administrative agreement

[Key points of the case]

A development company won two parcels, A and B, in a package. Because the commercial complex on parcel B was overdue, the Natural Resources Bureau calculated liquidated damages based on the total price of the two parcels, amounting to 999 million yuan. The company refused to accept the penalty and believed that the completion of plot A was on schedule and that the delay in plot B was partly due to government planning adjustments, so it applied for administrative review.

Lawyer Ying Ting pointed out that the core of this case is that supervision should be based on "parcel" rather than "overall contract". The reconsideration agency finally adopted this view and determined that plots A and B were independently evaluated and constructed in phases. Only plot B accounted for 20% of the total price, and the penalty based on the total amount was obviously inappropriate. At the same time, the new regulations of the administrative agency caused the construction permit to lag behind, and the responsibility should not be entirely borne by the enterprise.

Driven by the review agency, the administrative agency corrected the error on its own, and the company withdrew its application, successfully avoiding a loss of nearly one billion yuan. This case highlights the key role of administrative review in protecting the legitimate rights and interests of private enterprises and correcting improper administrative behaviors. It also provides an important reference for similar land contract performance disputes.

A development company was dissatisfied with the administrative reconsideration of the natural resources and planning bureau of a certain city in Zhejiang Province on the collection of liquidated damages - the administrative agency's supervision and management of the performance of the "State-owned Construction Land Use Rights Transfer Contract" should be based on land parcels[Basic case facts]In 2017, the applicant, a development company, obtained the state-owned construction land use rights for two plots A and B of a park in a city in Zhejiang Province through package bidding, and then signed a "State-owned Construction Land Use Rights Transfer Contract" with the former city's Land and Resources Bureau (now a city's Natural Resources and Planning Bureau). The contract clearly stipulates the transfer area, location, total transfer price, construction project start and completion time, planning conditions, etc. of plots A and B respectively. It also states the liability for breach of contract for overdue completion: for each day of delay, a penalty of 1‰ of the total transfer price of the land use rights must be paid. During the performance of the contract, the respondent's original land and resources bureau of a certain city determined that the applicant had completed the construction of the residential project on plot A as agreed. However, due to the applicant's own reasons, the commercial complex project on plot B failed to be completed on schedule. Accordingly, the respondent issued a "Decision to Pay Liquidated Damages" on April 18, 2024, determining that the applicant was responsible for breach of contract for the 689-day overdue completion of the two plots A and B, and should pay a liquidated damages of 999.739 million yuan based on the total land use right transfer price (including plots A and B). The applicant was dissatisfied with the decision and applied for administrative reconsideration to the People's Government of a certain city to revoke the decision to pay liquidated damages.
【Reconsideration result】

The administrative review agency concluded that the focus of the case was whether the applicant should bear liability for breach of contract and whether the calculation of liquidated damages was reasonable. By holding hearings, on-site inspections of construction projects, and convening collective case discussions, the administrative reconsideration agency believes that, with reference to the practice of investigating, identifying and processing idle land on a parcel basis in the disposal of idle land, the supervision and management of the performance of state-owned construction land use right transfer contracts should also be on a parcel basis. In this case, Plot A and Plot B were two independent parcels of land. The appraisal price was determined separately before the transfer. After the transfer, the project was submitted for construction approval in phases. The performance of the contract should be monitored separately for different parcels of land. The parcel price of the commercial complex project of Plot B only accounted for 20% of the total transfer price of the contract, but the respondent calculated liquidated damages based on the total transfer price of the two plots, which was obviously inappropriate. In addition, after the signing of the "State-owned Construction Land Use Rights Transfer Contract", the local government required the applicant to revise the plan due to the implementation of new regulations, resulting in a delay in the processing of construction permits for the commercial complex project in Block B. The respondent directly determined that the commercial complex project was completed overdue due to the applicant's own reasons, which was unfair. Accordingly, the administrative review agency pointed out to the respondent that there were problems with the decision involved in the case, prompting the respondent to correct the error on his own. The applicant voluntarily withdrew the administrative review application, and the administrative review was terminated.

【Typical meaning】
Supervising and managing the performance of state-owned construction land use rights transfer contracts in accordance with laws and regulations is a statutory means for the government to strengthen macro-control of land, and is an inevitable requirement for regulating land market behavior and promoting economical and intensive land use. Administrative review agencies should conscientiously implement the Private Economy Promotion Law, ensure that private economic organizations have equal use of land and other production factors in accordance with the law, and resolutely put an end to behaviors that harm the legitimate rights and interests of private enterprises. In this case, the administrative review agency insisted on taking the facts as the basis and the law as the criterion, and determined that the supervision and management of the performance of the "State-owned Construction Land Use Rights Transfer Contract" should be based on land parcels. It also pointed out that the respondent's determination that the applicant should bear the liability for breach of contract was unfair and the calculation of the amount of liquidated damages was obviously inappropriate. Correcting the misunderstanding of the respondent that "overall transfer equals overall responsibility", and promoting the respondent to correct improper performance supervision behaviors on its own, it has avoided economic losses of nearly one billion yuan for private enterprises, effectively protected the rights and interests of enterprises in the equal use of land and other production factors in accordance with the law, and created a good development environment for private enterprises.