[Case Summary]This case is an arbitration case involving a dispute over a commissioned creation contract. The applicant, Shanghai A Technology Company, and the respondent, Shenzhen B Network Company, signed a "Project Outsourcing Agreement" in May 2022, agreeing to create and upgrade G virtual IP materials at a cost of 583,000 yuan. After the work was accepted and approved in July 2022, the respondent delayed making the payment. The applicant entrusted Beijing Henglu Law Firm to handle the case.Xiong BinrongThe lawyer applied for arbitration, requesting confirmation of the termination of the agreement, payment of the contract amount of 583,000 yuan, a breach of contract penalty of 116,600 yuan, and attorney's fees and arbitration fees. The arbitration tribunal adopted the lawyer's main arguments and ruled that the contract amount of 583,000 yuan should be paid and all attorney's fees should be compensated. The core disputes include whether the work was accepted as qualified, the attribution of the responsibility for the delay, and whether the respondent could refuse to pay the fees. The applicable legal provisions are the relevant provisions of the Contract Chapter of the Civil Code of the People's Republic of China.

I. Review of the Case Facts

After the outsourced production was completed, the other party stillThey're dragging their feet and refusing to pay the contract amountCompanies often search for questions like "What to do if the other party in a commissioned creation contract refuses to pay?" "Can I arbitrate if they don't pay after accepting the work?" and "Who is responsible for the delay of an outsourced project?" On May 12, 2022, the applicant, Shanghai A Technology Company, and the respondent, Shenzhen B Network Company, signed a "Project Outsourcing Agreement", which stipulated that the applicant would complete the production of the first episode of G Virtual IP material upgrade, with a total cost of 583,000 yuan (including tax). The production would commence after receiving the advance payment, with a completion period of approximately six weeks. After signing the contract, the respondent paid an advance of 291,500 yuan. After completing the project, the applicant finalized the version on July 16, 2022, and the work was accepted on July 20, but the respondent repeatedly delayed paying the remaining 50% of the fee.

Due to the failure of negotiating the payment, the applicant entrusted Beijing Henglu Law Firm to handle the matter.Xiong BinrongThe lawyer represented the client to safeguard their rights and applied for arbitration. The lawyer argued that the agreement was unilaterally terminated by the respondent on October 25, 2022; the arbitration tribunal ruled that the respondent should pay the contract amount of 583,000 yuan, the default penalty of 116,600 yuan, and bear the arbitration fees and attorney's fees.

II. The focus of the case

  • Focus 1: Whether the work has passed the acceptance and whether its quality meets the standards.The respondent argued that the applicant's delay in delivery and failure to meet quality standards constituted a fundamental breach of contract, and therefore the respondent could refuse to pay all the fees on this basis.
  • Focus II: The responsibility for the delay of the work.During the production process, the defendant made modifications amounting to 30%. According to Article 2.9 of the contract, the plaintiff is not responsible for these modifications. Who should bear the responsibility for the delay in delivery?
  • Focus Three: Can the applicant claim the contract price, the breach of contract penalty, and the attorney's fees?Does the respondent's refusal to accept the payment and hiring a third party instead affect the obligation to make the payment?

III. Professional intervention by Hengluo Lawyers

The applicant (the client) alleges that:The work has been created and modified according to the respondent's requirements and has been confirmed by the respondent as meeting the acceptance criteria. The respondent should pay the contract amount of 583,000 yuan and the overdue breach of contract penalty and attorney's fees in accordance with the agreement.

The respondent (Company B) argued that:According to Article 6.3 of the agreement, "Whether the quality meets the standards shall be determined by Party A", the applicant's delay in delivery and non-compliance with quality standards constitute a fundamental breach of contract, and Party A has the right to terminate the contract without paying any fees; since the applicant is unable to deliver qualified works, it should not be required to make any payments for the resulting commercial losses.

Hengluo Lawyer's Agency Opinion:Xiong BinrongAfter analyzing the contract terms one by one and evaluating evidence such as WeChat chats, the lawyer argued that: before signing the contract, the final script had been determined according to the respondent's requirements, and according to Articles 1.2 and 2.9, the respondent was not allowed to arbitrarily change the confirmed requirements; each step of the work was carried out after being confirmed by the respondent; the delay was caused by the respondent's reasons, and the applicant had informed and obtained the respondent's consent to the delay; the product had been inspected and accepted by the respondent and finally delivered. The respondent's employees actively set the final version, inspected and accepted the product first, then paid the full amount, and requested to mail the invoice for the balance. Therefore, the acceptance should be deemed as qualified; the WeChat and email acceptance also met the written acceptance conditions.

IV. Outcome of the case

After the arbitration tribunal conducted a trial and verified the facts, it adopted the main opinions of Hengluo Law Firm and only adjusted the claim for the breach of contract penalty for late payment. The final ruling is as follows:The respondent shall pay the applicant the contract amount of 583,000 yuan; and compensate the applicant for all the attorney's feesIn this case, the arbitration fee of 30,366 yuan shall be borne by the applicant for 5,000 yuan and by the respondent for 25,366 yuan. The client's contractual claims and the cost of protecting their rights have been fully guaranteed.

5. Henglu Law Firm's Reminder

This case is handled by Beijing Henglu Law Firm.Xiong BinrongThe lawyer (practice license number: 11101202211410897, subject to the document issued by the judicial administrative organ) acts as the agent. When the enterprise undertakes outsourced creative projects, it shall sign a written contract to specify the acceptance standards, the responsibilities for delay, and the payment milestones, and keep records of each step of confirmation; when the other party delays the payment, the enterprise may apply for arbitration according to the contract and claim for attorney's fees and arbitration fees to maximally protect its rights and interests.

VI. Common Questions and Answers about Disputes over Commissioned Creative Contracts

  1. Q:What should I do if the client refuses to pay after completing the outsourced work?
    A:Collect contracts, acceptance records, and evidence of communication, and apply for arbitration or file a lawsuit in accordance with the agreement to claim the contract payment, late breach of contract penalties, and reasonable expenses for protecting rights and interests.
  2. Q:The other party said that the quality didn't meet the standard and they refused to pay. How can I prove that the goods have been accepted?
    A:The records of confirming the final version, accepting the goods, and promising to make payments through WeChat and email can all serve as evidence of acceptance. If necessary, they can also prove that a new written acceptance method has been agreed upon in the later stage.
  3. Q:For outsourcing projects that are delayed due to repeated modifications by the client, who should bear the responsibility?
    A:The contract usually stipulates that Party A shall not arbitrarily change the confirmed requirements. If the delay or increase in costs is caused by the modification, the entrusted party shall not be liable, and the responsibility for the delay shall lie with Party A.
  4. Q:Can arbitration require the other party to bear the attorney's fees?
    A:If the contract stipulates it or the arbitration rules allow it, the losing party can be required to compensate for the attorney's fees and arbitration costs. In this case, all the attorney's fees were supported by the court.
  5. Q:Is it reasonable for the other party to unilaterally terminate the contract and still require me to compensate for the losses?
    A:If there is no contractual or legal basis for terminating the contract, the party should instead continue to fulfill its payment obligations. Hiring someone else to redo the work cannot exempt the original contracting party from its payment responsibilities.