Court Orders Refund of CNY 30,000 Deposit in Cement Contract Dispute
Mr. Ling filed a lawsuit against Mr. Su and Ms. Xu seeking the return of a 30,000 yuan contract performance deposit paid in connection with a cement supply agreement. The lower court ruled in Mr. Ling’s favor, ordering the couple to jointly refund the full amount. Mr. Su and Ms. Xu appealed, arguing that the deposit had already been settled. The appellate court reviewed the evidence and upheld the original decision, finding no basis for the appeal.
The dispute began in November 2008 when Mr. Ling agreed to purchase cement from Ms. Xu. On 25 November 2008, he paid Ms. Xu a contract performance deposit of 30,000 yuan, for which she issued a receipt. The next day, Mr. Ling entered into a separate agreement with Ms. Xu’s husband, Mr. Su. Under that agreement, Mr. Ling would pay for and collect cement under Mr. Su’s account from 20 December 2008 to 15 February 2009, and would receive a rebate based on the volume collected. Mr. Ling paid Mr. Su an additional 30,000 yuan as a contract guarantee deposit, and Mr. Su also issued a receipt. However, shortly after the arrangement began, Ms. Xu lost her cement distribution authorization, making it impossible to continue the contracts.
On 12 January 2009, the parties attempted to settle the 30,000 yuan guarantee deposit. Mr. Ling gave Mr. Su a handwritten receipt stating that he had received 18,825 yuan, with deductions noted. The receipt included the line: “30,000 minus 5,000 minus 6,175 equals 18,825,” and indicated that if the accounts were unclear, they should be reconfirmed. The receipt was signed with the name “Ling San,” a nickname by which Mr. Ling was widely known in the community, as confirmed by village committee evidence. Ms. Xu did not refund the separate 30,000 yuan performance deposit she had received. Mr. Ling then sued both defendants to recover that amount.
At trial, Mr. Ling presented the original receipts for both deposits. Mr. Su and Ms. Xu argued that the 12 January 2009 settlement had fully resolved all deposit obligations. However, the court found that the settlement document only addressed the 30,000 yuan guarantee deposit paid to Mr. Su, not the 30,000 yuan performance deposit paid to Ms. Xu. The court noted that the receipts were separate and that the settlement receipt did not mention the earlier deposit. Applying basic principles of contract law, the court held that a valid contract requires mutual consent and performance in good faith, and that the inability to perform due to the loss of distribution rights constituted a breach.
The appellate court reviewed the trial record and confirmed the facts. It emphasized that the two deposits were distinct and that the settlement on 12 January 2009 covered only the guarantee deposit paid to Mr. Su. The performance deposit of 30,000 yuan paid to Ms. Xu remained outstanding. The court found no evidence that Mr. Ling had waived or settled that claim. Because Ms. Xu’s loss of distribution rights made it impossible to fulfill the contract, she and Mr. Su were jointly liable to return the performance deposit. The court concluded that the lower court’s judgment was proper and dismissed the appeal, ordering the appellants to bear the appellate costs.
This case underscores the importance of clear documentation and separate treatment of distinct contractual deposits. When multiple deposits are paid to different parties under separate agreements, each must be accounted for individually. A settlement that resolves one deposit does not automatically extinguish another. Parties should ensure that all receipts and settlement documents explicitly identify which obligations are being satisfied. The ruling also confirms that when a supplier loses the ability to perform, the buyer is entitled to recover any unearned deposits.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.