Decorating Company Ordered to Pay 12,000 Yuan for Unpaid Renovation Work

A design company in Hangzhou has been ordered to pay 12,000 yuan in outstanding renovation fees to a contractor, after the company failed to appear in court and was found to have issued a bounced check to the contractor.

Case Background

Mr. Zhang, a renovation contractor, was hired by Hangzhou Feitao Decoration Design Co., Ltd. to perform renovation work at a residential property in Yuhang District, Hangzhou. The work was carried out in June 2009 at a dormitory building.

According to the plaintiff, after completing the renovation work, the company issued a payment document acknowledging a debt of 13,300 yuan. However, the company refused to pay the full amount and instead deducted 1,300 yuan without the contractor’s consent.

The Bounced Check

In an attempt to settle the payment, the company issued a bank check from Zhejiang Tailong Commercial Bank on July 26, 2010. However, when Mr. Zhang attempted to cash the check, it was returned due to insufficient funds in the company’s bank account. The bank issued a formal notice of dishonored check.

Despite multiple demands for payment, the company continued to refuse, prompting Mr. Zhang to file a lawsuit at Xiacheng District People’s Court in Hangzhou in September 2011.

Plaintiff’s Claims

Mr. Zhang sought the following from the court:

• Payment of 13,300 yuan in renovation fees
• Interest of 800 yuan, with ongoing interest until full payment
• All court costs and publication fees to be borne by the defendant

Evidence Presented

Mr. Zhang provided three key pieces of evidence:

• A payment receipt dated October 16, 2010, acknowledging a debt of 12,000 yuan for the renovation project
• A bank check dated July 26, 2010, and two returned-check notices confirming the check was dishonored due to insufficient funds
• A receipt documenting the total work value of 13,300 yuan

Court’s Analysis

The court carefully reviewed the evidence and reached the following conclusions:

Accepted claims: The payment receipt confirming 12,000 yuan was found to be authentic and directly relevant to the case. The bounced check and return notices were also accepted as genuine evidence of the company’s failed payment attempt.

Rejected claim: Mr. Zhang claimed the company had arbitrarily deducted 1,300 yuan from the amount owed. However, the court found he had not provided sufficient evidence to prove the deduction. The general receipt showing a total of 13,300 yuan was deemed insufficient to establish this specific claim.

Court’s Decision

On March 5, 2012, the court ruled as follows:

• The company must pay Mr. Zhang 12,000 yuan in renovation fees within ten days
• The company must pay interest calculated from October 16, 2010, at the benchmark bank deposit rate until full payment
• Mr. Zhang’s claim for the additional 1,300 yuan was dismissed due to insufficient evidence

The defendant company was ordered to bear 753 yuan of the total court costs of 803 yuan, with Mr. Zhang responsible for the remaining 50 yuan.

Legal Principles

This case highlights several important legal principles in Chinese contract law:

Contractor’s right to payment: Under Article 109 of the Contract Law, when one party fails to pay for work performed, the other party has the right to demand payment. Renovation contractors who complete their work according to agreed terms are entitled to full compensation.

Evidence burden: The party making a claim bears the burden of proving it. Mr. Zhang’s inability to prove the 1,300 yuan deduction resulted in that portion of his claim being dismissed.

Bounced check as evidence: A dishonored check serves as strong evidence that the debtor acknowledged the debt but failed to pay. Courts view bounced checks as corroborating evidence of an unpaid obligation.

Practical Lessons

For contractors: Always obtain written payment acknowledgments and keep detailed records of work performed and amounts owed. If a client issues a check, deposit it promptly and retain all return notices if the check bounces.

For business owners: Never issue checks without sufficient funds. A bounced check not only fails to resolve the debt but also creates damaging evidence against you in court.

For both parties: Document all financial transactions and disputes in writing. Verbal agreements about deductions or adjustments are extremely difficult to prove in litigation.

Case citation: (2011) Hang Xia Shang Chu Zi No. 1508, Xiacheng District People’s Court, Hangzhou, Zhejiang Province.