Cai Xukun ruled in breach of contract, compensation as high as three million

[4] Compiled from: Red Star News
 
[2] Recently, the first-instance judgment in the dispute over the agency contract between Shanghai Yihai Film and Television Culture Communication Co., Ltd. and Cai Xukun was made public.

 
 

Case review
Plaintiff Yihai Company alleges that in November 2015, it entered into a contract with the defendant Cai Xukun, agreeing that the plaintiff would serve as the defendant’s exclusive and fully authorized agent, with the contract term extending until April 2023. The contract stipulated that if the defendant proposed to terminate the contract, he would be required to pay the plaintiff early termination compensation of 3 million yuan for each year of early termination. In June 2016, the plaintiff and the defendant signed a supplementary contract agreeing that if the defendant unilaterally proposed to terminate the contract, he would be required to pay the plaintiff early termination compensation of 30 million yuan for each year of early termination. In February 2017, the defendant sent a notice of contract termination to the plaintiff and filed a lawsuit with the court, seeking to terminate the contract and supplementary agreement signed by both parties. Accordingly, the plaintiff filed suit with the court, requesting an order that the defendant pay the plaintiff termination compensation of 30 million yuan and liquidated damages of 15 million yuan. The defendant Cai Xukun argued that the contract provided that the premise for the defendant to pay compensation to the plaintiff when unilaterally proposing to terminate the contract was that the plaintiff had expended substantial effort and cost to cultivate the defendant, but in fact the plaintiff did not make effective investments in the defendant’s cultivation and promotion. During the contract term, the defendant did not receive any remuneration paid by the plaintiff, and the expenses claimed by the plaintiff had no basis. In addition, the amount of compensation claimed by the plaintiff was obviously inflated.

 
 

The court held that, with respect to the 15 million yuan in damages for breach of contract, the portrait authorization cooperation agreement was signed between the plaintiff and a third party during the trial of the termination dispute between the plaintiff and the defendant. The resulting termination compensation arose from the plaintiff's failure to exercise due care regarding the risk that the cooperation agreement might not be performed, and there was insufficient basis for requiring the defendant to bear the termination losses. As for the termination compensation, the defendant was a minor at the time the contract and supplementary contract were signed, which were executed by the plaintiff and the defendant's mother, Xu. The defendant had not yet formed a clear plan or estimate for their future development and achievements. The excessively long performance periods of both contracts were in fact detrimental to the defendant's own development and to fostering a stable, healthy, and orderly environment in the entertainment industry, and the uncertainty of achieving commercial returns increased accordingly. Therefore, the defendant's early termination of the contract was reasonable and did not constitute a malicious breach. The high termination compensation stipulated in the contract between the plaintiff and the defendant did not conform to the principles of fairness and reasonableness. Ultimately, the court, taking into account the promotional investment made by the plaintiff for the defendant, the defendant's income level, and the performance period, determined the termination compensation at 3 million yuan at its discretion.
 
 
The [1] The People's Republic of China Civil Code
Article 6 
Civil subjects engaging in civil activities shall adhere to the principle of fairness and reasonably determine the rights and obligations of all parties.
 
 
[1] The author's perspective
As seen in this case, the plaintiff also had shortcomings during the performance of the contract, and although ultimately receiving compensation, the amount was not fully supported. The court, considering that the defendant was still a minor at the time of signing the contract and that the parents signed on their behalf, made the above judgment after comprehensive consideration, demonstrating that the law is not a cold tool.
 
In reality, people often think of compensation for breach of contract after signing, assuming that once a breach occurs, compensation is inevitable. However, this is not always the case, but due to the specific issues of contract performance, it is still necessary to seek professional lawyers. The professional competence and skill level of a lawyer often have a significant impact on the outcome of a case.