Court Orders Payment of CNY 600,000 in Processing Contract Dispute
A Chinese court has ordered a company to pay CNY 600,000 in unpaid processing fees to a sole proprietor based in Eastern China City. The dispute stemmed from a long-term business relationship for processing polyester yarn. The defendant company failed to appear in court or submit any defense, leading to a default judgment. The court ruled in favor of the plaintiff after examining documentary evidence that confirmed the debt.
The plaintiff, Mr. Li, ran a textile processing business in Eastern China City. He claimed that starting in 2008, he provided processing services for the defendant, Spring Orchid Company, which was also located in Eastern China City. On January 20, 2012, the two parties settled their accounts, and the defendant formally acknowledged owing Mr. Li CNY 600,000 for processing work. Mr. Li then filed a lawsuit seeking repayment of this amount plus interest of CNY 110,400. Before the court finished hearing the evidence, Mr. Li reduced his claim to only the principal amount of CNY 600,000 and asked the court to order the defendant to pay the litigation costs.
The case was heard in open court on March 20, 2012. Mr. Li attended the hearing in person, but Spring Orchid Company did not appear despite receiving proper legal notice. The plaintiff submitted two key pieces of evidence: a receipt and a payment slip, both showing that the defendant had confirmed the outstanding debt. He also provided five warehouse entry documents to prove that a processing relationship had existed between the parties. The court independently obtained a debt list from related case files, which stated that the defendant still owed CNY 600,000 for polyester yarn processing. Mr. Li accepted this evidence without objection. Because the defendant failed to appear, it lost the right to challenge the evidence.
The court reviewed all the evidence and found that the receipt and payment slip matched each other and also matched the debt list obtained by the court. The warehouse documents were deemed authentic and relevant to the case. The court concluded that the facts presented by Mr. Li were accurate. It held that a valid processing contract existed between Mr. Li and Spring Orchid Company. Under that contract, both parties were required to fully perform their obligations. Mr. Li had delivered the processed goods, but the defendant did not pay the agreed amount. This failure constituted a breach of contract.
According to relevant law, specifically Article 107 of the Contract Law, a party that fails to perform contractual duties must bear liability for breach, including continued performance or compensation. The court also applied Article 251, which