The dispute over the intermediary contract between Su Moumou and Guangdong某 Metal Technology Co., Ltd. and Shenyang某 Building Materials Co., Ltd.

Keywords: Determination of Fulfillment of Intermediary Obligations

Counseling Attorney: Geng Luhong, Jia Jiayu

Basic Facts of the Case:

On April 19, 2018, Guangdong某 Metal Technology Co., Ltd., as the principal, entered into an Intermediation Contract with Su Moumou, who acted as the intermediary. The contract stipulated the following: I. Scope of Commission: 1. The intermediary accepts the principal’s commission and undertakes to assist in the brand identification of porcelain-coated aluminum panels and metal ceiling materials for Shenyang Metro Lines 9 and 10 (hereinafter referred to as “the Project”), facilitate the signing of contracts, handle design changes, and assist in the recovery of payment for goods. The intermediary shall also introduce the principal to the project’s owner, design entity, and general contractor, provide the principal with information about the Project, and ultimately ensure that the principal successfully performs its contractual obligations and completes the Project. 2. “Intermediation Success” shall mean the completion of all the commissioned tasks set forth in this article. II. Obligations of the Intermediary: 1. The intermediary shall provide the principal with relevant information about the Project and ensure that the principal’s brand is included within the scope of brands selected by the owner for procurement. During contract negotiations, the intermediary shall facilitate the signing of procurement contracts between the principal and the winning bidder. 2. During the execution of the contract, the intermediary is obligated to properly coordinate the relationship between the principal and the owner as well as the construction contractor, and to coordinate detailed matters concerning the supply of goods between the owner, the construction contractor, and the principal. 3. The intermediary shall assist the principal and ensure that payments agreed upon in the contract between the principal and the owner are made to the principal on time and in accordance with the contractually specified deadlines, without any delay.

On October 10, 2018, with the assistance of Su Moumou, a certain metal technology company in Guangdong signed a “Materials Procurement Contract” with China Construction Company. During the performance of the contract, the certain metal technology company in Guangdong supplied goods to China Construction Company for a total amount of 7,782,754.98 yuan. On November 13, 2018, China Construction Company paid the certain metal technology company in Guangdong 1 million yuan; on March 5, 2019, China Construction Company paid 770,000 yuan; and on March 15, 2019, Shenyang Metro Group Co., Ltd. paid 4.77 million yuan. The project has not yet been fully settled.

On November 16, 2018, Dazhong Construction Company paid RMB 3 million to a certain metal technology company in Guangdong. In total, Dazhong Construction Company paid the Guangdong-based metal technology company for the “Agent Pricing for Materials and Accessories for the Shenyang Metro Project,” as agreed upon between the Guangdong-based metal technology company and a certain building materials company in Shenyang. The Shenyang-based building materials company then acted as the agent to procure materials from the Guangdong-based metal technology company. Subsequently, on December 5, 2019, the two parties signed three copies of an “Aluminum Composite Panel Processing Contract,” stipulating that the Shenyang-based building materials company would place orders for aluminum composite panels with the Guangdong-based metal technology company. The contract specified the name, specifications and model, unit of measurement, and unit price of each item in Annex 1, and clearly stated in the remarks that pricing was based on the unfolded area, inclusive of tax and freight charges, but excluding any keel or accessories.

Additionally, a certain building materials company in Shenyang was established on July 19, 2018. At that time, Su Moumou was one of the shareholders, holding a 50% stake.

In 2019, Su Moumou filed a lawsuit with the People's Court of Huanggu District, requesting the court to order Guangdong某 Metal Technology Co., Ltd. to pay Su Moumou an intermediary fee of 3,466,119.34 yuan.

On December 23, 2020, the People's Court of Huanggu District, Shenyang City, issued Civil Judgment No. (2019) Liao 0105 Min Chu 12300, ruling in favor of all of Su Moumou’s claims and ordering Guangdong某 Metal Technology Co., Ltd. to pay Su Moumou an intermediary fee of 3,466,119.34 yuan.

Subsequently, a certain metal technology company in Guangdong filed an appeal and appointed Attorney Geng Luhong and Attorney Jia Jiayu as its representatives in the case involving the intermediary contract dispute between the company and Su Moumou.

On August 21, 2021, the Shenyang Intermediate People's Court issued Civil Ruling No. (2021) Liao 01 Min Zhong 5445, ruling that the case be remanded for retrial.

On June 13, 2022, the People's Court of Huanggu District, Shenyang City, issued Civil Judgment No. (2021) Liao 0105 Min Chu 12996, dismissing all claims brought by Su Moumou.

Subsequently, Su Moumou filed an appeal. On January 5, 2023, the Shenyang Intermediate People's Court issued Civil Judgment No. (2022) Liao 01 Min Zhong 10798, dismissing Su Moumou’s appeal and upholding the original judgment.

Case Highlights:

1. Did Su Moumou fulfill the entrusted tasks of “assisting in the recovery of payment for goods” and “facilitating the successful completion of the project by Guangdong Metal Technology Co., Ltd.”? Furthermore, did Su Moumou “assist in and ensure that the payment for goods agreed upon jointly by Guangdong Metal Technology Co., Ltd. and China Construction Company is made to Guangdong Metal Technology Co., Ltd. on time, in accordance with the contractually stipulated deadlines, without any delay”?

The lawyer argued that the definition of “successful performance and completion of the project” should mean that Guangdong Metal Technology Co., Ltd. has delivered all the goods to China Construction Corporation, and China Construction Corporation has paid the full amount for the goods to Guangdong Metal Technology Co., Ltd. The Materials Procurement Contract, the special receipt issued by the Construction Bank for the client, and the reconciliation statement submitted by Guangdong Metal Technology Co., Ltd. to the court clearly demonstrate that the total value of goods supplied by Guangdong Metal Technology Co., Ltd. to China Construction Corporation was RMB 6,872,141, of which China Construction Corporation has already paid RMB 4,770,000, leaving a balance of RMB 2,102,141 still outstanding. Meanwhile, after the case was remanded for retrial, the presiding judge in the first-instance proceedings took a record of questioning from Manager Du of the Liaoning Branch of China Construction Corporation on June 7, 2022. Manager Du also stated that China Construction Corporation had indeed paid RMB 4,770,000 to Guangdong Metal Technology Co., Ltd., but the actual value of the goods delivered by Guangdong Metal Technology Co., Ltd. was less than RMB 4,770,000; the goods already delivered could not be matched with the payment of RMB 4,770,000. At present, the two parties have not yet finalized and settled the issue regarding the delivered goods and the corresponding payments. China Construction Corporation will resolve this matter through litigation.

In summary, given the significant discrepancies between the goods and payment involved in the case between Guangdong某 Metal Technology Co., Ltd. and China Construction Corporation, Mr. Su failed to fulfill his entrusted obligations as stipulated in the contract, namely: “assisting in the recovery of payment,” “facilitating Guangdong某 Metal Technology Co., Ltd.’s successful performance and completion of the project,” and “assisting and ensuring that the payment agreed upon jointly by Guangdong某 Metal Technology Co., Ltd. and China Construction Corporation is paid to Guangdong某 Metal Technology Co., Ltd. promptly within the time limits specified in the contract, without any delay.”

2. Can the “Processing Contract” signed between a certain Metal Technology Co., Ltd. in Guangdong and a certain Building Materials Co., Ltd. in Shenyang be regarded as Su某某 having fulfilled the commissioned matters and intermediary obligations stipulated in the “Intermediary Contract”?

During the trial, Su Moumou submitted the “Price List of Materials and Components Agents for Shenyang Metro” to the court as evidence. Clause 4 of this document stipulates: “The settlement unit price agreed upon in the contract signed between Party A and the agent, Shenyang某 Building Materials Co., Ltd., shall be taken as the standard.” Furthermore, during the first-instance proceedings following the remand for retrial, Su Moumou also referred to Shenyang某 Building Materials Co., Ltd. as an agent.

Moreover, the “Price List for Agents of Shenyang Metro Materials Supply” was signed on November 16, 2018. On December 5, 2018, Guangdong某 Metal Technology Co., Ltd. entered into three “Aluminum Panel Processing Contracts” with a certain Building Materials Co., Ltd. in Shenyang City. These three “Processing Contracts” were concluded precisely on the basis of the agency relationship established under the “Price List for Agents of Shenyang Metro Materials Supply,” serving as agency purchase orders. This clearly demonstrates that the said Building Materials Co., Ltd. in Shenyang City is indeed an agent of Guangdong某 Metal Technology Co., Ltd., and is not, in fact, the winning bidder for the construction project involved in this case.

The aforementioned evidence demonstrates that Shenyang某 Building Materials Co., Ltd. is neither the owner, designer, nor general contractor of the project in question, nor is it the entity that won the bid for the construction of the project. Therefore, Shenyang某 Building Materials Co., Ltd. is not a qualified party to enter into a procurement contract with Guangdong某 Metal Technology Co., Ltd. as stipulated in the Intermediary Contract. The signing of the Processing Contract between Guangdong某 Metal Technology Co., Ltd. and Shenyang某 Building Materials Co., Ltd. cannot be regarded as Sui Moumou having fulfilled the commissioned tasks and intermediary obligations set forth in the Intermediary Contract.

Typical significance:

As an intermediary, Su Moumou claimed a mediation fee from the client. The most critical point of contention was whether Su Moumou, as the intermediary, had fulfilled the commissioned matters and obligations stipulated in the mediation contract. Taking this issue as the starting point, the attorney meticulously examined the case, cross-referencing the contracting parties involved in the relevant contract, the status of its performance, and the intermediary’s obligations as agreed upon. Based on the evidence submitted by both sides during the trial, the attorney argued that Su Moumou had failed to perform the commissioned matters and intermediary obligations as prescribed in the Mediation Contract and therefore was not entitled to claim the mediation fee. Ultimately, the court adopted the attorney’s view, enabling the client, Guangdong Metal Technology Co., Ltd., to recover economic losses totaling 3.46 million yuan. This outcome undoubtedly safeguards the legitimate rights and interests of foreign enterprises, prevents unfair competition, upholds the fair order of the market, and helps create a business environment that is more stable, equitable, transparent, and predictable—thereby promoting healthy economic development.