Subcontract Dispute Dismissed – CNY 15,000 Land Deal
A Chinese court has dismissed a lawsuit seeking to terminate a land subcontract agreement after finding that the defendant had fully performed his payment obligations over a period of seven years. The plaintiff, Mr. Li, argued that the first installment of the contract price was underpaid and that the contract lacked terms for agricultural subsidies. The court held that the evidence did not support the claim of breach and that the subsidies lawfully belonged to the actual cultivator.
The dispute arose from two linked contracts. In December 2004, the plaintiff’s son, Mr. Li, signed a five-year subcontract with the defendant, Mr. Ping, to lease 7 mu (approximately 0.47 hectares) of dry farmland for a total of CNY 5,000. In April 2005, the plaintiff and the defendant signed a supplementary contract extending the term by another ten years, with annual payments of CNY 1,000 due before the end of February each year. The combined lease ran from 2005 through 2019, for a total consideration of CNY 15,000. The plaintiff later claimed that the initial CNY 5,000 had not been paid in full because a third party, Mr. Zhou, deducted CNY 1,500 before the money reached the plaintiff’s son. He also asserted that the contract failed to specify who was entitled to the annual agricultural direct subsidy payments.
During the hearing, both sides submitted documentary evidence. The plaintiff produced a copy of the 2005 contract, a land use certificate, and a village committee statement clarifying the exact acreage. The defendant presented two contracts – the 2004 agreement between Mr. Ping and the plaintiff’s son, and the 2005 extension signed by the plaintiff – along with eight receipts showing annual payments of CNY 1,000 each, totaling CNY 8,000. The plaintiff acknowledged receiving those eight payments. The court also reviewed the land registration records, which listed the subcontracted area as 7.2 mu rather than the 7 mu stated in the contracts. Both parties confirmed the physical boundaries of the land and agreed that 1.5 mu had already been cultivated by another villager.
The court found that the 2005 contract contained an express acknowledgment that the initial CNY 5,000 had been paid to the plaintiff’s son. The plaintiff’s belated claim of a deduction seven years after the fact was not credible, especially as he had accepted eight subsequent annual payments without protest. The court further noted that the defendant had made all eight annual payments on time and had not committed any material breach. According to the court, the plaintiff had been explicitly advised twice during the trial to consider changing his legal claim from termination to something else, but he insisted on seeking rescission of the entire agreement.
Under relevant contract law, a party may rescind a contract only in cases of material breach or mutual agreement. The evidence showed that the defendant had performed consistently. The court also addressed the agricultural subsidy issue: in the absence of a specific contractual term, the subsidy belongs to the person who actually farms the land. Since the defendant was the cultivator, his receipt of the subsidy was lawful. The minor discrepancy between the stated 7 mu and the registered 7.2 mu was deemed an estimate that did not affect the validity or enforceability of the contracts.
The court dismissed the plaintiff’s lawsuit in full and ordered him to bear the litigation costs of CNY 50. The decision reinforces that long-standing contracts supported by consistent performance will not be set aside based on stale or unsupported allegations. Parties entering into agricultural land subcontracts in Eastern China City are reminded to clearly address subsidy entitlements and payment receipts in writing at the outset, as courts will generally uphold agreed terms and reject attempts to terminate without proof of breach.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.