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Compiled from: Juye Court
According to legal provisions, a contract may stipulate a payment deadline, and civil legal acts may also be subject to conditions. Recently, Juye Court heard a labor contract dispute case, where the plaintiff and defendant disputed whether it was a time limit or a condition. Below, let us take a look at the case together.
Case Review
Defendant Company A, during its investment and construction of a commercial trade city from 2012 to 2014, subcontracted part of the project labor to plaintiff Yang. By April 2022, Company A owed plaintiff Yang 400,000 yuan in project funds.
On April 9, 2022, Company A as Party A, Company B as Party B, and Yang as Party C signed a tripartite agreement stipulating: 1. Party A owes Party C 400,000 yuan as the total principal and interest of the project debt. Party C agrees to stop accruing interest after signing this tripartite agreement. 2. Party C agrees that the 400,000 yuan will be repaid directly by the assignee, Party B. After signing this tripartite agreement, Party C shall not assert any rights against Party A regarding the 400,000 yuan. 3. The repayment milestones for Party B to Party C are: (a) 50,000 yuan after signing; (b) another 50,000 yuan one month after the first payment (May 8, 2022); (c) settlement of the remaining amount when Party A's real estate parcels with property rights numbers **** and ### reach the mid-stage of construction start (upon completion of the third floor); (d) Party C confirms and accepts the repayment timeline... The tripartite agreement bore the official seals and legal representative stamps of Party A and Party B, and Yang's signature.
Plaintiff Yang sued Defendants A and B in court, demanding Company B pay 190,000 yuan in labor fees and Company A assume joint repayment liability.
During the trial, plaintiff Yang stated that as of the lawsuit filing, the amount owed by Defendant B for project labor fees was 190,000 yuan, which Company B did not dispute. The defendants argued that the tripartite agreement signed with the plaintiff was a civil agreement subject to conditions, and since the payment conditions were not met, the defendants should not pay the disputed project labor fees.
Court Opinion
The court held that the tripartite agreement signed by plaintiff Yang and defendants Company A and Company B reflected the true intentions of the parties, did not violate mandatory legal provisions, and was legally valid. In this case, based on the overall content of the tripartite agreement, the project labor fees claimed by the plaintiff were debts of Company A assumed by Company B after signing an investment agreement, unrelated to the project specified in the tripartite agreement. The disputed project labor fees were a definite obligation that would not be discharged, so the payment terms in the tripartite agreement for these fees constituted an agreement on the payment deadline.
The tripartite agreement's payment deadline clause—"settlement of the remaining amount when Party A's parcels reach the mid-stage of construction start (upon completion of the third floor)"—was not clear or specific and should be considered as an unclear performance deadline. Article 511, Item 4 of the Civil Code of the People's Republic of China states: "If the performance period is unclear, the debtor may perform at any time, and the creditor may demand performance at any time, but the other party shall be given the necessary preparation time." Therefore, the court supported the plaintiff's claim for Company B to pay 190,000 yuan in project labor fees.
The plaintiff requested that Company A bear joint repayment liability, but in the "Tripartite Agreement," the engineering labor fees owed by Company A to Yang had been transferred to Company B with Yang's consent. It was also stipulated that after the signing of this tripartite agreement, Yang could not assert any rights against Company A regarding the 400,000 yuan. Therefore, the court did not support the plaintiff's claim for Company A to bear joint repayment liability.
The court ruled that Defendant Company B shall pay the plaintiff Yang 190,000 yuan in engineering labor fees within ten days after this judgment takes effect.
Civil Code of the People's Republic of China
Article 158
A civil juristic act may be subject to a condition, unless its nature precludes such a condition. A civil juristic act subject to a condition precedent becomes effective upon the fulfillment of the condition. A civil juristic act subject to a condition subsequent becomes invalid upon the fulfillment of the condition.
Item 4 of Article 511
If the performance period is unclear, the debtor may perform at any time, and the creditor may also demand performance at any time, but shall give the other party the necessary time for preparation.
Article 551
If a debtor transfers all or part of its obligations to a third party, the consent of the creditor shall be obtained. The debtor or the third party may urge the creditor to give consent within a reasonable period; if the creditor fails to respond, it shall be deemed as refusal of consent.
[4] Author's Opinion
First, according to the above legal provisions, the subject of a condition is a civil juristic act, and the legal consequence of attaching a condition is to restrict the validity of the civil juristic act, thereby affecting the validity of the legal act itself. Further, the essence of a condition in the legal sense should be a fact that determines the entry into force or dissolution of a civil legal relationship. In a contractual relationship, the fulfillment or non-fulfillment of a condition determines the validity of the contract. The purpose of allowing civil juristic acts to be subject to conditions is to align the consequences of the legal act with future possible but uncertain factors, thereby making the risks of the legal act controllable, fundamentally aiming to promote fair transactions and ensure transaction security.
