[Case Summary]This case involves a dispute over a film copyright investment contract. On May 27, 2021, Zhou * signed a "Cinema Film Project Cooperation Agreement" with ** Film Company, paying a fee of 150,000 yuan for the right to receive income and enjoying a 0.03% net income right. The film was released on September 30, 2021, with a total box office revenue of 1.477 billion yuan, but the company has not paid the income to Zhou *. Zhou * entrusted Beijing Henglu Law Firm to handle the case.Wang DongThe lawyer filed a lawsuit, requesting the rescission of the contract, the return of 150,000 yuan and interest, the payment of attorney's fees, and the joint and several liability of the sole shareholder, Wang *. The court adopted the lawyer's opinion and ruled to rescind the contract. The company shall return 150,000 yuan and the interest on the occupied funds within ten days, and pay the attorney's fees. Wang * shall bear joint and several liability. The core dispute: determination of fundamental breach of contract and joint and several liability of the sole shareholder. Applicable legal provisions: the provisions of the Civil Code on the rescission of contracts, restoration of the status quo ante, and the disregard of the personality of a sole limited liability company.

I. Review of the Case Facts

Film and television investors often ask, "What if the movie box office is high but there's no dividend?" "Can I get back my investment money?" and "Are the shareholders of a single-person company jointly liable?" On May 27, 2021, Zhou * signed the "Cinema Film Project Cooperation Agreement" with ** Film Company. The film copyright was valued at 500 million yuan, and Zhou * was one of the investors in the distribution revenue share, paying 150,000 yuan for the film revenue rights and enjoying a 0.03% share of the net distribution revenue. On the same day, Zhou * made the payment according to the agreement.

The film involved in the case was released in mainland China on September 30, 2021, with a total box office of 1.477 billion yuan. However, ** Film Company has never paid Zhou * the investment income, and Zhou * learned that the company recommended the investment to unspecified people, violating the contract agreement. Due to the failure of negotiation, Wang * (the attorney's representative in this article) entrusted Henglue Law Firm to handle the case.Wang DongThe lawyer filed a lawsuit on behalf of the client, requesting the rescission of the contract, the return of 150,000 yuan and the interest on the occupied funds (calculated according to the LPR from May 27, 2021), and the payment of attorney's fees. Wang * shall bear joint and several liability for repayment.

II. The focus of the case

  • Focus 1: Whether the defendant constitutes a fundamental breach of contract.The film has been released for more than two years and has achieved impressive box office results, but the profits have not been paid within the agreed timeframe. Moreover, the party involved is not the producer and lacks a legitimate source of profit rights. Can the contract be terminated in this case?
  • Focus 2: Whether the investment funds, interest, and attorney's fees should be returned or compensated for.The scope of restoring the status quo ante after the contract is rescinded.
  • Focus 3: Whether the sole shareholder, Wang Mou, should bear joint and several liability.Can it prove that the individual's property is independent of the company's property?

III. Professional intervention by Hengluo Lawyers

The plaintiff (Zhou *) claimed that:I have paid the money as agreed. The film has been on show for more than two years and achieved impressive box office results, but the defendant has not paid the profits, failed to inform me of the amount and time of payment, and recommended the investment to an unspecified number of people in breach of contract. I request to rescind the contract, return the money with interest, pay the attorney's fees, and hold Wang * jointly and severally liable.

The defendant (the ** company and Wang **) argued that:We have received 150,000 yuan, but due to the sluggish market and the impact of the pandemic, we have not yet received any income, and the payment conditions have not been fulfilled. There is no basis for terminating the contract, so we should not bear the attorney's fees. Wang * is a shareholder, but his assets are not intermingled with the company's assets, so he should not be held jointly and severally liable.

Hengluo Lawyer's Representation Opinion:Wang DongThe lawyer pointed out that:

  • The contract is legal and valid. The plaintiff has fulfilled all his obligations by paying 150,000 yuan; the film has earned a considerable box office after being released for more than two years, but the defendant has neither paid the revenue within one year nor informed the plaintiff about the amount and the payment time. Despite being reminded, the defendant still failed to fulfill his obligations.
  • The defendant is not the producer or co-producer of the film, and has not provided evidence of the source of the legal right to profits, which results in the plaintiff being unable to achieve the investment purpose. This constitutes a fundamental breach of contract, and the contract can be terminated in accordance with the law.
  • After the contract is rescinded, the party may request the restoration of the status quo ante, compensation for losses, and the return of 150,000 yuan, and it is legally justified to charge interest on the funds occupied during the period of non-performance of the contract.
  • Wang * is a shareholder of the company. He failed to prove that his personal assets are separate from the company's assets, and therefore he should bear joint and several liability for the debt.

IV. Outcome of the case

The court fully adopted the opinions of Hengluo Law Firm and fully supported the plaintiff's claims, ruling that: the contract signed by the two parties be terminated; ** Film Company shall, within ten days, pay Zhou * an investment amount of 150,000 yuan and the loss of interest on the use of funds, and pay Zhou *'s attorney's fees; Wang * shall bear joint and several liability for ** Film Company's debts. The high risk of film copyright investment is clearly demonstrated in this case, and the intervention of professional lawyers effectively safeguarded the legitimate rights and interests of investors.

5. Henglu Law Firm's Reminder

For film and television investment, it is necessary to clarify the source of the right to profits. This case was handled by Beijing Henglu Law Firm.Wang DongAttorney (Practice Certificate No.: 11101201910090334, subject to the document issued by the judicial administrative organ). Attorney's Reminder: When investing in film copyrights, it is necessary to verify the qualifications of the production party and the legal source of the profit rights. The contract should clearly specify the profit cycle, accounting and breach of contract liability; shareholders of single-member limited liability companies should pay attention to the independence of their property, otherwise they may bear joint and several liability for the company's debts.

VI. Common Questions About Corporate Contract Cases (FAQ)

  1. Q:The movie has earned a high box office, but I didn't receive any dividends. Can I sue them for this?
    A:Yes. If the film has been released, the agreed earnings period has passed, but the producer has not made the payment and the investor is not the producer or does not have a legal source of earnings rights, this constitutes a fundamental breach of contract, and the investor may request to terminate the contract, return the investment funds, and seek compensation.
  2. Q:Can I get back the interest on the investment funds?
    A:After the contract is terminated and the party requests to restore the status quo ante, it may claim the return of the investment funds and compensation for the interest loss during the period of funds' occupation, which is usually calculated by referring to the LPR.
  3. Q:Do the shareholders of a one-person company need to be jointly and severally liable for the company's debts?
    A:If a shareholder of a one-person limited liability company cannot prove that his/her personal assets are separate from the company's assets, he/she shall bear joint and several liability for the company's debts; the shareholder should pay attention to asset isolation and evidence collection.
  4. Q:How to determine whether a film and television investment contract is in breach of contract?
    A:Check whether the income is calculated and paid on schedule, whether there is a legal source of income, and whether the funds are raised from an unspecified number of people in violation of regulations. If the contractual purpose is thwarted due to a breach of contract, the party can claim to terminate the contract.
  5. Q:What risks should be considered before investing in a movie?
    A:Verify the source of the production party and the right to profits, clarify the profit distribution cycle and accounting method, agree on the liability for breach of contract and the responsibility for attorney's fees, and, if necessary, entrust a lawyer to review the contract.