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
[3] The plaintiff, Yihai Company, alleged that in November 2015, it signed a contract with the defendant, Cai Xukun, stipulating that the plaintiff would act as the defendant's exclusive and full agent, with the contract term lasting until April 2023. The contract stated that if the defendant proposed termination, they would have to pay the plaintiff an early termination compensation of 3 million yuan per year for each year the contract was terminated early. In June 2016, the plaintiff and defendant signed a supplementary contract stipulating that if the defendant unilaterally terminated the contract, they would have to pay the plaintiff an early termination compensation of 30 million yuan per year for each year the contract was terminated early. In February 2017, the defendant sent a notice of termination to the plaintiff and filed a lawsuit in court, requesting the termination of the contract and supplementary agreement. Therefore, the plaintiff sued the court, demanding that the defendant pay 30 million yuan in termination compensation and 15 million yuan in liquidated damages. The defendant, Cai Xukun, argued that the contract stipulated that the defendant's unilateral termination requiring compensation to the plaintiff was conditional on the plaintiff having invested significant effort and cost in cultivating the defendant. In reality, the plaintiff had not effectively invested in the defendant's training and promotion. During the contract period, the defendant received no remuneration from the plaintiff, and the plaintiff's claimed expenses were unfounded. Additionally, the compensation amount proposed by the plaintiff was clearly inflated.

 
 

[4] The court found that regarding the 15 million yuan in breach-of-contract losses, these arose from a portrait authorization cooperation agreement between the plaintiff and a third party during the dispute over the termination of the contract between the plaintiff and defendant. The resulting termination compensation was a risk the plaintiff should have anticipated but failed to consider regarding the potential inability to perform the cooperation agreement. Thus, the claim for the defendant to bear these termination losses lacked sufficient basis. Regarding the termination compensation, when the contract and supplementary contract were signed, the defendant was still a minor, and the contracts were signed by the plaintiff and the defendant's mother, Xu. The defendant had not yet formed a clear plan or estimation of their future development and achievements. The excessively long performance period of the two contracts was, in fact, detrimental to the defendant's personal development and to fostering a stable, healthy, and orderly environment in the entertainment industry, while also increasing the uncertainty of achieving commercial returns. Therefore, the defendant's early termination of the contract was reasonable and not maliciously in breach. The high termination compensation stipulated in the contract between the plaintiff and defendant did not align with the principles of fairness and reasonableness. Ultimately, the court determined the termination compensation to be 3 million yuan, taking into account the plaintiff's promotional investment in the defendant, the defendant's income level, and the contract performance period.
 
 
《 [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.