Construction Dispute Yields CNY 150,305 Judgment
In a recent construction subcontracting dispute, a Chinese court ordered a project manager to pay a contractor over CNY 150,000 in unpaid fees plus interest and partially reimbursed the contractor’s appraisal costs. The case arose from a stone curtain wall installation project at a residential complex. The court examined evidence of an unsigned settlement note and an expert appraisal, ultimately finding the defendant liable for the outstanding balance.
The plaintiff, Mr. Yao, entered into a subcontract agreement with the defendant, Mr. Gao, on March 5, 2008. Under the contract, Mr. Yao agreed to install stone curtain walls on the exterior of Building 5 of a development in Eastern China City. Mr. Yao completed the work by August 2008, and the project passed inspection. He later sought payment and claimed that on November 28, 2009, a site supervisor named Mr. Zeng signed a settlement statement confirming the total project value at CNY 197,754.75. After deducting CNY 40,000 in living expenses and a CNY 2,000 bank transfer, Mr. Yao argued that Mr. Gao still owed him CNY 155,254.75. The plaintiff sued for the unpaid amount, interest of CNY 20,540 calculated from September 2009, and CNY 9,500 in appraisal fees. Mr. Gao denied liability, asserting that the parties had already reached an oral settlement and that he had not authorized Mr. Zeng to sign the settlement note.
The court held two hearings in August 2011 and March 2012. Mr. Yao presented the written subcontract and a settlement note signed by Mr. Zeng. Mr. Gao challenged the note’s authenticity, claiming that Mr. Zeng lacked authority to bind him. In response, Mr. Yao requested an expert appraisal of the completed work area. On February 28, 2012, Zhejiang Weining Engineering Appraisal issued a report confirming that the stone installation area totaled 2,564.07 square meters. The court accepted this report as reliable. Mr. Gao also introduced an old promissory note from 2005, arguing that Mr. Yao owed him a material debt of CNY 58,000, but the court found that note unrelated to the current dispute and lacking the necessary elements for legal setoff.
The court found that Mr. Yao had performed the contracted work, and that the total contract price, at CNY 75 per square meter for 2,564.07 square meters, amounted to CNY 192,305. After deducting the CNY 42,000 already paid, the outstanding principal was CNY 150,305. The contract also provided a 5% warranty retention of CNY 9,615, payable in two installments after one and two years. The court rejected Mr. Gao’s claim of an oral settlement because he could not recall when or where it occurred and provided no supporting evidence. The court also noted that the appraisal fee of CNY 9,500 was necessary to resolve the factual dispute over the work area, but since the plaintiff bore some burden of proof, the fee was split: Mr. Gao must pay CNY 7,000 and Mr. Yao the remaining CNY 2,500.
The court’s legal reasoning centered on the validity of the written subcontract and the lack of evidence for an oral settlement. Under relevant contract law, a party that completes contracted work is entitled to payment. The interest award followed the statutory rate for delayed payment, with separate calculations for the main sum and the warranty retention. The court applied the principle that a party opposing a claimed amount must provide contrary proof, and Mr. Gao failed to do so. The debt setoff argument was dismissed because the old promissory note involved a different obligee and was not a mutual, mature debt of the same kind. The appraisal fee allocation reflected the court’s view that both parties shared responsibility for the need to determine the work area.
This case illustrates the importance of documented authorization for site representatives who sign settlement or payment confirmations. Without clear evidence of authority, such signatures may not bind the principal. It also underscores that oral settlement claims are difficult to sustain without specific details or documentary support. For contractors and subcontractors, maintaining clear written records of all changes, approvals, and payments is essential. The ruling further confirms that expert appraisals can be a necessary tool to resolve factual disputes, and their costs may be apportioned based on the parties’ respective burdens of proof.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.