Court Orders Payment of CNY 40,000 in Processing Contract Dispute
A court in Eastern China City has ordered a manufacturing company to pay a local farmer CNY 40,000 for unpaid processing work on polyester yarn. The dispute arose after the defendant failed to settle the balance despite multiple requests. The court found the defendant liable for breach of contract and granted the plaintiff’s claim for the outstanding processing fee.
The plaintiff, Mr. Chen, a farmer, began processing polyester yarn for Chunlan Industrial Co., Ltd. (the defendant) in March 2005. The parties operated under an oral processing contract for several years. On January 19, 2012, both sides conducted a settlement meeting, during which the defendant confirmed it still owed Mr. Chen a processing fee of CNY 40,000. Mr. Chen later filed a lawsuit seeking payment of that amount plus CNY 7,680 in interest. Before the trial ended, he reduced his claim to only the principal sum of CNY 40,000 and requested that the defendant bear the litigation costs.
At the trial on March 29, 2012, Mr. Chen appeared in person. The defendant, despite being properly served with a summons, did not attend the hearing and submitted no written defense or evidence. Mr. Chen presented two key pieces of evidence: a receipt and a payment slip showing the unpaid balance, and eight warehouse entry documents establishing the ongoing processing relationship. The court also independently obtained a debt list from case files, which recorded that the defendant owed exactly CNY 40,000 for polyester yarn processing. Mr. Chen confirmed the accuracy of this list. Since the defendant failed to appear, it waived its right to challenge the evidence.
The court reviewed the evidence and found it reliable. The receipt and payment slip matched the debt list, confirming the amount owed. The warehouse entries were genuine and relevant to the dispute. Accordingly, the court accepted all exhibits submitted by Mr. Chen. The facts as found by the court aligned with Mr. Chen’s account: a valid processing contract existed, Mr. Chen delivered the processed goods, and the defendant did not pay the agreed sum.
Under the Contract Law of the People’s Republic of China, a processing contract is a type of work contract where the contractor completes work according to the client’s requirements and the client pays for the completed work. The court held that both parties were legally bound to perform their obligations in full. Mr. Chen fulfilled his duty by delivering the processed yarn, but the defendant failed to pay. This constituted a breach of contract. The court also noted that Mr. Chen voluntarily gave up his claim for interest, which did not harm the defendant’s interests, and therefore allowed that waiver. Because the defendant did not appear, the court proceeded with a default judgment.
The court ordered Chunlan Industrial Co., Ltd. to pay Mr. Chen CNY 40,000 within seven days of the judgment taking effect. If the defendant delays payment, it must pay double the interest on the overdue amount as specified by law. The defendant was also ordered to bear half of the court costs, totaling CNY 400, which must be paid within the same seven-day period. This case illustrates that courts will enforce payment obligations under processing contracts even when the defendant fails to defend itself, relying on documentary evidence and settlement records to establish the debt.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.