreseeability. The page should state "loss list + evidence + calculation sheet + mitigation record", not "compensate all losses".
Acceptance checks: loss types; amount; causation; mitigation; foreseeability; evidence; calculation; fees. Common gaps: "all losses"; no evidence; no causation; no mitigation; unforeseeable; no calculation; no fee clause.
| Item | Key point | Basis | Common gap |
|---|---|---|---|
| Loss types | Difference/line stop/rework/claim | Contract/record | Generic |
| Amount | Invoice/quote/wages/rent | Evidence | None |
| Causation | Breach → loss | Timeline | Broken |
| Mitigation | Replacement/stop loss | Record | None |
| Foreseeability | At formation | Contract/communication | Unforeseeable |
| Calculation | Formula/data | Sheet | None |
| Fees | Legal/valuation | Contract/receipt | No clause |
Loss/evidence follows Civil Code Article 584; evidence and the court's finding control.
Do damages and settlement clauses survive termination?
Termination of the rights and obligations does not affect the validity of settlement and wind-down clauses (Civil Code Article 567). Therefore damages, settlement, wind-down and dispute-resolution clauses may still apply after termination/exit, and termination does not erase accrued liability. The page should state "termination does not waive damages", "settlement clauses are independent", and "termination notice + settlement list + damages calculation". A common mistake is "the contract is terminated, so no damages".
Acceptance checks: basis; notice; settlement; damages; performed part; dispute clause; records. Common gaps: termination = waiver; no settlement; no damages; performed part ignored; dispute clause lost; no record.
| Item | Key point | Basis | Common gap |
|---|---|---|---|
| Basis | Contract/statute | Contract/Civil Code | None |
| Notice | Arrival | Civil Code 565 | No notice |
| Settlement | Independent | Civil Code 567 | No settlement |
| Damages | Accrued claim remains | Contract/Civil Code | Termination = waiver |
| Performed part | Restore/value/compensate | Civil Code 566 | Ignored |
| Dispute clause | Survives | Civil Code 567 | Lost |
| Record | List/calculation | Internal | None |
Termination/settlement follows Civil Code Articles 565–567; the contract and the court's finding control.
How should the damages and deposit page be written?
Suggested content: (1) scope (procurement/sales/services); (2) breach types; (3) calculation base/rate/period/cap; (4) adjustment (low/high/30% reference/burden); (5) deposit (20%/actual payment/forfeiture/double return); (6) choice between damages and deposit; (7) overdue interest (covered parties/period/LPR/0.05% per day); (8) loss and evidence; (9) post-termination settlement; (10) dispute resolution; (11) contact/version/update date. The public page explains rules and calculation; it should not publish specific supplier/customer contract amounts; examples should be marked "not a commitment". State "the contract, evidence and the court's finding control"; do not write "always 30%/deposit never returned".
Use consistent English terms (liquidated damages, penalty, deposit, earnest money, set-off, LPR, overdue interest, mitigation, foreseeability, burden of proof) and state the review date. Link to contract signing, quality claims and payment pages, but do not turn the damages page into a claims page.
| Section | What to write | Evidence | Avoid |
|---|---|---|---|
| Scope/breach | Procurement/sales/services | Contract | Vague |
| Calculation | Base/rate/period/cap | Formula/example | 30% only |
| Adjustment | Low/high/burden | Interpretation 64/65 | No adjustment |
| Deposit | 20%/payment/forfeiture | Receipt | Earnest money |
| Choice | Damages or deposit | Civil Code 588 | Both |
| Overdue interest | Parties/period/LPR | Regulation 17 | All parties |
| Loss/evidence | Types/evidence/mitigation | Records | All losses |
| Termination/dispute | Settlement/jurisdiction | Contract | Termination = waiver |
This structure is editorial; external statements must be truthful and verifiable, per the contract, evidence and the court's finding.
What must not be written?
High-risk claims: "always 30% of the contract total" (base/period/cap unclear, and 30% is only an adjustment reference); "the agreed damages cannot be adjusted" (a court may adjust on request); "the deposit is never returned" (depends on who breached and whether the contract purpose is frustrated); "damages and deposit apply together" (choose one); "earnest money is a deposit" (different nature); "overdue payment is always 0.05% per day" (the regulation covers government/public/large enterprises delaying SMEs, and an agreed rate may not be below LPR); "termination means no damages" (settlement clauses survive); "compensate all losses" (limited by foreseeability/causation/mitigation). These are inaccurate or misstate calculation, deposit or liability.
Safer wording: "This page applies to [procurement/sales/services]; breach [list]; calculation [base × rate × period, cap]; adjustment [low/high/burden]; deposit [≤20%/actual payment/forfeiture]; choice [damages or deposit]; overdue interest [parties/period/LPR/0.05% per day]; loss [types/evidence/mitigation]; termination [settlement]. The contract, evidence and the court's finding control." External promotion must comply with advertising and fair-competition rules; contract amounts and customer information need authorisation or redaction.
Go-live acceptance checklist
Ten checks: breach types, calculation base/rate/period, adjustment mechanism, deposit rules, choice between damages and deposit, overdue payment interest, loss/evidence, termination/settlement, examples and wording, version and contact. Each needs an owner, evidence and review date. The pass condition is not "the page says 30%", but that procurement, legal and finance can calculate, assess adjustment, handle the deposit, choose the clause and prepare evidence from the page.
Before go-live, run one real (anonymised) contract through: breach → base → calculation → adjustment → deposit → choice → loss → termination → dispute. Any step that fails is a gap in the page or the clause.
| Check | Pass condition | Evidence | If it fails |
|---|---|---|---|
| Breach types | List/classification | Contract | Add list |
| Calculation | Base/rate/period/cap | Formula | Add formula |
| Adjustment | Low/high/burden | Interpretation | Add mechanism |
| Deposit | ≤20%/payment/forfeiture | Receipt | Amend clause |
| Choice | Damages or deposit | Civil Code 588 | Reword |
| Overdue interest | Parties/period/LPR | Regulation | Add rule |
| Loss/evidence | Types/evidence/mitigation | Records | Add evidence |
| Termination/settlement | Independent clause | Contract | Add clause |
| Examples/wording | Examples/no misleading | Page | Rewrite |
| Version/contact | Date/channel | Page | Add version |
This checklist is editorial; the contract, evidence and the court's finding control.
Who should read this, who should not, and what decisions does it support?
It suits procurement, legal, finance, sales and website teams at equipment, electronics/electrical, automotive, medical device, hardware, chemical, packaging and export manufacturers in Changzhou and nearby areas; also companies drafting damages/deposit clauses for the first time, or facing "excessive damages reduced / deposit return dispute / overdue interest". It does not suit teams that do not sign contracts or trade only cash on delivery, or those wanting one page to replace legal/contract advice.
Read it if you are building a damages/deposit page; only 30% is written; the deposit exceeds 20%; damages and deposit are used together; overdue interest is applied to all parties; no loss evidence; termination is treated as a waiver. Skip it if you treat 30% as a hard rule, "earnest money" as a deposit, termination as no damages, or want to publish contract amounts/customer information. It supports self-review of breach, calculation, adjustment, deposit, choice, overdue interest, loss, termination and page wording.
FAQ
How much liquidated damages should we write?
There is no uniform percentage. Civil Code Article 585 allows agreed damages or a method for calculating loss; the key is to state the base, rate/amount, period, starting point and cap, based on provable loss. Excessive damages may be reduced and low damages increased; 30% is only an adjustment reference under Article 65 of the Contract Part Interpretation, not a hard rule.
Can excessive damages be reduced?
Yes. Under Civil Code Article 585, if agreed damages are excessively higher than the loss, a court/arbitration may appropriately reduce them on request; a breaching party seeking reduction by counterclaim/defence bears the burden of proof; damages exceeding the loss by 30% are generally regarded as excessively high; a bad-faith breaching party seeking reduction is generally not supported (Interpretation Articles 64 and 65).
Can a deposit exceed 20%?
No. Civil Code Article 586 provides that a deposit may not exceed 20% of the main contract amount, and the excess has no deposit effect; a deposit contract is formed when the deposit is actually paid; if the amount paid is more or less than agreed, it is treated as a change. A deposit differs from "earnest money/advance payment"; the page should make this clear.
Can damages and a deposit be used together?
No. Civil Code Article 588 provides that where both are agreed, the non-breaching party may choose damages or the deposit; if the deposit is insufficient to cover the loss, it may claim the excess. The choice should consider amount, evidence and speed.
How is overdue payment interest calculated?
Where government bodies, public institutions and large enterprises delay payment to small and medium-sized enterprises, they must pay overdue interest: an agreed rate may not be lower than the one-year LPR at contract formation; absent agreement, 0.05% per day applies (SME Payment Guarantee Regulation Article 17, in force 2025-06-01). Payment periods and starts are in Articles 9 and 10; do not apply 0.05% per day to all parties/contracts.
How should loss be proved?
Under Civil Code Article 584, damages should equal the loss caused by the breach, including profits after performance, but may not exceed what the breaching party foresaw or should have foreseen at formation. Prepare: breach facts, loss evidence (replacement difference, line-stop/rework/transport/customer claim), a causation timeline, mitigation measures, foreseeability evidence and a calculation sheet.
One-sentence takeaway
A Changzhou manufacturer's procurement damages and deposit page is not about "write 30%". It should turn breach types, calculation base/rate/period/cap, adjustment and burden, deposit 20%/forfeiture, choice between damages and deposit, overdue interest, loss evidence and post-termination settlement into a reviewable checklist—so procurement, legal and finance can calculate, adjust, choose and prove.
Method and limitations
This is a review of public rules and page practice, not legal or contract advice. No undisclosed customer, price or contract data were used; calculation methods, tables and acceptance items are editorial, not legal conclusions. Damages/deposit/loss/termination follow Civil Code Articles 567, 584–588; adjustment/burden follow the Supreme People's Court Contract Part Interpretation Articles 64 and 65; overdue interest and payment periods follow the SME Payment Guarantee Regulation Articles 9, 10 and 17 (in force 2025-06-01); the contract, evidence, party status and the court's finding control. This article does not determine whether any specific contract's damages are excessive; companies should assess actual loss and evidence.
Sources and scope
Information is current to 2026-11-07. The following are official pages; their text controls.
- Civil Code of the People's Republic of China: Supreme People's Court. Damages (Article 584), liquidated damages (Article 585), deposit (Articles 586, 587), choice between damages and deposit (Article 588), post-termination settlement (Article 567).
- Supreme People's Court Interpretation on Several Issues Concerning the Application of the Contract Part of the Civil Code (in force 2023-12-05): Supreme People's Court. Burden of proof in adjustment (Article 64), 30% reference and bad faith (Article 65).
- Regulation on Guaranteeing Payments to Small and Medium-sized Enterprises (State Council Order No. 802, in force 2025-06-01): The State Council of China. Payment periods and starts (Articles 9, 10), overdue interest (Article 17).