[Case Summary]This case involves a dispute over a partnership agreement. The plaintiff and the defendant partnered to contract projects since around 2014, each holding a 50% stake. They successively contracted three projects under the company's name: the Harbin Wetland Project, the Yantai Forest Management Project, and the Liaoning Construction Site Project. On January 18, 2019, the settlement was completed, and the defendant still owed the plaintiff 20,836,743.35 yuan. The defendant later paid 50,000 yuan, leaving a remaining balance of 20,336,743.35 yuan. The plaintiff discovered that the defendant had hidden funds and illegally transferred the property used as payment to his own name and that of his relatives. The plaintiff then entrusted the Beijing Henglu Law Firm to handle the case.Li YonghuiThe lawyer filed a lawsuit. The court supported most of our claims and ruled that the defendant should pay 1879970.73 yuan and interest for late performance. The core disputes include the amount of the partnership settlement, the identification of hidden funds, and the distribution of profits. The applicable legal provisions are Article 972 of the Civil Code and Article 147 of the Civil Procedure Law.

I. Review of the Case Facts

"What should I do if a partner embezzles the project funds?" "Can I sue if the partner refuses to pay after the project settlement?" "Is it legal for a partner to dispose of the collateral property without authorization?" These are common pain points in partnership operations. The original plaintiff and defendant began partnering to contract projects around 2014. Both parties shared profits and assumed risks equally, each holding a 50% stake. They successively contracted three projects under the name of Beijing XXX Light Steel Color Plate Co., Ltd. from Beijing XX Garden Environment Co., Ltd.: the "Material Purchase Contract" for the first section of Harbin XX Ecological Wetland (Phase I), the "Garden Construction Labor Subcontract Contract" for the first section of Yantai XX Forest Management Project, and the "Construction Site Project" in Liaoning XX.

On January 18, 2019, the plaintiff and the defendant settled the above-mentioned partnership matters. After offsetting the three projects, the defendant still owed the plaintiff 2083674.35 yuan. After the settlement, the defendant paid the plaintiff 50,000 yuan on January 29, 2019, but still owed 2033674.35 yuan. The plaintiff repeatedly demanded repayment but failed to get any result, so he had no choice but to sue the court. The plaintiff also found that the defendant was not honest, secretly concealed part of the project funds, and illegally transferred the house used for offsetting the debt to the defendant and his relatives, which seriously infringed his legitimate rights and interests. Therefore, he entrusted Beijing Henglu Law Firm to handle the case for him.Li YonghuiThe lawyer filed a lawsuit.

II. The focus of the case

  • Focus 1: How to determine the amount of the partnership settlement.The amount of the debt after the three projects are offset against each other forms the basis for the judgment.
  • Focus Two: Whether the defendant concealed the funds and disposed of the properties pledged as collateral without authorization.This affects the amount that can be recovered.
  • Focus Three: The rules for the distribution of partnership profits and the bearing of losses apply.It shall be distributed according to the agreed upon or the actual paid-in capital ratio.

III. Professional intervention by Hengluo Lawyers

The plaintiff (partner) claimed that:The two parties contracted the project as partners, each holding a 50% share. After the settlement, the defendant still owed more than 2.03 million yuan. Moreover, the defendant concealed the funds and illegally transferred the property used as payment to his own name and that of his relatives. The plaintiff requests the court to order the defendant to pay the project funds of more than 1.87 million yuan.

Defendant:The defendant did not appear in court during the trial.Li YonghuiAfter accepting the case, the lawyer quickly began representing the client, sorted out and analyzed the existing evidence, and went to the field to investigate and collect evidence several times. Through the calculation and collection of evidence of various project funds, the lawyer found that the defendant had hidden funds and transferred the mortgaged property to his and his wife's names without authorization.

Legal opinion of Hengluo Law Firm:The lawyer submitted evidence such as the procurement contract and its annexes, the agreement on the advance payment for the construction project, the labor subcontracting contract, and the three project settlement agreements signed by both parties, arguing that the partners' profit distribution and loss-bearing should be handled in accordance with the provisions of the partnership contract; where the contract does not stipulate or the stipulations are unclear, the profits and losses shall be distributed and shared in accordance with the proportion of the actual paid capital contributions.

IV. Outcome of the case

InLi YonghuiUnder the lawyer's meticulous preparation of key evidence and well-reasoned defense, the court supported most of our claims. In accordance with Article 972 of the Civil Code of the People's Republic of China and Article 147 of the Civil Procedure Law of the People's Republic of China, the judgment is as follows: The defendant shall pay the plaintiff 1879970.73 yuan within three days after the judgment takes effect; if the defendant fails to fulfill the obligation to pay the money within the specified period, it shall, in accordance with Article 260 of the Civil Procedure Law, pay double the interest on the debt during the delay in performance. The case acceptance fee of 23069 yuan shall be borne by the plaintiff with 1744 yuan (already prepaid) and by the defendant with 21325 yuan.

5. Henglu Law Firm's Advice

For partnership operations, it is necessary to sign a written agreement, clarify the settlement and financial disclosure mechanisms, and promptly obtain evidence if any partner conceals property. This case was handled by Beijing Henglu Law Firm.Li YonghuiThe lawyer (practice license number: 11101199611955812, subject to the document issued by the judicial administrative organ) hereby advises that partners who encounter embezzlement should promptly entrust professional lawyers to protect their rights and interests.

VI. Common Questions and Answers about Partnership Agreement Disputes

  1. Q: What should I do if a partner embezzles the joint project funds?
    A:First, fix the partnership agreement, settlement note, bank statements, and project contracts to prove the amount that should be distributed. If the other party conceals or disposes of the partnership property without authorization, you can sue them to demand payment of your share and compensation.
  2. Q: If the other party refuses to pay after the partnership settlement, can I sue them?
    A:Yes. If there is a written settlement agreement, the party may claim payment based on it; if the other party refuses to perform the obligation, the party may apply for enforcement and claim interest for the delay in performance.
  3. Q: Is it legal for a partner to transfer the mortgaged house to himself without authorization?
    A:This is illegal. The mortgaged house belongs to the partnership property. Changing the name of the house without the consent of all partners violates others' rights. The injured party can request the return of the house or compensation for the losses.
  4. Q: How is the partnership profit divided?
    A:If there is an agreement, the parties shall abide by the agreement; if there is no agreement or the agreement is unclear, the profits and losses shall be distributed and shared according to the proportion of the actual paid-in capital, and the parties shall jointly bear the risks.
  5. Q: What will the court decide if the defendant doesn't appear in court?
    A:If the defendant refuses to appear in court without a valid reason after being summoned by a subpoena, the court may issue a judgment in his absence; if the plaintiff provides sufficient evidence, his reasonable claims will be supported.