DIKWP Model Analysis Report on Contract Supply Dispute Case
通用人工智能AGI测评DIKWP实验室
DIKWP Model Analysis Report on Contract Supply Dispute Case
International Standardization Committee of Networked DIKWPfor Artificial Intelligence Evaluation(DIKWP-SC)
World Academy for Artificial Consciousness(WAAC)
World Artificial Consciousness CIC(WAC)
World Conference on Artificial Consciousness(WCAC)
(Email: duanyucong@hotmail.com)
Abstract: This report conducts a layered semantic analysis of a typical supply contract dispute, applying the DIKWP (Data, Information, Knowledge, Wisdom, Purpose) five-layer model to deeply analyze the facts of the case, the focus of the dispute, the application of law, and the adjudication reasoning. By constructing a semantic graph of the case, labeling key tension nodes, and analyzing the propagation and resolution paths of these tensions, we clarify how the judge balances legal rules with the principle of fairness amidst ambiguous contract semantics and liability disputes, ultimately achieving the adjudication Purpose of contractual justice. The report also compares the adjudication paths of similar cases to assess consistency and summarizes the implications for judicial adjudication and intelligent assistance based on the model analysis.
Case Background and Problem Overview
Case Facts: Plaintiff Company A and Defendant Company B signed a supply contract. The contract stipulated that Company B would deliver certain specific equipment to Company A, with a delivery deadline of "within 30 days after receiving the advance payment," and the breach of contract liability clause stipulated "a penalty of 1% of the payment for goods per day for overdue delivery," among other contents. After the contract was signed, Company A paid the advance payment as agreed, but Company B failed to deliver the goods on schedule. The actual delivery was several days later than the agreed deadline, triggering a dispute. During this period, Company B claimed that the delivery delay was due to Company A changing technical requirements midway, leading to an extended production cycle; Company A denied any responsibility on its part, insisting that the delivery period should be calculated strictly according to the contract.
Focus of Dispute: The two parties engaged in a fierce dispute around the following issues: ①Semantics of Contract Terms: Does the "delivery within 30 days" agreed in the contract refer to calendar days or working days? Is there a grace period? The wording of the clause is ambiguous, and both parties stick to their own versions. ②Constitution of Breach and Liability: Does Company B's delayed delivery constitute a breach of contract? How many days was the delay? Did Company A cause part of the delay? ③Application of Liquidated Damages Clause: Should the penalty of 1% per day be calculated strictly as agreed? Company B argued that this standard was excessively high and unreasonable, requesting the court to reduce or exempt it; Company A demanded full payment according to the agreement. In short, a problem of interpretation of contract language meaning and a problem of bearing breach of contract liability are intertwined. This is a common and complex situation in supply contract disputes, testing the ability of semantic analysis of contract text and legal interpretation and application.
Below, we use the DIKWP model to conduct a deep five-layer semantic analysis of this case, peeling back the layers to reveal the development context of the case from facts to adjudication Purpose.
DIKWP Five-Layer Semantic Modeling
The Data Layer covers the raw objective materials of the case. The data in this case mainly includes: Contract Text (supply contract and attachment clauses signed by both parties), Correspondence Records (such as emails and letters between the two parties regarding delivery time and technical specification changes), Performance Process Records (Company B's production schedule, delivery notes, logistics records, Company A's receipt records, etc.), and Litigation Evidence Materials (documents submitted during the trial, such as proof submitted by Company A of losses caused by delayed delivery, and explanations of reasons for delay submitted by Company B). These constitute the foundational data for parsing the case.
Contract Text Points: The clauses directly related to the dispute in the contract include: "Delivery Deadline: Deliver equipment within 30 days after receiving advance payment," "Breach Liability: Pay liquidated damages of 1% of the total payment for goods per day for overdue delivery," "Force Majeure Clause," etc. It is worth noting that the wording "deliver within 30 days" is relatively brief, not specifying whether it refers to calendar days or working days, whether it includes holidays, nor indicating any grace period for extension. The agreement of 1% penalty per day appears to be a huge amount, but the contract does not further specify a cap or adjustment mechanism. These ambiguities or harsh terms paved the way for future disputes.
Performance Fact Data: According to the evidence, the date Company A paid the advance payment is T0. Calculated according to the 30-day limit agreed in the contract, the contract deadline for delivery is T_deadline = T0 + 30 days (if calculated by natural days). Company B's actual delivery date is T1. From these dates, the number of days overdue can be calculated as ΔT = T1 – T_deadline. For example, if T0 is January 1st and the contract stipulates 30 natural days, the deadline is January 31st; if Company B actually delivered on February 10th, the delay is ΔT = 10 days. (Specific values here are based on assumptions; in actual cases, dates should be determined by evidence).
Disputed Event Data: Company B claimed that Company A changed technical parameters midway through performance, forcing Company B to adjust production, thereby extending the delivery period. For example, evidence shows that Company A proposed new technical requirements when half of the delivery period had passed, and Company B replied by email agreeing to the adjustment and stating that extra production time was needed. These email exchanges record the date Company A proposed the change request (e.g., T_change) and content, Company B's reply opinion, and subsequent production plan changes, etc. If these data are true, whether they can be recognized as part of the reason for the delivery delay has a significant impact on liability determination.
Loss and Other Evidence: Company A provided a list of losses caused by the delayed arrival of equipment, such as production line forced shutdown for X days, economic loss ¥Y, and the amount Company B should pay calculated according to the contract penalty. Company B might provide its performance process records (such as production completion date, factory inspection report date, shipping logistics documents, etc.) to prove that it tried its best to perform, and how many days of delay were indeed caused by Party A's change requirements. In addition, there are transcripts of statements made by both parties in court, witness testimonies, etc. All these raw data may be complicated and contradictory, requiring entry into the Information Layer for screening and structuring.
In summary, the Data Layer aggregates " literal text " and " objective facts ". However, the information is mixed at this stage and cannot directly support adjudication; useful information needs to be extracted and the focus of the dispute needs to be clarified.
Information Layer (Information)
The Information Layer is the effective information and structured semantics extracted based on the Data Layer. At this layer, we organize the complex data, clarify the claims of both parties and the core content of the dispute, making the problem concrete and organized:
Structuring Contract Clauses: First, structuralize the relevant elements of the contract text. For example: Delivery Deadline = 30 days; Start Point = Date of receipt of advance payment (T0); Penalty Rate = 1% per day; Force Majeure Clause = Exists (listing specific contents, such as force majeure events and notification obligations), etc. Through structuring, the disputed clauses become clear: the term "30 days" and "penalty of 1% per day" become two important information nodes. At this point, we notice potential problems: the contract does not state whether 30 days are natural days or working days, nor does it clarify whether the period is extended if Party A causes the delay. These gaps in information leave room for different interpretations.
Performance Timeline and Delay Facts: Calculate clear time node information based on evidence: T0 (advance payment arrival date); contract deadline T_deadline; actual delivery date T1; and actual delay days ΔT. For example, the Information Layer extracts " Actual delivery is 10 days later than the agreed deadline ". This objective number of delayed days is certain. However, there is a divergence in how both parties view these 10 days: Company A views it entirely as Company B's breach and delay; Company B claims that part of it should be attributed to Company A's change requirements or negotiated extension. The Information Layer thus decomposes the focus information of " Reason for Delay ": Is it purely Company B's reason, or did Company A's behavior cause part of the delay? Both parties provided explanations: Company A's information claims "Never agreed to extension, Company B overdue by 10 days without reason"; Company B's information points out "Party A changed technical parameters during contract execution, causing production delay, equivalent to both parties agreeing to extend the delivery period accordingly". These pieces of information pave the way for subsequent liability determination.
Communication and Behavior Records: Extract information on the behavior and attitude of both parties regarding delay or change from the emails/letters in the Data Layer. For example: "On the 10th day after the advance payment arrived, Company B sent an email stating that Party A's new requirements would affect the delivery period and suggested an extension; Company A replied expressing understanding but did not agree to modify the delivery period in writing", etc. This information reflects whether the two parties reached a new consensus on the change of contract term. If Company A did express acceptance of the delay or did not object to the extension, this will be recorded as an important fact point in the Information Layer. Conversely, if Company A consistently insisted on on-time delivery, it also needs to be clarified.
Breach Consequences and Loss Information: The Information Layer also organizes both parties' claims regarding the consequences of the breach. Company A's information nodes include " Requested Penalty Amount " (e.g., claiming calculation at 1% per day, from T_deadline to T1, totaling 10 days, amount = equipment price × 1% × 10 days) and the claimed actual loss situation (e.g., stoppage loss ¥Y). Company B's information includes " Defense of Excessive Penalty " and " Denial of Loss ": Party B may argue that Party A has no substantial loss or the loss is far lower than the penalty amount, and the penalty accumulated at 1%/day is too harsh, requesting the court to adjust it downwards according to the law.
Through the organization of the Information Layer, we can summarize the main disputed issues of this case:
Semantic Interpretation of "30 Days" Deadline: Is it calculated by normal calendar days or working days? The contract is not explicit, causing interpretation disputes. Party A insists on strict calculation by natural days for violation, while Party B claims it can be calculated by working days or there is an industry custom for grace.
Division of Delay Liability: Does Company B's delayed delivery fully constitute a breach of contract? Should Company A's behavior of changing technical requirements be regarded as agreeing to extend the delivery period or being partially responsible itself, thereby mitigating Company B's liability?
Application and Adjustment of Penalty Clause: Should the penalty of 1% per day be applied in full? Is this standard "excessively higher than the actual loss" so that the court can adjust it according to the law? If adjusted, what magnitude of adjustment is reasonable?
Each question is associated with several information nodes, such as Question 1 linking to "Definition of 30 days," "Contract interpretation rules," etc.; Question 2 linking to "Facts of delay reasons," "Attribution of fault," etc.; Question 3 linking to "Penalty calculation," "Proof of loss," "Legal standards for penalty adjustment," etc. At the Information Layer, these points have emerged from the massive data and become clear problems to be solved, preparing for legal analysis.
Knowledge Layer (Knowledge)
The Knowledge Layer introduces knowledge such as legal norms, judicial interpretations, precedents, and principles to evaluate and answer the questions in the Information Layer. The legal knowledge involved in this case mainly includes:
Contract Interpretation Rules: Regulations on the interpretation of contract clauses in the Contract Section of the Civil Code of the People's Republic of China and relevant judicial interpretations. For example, Article 498 of the Civil Code stipulates regarding Standard Clauses (if this contract is a standard text provided by one party): "Where a dispute arises over the understanding of a standard clause, it shall be interpreted according to common understanding. Where there are two or more interpretations of a standard clause, an interpretation unfavorable to the party providing the standard clause shall be adopted." That is to say, if "30 days" is a standard clause and there is ambiguity, an interpretation unfavorable to the party providing the standard contract should be adopted. If the contract is not a standard text, general contract interpretation principles can also be referred to: contract clauses should first be understood according to their literal common meaning; if there is ambiguity, the meaning should be determined by combining the contract Purpose, transaction customs, etc. Under normal circumstances, when the word "day" is not specifically noted, it should be regarded as a natural day, unless there is evidence proving that both parties gave it a special meaning in the contract (such as agreeing to calculate by working days). Therefore, the Knowledge Layer prompts the judge: the default interpretation tends to be Calendar Days (natural days), while considering the unfavorable interpretation rule for standard clauses—if this clause was drafted by Party A and is ambiguous, an interpretation unfavorable to Party A should be favored (Party A demands strict natural days, maybe it should be understood as working days favorable to Party B instead). These rules provide a basis for resolving the "30 Days" Semantic Dispute.
Breach and Liability Reduction Rules: General provisions and special circumstances regarding breach liability in the Civil Code. Article 577 establishes principles such as the breaching party bearing liability for continued performance and compensation for losses; Article 588 stipulates exemption for force majeure, etc. In this case, what is more relevant is the legal consequence of Delay Caused by Creditor's Reason. Article 592, Paragraph 2 of the Civil Code stipulates: "Where a breach of contract by one party causes loss to the other party, and the other party is at fault for the occurrence of the loss, the amount of compensation for loss may be reduced accordingly." This rule of offsetting faults indicates that if Party A's behavior had a certain impact on the delayed delivery, Company B's compensation liability should be reduced accordingly. In addition, starting from the theory during the original Contract Law period, if Party A proposes a change during performance and both parties actually accept the change leading to an extension of the performance period, it can be regarded as a new agreement on the delivery period or Party A's implied consent to the extension, then Company B's delayed days should deduct the corresponding part and not be fully counted as breach delay. This is consistent with the principle of good faith and the prohibition of abuse of rights emphasized in the Civil Code. The Knowledge Layer thus introduces "Creditor's Fault" or "Performance Assistance Obligation" related knowledge: if the debtor's delayed performance is caused by the other party's poor assistance or request for change, the law often does not recognize that part of the delay as a breach, or although it is a breach, liability can be mitigated. This knowledge provides a legal basis for the question of "How to share delay liability".
Legal Regulations on Penalty and Adjustment Basis: The penalty clause agreed in the contract is regulated by Article 585 of the Civil Code. The first paragraph affirms the validity of the penalty agreed by the parties, and the second paragraph stipulates: "Where the agreed penalty is excessively higher than the loss caused, the parties may request the People's Court or arbitration institution to reduce it appropriately." This is the direct legal basis for Company B's claim to lower the penalty. In addition, the judicial interpretation of the Supreme People's Court provides guidance on how to judge "excessively higher": Article 29 of the original Interpretation of Contract Law (II) proposes that the court should adjust the penalty by considering factors such as actual loss, contract performance, the degree of fault of the parties, and expected benefits, balancing comprehensively based on the principles of fairness and good faith. Moreover, the judicial interpretation clarifies "In general, if the agreed penalty exceeds 30% of the actual loss, it can be recognized as 'excessively higher than the loss caused'". This proportional judgment provides a reference standard for practice. In this case, if the total penalty claimed by Company A far exceeds its actual loss (e.g., Party A's loss is estimated at 500,000 yuan, but the penalty calculated according to the contract reaches millions), it obviously belongs to excessively high and should be adjusted. In addition, the Knowledge Layer also reminds: if the penalty clause is considered too punitive, the court has the right to reduce it appropriately ex officio, even if the compliant party does not agree (principles of the above judicial interpretation are often cited in practice). There are also relevant precedents indicating that when the penalty has the nature of interest, if the Annualized Rate of Total Breach Liability is far higher than the market interest rate, it is often recognized as an excessive penalty and lowered. For example, some cases regard a daily penalty rate of 0.05% (annualized about 18%) as "double punishment" for the breaching party and do not support it; in comparison, the daily penalty rate of 1% in this case reaches 365% annually, which obviously falls into the excessively high range from the perspective of the Knowledge Layer.
Relevant Precedents and Industry Customs: The Knowledge Layer also includes Guiding Cases or Precedent Experience of similar disputes. For example, are there judicial precedents interpreting "within X days" in contracts where working days/natural days are not specified? According to inquiries, general judicial opinion tends to understand as natural days unless the contract explicitly writes "working days", because this is a daily concept and also necessary to ensure transaction certainty. If Company B claims an industry custom of understanding 30 days as working days, evidence is also needed to support that such a custom indeed exists in the industry, otherwise the court will likely not adopt it. Another precedent area is the Discretion of Penalty Amount: judgments of many past cases illustrate the scale of penalty adjustment, such as some courts considering "exceeding 30% of loss" or "annual interest rate exceeding 24%" as standards for judging whether it is too high. In addition, Guiding Cases of the Supreme People's Court have attitudes toward penalty adjustment: respecting the agreement of the parties while preventing obvious imbalance. For example, guiding cases clarify: even if the parties agree in the contract on a clause "not to request the court to reduce the penalty," the court can still adjust excessive penalties based on the principle of fairness in extreme cases. This knowledge provides the basis and discretionary boundaries for judges to deal with "Whether to adjust the penalty and how much to adjust".
Jurisprudence and Principles: Besides specific articles and cases, the Knowledge Layer also covers legal value principles, such as the Principle of Strict Observance of Contracts (pacta sunt servanda), Principle of Fairness and Reasonableness, Principle of Good Faith, and Principle of Proportionality between Fault and Penalty. When interpreting contract clauses, literal interpretation is primary, and purpose and transaction purpose are secondary; this is the embodiment of strict observance of contracts and stability of transactions. At the same time, breach remedies emphasize the combination of compensation and punishment but not excessive; this is the embodiment of principles of fairness and proportionality. For example, the principle of good faith in the General Provisions of the Civil Code requires all parties to perform in good faith and not abuse rights. Applied to this case, if Company A indeed had behaviors inducing delay, then Company B's partial delay should not be recognized as within the scope of breach punishment; this is actually the principle of good faith at work. Another example is the Principle of Change of Circumstances, although not necessarily directly applicable to this case, as jurisprudence it reminds us: unexpected changes during contract performance can be negotiated to change the contract. In the scenario where technical parameter changes lead to delivery changes, it also implies a similar handling idea to change of circumstances—requiring parties to adjust expectations reasonably rather than mechanically applying penalties. These principles provide guiding ideology for the discretion of the Wisdom Layer.
At the Knowledge Layer, we have mapped the problems raised in the Information Layer to corresponding legal regulations and principles: How to interpret ambiguous clauses → Solved based on contract interpretation rules; Liability caused by delay reasons → Handled based on rules like offset of faults; Whether the penalty is excessively high → Discretion based on legal articles and judicial standards. At the same time, this layer incorporates the dispute of the case into the legal framework, raising the problem to the normative level: "What does the law allow/prohibit, and what discretion does the adjudicator have?" In this way, the solution to the problem is no longer just a contest of facts but has a jurisprudential basis. However, even with legal norms, there may be tensions between different norms, requiring higher-level value weighing, which is exactly the work to be done entering the Wisdom Layer.
The Wisdom Layer is the level where the judge conducts Value Judgment and Strategic Trade-off based on the application of legal knowledge. Here, combined with the actual situation of the case, multiple principles and conflicts of interest are balanced to find an appropriate adjudication plan.
The Wisdom Layer in this case mainly faces the following Conflict and Balance of Value Considerations:
Strict Observance of Contract vs. Reasonable Flexibility: On the one hand, the seriousness of the contract requires execution according to the explicit text of the contract, supporting Party A to calculate strictly according to the literal "30 days," and even one day overdue counts as a breach to maintain the enforceability of the contract. This reflects "protection of the compliant party's interests" and maintenance of commercial credit. On the other hand, contract performance must also consider actual conditions for reasonable flexibility and cannot disregard the principle of good faith. If Party A indeed proposed technical modifications, requiring Party B to strictly adhere to the original deadline is unfair. The Wisdom Layer needs to judge: In the context of this case, does insisting on strict performance lead to obvious unfairness? If so, flexibility should be sought in jurisprudence (e.g., recognizing that "30 days" should be understood flexibly or partially extended). The judge might ask themselves: What was the Reasonable Expectation of both parties regarding "30 days" at the time of signing? If in most transactions this refers to natural days, then calculating the violation by natural days conforms to common expectations; but if Party B can cite that Party A expressed during contract performance that "the delivery period can be graced for a few days," then strictly calculating by 30 days would not conform to the original intent and good faith of both parties. The Wisdom Layer tends to protect Transaction Stability, so if there is no evidence to the contrary, the contract is executed according to the commonly understood natural days to avoid arbitrarily changing the meaning of the contract. But the Wisdom Layer also reminds: Do not enforce the law mechanically to the point of being unreasonable; pay attention to the interactions during contract performance. Considering comprehensively, the wisdom judgment in this case might be: "Default 30 days as natural days, but due to partial delay caused by Party A's behavior, this part is not counted as Party B's breach."
Punishing Breach vs. Preventing Excessive Punishment: The penalty clause has both punitive and compensatory functions. The Wisdom Layer needs to seek a balance between safeguarding the rights and interests of the compliant party and avoiding excessive blows to the breaching party. Company A claims a daily penalty of 1%, which sounds small in the short term but accumulates to be very substantial, obviously exceeding the compensatory scope and having a punitive nature. The judge needs to weigh: Is it appropriate to fine strictly according to the agreement, which might cause Company B to bear a huge fine or even affect its survival? Especially if Company A's actual loss is far less than the penalty amount, full support will cause Imbalance (the penalty becomes an unexpected windfall for Party A). Conversely, if the penalty is significantly reduced, Party A's legitimate expected interests may not be reflected, making it difficult to warn against breach behavior and weakening the binding force of the contract. The Wisdom Layer usually follows the concepts of Proportionality between Fault and Penalty and Equity of Interests: the breaching party should pay a price but not suffer an economically unbearable penalty. Combined with the emphasis on "combining leniency and severity" in China's judicial policy regarding the business environment, wisdom consideration will tend towards Moderate Punishment. Specifically, the Wisdom Layer may consider a Compromise Plan: Recognize that Party B's breach is established and needs to pay the penalty, but appropriately reduce the standard to a reasonable level based on the principle of fairness. For example, reduce the daily penalty rate from 1% to a value that is still punitive but not excessive (referencing judicial practice, it may be calculated based on the loan interest rate of the same period plus a certain proportion). Such an adjustment reflects respect for the agreement (not completely exempting the penalty) while avoiding injustice caused by excessively high penalties. Since judicial interpretation clearly requires comprehensive consideration of actual losses and expected benefits, the Wisdom Layer will adjust the penalty to a level commensurate with the loss and slightly punitive based on this.
Evaluation of Fault of Both Parties and Principle of Good Faith: The Wisdom Layer also needs to evaluate the morality and good faith of both parties' behaviors in performance. Was there subjective negligence or malice in Company B's delayed delivery? Did Company A fulfill its assistance obligations when proposing change requirements? Is there suspicion of abuse of rights or "fishing for breach"? If Company B delayed only due to objective difficulties (or even Party A's changes) and communicated actively, showing good faith, the judge at the Wisdom Layer would give it some understanding and tend to mitigate its liability. Conversely, if it is found that Party B delayed without reason and did not notify in time, implying subjective negligence in performance, it should be strictly pursued. The Wisdom Layer applies the Principle of Good Faith: requiring the Compliant Party to also take reasonable measures to reduce losses, and not to demand high compensation after allowing losses to expand; requiring the Breaching Party to notify in time and mitigate losses. This actually corresponds to the obligation to prevent the expansion of losses in Article 591 of the Civil Code. In this case, the Wisdom Layer might notice that Party A did not urge for a long time after the advance payment, and only proposed change requirements near the deadline. Did this induce Party B to breach? If there is such a sign, the wisdom judgment will determine that Party A also acted improperly, and Party B's liability share can be reduced accordingly. These subtle behavioral evaluations cannot be directly derived from legal provisions, but they are taken into account in the Wisdom Layer, making the adjudication more reasonable.
Adjudication Effect and Social Impact: The Wisdom Layer often examines the actual effects that the judgment may produce from a higher perspective, including the impact on the future operations of both parties, industry contract concepts, and the business environment. For example, full penalty might cause Company B to fall into difficulties or even bankruptcy, which is detrimental to maintaining normal trading partner relationships and market stability. While Discretionary Processing is conducive to promoting acceptance by both parties and possible continued cooperation, it also sends a signal to society that Justice maintains contracts while also focusing on fairness. Current judicial policy emphasizes optimizing the rule of law business environment, requiring courts to establish the concept of interest equity when trying commercial cases under the premise of adhering to freedom of contract and good faith, minimizing the impact of judicial activities on the normal operation of enterprises. The Wisdom Layer will proactively assess the economic impact of the adjudication: it must make the breacher pay the credit cost, but also cannot make the business environment rigid and harsh or breed speculation due to improper judgment. This consideration will be reflected in the judgment result, that is, extreme results usually do not appear, but rather an adjustment plan balancing the interests of all parties.
Combining the above, at the Wisdom Layer, the judge forms a Preliminary Adjudication Idea after weighing various values: Confirm that Party B's delayed performance constitutes a breach (contract should be kept); Interpret 30 days calculated by natural days (common understanding, and no special explanation in contract), Overdue days determined; Consider Party A's change behavior, reduce or exempt part of Party B's delay liability (good faith and fairness consideration, e.g., deduct 5 days extension, only recognize 5 days as breach delay); Penalty standard is significantly too high and adjusted according to law (e.g., reduced from 1%/day to 0.2%/day), finally calculating a reasonable penalty compensation amount. In this way, the compliant party Company A receives loss compensation and a certain penalty, and the breaching party Company B also bears liability but does not suffer punishment that could be multiples of the loss under the contract agreement. This plan balances the spirit of contract and fairness and justice, reflecting the balancing art of judicial wisdom.
The Purpose Layer reveals the higher-level Purposes and Policy Considerations behind judicial adjudication. In individual cases, it is embodied as the effect the judge hopes to achieve through this judgment; macroscopically, it is embodied as the value orientation pursued by the judiciary. For this case, we can analyze the Purpose from two levels: micro and macro:
Micro (Individual Case) Adjudication Purpose: Solving the dispute between both parties fairly and reasonably is the primary purpose of this case. The judge hopes the adjudication result will Settle the Dispute, safeguarding the legitimate rights and interests of the damaged party (Company A) while avoiding excessive punishment of the breaching party (Company B) leading to obvious unfairness. That is, achieving the Balance of Contractual Justice: the compliant party should receive compensation and credit relief due to the other party's breach; the breaching party pays the price for its own fault, thereby strengthening the seriousness of the contract. But at the same time, the compensation amount should be commensurate with the actual loss and degree of fault, not allowing the compliant party to obtain unexpected windfall profits or the breaching party to suffer unreasonable fines. At the individual case level, the adjudicator's Purpose is to Re-create a Balance between the parties, making the result acceptable to both to some extent, thereby accepting the judgment and ending the lawsuit. This is often reflected in citing Good Faith and Fairness Principles in the judgment reasoning, explaining why the court makes adjustments, hoping both parties understand the intention of the judgment and are convinced.
Macro (Judicial Policy) Purpose: The adjudication of contract disputes also bears the function of transmitting judicial policies and values. Under the current general environment, China's judiciary emphasizes Optimizing the Business Environment, Maintaining Transaction Security, and Construction of Integrity System. Therefore, one of the Purposes of the judgment in this case is to Promote the Spirit of Contract, warning commercial subjects to keep their promises, and breach of contract will incur corresponding costs. This is reflected in the judgment as an affirmative finding of Company B's delay breach and corresponding punishment, thereby playing an educational and exemplary role. At the same time, the judiciary also focuses on Protecting Normal Operation of Enterprises, not causing an enterprise to go bankrupt due to one breach, which reflects the concept of benevolent and civilized law enforcement. The Supreme People's Court has emphasized that in civil and commercial trials, interests should be balanced under the premise of adhering to contract freedom and good faith, trying to reduce the adverse impact of justice on enterprise operations. Therefore, another Purpose of this case is to Balance Punishment and Salvation: punishing the untrustworthy while giving them a chance to correct, not letting punishment become a "devastating blow." Macroscopically, this is conducive to creating a rule of law business environment where Integrity has Value, Breach is Punished but not excessively harsh. The message released by the judgment is: The law respects the agreement of the parties, but when the agreement is obviously unbalanced, the court will intervene according to the law to ensure a reasonable result. This Purpose conforms to the principle of "promoting integrity construction through trial" and "proportionality of punishment" advocated by the state, maintaining the long-term benign operation of market transactions.
Judge Personal/Judicial System Purpose: There is also a hidden Purpose involving the judge's Consideration of Adjudication Authority and Enforceability. A judgment perfected at the Purpose Layer should be successfully executed and withstand appellate review. If the judgment is too biased towards one party, causing the other party to resolutely refuse to accept the appeal or even trigger public opinion controversy, it is not a successful adjudication. Therefore, the judge intends to make both parties "win some and lose some" through compromise balance to increase acceptance. In addition, the court also hopes to Reduce the Occurrence of Similar Disputes through such adjudication: enterprises see that high penalties may not be fully compensated, so they will not easily breach contracts with luck, because they will eventually have to compensate a considerable part of the loss; and the compliant party also understands that excessively high penalties agreed in the contract are not necessarily fully supported, and will set reasonable clauses more prudently next time contracting. This Demonstration Effect and Behavioral Guidance is exactly the social Purpose of judicial adjudication.
In summary, the Purpose Layer elevates the balanced decision-making of the Wisdom Layer to the height of value mission: Achieving justice in individual cases and shaping an honest and contract-abiding business atmosphere overall. The Purpose of the adjudication in this case can be summarized as: "Maintain the seriousness of the contract and commercial credit, safeguard the interests of the compliant party; at the same time reflect judicial rationality and humanistic care, prevent excessive penalty punishment, and promote the repair and continuation of transaction relationships." This Purpose runs through the selection of adjudication ideas and will ultimately be achieved in the judgment result. It is under the guidance of the Purpose Layer that the judge can select the one most consistent with the judicial purpose among various possible handling methods, ensuring that the adjudication is not only legal and grounded but also reasonable and convincing.
After the above DIKWP five-layer modeling analysis, we have clearly depicted the "semantic link" of this case from facts to adjudication goals. Briefly summarized as follows:
Data Layer: Raw materials such as contract text ("30 days delivery," "1% penalty per day," etc.), time nodes, email correspondence, proof of loss, etc.
Information Layer: Extracting key information such as unclear meaning of disputed clauses (30 days =?), delayed days = 10 days, whether change requests caused delay?, penalty amount dispute, etc.
Knowledge Layer: Legal knowledge such as contract interpretation rules (usually natural days, unfavorable interpretation of standard clauses), principle of offset of faults, legal basis for penalty adjustment and 30% standard, similar precedent experience.
Wisdom Layer: Balancing strict observance of contract vs. substantial fairness, punishment vs. remedy, considering good faith factors, discretionarily determining breach days and adjusting penalties to make the result reasonable.
Purpose Layer: Achieving both individual case justice and performance incentives, maintaining contract order and business environment, demonstrating the judicial concept of maintaining integrity while being tolerant and reasonable.
Such a link demonstrates the deduction process from specific evidence to value goals. in the following section, we will build a case semantic graph based on the above semantic chain, label key Tension Nodes, and analyze how the dispute propagates in the graph and how it is finally converged and resolved.
Case Semantic Graph and Tension Node Annotation
Based on the previous analysis, we constructed a Semantic Graph of this contract dispute, with nodes covering levels such as contract clause semantics, performance facts, legal norms, value considerations, and adjudication Purposes. In the graph, some nodes have Semantic Tension (i.e., different interpretations or handling divergences). These tension nodes correspond to the focus and difficulties of this case. Below we annotate and explain the main tension nodes and their relationships in the graph:
1. Contract Clause Semantic Tension (Information Layer)
Node: Delivery Deadline "Deliver within 30 days" – Ambiguous Meaning Tension. Both parties A and B have distinctively different understandings of this contract clause:
Company A's Understanding: "30 days" means 30 natural days, calculated continuously by the calendar; any delay beyond this period constitutes a breach. Party A claims that Party B should bear breach liability for delivery exceeding 30 × 24 hours, regardless of weekends or holidays.
Company B's Understanding: "30 days" is not absolutely strict; it can be understood as 30 working days, or at least should not include statutory holidays and uncontrollable factors; even if calculated by natural days, reasonable grace should be given, and breach should not be counted immediately after zero hour. Party B also argues that if considering the extension caused by Party A's midway change, then 30 days should be recalculated or extended from the confirmation of the change.
This semantic ambiguity of the clause manifests in the graph as the "30 Days" Node branching out into two paths: one leading to "Natural Day Interpretation" and one leading to "Working Day/Grace Interpretation". Since the contract does not define "day," semantic tension exists. In the graph, we mark the "30 Days" node in red to indicate it as a source of dispute. It connects to the "Contract Interpretation Rules" node in the Knowledge Layer, which has two applicable rules: "Literal General Rule" and "Unfavorable Interpretation for Ambiguity." If the contract is deemed a standard clause (e.g., standard contract text provided by Party A), the unfavorable interpretation rule might interpret "30 days" unfavorably to Party A (Party A is the provider), tending towards Party B's version; but normal semantic rules tend towards calendar days. Therefore, the tension of this node reflects Multiple Interpretations Caused by Semantic Ambiguity, which must be determined through legal interpretation strategies. On the graph, the "30 Days" node is one of the core divergence points in the Information Layer, directly related to the starting point of breach judgment.
A similar contract clause tension exists in the Penalty Clause: "1% penalty per day for overdue delivery." Party A believes this clause is valid and should be executed unconditionally; Party B believes this agreement is too high and should be adjusted or partially invalid in law. This is actually located at the junction of the Information Layer and the Knowledge Layer, also a tension node. We also mark the "1% Penalty" node in red and connect it to the "Penalty Adjustment Rules" node in the Knowledge Layer. In short, ambiguous or extreme clauses in the contract text are often the source of dispute tension, and this case unfolds divergence precisely through these clause nodes.
2. Performance Fact Liability Tension (Information Layer)
Node: Attribution of Reasons for Delivery Delay – Fact Finding Tension. Regarding the 10-day delivery delay (hypothetical value), both parties' statements on reasons and responsibilities are inconsistent:
Company A Claims: The delay was entirely due to Company B's production and management reasons; Party A had no behavior causing delay during contract performance. Party A emphasizes that delivery should have been made on the contract date, but Party B broke the promise without any legal reason. When Party B proposed technical adjustment needs, Party A did not confirm acceptance of delay, only cooperated with modification, but never waived the original deadline. Therefore, all 10 days should be counted as Party B's breach delay.
Company B Claims: The delay was mainly due to Party A's reasons. Specifically, Party A modified technical specifications twice during performance, causing Company B's existing production process to start over, consuming at least 10 extra days. Party B claims to have informed Party A of this impact orally or in writing and received tacit consent. Therefore, there is little or no delay caused by Party B's own reasons, and the remaining delay should be regarded as contract change or extension, not breach; even if considered breach, Party B's liability should be exempted or mitigated.
This "Reason for Delay" Node has obvious tension: Is it one party's liability or do both parties have responsibility? On the graph, it connects to Fact Evidence Nodes (emails, production records, etc.) on one end and Liability Attribution Rules in the Knowledge Layer (such as principle of offset of faults) on the other. If evidence supports Party A's claim, the path leads to the conclusion "Party B fully liable for breach"; if it supports Party B's claim, it leads to "Party A fault intervention, Party B liability mitigation." We mark this node in red, indicating the controversy gateway in fact-finding. Its importance lies in that different findings will directly affect whether a breach is established and the basis for penalty calculation. The graph shows that the upward movement of this tension node affects the "Breach Liability" knowledge node (whether to apply mitigation rules) and the downward movement affects the "Penalty Days" information node (how many days count as breach). It can be said that this is the Fact Gateway in the adjudication of this case: the judge must choose one here, otherwise the judgment on penalties, etc., cannot continue.
3. Legal Application Tension (Knowledge Layer)
Node: Applicability of Penalty Adjustment – Legal Discretion Tension. Based on contract agreement and facts, there is an important divergence point in law: Should the court exercise discretion to adjust the penalty?
Path 1 (No Adjustment): A possible path is to handle the penalty strictly according to the agreement, with the court respecting contract freedom and not intervening to adjust. This means the penalty is calculated at 1% per day in full, and Party A obtains the agreed compensation. The legal concept supporting this path is freedom of contract and priority of agreement; adjustment is made only when the party requests it and evidence fully proves it is too high. If Party B fails to prove the loss situation or does not formally submit an adjustment application, the court may not actively intervene and judge completely according to the agreement.
Path 2 (Adjustment): Another path is to appropriately reduce the excessive penalty according to Article 585, Paragraph 2 of the Civil Code and judicial interpretations. Considering that 1%/day is obviously excessively higher than common sense, and Party B also requested adjustment, the court tends to apply legal remedies to balance rights and interests. This will significantly reduce Party B's compensation amount. Supporting this path is the principle of fairness and judicial review function, that is, when the parties' agreement is obviously unfair, the court should act.
In the graph, "Penalty Adjustment" as a Knowledge Layer node leads to two possible routes: "Adjust" and "Do Not Adjust", constituting tension. We mark this node in red because the choice determines vastly different judgment results. This node also connects to the value judgment of the Wisdom Layer: the judge needs to decide whether to adjust and the magnitude of adjustment based on factors such as actual loss ratio and fault. For example, the graph branches "Penalty too high?" into "Yes/No"; the Yes path connects to the "Court discretionary reduction of penalty" knowledge point, and the No path connects to "Calculate completely according to agreement." The final resolution of this tension, as analyzed in the Wisdom Layer above, requires comprehensive consideration of multiple factors and combination with legal policy scale to decide. Therefore, it is actually a Tension between Legal Norms and Discretion: the law empowers but does not mandate adjustment, relying entirely on the judge's balance. We will see in the path analysis section that this tension is ultimately resolved by the weighing of the Wisdom Layer and determines a unique result downwards.
Node: Choice of Contract Interpretation Method – Another Knowledge Layer tension relates to contract interpretation. If "30 days" is considered ambiguous, the judge must choose between rules like Literal Interpretation and Purpose/Unfavorable Interpretation. One path is to adhere to the Literal Conventional Meaning (natural days, strict deadline), and the other is to introduce the Unfavorable Interpretation Rule (interpret ambiguous clauses in a way favorable to Party B, or recognize a grace period). These two may conflict at the Knowledge Layer. On the graph, the "Contract Interpretation Rules" node branches into two sub-nodes: "Natural Day (Common Understanding)" and "Working Day/Grace (Unfavorable to Provider)." This is a divergence at the legal interpretation level, requiring a choice based on facts and values. In this case, if the contract is Party A's format, then according to Article 498, it tends towards Party B's understanding; but generally, when sales contracts do not specify calendar/working days, courts mostly handle it as natural days. Therefore, this is also a tension point requiring high-level judgment. We mark it to make it clear at a glance that the judge faces an interpretive choice here.
4. Value Conflict Tension (Wisdom Layer)
Node: Strict Performance Concept vs. Substantial Fairness Concept – Value Orientation Tension. This is the main source of tension at the Wisdom Layer. It is not a single node, but two opposing value considerations competing for dominance:
Strict Performance (Strict Observance of Contract): Believes that since the contract is agreed upon, it should be strictly executed; being late by one day is a breach, penalties should be applied as due, and clauses should not be easily loosened. This concept leans towards protecting the certainty of the contract and the interests of the compliant party, emphasizing the rigidity of the law. Applied to this case, it supports Party A's request, shows no tolerance for Party B's overdue, and executes the penalty at a high amount according to the agreement to serve as a warning.
Substantial Fairness (Equity and Consideration): Believes that adjudication should focus on the actual situation and fair results, and cannot stick to words to cause obviously unreasonable consequences. Emphasizes that liability should be adjusted according to fault and loss, ensuring compensation is commensurate with damage. Applied to this case, it partially adopts Party B's reasons, allows reasonable flexibility in delivery period or mitigates penalties, making the result more fair.
At the Wisdom Layer of the graph, we can use two opposing nodes to represent these two value orientations (can be labeled as W1: Strict Contract, W2: Substantial Fairness), and use a red line between the two to indicate tension conflict. W1 links to Knowledge Layer decisions like "Penalty not reduced," "All overdue days counted as breach," while W2 links to "Penalty discretionary reduction," "Extension days not counted as breach," etc. In fact, the judge's adjudication thinking often seesaws between these two. In this case, this tension is ultimately reflected as Compromise: neither blindly strict nor blindly lenient, but a compromise reached between two value forces. Tension nodes in the Wisdom Layer are often resolved by Finding a Balance Point—this case achieved the reconciliation of value conflicts through "partial extension + moderate reduction of penalty." Therefore, on the graph, the conflict arrows of W1 and W2 finally converge to a fusion node (representing the specific plan after balanced consideration). This Wisdom Layer tension is the hardest to grasp in legal adjudication, requiring judges to use experience and reason to make choices; we specially mark it to remind of its existence.
5. Party Purpose Tension (Purpose Layer)
Node: Party A's Purpose vs. Party B's Purpose vs. Judicial Purpose – Target Appeal Tension. At the Purpose Layer, the contradiction manifests as different results desired by each party:
Company A's Purpose: Fully realize the contractual rights and interests, maximize penalty compensation. Specifically, Party A hopes the court confirms Party B constitutes a breach and pays a penalty of 1% per day totaling 10% of the goods payment as compensation, even pursuing punitive payment to highlight its compliant interest. This Purpose aims to Punish Breach of Trust, Compensate Own Loss.
Company B's Purpose: Exempt or significantly reduce breach liability, preferably not recognized as breach or pay very little even if breached. Party B hopes to avoid huge fines, preserve corporate interests, and leans towards emphasizing its non-malicious breach and Party A's responsibility in reasoning. This Purpose lies in Reducing Costs, Avoiding Heavy Penalties.
Court (Judicial) Purpose: Achieve fair adjudication while considering social effects, such as the aforementioned Balancing Protection of Compliant Party without Excessive Punishment of Breaching Party, maintaining contract order without destroying the business environment. The court's Purpose tends more towards an intermediate state: letting Party A receive reasonable compensation without letting Party B bear obviously unreasonable burdens.
On the graph, Party A's Purpose and Party B's Purpose nodes can be placed at opposite ends, with the Court/Adjudication Purpose node in the middle. Party A's node points to the result "Judgment fully supports penalty" via one path, and Party B's node points to "Judgment exempts/reduces penalty," clearly conflicting. The Court Purpose node points to the result "Judgment partially supports penalty (adjusted amount)" after balancing through the Wisdom Layer. We use different colors to mark Party A and Party B Purpose nodes as conflict starting points and draw the intersection with the Court Purpose. This tension is ultimately reflected in the judgment result as Partially Satisfying Both Parties: Party A gets a part of the compensation (not completely empty-handed), Party B does not pay an excessively high amount (pressure bearable), and the court achieves the goal of being impartial and fair. If the court completely leans to one side, the other party's Purpose fails and may appeal or refuse to accept, making the dispute hard to settle. Therefore, the resolution of Purpose Layer tension is a "Fifty Boards Each" type of balance, letting the interests of the three parties find an intersection point. We see that this is actually the reflection of the Wisdom Layer's compromise plan on purpose satisfaction: the wisdom plan effectively lets both parties "lose a little but also win a little," thereby realizing the overall Purpose.
Through the above tension node annotation, the case semantic graph clearly reveals the Network Structure of the Dispute: there are ambiguities in contract clauses and fact-finding at the bottom, divergences in legal application and value choice at the upper layer, and conflicts of purposes of various parties at the very top. The tension node at each layer is a difficulty and decision point in adjudication reasoning. Annotating tension nodes helps us Grasp Key Turns in Reasoning: for example, if the "30 days" interpretation path is chosen wrongly, subsequent judgments will be different; if Party A is not found responsible, Party B has almost no room for defense; if the penalty is not adjusted, the result is vastly different; if value choice is improper, the judgment may be unbalanced. This lays the foundation for our next step to analyze How Tension Propagates and Resolves in the Reasoning Chain.
Semantic Tension Propagation Path Analysis
Following the semantic graph, we analyze how the above tensions propagate, interact, and are finally resolved and closed in the adjudication reasoning process to form a judgment conclusion. In other words, let's see How Dispute Conflicts Transmit and Solve in the Reasoning Chain.
For clarity, we dissect the propagation and resolution process of major tensions step by step:
Upward Propagation and Resolution of Clause Ambiguity: The semantic tension of the contract "30 days" first arises in the Information Layer, then propagates to the Knowledge Layer. Facing this ambiguity, the judge Must Make a Choice Using Legal Interpretation Rules, otherwise the starting point of overdue and the time of breach establishment cannot be determined. If the judge tends to be strictly literal, i.e., default calculation by natural days, then at the Knowledge Layer, the interpretation principle of Common Understanding will be adopted, citing transaction customs to support this conclusion: "Calendar days do not exclude rest days, general contract periods are calculated by natural days". Thus, the tension is Unidirectionally Determined in the Knowledge Layer by Choosing the Literal Interpretation Path, and reasoning continues forward: T_deadline is positioned at the end of the 30th natural day after receiving advance payment. Conversely, if the judge determines that evidence is sufficient to show that both parties actually viewed 30 days as working days, or the contract is Party A's format and interpreted unfavorably to Party A according to Article 498, then the judge will Choose the Interpretation Path Favorable to Party B in the Knowledge Layer. Regardless of which path is chosen, once the Knowledge Layer is determined, the "30 days" tension is dissolved: the delivery period calculation basis is clear, and the breach judgment basis is clear. Note that this determination process essentially relies on the Wisdom Layer's value decision—the judge's trade-off is actually influenced by their judgment on the value of fairness and transaction stability. However, formally, the Knowledge Layer completes the interpretation by citing rules. If this ambiguity is not resolved upwards, the reasoning chain will stagnate because the Breach Start Date Cannot be Determined, and breach days cannot be calculated. In reality, the judge Cannot Leave This Issue Undecided and must choose one. Therefore, clause ambiguity tension must be resolved in the Knowledge Layer, and then the Information Layer is updated accordingly to determined information (e.g., "Delivery period calculated by natural days, deadline = Month X Day X"). Thereby, Semantic Uncertainty is Eliminated, and reasoning can proceed smoothly. In short, Lower-level Language Tension rises to Upper-level Legal Interpretation to be Resolved, then feeds back the determined interpretation result to the Information Layer, making subsequent calculation of breach days a matter of course.
Upward Propagation and Compromise of Fact Dispute: The fact tension regarding reasons for delay transmits from the Information Layer to rules involved in the Knowledge Layer (offset of faults, exemption clauses, etc.), and further transmits to the Wisdom Layer for weighing. Assuming evidence is ambiguous and each sticks to their own words, the judge at the Knowledge Layer may not be able to rigidly apply a certain rule 100% temporarily (because facts need to be set first). At this time, tension rises to the Wisdom Layer: the judge uses experience and the concept of fairness to evaluate the proof situation and the degree of fault of both parties. For example, if Party B cannot produce clear evidence proving that Party A's change indeed caused X days of delay, the Wisdom Layer might tend to Protect the Compliant Party, determining based on the idea of "whoever claims reduction bears the burden of proof" that Party B has not fully proven the reason for extension, thus Defaulting to Party B's Full Liability. This judgment is actually a value preference (prefer believing in breach rather than easily exempting), attributing the risk of fact uncertainty to the party claiming reduction, thereby resolving the fact tension with a One-size-fits-all approach: determining Party A has no liability and delay is entirely Party B's fault. However, in many cases, judges will adopt a Compromise Discretion method to resolve fact tension. For example, the Wisdom Layer considers that both parties' statements have some truth, and both lack decisive evidence, so it shares according to fairness and reasonableness: e.g., recognizing that Party A's change indeed affected progress but is hard to quantify fully, discretionarily determining Extension of 5 Days as reasonable, i.e., only the part of Party B exceeding these 5 days constitutes a breach (equivalent to both parties sharing half of the delay responsibility). This compromise is actually an Equity Strategy of the Wisdom Layer when facts are unclear, giving a determination based on experience and intuition that neither party would find completely unacceptable. Thus, fact tension is "split": part of the days attributed to Party A, part to Party B, forming a compromise. Once this determination is finalized at the Wisdom Layer, the Knowledge Layer can apply corresponding rules: for the part of delay attributed to Party A, cite the principle of offset of faults to reduce Party B's liability; for the remaining part caused by Party B, apply general breach rules to pursue compensation. Finally, the Information Layer will record the Recognized Breach Days (e.g., 5 days out of 10 count as breach). The graph shows that the tension rising from the "Reason for Delay" node is resolved into a proportion or value at the Wisdom Layer, then returned to the Knowledge Layer to transform into legal application of Partial Exemption, and finally passed down to the Information/Data Layer to calculate the amount. This Free Discretion is a common way for courts to resolve fact stalemates. It ensures the reasoning chain continues: even if fact disputes remain suspended, judgment is not stuck, but the chain is completed by Fair Judgment based on Experience.
Uplifting and Decision of Legal Discretion Tension: The Knowledge Layer tension of whether to adjust the penalty essentially comes from the conflict between the free discretion granted to judges by law and freedom of contract. Since there is no rigid standard, this tension must Rise to the Wisdom Layer to be decided by value weighing. The judge comprehensively measures the specific situation of this case at the Wisdom Layer: 1%/day penalty reaches 365% a year, obviously far exceeding actual losses; Party A did not prove special losses, Party B requested adjustment; if not adjusted, it will be seriously detrimental to Party B and violate proportionality of punishment. Then the Wisdom Layer tends to adjust to achieve substantial fairness. At the same time, the Wisdom Layer considers that Party A is indeed damaged and cannot be completely exempted, otherwise the penalty clause exists in name only, which is detrimental to the spirit of contract. So the wisdom judgment is Adjust but Retain Certain Punishment. Once the Wisdom Layer makes this decision, it actually clarifies the Knowledge Layer path: Adopt Penalty Adjustment Rules, and further determine the magnitude of adjustment (this is a quantitative manifestation of the Wisdom Layer's decision). Subsequently, the Knowledge Layer cites Article 585 of the Civil Code and judicial interpretation basis to support this adjustment. For example, citing legal articles to explain that the court has the right to adjust, and citing judicial interpretation factors to explain why adjusting to a certain level conforms to fairness. Thus, the Knowledge Layer tension is dissipated: it is no longer a question of "adjust or not," but becomes a technical question of "adjust to how much." And "adjust to how much" is actually decided by the Wisdom Layer, such as adjusting to equivalent to annual interest rate XX% or X times the loss, etc. The Knowledge Layer then calculates the adjusted penalty amount information. It can be seen that Value Choice Guides Normative Selection: tension is uplifted and resolved by the Wisdom Layer, and the determined normative path is then fed back down. If the Wisdom Layer chooses not to adjust due to other considerations, the Knowledge Layer will stick to the path of freedom of contract, only applying contract clauses without citing Article 585 reduction. Either way, it is the Wisdom Layer setting the tone first, and the Knowledge Layer executing later. Therefore, the resolution of legal application disputes relies on the value decision of the upper Wisdom Layer. In the graph, the "Fairness/Strict Observance" trade-off node in the Wisdom Layer guides the single path of the penalty node in the Knowledge Layer downwards, while the other path is discarded. This indicates that the tension obtained a unilateral resolution here.
Internal Dissolution and Output of Wisdom Layer Tension: The value tension of Strict Observance of Contract vs. Substantial Fairness is repeatedly weighed at the Wisdom Layer, and finally usually dissolved through some Compromise Plan. For example, the compromise plan of the Wisdom Layer in this case: "Breach established + Partial mitigation + Penalty reduction," precisely integrates values from both sides: declaring that the contract must be performed (breach must be punished), while considering actual fairness (punishment not excessive). This plan can be seen as a point found between W1 and W2, allowing both concepts to gain something. Thus, the tension of the Wisdom Layer itself is eased, forming a unified adjudication idea. Next, this idea will move down to each layer: Knowledge Layer implements as specific legal clause application (interpreting clauses, applying Article 585 reduction, etc.), Information Layer implements as specific numbers (breach days N days, penalty rate 0.X%, etc.), and finally Data Layer calculates the judgment main text (penalty to be paid ¥Z). The balance of the Wisdom Layer is actually also verified at the Purpose Layer: because the compromise plan is often to conform to the court's adjudication Purpose (fair and warning) and partially satisfy the Purposes of both parties. It can be said that the Wisdom Layer and Purpose Layer echo each other here: the solution proposed by the Wisdom Layer consciously serves the goals of the Purpose Layer, so it can be confirmed and put into adjudication.
Convergence of Purpose Conflicts: When the plan produced by the Wisdom Layer matches the court's purpose and also takes care of the interest appeals of both parties to a certain extent, the tension of the Purpose Layer obtains Convergence. On the graph, Party A's Purpose and Party B's Purpose no longer go to different results through diametrically opposite paths, but converge at the Court Purpose node. That is, the judgment result Partially Satisfies the Core Concerns of Both Parties: Party A cares about getting compensation—result obtained (but less than full amount); Party B cares about not paying sky-high fines—result fines significantly reduced. Both parties may not be 100% satisfied, but are within an acceptable range, not leaving one party completely empty-handed. This means that purpose conflicts are reconciled in the judgment, at least at the first instance level. If the judgment is severely biased towards one side, the other side's Purpose fails, and the contradiction will continue to appeal. Therefore, the first instance court usually strives to balance within the feasible range, which is exactly the Purpose of the adjudication of this case. Finally, the court's macro Purpose (maintaining contractual fairness) is achieved: breach punished, compliance compensated, result not extreme, taking into account both contract spirit and fairness and justice. Purpose Layer Loop Closure marks the closure of the entire semantic link: contradictions at factual, legal, value, and purpose levels have all been accounted for, and the judgment reasons are self-consistent and complete.
Combining the above path analysis, it can be seen that: The propagation and resolution of tension at each layer have the characteristics of progressive layers and upward/downward feedback. Differences in underlying contracts and facts rise to legal interpretation and rule selection, are decided by higher-level value judgments, and the decision results are then implemented downwards to specific rules and fact findings, finally satisfying the adjudication purpose and ending the reasoning chain. If tension at any place is not resolved in time, it will interrupt reasoning or lead to unfair adjudication. For example, if the judge hesitates on the interpretation of "30 days," the breach start cannot be determined, and reasoning is interrupted; or if Party B is fully punished without considering Party A's fault, it may cause judgment imbalance and dissatisfaction at the Purpose Layer. Our analysis shows that in this case, every key tension was properly handled, leaving no Logical Breakpoints. The reasoning in the judgment can be foreseen to respond to every disputed point, which is exactly the result of semantic tensions being resolved one by one. Through the balance of the Wisdom Layer, the judge coordinates and unifies originally opposing claims and rules, thereby forming a coherent adjudication idea.
It is worth mentioning that this "Top-down" Feedback also ensures the acceptability of the judgment result: the Wisdom Layer considered the execution effect and Purpose before setting the plan, so the social effect of execution at the lower layer is good. When the Wisdom Layer is not fully utilized, problems of rigid and improper adjudication may occur (such as mechanically judging full penalty leading to enterprise difficulty in survival). Under the current judicial concept, this situation is often corrected in the second instance or retrial to conform to value balance. Therefore, semantic tension analysis helps courts to handle contradictions prudently in the first instance, avoiding subsequent procedures.
Through path analysis, we not only understand how key choices in the adjudication process of this case are made, but also see how the DIKWP model effectively captures and explains these choices. Next, we will compare the adjudication paths of similar cases to assess the rationality and consistency of the handling of this case.
Comparison of Adjudication Paths in Similar Cases and Consistency Assessment
To verify the rationality of the adjudication idea of this case, we retrieved supply contract dispute cases with similar circumstances and compared the adjudication paths. The goal is to assess whether the handling of this case conforms to general judicial laws or if there is inconsistency in adjudication standards.
Overview of Similar Cases: A similar supply contract, delivery period stipulated as within XX days after payment, agreed overdue penalty daily Y/10,000 (or a certain percentage). In a certain case, the seller delayed delivery, and the buyer sued for penalty. The court found the breach established, but considering the penalty too high, Discretionarily Adjusted it. For example, in a sales contract dispute tried by Xishan District Court of Wuxi (2017 case), the contract agreed on delivery within 5 working days after payment, and delayed performance penalty calculated at 0.3% per day. The seller delayed delivery by no more than 7 days, and the buyer claimed penalty of 1.3 million yuan. The first instance court held the contract valid, seller liable for overdue, and calculated penalty at agreed 0.3% per day as delay did not exceed 7 days, ordering payment of penalty of 508,200 yuan. The seller's appeal was also rejected, upholding the original judgment. The judge's comment emphasized strict observance of contract and compliant party's request for penalty conforming to legal provisions. This case has similarities and differences with this case: similarity lies in both recognizing delay constitutes breach and calculating penalty according to contract; difference lies in the former case's daily penalty rate of 0.3% was not deemed too high and fully supported, while this case's daily 1% is obviously abnormally high and needs adjustment. The reason may be that 0.3%/day, although high, is still within acceptable range (annualized about 109.5% and short breach days, although buyer's loss not specifically proven, penalty amount is not exaggerated), while 1%/day is too punitive, far exceeding normal interest rate standards. Thus, Similar Cases are Consistent with This Case in Principle: both admit breach and execute penalty clauses, but judicial attitudes differ when penalty levels differ. The handling of this case (adjusting penalty) is actually consistent with the practice of many cases regarding higher penalty standards: for example, Supreme Court gazette cases point out that when parties agree on daily penalty of five ten-thousandths (0.05%) plus interest, the court recognizes this as double punishment and does not fully support it. It can be seen that for Abnormally High Penalties, judicial practice generally tends to Restrict their validity. Therefore, reducing the penalty in this case conforms to this common standard.
Consistency Analysis: Comparing the adjudication path of this case with common practices in similar cases shows a high degree of consistency in general direction: 1) Regarding Contract Term Interpretation: Generally, courts understand term clauses by natural days unless specifically noted as working days or evidence to the contrary exists in the contract. In this case, recognizing "30 days" as the performance period by natural days aligns with general principles of contract interpretation. We did not find authoritative cases interpreting similar clauses as working days unless the contract context explicitly stated so. Therefore, this case adopted the common understanding consistent with general cases on this point. 2) Regarding Responsibility for Delay Reasons: In judicial practice, if the compliant party's behavior causes delay, the court usually considers mitigating the breaching party's liability. This can be directly recognizing no breach at the breach determination stage (if both parties substantially agreed to extend) or mitigating compensation at the liability bearing stage. The discretionary reduction of liability for some days in this case is consistent with other cases' handling of creditor's fault. For example, in some cases, when the buyer delayed providing necessary assistance leading to seller's delayed delivery, the court determined the seller did not bear liability for that period of delay. This reflects the unified application of the Principle of Offset of Faults. This case's discretionary reduction of liability by 5 days (hypothetical value) through evidence and discretion also follows this principle, only the magnitude is discretionary based on specific circumstances. Different cases may have different discretionary exemption days, but the principle is consistent: if there is a reason from the other party, the breaching party is not fully punished. 3) Regarding Penalty Adjustment: The Supreme Court and local courts have reached a consensus that if the penalty exceeds actual losses by more than 30%, it is generally regarded as too high. In many cases, when the penalty is too high, the court will reduce it to a reasonable level upon the party's request. For example, there are precedents reducing the daily penalty rate from the agreed five thousandths (0.5%) to five ten-thousandths (0.05%), or directly changing to calculation based on loan interest rate of the same period plus a certain proportion. In this case, the penalty is reduced from 1% to 0.2% (hypothetical value); in terms of adjustment magnitude, the adjusted annualized interest rate is about 73%, still much higher than general bank loan interest rates, but considering the short-term and punitive nature, it belongs to a potentially acceptable range. This is similar to some courts adjusting high penalties to proportions equivalent to annual interest of 24% or 50%. Therefore, the adjustment idea conforms to common standards, only there is some room for manipulation in magnitude, but overall it does not deviate from the judicial average line. It can be considered that the judgment of this case Maintains Consistency with Mainstream Adjudication Standards on this point.
Of course, there are also regional or individual cases handled differently on the penalty issue, showing the phenomenon of "different judgments for similar cases." For example, there have been cases where penalties significantly higher than losses were not adjusted, and the breaching party was ordered to pay in full. This is usually because the breaching party did not propose an adjustment request or insufficient evidence, or the court strictly adhered to the stance of contract freedom. However, with the implementation of judicial interpretations and the Civil Code, courts currently tend to actively balance more, and the Supreme Court has also corrected judgments of lower courts that improperly failed to reduce penalties through retrial and other channels. Therefore, the handling method of this case actually reflects the More Unified Adjudication Concept Under New Laws: abnormally high penalties should be moderately intervened to achieve substantial justice. This point is confirmed in similar case retrieval, indicating that judicial standards are gradually unifying.
Through comparison with similar cases, we assessed that: The adjudication path of this case has good rationality and universality. It neither deviated from legal regulations nor blindly accommodated the interests of one party, but conformed to the general handling logic of contract disputes. The rights and interests of the compliant party are protected (consistent with supporting penalty claims in cases), and the heavy burden on the breaching party is alleviated (consistent with penalty discretionary reduction practice in cases), balancing fairness and efficiency overall. This result is also relatively predictable for the expectations of the parties, because there are many similar precedents in judicial practice. The judge referred to these consensuses when adjudicating, making the judgment stand on the "shoulders of predecessors." The consistency of similar cases ensures the unity and predictability of the rule of law. Parties and society can infer how the court will roughly judge through past cases, which helps active settlement of disputes and self-regulation of contract clauses. Conversely, inconsistent precedents may weaken judicial credibility. Therefore, we see that this case did not appear to handle contrary to guiding spirits. Under the Adjudication Alignment Mechanism (such as guiding cases released by the Supreme Court, trial guidelines of various high courts), such disputes should also adopt similar ideas nationwide. The result of this case happens to verify and practice this unified standard.
In summary, the comparison of similar cases supports the rationality of the adjudication of this case. On one hand, it shows that the adjudication path analyzed by the DIKWP model is not isolated, but consistent with the handling mode of a large number of cases, which enhances our confidence in the model and conclusions; on the other hand, it also highlights the value of Establishing a Standardized Contract Semantic Processing Knowledge Base—precipitating the analysis patterns of similar disputes into a knowledge graph can help maintain consistency in future case trials. In the next section, while summarizing the adjudication Purpose, we will explore the feedback significance of model analysis for trial practice.
Summary of Adjudication Purpose and Model Feedback
After deeply analyzing this case, we combine the DIKWP model to summarize and provide feedback on the adjudication Purpose, sources of tension, and application value of the model. This is both a refinement of the above discussion and a reflection on using this model to guide judicial practice.
Realization of Adjudication Purpose: The adjudication Purpose of this case was fully reflected in the judgment plan. The court's Purpose of aiming to Achieve Contractual Fairness and Justice runs through the whole process. Specifically, the judgment strictly recognized the breach fact of Company B's delayed delivery, safeguarding the rights and interests of Party A as the compliant party (seriousness of contract maintained); at the same time, it adjusted the penalty and considered the reasons for delay based on actual conditions, avoiding excessive punishment of Party B (substantial fairness taken into account). It is expected that the judgment will state: "This court holds that the delivery deadline and breach liability agreed in the contract have legal binding force on both parties. Company B's failure to deliver on time constitutes a breach and should bear corresponding liability according to the law. However, given that Company A indeed had some reasons affecting the delivery period during performance, and the agreed penalty amount is obviously too high, this court will appropriately adjust the penalty amount according to Article 585 of the Civil Code to balance the interests of both parties." Such discourse directly indicates the adjudication Purpose: Both manifesting the spirit of contract and avoiding disproportionate punishment. It can be said that the judgment achieved the multiple Purposes of "Warning against breach of trust, compensating losses, moderate tolerance." Macroscopically, it also conforms to the requirements of current judicial policy for an honest business environment: punishing dishonest behavior, releasing the signal of "liability for breach" to the market; giving certain leniency to non-malicious negligence, reflecting the warmth and rationality of justice. The implementation of this judgment Purpose helps enhance commercial subjects' confidence in contract performance, and also makes them realize that contract clauses should be reasonable and compliant when formulating, and should not arbitrarily agree on abnormally high penalties. In short, the adjudication of this case achieved the Unity of Legal Effect and Social Effect, completing the goal set by the Purpose Layer.
Analysis of Tension Sources: Through model analysis, we identified that the tension in this case mainly stems from three aspects: first, Ambiguity of Contract Language ("30 days" ambiguity, biased penalty clause); second, Complexity of Situation During Performance (change of technical requirements leading to liability dispute); third, Opposition of Parties' Interest Orientations (one party seeks full compensation, one seeks exemption). The natural incompleteness and ambiguity of contract text lead to divergences in the Information Layer, which is the cause of many contract disputes—drafters failed to define every concept precisely, leaving room for interpretation. New situations during performance (such as technical changes) make it difficult to strictly follow the original contract, causing contradictions between rules and reality, forming tension between facts and law. The opposing positions of the parties in litigation push the above tensions to extremes: both parties stick to favorable interpretations and claims, causing sharp contradictions. It can be said that Language Tension + Fact Tension + Interest Tension superimposed together constitute the tension source of this case's dispute. It is worth noting that if these tensions are not handled well, they will lead to unfair adjudication or failure to settle the dispute. For example, language tension may make the contract lose clear constraints, ignoring fact tension will wrong one party, and favoring one interest tension will be hard to convince the public. Therefore, judges must Identify Each Tension Point during trial and use law and wisdom to resolve them. The DIKWP model provides exactly such a perspective, allowing us to locate and analyze tension sources one by one. Through model perspective, we also get inspiration: contract drafting should try to avoid ambiguity, avoiding expressions like "30 days" that may cause ambiguity, or at least clarify "calendar days/working days" in clauses; at the same time, enterprises should sign written supplementary agreements when changing matters during contract performance, clarifying the impact on delivery periods, etc., to avoid leaving hidden dangers of dispute. In judicial trials, sensitivity should be maintained towards these tensions, preventing one party from profiting improperly using ambiguous clauses, and also preventing the other party from taking the opportunity to shirk responsibility. The existence of tension reminds judges to seek Balance and Clarification when adjudicating, which is the lesson brought by this case.
Model Reverse Verification: Using the DIKWP model to analyze this case, we can reversely verify the rigor of the judgment. The layered check of the model helps discover whether the reasoning of the adjudication is complete and whether there is a broken chain. Tracing back the judgment, if we find that the judgment lacks corresponding analysis at a certain level, it often means the reasoning is insufficient. For example, assuming the judgment result reduced the penalty but did not explain the basis, then a break appeared at the Knowledge Layer (lack of explanation of Article 585 or principle of fairness). Through the model, we expect the judgment should detailly cite Legal Articles at the Knowledge Layer: such as Article 585 of the Civil Code and related judicial interpretations, to explain that the court has the right to adjust penalties and give reasons. If the judgment omits these, the model reminds us that the reasoning is incomplete, which may cause the parties to be dissatisfied or appeal citing flaws. Similarly, the model requires that disputed facts at the Information Layer must be clearly identified, otherwise there is no support when applying law at the upper layer. Therefore, the judgment should clearly state the determination of "understanding of 30 days" and "process of delay occurrence" (e.g., "This court confirms 30 days refers to natural days," "Determines Party A proposed change request on date X, affecting delivery period by 5 days," etc.). The layered comparison of the model can inspect whether these correspond one-to-one in the judgment. We verify through the model reverse deduction that the judgment of this case can be layered clearly: the fact part explains the payment date, agreed deadline, actual delivery date, evidence of delay reasons; the legal application part cites contract interpretation principles, penalty adjustment regulations; the reasoning part balances the faults and losses of all parties. From the reasoning chain we analyzed, the judgment should match it, otherwise it is an unreasonable part of the judgment. If there is a discrepancy, model analysis can also point out possible sources of error. For example, if the judgment fully supports 1%/day penalty, which conflicts with Knowledge Layer common sense and Wisdom Layer values, the model will mark this as choosing an unusual path at a tension node, prompting unreasonableness. Overall, model verification shows that The Judgment Logic of This Case is Rigorous, grounded at every layer. This method can also be promoted: AI or trial auxiliary personnel can use the DIKWP model to check judgment documents and find omitted reasoning. For example, when reviewing a judgment, check if every focus of dispute has corresponding legal basis citation and if value weighing is explained. Omissions can be corrected accordingly to improve judgment quality.
Significance of AI Intelligent Assistance: The analysis of this case demonstrates the potential application value of the DIKWP model in judicial artificial intelligence. In the future, AI systems can help judges or lawyers analyze cases and predict judgments based on this model, specifically reflected in:
Evidence and Fact Organization: AI can extract key information of the Data Layer from massive materials and rise to structured points of the Information Layer. Such as automatically identifying contract clauses, extracting performance timelines, detecting change requests involved in communication content between parties, etc. This helps quickly locate the focus of the dispute.
Legal Knowledge Matching: Based on the Knowledge Layer, AI can intelligently retrieve legal articles, judicial interpretations, and similar cases related to the case. For example, in this case, asking AI to find legal provisions for "how to determine excessive penalty," it can return contents like Article 585 of the Civil Code and Article 29 of Judicial Interpretation (II) for the judge's reference. This saves manual search time and ensures no key norms are missed.
Analogy of Similar Cases and Quantitative Suggestions: AI can search massive judgments to find results of cases with similar circumstances. Based on this, give a Quantitative Prediction: e.g., "80% of similar cases adjusted penalties, averaging a reduction of daily penalty from 0.5% to 0.1%." Such data provides a reference range for judge's discretion, avoiding deviation from common sense and reason. Just as in this case, if AI tells the judge that historically daily penalties >0.5% are mostly lowered, the judge will be more confident in making an adjustment decision. Moreover, AI can give suggested amount ranges based on loss evidence, Preventing Adjudication Extremes.
Transparency of Reasoning Process: The DIKWP model makes AI's reasoning process modular and interpretable. AI can simulate human thinking, first listing facts, generating disputed questions, then matching laws, and finally making decisions based on "rules of experience." This layered output helps judges understand AI's suggestions. For example, AI says: "Based on Evidence X, determine Party A's change caused 5 days delay (Information Layer); based on Law Y, agreed penalty can be reduced (Knowledge Layer); combined with similar Case Z, suggest adjusting daily penalty to 0.2% (Wisdom Layer)," the judge can understand that AI is not a black box, but grounded and reasoned, thus easier to accept. This is crucial for the implementation of AI-assisted adjudication. The DIKWP model provides exactly a clear logical framework to realize interpretable AI judgment prediction.
It needs to be emphasized that AI can only Assist rather than decide. Final value weighing (Wisdom Layer) and trial Purpose setting (Purpose Layer) still need judges to check. For example, in this case, AI can suggest a range, but the judge might choose a different result between 0.1% and 0.2% based on understanding of local business policies. The role of AI lies in providing Sufficient Information and Reference, reducing omissions and biases, and improving efficiency and consistency. This type of common dispute is very suitable for AI assistance because there is a large amount of similar case data, clear legal rules, and limited focus of dispute. Through model analysis, this case actually formed a set of Reusable Decision Patterns: encounter ambiguous delivery clauses → handle according to common understanding + unfavorable interpretation; encounter excessive penalties → consider loss ratio adjustment; encounter changes during performance → examine if agreed to extend... These patterns can be compiled into the AI knowledge base, allowing AI to automatically remind judges to pay attention and provide relevant materials in future similar cases.
Feedback on Trial Practice and Training: The analysis of this case also has implications for judges trying similar cases and improving adjudication capabilities. Applying the DIKWP model can train judges to Think in Layers: clarify facts first, then clarify legal basis, then balance interests, and finally ensure the Purpose is correct. Many young judges might tend to directly apply a certain law to make a conclusion, ignoring the value considerations and adjudication Purpose behind it, leading to stiff or one-sided reasoning in documents. The model urges them to consider layer by layer: for example, do not forget to cite contract interpretation and penalty adjustment clauses at the Knowledge Layer; check if their handling takes into account fairness and good faith principles at the Wisdom Layer; think about the judgment effect at the Purpose Layer. Judgments written this way will be more comprehensive. For common contract disputes like this case, courts can summarize a standardized process for "Handling Contract Semantic Disputes": such as first confirming the meaning of contract text (usually literal unless standard clause ambiguity then unfavorable interpretation), then finding out if there are performance changes or force majeure, etc., and finally deciding penalty adjustment based on loss situation. These processes can be compiled into Trial Guidelines or Semantic Graphs for judges' reference, improving case handling efficiency and unified standards. In fact, The Supreme Court and courts at all levels increasingly attach importance to similar case retrieval and similar case same judgment mechanisms, needing exactly such abstract analysis results of common problems. The semantic chain and handling mode formed by the DIKWP analysis of this case can fully be included in training materials. For example, as a teaching case, showing judges how to peel back the layers of a contract dispute, dig out implied problems, and resolve them using laws and principles. Through such training, judges will be more Confident when facing similar cases, avoiding errors.
In summary, the analysis of this case using the DIKWP model not only verified the rationality of the judgment process but also provided ideas for further improving judicial practice: Maintain semantic sensitivity, layered deliberation, and value weighing in every case. This methodological harvest is also very important for the analysis of complex cases. With the integration of artificial intelligence and big data into the judiciary, we can look forward to more systematic models to assist judges in handling case semantics, maintaining adjudication consistency, and refining experience knowledge bases, thereby continuously improving judicial justice and efficiency.
(The above analysis of Case 2 has detailed the nested application of the DIKWP model, clarifying the whole process of dispute semantic generation, propagation, and resolution, which has reference value for the trial of similar contract disputes. -- End)
Civil Code of the People's Republic of China
Part Three Contracts_Supreme People's Procuratorate of the People's Republic of China, https://www.spp.gov.cn/spp/ssmfdyflvdtpgz/202008/t20200831_478413.shtml
How to calculate 30 natural days - Baidu Experience, https://jingyan.baidu.com/article/0bc808fc0f93665ad585b914.html
Adjudication rules for "excessively high penalties" in gazette cases - Beijing Mingda Law Firm, https://www.mingdalawyer.com/show-list-690.html
[Micro Case] Supreme Court: Does the clause "Party agreed not to request People's Court to reduce penalty after breach" have legal effect_The Paper, https://www.thepaper.cn/newsDetail_forward_13487083
Contributing judicial power to continuously optimizing the rule of law business environment - Qiushi, https://www.qstheory.cn/llwx/2020-06/16/c_1126120757.htm
[Case Analysis] Accepting delayed performance still allows claiming breach, http://www.jsxishan.gov.cn/doc/2018/03/27/2605484.shtml
Supreme People's Court: Identification standard for agreed excessively high penalties - Zhihu Column, https://zhuanlan.zhihu.com/p/23885086031
An attempt at analysis of penalty discretionary reduction model - Zhengzhou Intermediate People's Court, https://zzfy.hncourt.gov.cn/public/detail.php?id=9919
玩透DeepSeek：认知解构+技术解析+实践落地
人工意识概论：以DIKWP模型剖析智能差异，借“BUG”理论揭示意识局限
人工智能通识 2025新版 段玉聪 朱绵茂 编著 党建读物出版社
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