[Case Summary]This case involves a dispute over the distribution of film revenue. On May 27, 2021, Zhou * signed a "Cinema Film Project Cooperation Agreement" with ** Film Company, with a copyright valuation of 500 million yuan. Zhou * paid 150,000 yuan for the film revenue rights and enjoyed a 0.03% share of the net distribution revenue. The film was released on September 30, 2021, with a total box office revenue of 1.477 billion yuan, but ** Film Company has never paid the revenue and recommended investments to an unspecified number of people, which constitutes a breach of contract. Zhou * entrusted Beijing Henglu Law Firm to handle the case.Wang DongAttorney representation. Core disputes: whether the contract should be rescinded, whether the investment funds and attorney fees should be refunded, and whether the sole shareholder should bear joint and several liability. Applicable legal provisions: provisions related to the rescission of contracts and the commingling of assets in single-member limited liability companies. The plaintiff won the first and second instance trials, and was awarded 150,000 yuan in investment funds, interest, and attorney fees. The shareholder, Wang * , was ordered to bear joint and several liability.

I. Review of the case facts

Film and television investors often search for terms like "what to do if a film's box office performance is high but there's no dividend distribution", "how to handle disputes over profit-sharing investments", and "how to represent clients when the second-instance court upholds the original verdict". On May 27, 2021, Zhou * signed a "Theatrical Film Distribution Contract" with ** Film and Television Company.<*****>The "Project Cooperation Agreement" stipulates that the film copyright is valued at 500 million yuan. Zhou * is one of the investors in the distribution income, and he/she pays a total of 150,000 yuan to ** Film Industry for the film's income rights, and enjoys a 0.03% share of the net income from the distribution of the project.

On May 27, 2021, Zhou * fulfilled his payment obligation as agreed. ** Film Company should pay the pure box office profits and non-box office income generated within one year from the date of the film's release in full and on time according to the proportion of the income rights. Later, the film in question was released in mainland China on September 30, 2021, with a total box office of 1.477 billion yuan, but ** Film Company has not paid Zhou * the investment income; and according to Zhou *, ** Film Company recommended investing in the film in question to an unspecified number of people, which violated the contract agreement. Due to the failure of negotiation, Zhou * entrusted Beijing Henglu Law Firm to handle the case for him.Wang DongThe lawyer represents the client in filing a lawsuit to protect their rights.

II. The focus of the case

  • Focus 1: Whether Zhou * has the right to terminate the cooperation agreement.If the film company fails to pay the profits within the agreed profit period after being reminded, the party in compliance with the contract may terminate the contract in accordance with the law.
  • Focus II: Whether the investment funds, interest, and attorney's fees should be refunded.It is legally justified to return the investment funds after the contract is terminated and to compensate for the interest on the funds occupied and the loss of attorney's fees.
  • Focus 3: Whether the sole shareholder, Wang * , should bear joint and several liability.He/She has failed to prove that his/her personal property is separate from the company's property, and should bear joint and several liability for repayment.

III. The professional intervention of Hengluo Law Firm

The party involved (Zhou *) claimed that:Zhou * claimed that the film had been released for more than two years and had achieved good box office results. However, the film company claimed that there was no evidence of losses and unpaid profits after being reminded to pay the earnings. Therefore, the company decided to terminate the agreement and demanded that Zhou * return the investment of 150,000 yuan, bear the interest on the occupied funds and the loss of attorney's fees, and that the shareholder Wang * bear joint and several liability.

The respondent (the film company) appealed, stating that:Please request to revoke the first-instance judgment and rule that Zhou * is not entitled to terminate the agreement, and does not need to return the investment funds and pay the attorney's fees and interest; claim that the payment conditions have not been fulfilled, that he has the right to transfer his legitimate earnings, and that Wang * should not bear joint and several liability.

Hengluo Lawyer's Representation Opinion:Wang DongThe lawyer systematically argued in the first and second instance that the agreement stipulated a one-year period for the exercise of the beneficiary rights, and the settlement would be made after the expiration of the period and upon the written confirmation of both parties; however, more than two years after the film was released, ** Film Company claimed that it suffered serious losses but failed to provide evidence, failed to pay the profits within the agreed period, and still failed to pay after being reminded. Zhou * as the party fulfilling its obligations has the right to rescind the contract according to law. After the contract was rescinded, Zhou * demanded the return of the investment funds and compensation for the interest on the funds occupied and the attorney's fees, which is legally justified. Wang * is the sole shareholder of ** Film Company, and failed to provide evidence to prove that his personal assets are independent of the company's assets. The first-instance judgment requiring him to bear joint and several liability for repayment is in accordance with the law. The lawyer requested to reject the appeal and maintain the original judgment.

IV. Outcome of the case

The first-instance judgment fully adoptedWang DongThe lawyer's opinion fully supports our claims: to rescind the contract between the two parties, ** Film and Television Company shall, within ten days, pay Zhou * an investment of 150,000 yuan and the loss of interest on the use of funds, and pay the attorney's fees. Wang * shall bear joint and several liability for ** Film and Television Company's debts, and the litigation fees shall be borne by the two defendants jointly. ** Film and Television Company appealed against the judgment, but the appellate court, after reviewing the case, adopted the lawyer's legal opinion, holding that the appeal request was unfounded and should be rejected. The first-instance judgment was found to be based on clear facts and correct application of the law, and should be maintained. The appellate court dismissed the appeal and upheld the original judgment.

5. Henglu Law Firm's Advice

This case is handled by Beijing Henglu Law Firm.Wang DongThe attorney (practice license number: 11101201910090334, subject to the document issued by the judicial administrative organ) acts as an agent. Beijing Henglu Law Firm specializes in representing clients in various civil and commercial, administrative, and criminal cases, and has a team of experienced professional lawyers. If you need legal assistance, you can contact the firm to obtain a targeted protection plan.

VI. Common Questions and Answers about Disputes over Film and Television Investment Contracts

  1. Q: Is it legal for a movie to have a high box office but not pay dividends to investors?
    A:It's illegal. According to the income distribution agreement, the box office revenue should be paid in proportion after it is generated; if the party refuses to pay and still fails to perform after being reminded, the party in compliance with the contract may terminate the contract and claim back the investment and losses.
  2. Q: Does the sole shareholder of the company have to bear joint and several liability?
    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.
  3. Q: What does it mean that the second-instance court upheld the original verdict?
    A:It indicates that the first-instance court has identified the facts clearly and applied the law correctly, and the effective judgment is enforceable. The other party is obliged to fulfill its obligation to refund and compensate according to the original judgment.
  4. Q: What should I do if the investment agreement stipulates a "one-year earnings cycle" and the earnings have not been settled by the end of the period?
    A:If a written reminder is issued, and the defaulting party still fails to settle the payment within a reasonable period after the reminder, the party in compliance with the contract has the right to terminate the agreement and claim the return of the investment funds and interest.
  5. Q: Is there any risk for film and television companies to raise funds from unspecified people in society?
    A:It may violate compliance requirements and constitute a breach of contract. Investors should review the qualifications and agreements, keep evidence, and entrust professional lawyers to protect their rights in a timely manner in case of disputes.