Background. Mongolian law caps both the daily rate and the total amount of penalties for delayed performance, but permits a further reduction where an amount within those limits is manifestly excessive.
Objectives. This article examines the grounds for reducing late-payment penalties after the statutory cap has been applied, with reference to Chinese law.
Methods. The study combines statutory interpretation with close reading of three purposively selected decisions of the Supreme Court of Mongolia. Chinese legislation and Guiding Case No. 166 provide the comparative materials.
Results. Corrections to calculations, findings of payment liability, and discretionary reductions perform different functions. Supply negotiations and disruption of a company’s business may support a reduction without excusing payment. Their separate relevance and their connection to the amount reduced nevertheless require explanation. Mongolia’s caps and China’s loss-based standard regulate different matters and cannot be compared as interchangeable percentages.
Conclusion. Courts should identify the person affected by each circumstance, its timing and legal relevance, any effect already accounted for elsewhere, and its connection to the extent of reduction. The proposed analysis concerns the reasoning in the selected decisions and does not establish a general rate of reduction.