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CFA Tour Sponsor Requested Termination of Contract Halfway Court: Sponsor Shall Pay Organizer as Agreed
[2018-04-03]

the cat fanciers association (cfa) tour - a great event in the community of cats, has attracted cat fans from all over the world as well as many well-known cat supplies manufacturers, who wanted to become the title sponsors of the event by supporting the organizer financially, thereby promoting their brand images. it could have been a win-win cooperation. however, the sponsor terminated the contract halfwayrefused to pay relevant sponsorship fees,was brought by cfa tour organizer to court.

 

recently, shanghai no.1 intermediate peoples court concluded the dispute over cat tour service contract in the second instance by affirming the first-instance judgment that "sponsor shall pay the organizer relevant sponsorship fees for the events already held."

 

in 2016, gia, a company that deals in pet goods, signed a cooperation agreement with honghua company, which is engaged in assets management. as agreed upon, honghua would organize the cat tour from july 2016 to april 2017 for gia, while gia would provide honghua with the service ges, cat registration feescat food, etc. as the sole sponsor of the event.

 

in november 2016, on the ground that honghua didnt make product publicityassist in the development of some new cat houses as agreed during the cat tour held previously, gia sent a letter to honghua, claiming for termination of cooperation on december 31, 2016. honghua replied that as the work under the contract was cyclicalsome affairs had to be done ahead of schedulecould not be changed, the losses caused by termination of the contract should be borne by gia. later, honghua held the tours in changchun, chengduother places successively without receiving any related fees from gia. hence, it sued to court, claiming for nearly 200,000 yuan from gia for outstanding amountcat food fees.

 

the court of first instance found that it was true the parties had signed an agreementhonghua had fulfilled its obligations of hosting the eventrelated publicity as agreed. therefore, gia should pay honghua relevant fees amounting to over 150,000 yuan. gia was unsatisfied with the first-instance judgmentinstituted an appeal to shanghai no.1 intermediate peoples court, arguing that honghuas decision to hold subsequent tours despite of its definite knowledge of the earlier termination of contract by gia had increased its losses from objective perspective. moreover, honghua didnt fulfill the obligation of naming gia exclusivelypublicizing gia productsbrand in subsequent tours, making it impossible to realize the purpose of the contract. hence, it requested the court to rescind part of the first-instance judgmentrule that gia should pay the service fees according to honghuas actual losses.

 

after the trial, shanghai no.1 intermediate peoples court held that according to the service agreement, either party requesting an earlier termination should give a two-month written notice to the other partyobtain the consent therefrom. any party terminating the agreement without any due reason should compensate for the other partys losses according to the work that has been done in a single tour. since gia sent a notice to honghua in november 2016, specifying that the cooperation would be terminated on december 31, 2016,now honghua had evidences to prove it had organized 8 cat tours in shanghai, fuzhouother places prior to the termination of the cooperation, gia should pay the fees for the above events as agreed.

 

it could be seen from the tour scene pictures provided by honghua that honghua has fulfilled its obligation for advertisingspublicity as agreed. honghua didnt make any commitment on the effect of publicity in the contractonly helped gia to do so, which, hence, doesnt affect the amount of fees that gia should pay as agreed. 

 

in conclusion, shanghai no.1 intermediate peoples court dismissed the appeal of giaaffirmed the original judgment. (names of the companies in question are all pseudonyms)

 

i. contract law of the peoples republic of china

article 60 each party shall fully perform its own obligations as agreed upon.

...

ii. civil procedure law of the peoples republic of china

article 142 after the end of court debate, a judgment shall be entered in accordance with law. where mediation is possible before a judgment is entered, mediation may be conductedif mediation fails, a judgment shall be entered in a timely manner.

 

(author: wang mengqian, shanghai no.1 intermediate peoples court)

 

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