[Title]

Cheng Moufeng’s dispute over the lease contract with Shenyang [Company Name] Real Estate Development Co., Ltd., the Huanggu Branch of Shenyang [Company Name] Commercial Plaza Management Co., Ltd., and the third parties who are the owners of commercial premises Nos. 0248, 0213, 0214, and 0022.

[Keywords]

Civil/Lessee-tenant contract disputes/Contract relativity/Contract termination

【Key Points of the Ruling】

The court holds that contracts duly established in accordance with the law are protected by law. Although the plaintiff claims to have entered into four lease agreements with the defendant, the signatures of both parties to the lease agreements, the statements made by the defendant and various third parties, and the defendant’s practice of returning rent to the third parties all indicate that lease agreements were indeed established and performed between the plaintiff and each of the third parties. The lease agreements between the parties reflect the true intentions of the contracting parties and do not violate any prohibitive provisions of national laws or administrative regulations; thus, these contracts are lawful and valid. Both parties should fulfill their respective obligations as stipulated in the contracts. Now, the plaintiff seeks to terminate the contract on the ground that the defendant failed to honor its promises and promotional commitments. In essence, however, this amounts to seeking to terminate the lease agreements between the plaintiff and the third parties. Although the plaintiff has submitted witness testimony proving that the defendant made certain promises and conducted promotional activities during the tenant recruitment process, the parties to the lease agreements are the plaintiff and each of the third parties. The lease agreements between the parties do not specify the particular tenant recruitment conditions alleged by the plaintiff. Therefore, the plaintiff’s grounds for seeking termination of the contract do not meet the statutory grounds for contract termination set forth in Article 94 of the Contract Law. The plaintiff has failed to provide sufficient evidence to support its claim for termination of the contract; accordingly, this court does not uphold the plaintiff’s request to terminate the contract.

[Basic Facts of the Case]

The plaintiff and the defendant signed four “Commercial Property Lease Agreements” concerning the disputed commercial premises, with a lease term of two years and one month. Before the expiration of the lease term and after the plaintiff had paid six months’ rent, the plaintiff requested the court, on the grounds that the defendant had failed to fulfill its promises made during the leasing process, to legally order the termination of the lease agreement between the parties and to return to the plaintiff the rental deposit of 5,500 yuan, the property management fee deposit of 5,500 yuan, the electricity meter deposit of 1,500 yuan, and the remaining four months’ rent for the premises, totaling 21,470.01 yuan—thus bringing the total amount claimed to 33,970.01 yuan.

As the defendant’s counsel, Attorney Rodin submitted the following defense arguments:

1. Shenyang Real Estate Development Co., Ltd. should not be listed as a defendant in this case, and the plaintiff has no right to sue Shenyang Real Estate Development Co., Ltd.

The four commercial premises—0213, 0214, 0248, and 0022—located on the basement level of a certain commercial plaza in Shenyang involved in this case have all been sold. Shenyang Real Estate Development Co., Ltd. entered into “Commodity Housing Sales Contracts” separately with Zhang, Yu Moxin, Gu Moxin, and Wang for these four premises, and these contracts have been duly filed and registered. Moreover, on October 20, 2014, it was the owners of the four premises—not Shenyang Real Estate Development Co., Ltd.—who signed four “Lease Contracts” with the plaintiff, Cheng Moufeng. Thus, Shenyang Real Estate Development Co., Ltd. is not a party to the “Lease Contracts.” The four “Lease Contracts” have been fully performed, and the owners of the commercial premises have each received six months’ rent and the corresponding security deposits for their respective premises (as evidenced by receipts and bank transfer records). In accordance with the principle of contractual relativity, the plaintiff, Cheng Moufeng, has no legal right to sue Runxiang.

II. The premise upon which the plaintiff unilaterally demanded termination of the Lease Contract does not hold; the plaintiff is not entitled to unilaterally terminate a contract that has been duly established under law nor to demand the return of the sums claimed.

With regard to the four “Lease Contracts” involved in this case, all four contracts were duly established in accordance with the law and have been actually performed. The parties to the contracts should strictly fulfill their respective rights and obligations as stipulated in the contracts. Currently, each shop has been delivered on time, and the delivered premises conform to the terms and conditions set forth in the “Lease Contracts.” Therefore, Party B can achieve the purpose of the lease, and the shopping mall has opened for business as usual. Consequently, the situation described in Article 11.2 of the contract does not exist on the part of Party A; hence, the precondition for the plaintiff’s unilateral request to terminate the “Lease Contracts” does not hold, and the plaintiff is not entitled to unilaterally demand termination of the contract or reimbursement of the sums claimed.

3. Shenyang某 Real Estate Development Co., Ltd. never made the so-called promise alleged by the plaintiff, and the evidence presented by the plaintiff in court does not indicate that Shenyang某 Real Estate Development Co., Ltd. ever made any such promise. With regard to the shop lease, the rights and obligations of the property owner and the plaintiff are clearly stipulated in the Lease Contract signed by both parties, and both parties should strictly abide by these terms. Moreover, the shopping mall has already passed the fire safety inspection and holds a certificate of compliance for pre-operational fire safety inspections; therefore, it does not, as the plaintiff claims, fail to meet fire safety standards and pose a safety hazard. Shenyang某 Real Estate Development Co., Ltd. has not breached the contract, and the plaintiff is therefore not entitled to demand termination of the Lease Contract or reimbursement of related payments.

4. According to Clauses 1.7, 6.2, 6.16, and 2.3 of the “Management and Operation Agreement” signed between the plaintiff and the shopping mall, the plaintiff’s act of prematurely vacating the premises and voluntarily ceasing operations constitutes a breach of contract, and the contract term has not yet expired. Therefore, the plaintiff is not entitled to request a refund of the security deposit or the return of any corresponding payments.

【Judgment Result】

The People's Court of Huanggu District, Shenyang City, ruled: Dismiss all claims filed by the plaintiff.

【Reasons for the Ruling】

The court holds that contracts duly established in accordance with the law are protected by law. Although the plaintiff claims to have entered into four lease agreements with the defendant, the signatures of both parties to the lease agreements, the statements made by the defendant and various third parties, and the defendant’s practice of returning rent to the third parties all indicate that lease agreements were indeed established and performed between the plaintiff and each of the third parties. The lease agreements between the parties reflect the true intentions of the contracting parties and do not violate any prohibitive provisions of national laws or administrative regulations; thus, these contracts are lawful and valid. Both parties should perform their respective obligations as stipulated in the contracts. Now, the plaintiff seeks to terminate the contract on the ground that the defendant has failed to fulfill its promises and promotional commitments. In essence, however, this amounts to seeking termination of the lease agreements between the plaintiff and the third parties. Although the plaintiff has submitted witness testimony proving that the defendant made certain promises and conducted promotional activities during the tenant recruitment process, the parties to the lease agreements are the plaintiff and each of the third parties. The lease agreements between these parties do not specify the particular tenant recruitment conditions alleged by the plaintiff. Therefore, the plaintiff’s grounds for seeking termination of the contract do not meet the statutory grounds for contract termination set forth in Article 94 of the Contract Law. The plaintiff has failed to provide sufficient evidence to support its claim for termination of the contract; accordingly, this court does not uphold the plaintiff’s request to terminate the contract.

【Relevant Statutes】

Article 8, Article 60, and Article 94 of the Contract Law of the People's Republic of China; Article 144 of the Civil Procedure Law of the People's Republic of China; and Article 90 of the Supreme People's Court’s Interpretations on the Application of the Civil Procedure Law of the People's Republic of China.

[Lawyer’s Perspective]

The case involves numerous parties and is representative of all cases involving a certain real estate development company in Shenyang. Moreover, it carries significant implications. The exemplary effect of this final judgment has played a major role in reducing repetitive litigation, thereby helping the company avoid substantial losses in similar and related cases.