Meaning
Statutory penalty for a breach of contract requires a party who received a deposit to pay back twice that amount if they fail to perform their obligations. The double return rule is a core feature of the PRC Civil Code and serves to deter sellers from walking away from a deal for a better offer. It applies only when the payment has been specifically labeled as a deposit (Dingjin) in the contract.
Liability Calculation
Math for the penalty is straightforward as it doubles the original sum transferred at the start of the agreement. If a buyer pays fifty thousand dollars under the double return rule, the breaching seller must return the original fifty thousand plus an additional fifty thousand as a fine. This total payment satisfies the obligation to return the deposit and pay the penalty simultaneously.
Breach Consequence
Application of this rule requires a fundamental failure to execute the contract rather than a minor delay. When a seller invokes the double return rule, they acknowledge that their inability to deliver the goods has caused a legal default. Courts enforce this strictly, provided the initial deposit did not exceed the twenty percent statutory limit of the total contract price.
Judicial Application
Disputes regarding this penalty often center on whether the failure to perform was caused by force majeure or a deliberate choice. Evidence of the initial payment is required to trigger the double return rule in a legal proceeding. Once the transfer is proven, the burden of proof shifts to the receiver to justify why the double payment should not be made.
