Case of the Week | Litigation + Mediation is the most effective way to resolve disputes in this case

Ren Yihua, Lawyer, Senior Partner and Vice Director of Zhejiang Hangtianxin Law Firm, Director of the Civil and Commercial Business Department, and Secretary-General of Hangzhou Hangtianxin Public Legal Service Center.

Lawyer Ren Yihua holds a lawyer's qualification certificate, an enterprise legal counsel qualification certificate, and a marketing specialist qualification certificate; he is a legal counsel for Zhejiang Provincial Association of Aging Industry, Hangzhou Automobile Industry Association, etc.; since his practice, he has provided enterprise legal counsel services for many industry benchmark enterprises and handled many influential litigation cases (including criminal defense) in the industry. Adhering to the professional philosophy of "winning trust with responsibility", he provides satisfactory legal services to clients.

Contact Information: Mobile: 15925651010 Email: renyihua@htxls.com

Litigation + mediation is the most effective way to resolve the dispute in this case.
 

Case Details

In February 2019, P Company and Y Company (a sole proprietorship) signed the "CP Automated Production Line and Technology Agreement", agreeing that P Company would purchase a set of CP automated production lines from Y Company, with a total price of 2.2 million yuan including tax, and the delivery time should not exceed May 15, 2019. The technical standards for assembling the production line were clearly defined; on July 30, 2019, both parties conducted supplementary consultations on the technical requirements of the production line, agreeing that the delivery date would be within one month after the signing of this supplementary agreement. On October 8, 2019, both parties further amended the agreement on tax invoices and payment methods and progress; by the acceptance date, P Company had actually paid 1.59 million yuan; on June 1, 2020, both parties conducted an acceptance of the production line. Due to too many problems, Y Company took the initiative to stop the acceptance, and the acceptance result was unqualified; after that, Y Company delayed the acceptance for as long as 3 months on the grounds that the technical issues in the CP automated production line needed to be improved and resolved. After Lawyer Ren Yihua intervened, he found that the case was in the midst of a back-and-forth dispute between the two parties via telephone calls, and the conditions for initiating litigation were not yet met. However, this dispute could not be resolved without litigation, and it had a significant impact on P Company's development strategy. Therefore, P Company hired Lawyer Ren and his team as its legal counsel.

Litigation Strategy

First, on August 7, 2020, a letter was sent to Y Company in the name of P Company, notifying Y Company to immediately rectify and deliver qualified equipment within a time limit;

Second, on August 18, 2020, P Company notified Y Company to terminate the "CP Automated Production Line and Technology Agreement";

Third, on August 25, 2020, P Company filed a lawsuit with the court, with Y Company and its legal representative as defendants, claiming to confirm the termination of the "CP Automated Production Line and Technology Agreement", ordering Y Company to return the 1.59 million yuan already paid to P Company, and the litigation costs to be borne by Y Company; at the same time, it also proposed a litigation property preservation.

Litigation Process

  During the litigation, Y Company raised jurisdictional objections. The first-instance court ruled to dismiss P Company's lawsuit, and the case was transferred to the arbitration commission for adjudication; P Company appealed to the intermediate court, and the second-instance court ruled to revoke the ruling of the first-instance court and instructed the first-instance court to continue the trial.

During the trial, Y Company underwent a corporate change, changing from a sole proprietorship to a limited liability company with more than two shareholders; during the trial, Y Company seized on the lack of page numbers in the acceptance report and the lack of signatures of acceptance personnel on each page of the acceptance report, and did not recognize the authenticity of the acceptance results. P Company applied for quality appraisal, with an appraisal fee of 78,500 yuan, to be paid within 7 days.

Litigation Result

  Finally, 12 hours before the payment of the appraisal fee, both parties shook hands and made peace, reaching a settlement: both parties terminated the "CP Automated Production Line and Technology Agreement", P Company returned the equipment to Y Company, and Y Company returned 850,000 yuan to P Company; the 1.59 million yuan tax invoice already issued to P Company was not returned to Y Company; both parties had no further disputes.

Practical Experience Summary

1. Signing a rigorous, professional, and operable written contract is a prerequisite for protecting one's legitimate rights and interests, but it is equally crucial to perform the contract in a way that leaves a record.

2. Judgments and mediation are both ways to resolve disputes. Choosing which method to use is actually a game of commercial interests, requiring a comprehensive analysis based on the case facts, client's demands, client's short-term/long-term commercial interests, trial situation, and judgment outcome orientation.

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