[Case Summary]This case involvesContract disputes(Film and television investment). The plaintiff, Yang *, signed the "Cooperation Subscription Agreement for the Film 'XX in the World'" with the defendant Film Industry Company, subscribing for 315,000 yuan, accounting for 0.09% of the project. It was agreed that the film would be released in mainland China before 2021, and if the film failed to obtain the "Film Public Screening Permit", all the subscription fees would be refunded. However, the Film Industry Company failed to produce, submit for review, or release the film on schedule, and even failed to obtain the public screening permit. The plaintiff entrusted Beijing Henglu Law Firm to handle the case.Chen Mei'eAttorney,Yè QingyǔThe lawyer, on behalf of the plaintiff, alleged that the defendant had breached the contract fundamentally and that the purpose of the contract could not be achieved, and requested to rescind the contract, return the investment funds, and pay the breach of contract damages. The court found that the defendant had seriously breached the contract and ruled that the contract should be rescinded, and the investment principal of 315,000 yuan should be returned. The breach of contract damages should be calculated according to the LPR from March 31, 2022. The core dispute is whether the failure to release the film as agreed constitutes a fundamental breach of contract. The applicable legal provisions are Articles 563 and 566 of the Civil Code.

I. Review of the Case Facts

"Can the movie investment funds be refunded?" and "What should I do if the film and television company fails to release the film and breaches the contract?" are popular inquiries about film and television investment. The plaintiff, Yang * (the Party B), and the defendant (the Party A), a certain company, signed the "Film Cooperation Subscription Agreement for 'XX in the World'" as the production party. The agreement stipulated that "the film production cost is 350 million yuan, and the Party B voluntarily invests 315,000 yuan in the film production, with the subscription accounting for 0.09% of the total project amount". The film company promised that the film would be released in mainland China before 2021. At the same time, it was agreed that if the film failed to obtain the "Film Public Screening Permit", the Party A should refund all the subscription funds to the Party B. After the contract was signed, the plaintiff paid the funds according to the agreement, but the film company failed to produce, submit for review, and release the film according to the agreed schedule. Despite the plaintiff's repeated inquiries, the film company evaded the issue and has not completed the production, submission for review, and release work to this day.

The plaintiff decided to terminate the contract and demand the return of the investment funds, but the defendant disagreed with the termination, arguing that the film had already been completed and had the basis for continued performance. The plaintiff should have foreseen the uncertainty of the release date and should bear the commercial risks by itself. After the negotiations failed, the plaintiff entrusted Beijing Henglu Law Firm to handle the case.Chen Mei'aoAttorney,YeqingyuThe lawyer is representing this case.

II. The focus of the case

  • Focus 1: Whether failing to release the film as agreed or failing to obtain a public screening license constitutes a fundamental breach of contract.Whether the film can be released on schedule is a decisive factor for the plaintiff to benefit. Whether the defendant's long-term stagnation can be deemed as the failure to achieve the contractual purpose is a prerequisite for the termination of the contract.
  • Focus Two: Should the plaintiff bear the commercial risks by himself/herself?The defendant claimed that the uncertainty of the release should have been foreseen and the transaction stability should have been maintained. Whether this defense is valid or not will determine whether the contract will be terminated.
  • Focus 3: Return of investment funds and calculation of breach of contract penalties.After the contract is terminated, whether the principal can be refunded and the claim for the breach of contract penalty (based on the LPR) can be supported will determine the final recovery of the payment.

III. The professional intervention of Hengluo Law Firm

The plaintiff (Yang *) alleged that:The plaintiff claimed that the purpose of signing the subscription agreement was to obtain the box office revenue after the film's release, and whether the film could be released on time was a decisive factor. By the end of 2021, the defendant had not completed the release of the film and even failed to obtain the public screening license, which constituted a fundamental breach of contract. The plaintiff therefore demanded the termination of the contract, the return of the investment funds, and the payment of the breach of contract damages.

The defendant (the film company) argued that:The defendant disagrees with the termination and believes that the film has been completed and has the basis for continued performance. Both parties should maintain the stability of the transaction. The plaintiff should have foreseen the uncertainty of the release time and should bear the corresponding commercial risks by himself.

Hengluo Lawyer's Agency Opinion:Chen Mei'oAttorney andYè QīngyǔAfter a detailed analysis, the lawyer concluded that the purpose of the plaintiff and the defendant signing the cooperation subscription agreement was to obtain box office benefits after the film's release. Whether the film could be successfully and timely released was a decisive factor for the plaintiff to obtain benefits. According to the Civil Code and other relevant provisions, as of the end of 2021, the defendant had not completed the release according to the agreed time, and even failed to obtain the "Film Public Screening Permit". The defendant's actions constituted a fundamental breach of contract, resulting in the contract being impossible to perform. The plaintiff has the right to demand the return of the investment funds and the payment of the breach of contract damages in accordance with the contract provisions and the law.

IV. Outcome of the case

The court supported our claims, finding that the defendant had committed a serious breach of contract and upheld the plaintiff's request to terminate the cooperation subscription agreement. After the contract was terminated, the defendant should return the investment capital of 315,000 yuan to the plaintiff. According to the agreement, the defendant failed to return the investment funds on schedule and caused losses from capital occupation, so the plaintiff's claim for breach of contract damages was supported. In accordance with Article 563 Paragraph 1 Item 3 and Article 566 of the Civil Code, and Article 67 Paragraph 1 of the Civil Procedure Law, the court ruled as follows: 1. Confirm that the "Film Cooperation Subscription Agreement" signed by the plaintiff and the defendant on June 16, 2021 was terminated on March 30, 2022; 2. The defendant shall pay the plaintiff the investment principal of 315,000 yuan and the breach of contract damages (based on 315,000 yuan, calculated at the lending market quotation rate announced by the National Interbank Funding Center from March 31, 2022 until full payment) within ten days from the effective date of this judgment; 3. Reject the plaintiff's other claims; 4. The case acceptance fee shall be reduced by half to 3,050 yuan and shall be borne by the defendant.

5. Henglu Law Firm's Reminder

This case is handled by Beijing Henglu Law Firm.Chen Mei'aoAttorney (Practice Certificate No.: 11101201911105336, subject to the certificate issued by the judicial administrative organ)YeqingyuThe attorney (practice license number: 11101201910076968, subject to the document issued by the judicial administrative organ) acts as the agent. Attorney's advice: When investing in film and television projects, investors should review the qualifications of the production companies, the terms of the release and public screening permits, and the refund agreements, and be vigilant against fraudulent projects in the "mixed bag" market. In the event of disputes over the "return of film investment funds", investors should promptly entrust professional lawyers to fix evidence and claim the termination of the contract due to fundamental breach of contract.

VI. Common Questions and Answers about Corporate Commercial Investment Cases

  1. Q: The movie has not been released yet. Can I get a refund for my investment?
    A:If the contract stipulates that the screening period must be extended or a refund must be provided if the public screening license is not obtained, and the producer breaches the contract and fails to achieve the contractual objectives, investors may request the termination of the contract and the return of their investment funds.
  2. Q: Is it legal for film and television companies to say that they bear the commercial risks themselves?
    A:Business risks do not exempt the party from the liability for fundamental breach of contract. If the production company fails to produce the film for review and release as agreed, it constitutes a fundamental breach of contract, and it cannot use the "assumption of risk" to resist the refund request.
  3. Q: Which clauses in the investment subscription agreement are the most crucial?
    A:You should pay attention to the release date, the public screening permit, the refund conditions, the liability for breach of contract, and dispute resolution. These are the core basis for protecting your rights in the future.
  4. Q: How can we prevent being scammed when investing in movies?
    A:Invest through formal channels, verify the qualifications of the production company and the project's filing, do not easily believe in high-yield information on the internet, and consult a professional lawyer when necessary.
  5. Q: What evidence do I need to prepare for an investment dispute?
    A:Keep the subscription agreement, payment receipts, communication records, proof of project progress, etc., and entrust a professional lawyer to assert rights as soon as possible.