Recently, in a service contract dispute case filed by Company A against Company B and third party C—represented by attorney Liu Hongbei of Beijing King&Capital Law Firm—the Xicheng District People’s Court of Beijing issued a first-instance judgment in favor of Company A. All core claims were upheld by the court, and Company B accepted the judgment. This outcome helped the client recover significant financial losses, fully demonstrating King&Capital Law Firm’s professional expertise and practical capabilities in the fields of commercial contracts and investment and financing services.
I. Case Summary:
Payment Made but Services Not Received; Contractual Purpose Frustrated
In September 2024, to advance industrial cooperation with a central state-owned enterprise, Company A signed a “Project Investment Consulting Services Contract” with Company B. The contract stipulated that Company B would provide a full suite of consulting services, including specialized research, project proposals, expert reviews, and an action roadmap. Company A paid several hundred thousand yuan in service fees as agreed.
During the contract period, B Technology claimed to have completed the research report, expert review, and implementation roadmap. However, Company A contended that B Technology had failed to fulfill its contractual obligations as agreed; despite repeated demands, B Technology refused to perform its core obligations, causing the cooperation to stall and rendering the contract’s purpose entirely unattainable. B Technology maintained that it had fulfilled all contractual obligations and that the stalemate was due to other factors. Significant disputes and disagreements between the parties could not be resolved through negotiation, ultimately leading to litigation.
II. Key Points of the Case: Precisely Breaking the Deadlock and Laying a Solid Foundation for Victory
After accepting the retainer, Attorney Liu Hongbei and his team swiftly reviewed all evidence in the case. Focusing on the three core issues—fundamental breach of contract, termination of the contract, and refund of payments—they constructed a comprehensive argumentative framework and formulated a professional litigation plan and strategy:
1. Establishing the Facts of Breach: Based on legal provisions and a strict comparison with the contractual obligations agreed upon by both parties, they demonstrated that B Technology Company had failed to fulfill core obligations—such as delivering qualified research reports and expert evaluations—and that the materials submitted to Company A did not meet the standards specified in the contract, thereby constituting a fundamental breach;
2. Establishing the Chain of Evidence: By consolidating WeChat communication records, meeting minutes, legal letters, and mailing receipts from both parties, the team demonstrated that the plaintiff (Company A) had repeatedly urged the defendant (B Technology) to fulfill its obligations, and that the defendant’s subsequent conduct indicated a refusal to perform its primary obligations;
3. Precise Application of Law: Based on the provisions of Articles 563 and 566 of the Civil Code, we argued that Company A, as the party in compliance with the contract, had the right to terminate the contract, demand a refund of the payment, and claim losses resulting from the misappropriation of funds—presenting a logically rigorous and well-substantiated case;
4. Efficient Procedural Advancement: After the case was filed, we promptly applied for a property preservation order to ensure the enforceability of the judgment and maximize the protection of the client’s rights and interests.
III. Judgment Outcome: Complete Victory, Client’s Rights Enforced
Following a lawful trial by the Xicheng District People’s Court of Beijing, a civil judgment was rendered: The court confirmed the termination of the “Project Investment Consulting Service Contract” at issue; B Technology Company was ordered to refund the service fees and compensate for losses within seven days after the judgment took effect; the defendant was ordered to bear the vast majority of the case filing fees and preservation fees, and all of the defendant’s defenses were dismissed.
The court explicitly ruled that B Technology Company failed to fulfill its core contractual obligations, constituting a fundamental breach of contract, and that the contract should therefore be terminated. Taking into account the actual performance of the contract, the court ordered the return of the vast majority of the service fees. The judgment was highly consistent with our legal arguments.
IV. Professional Analysis of This Case
This case is a typical service contract dispute, involving core issues such as: whether the service provider committed a fundamental breach of contract; what remedies are available to the client after a lump-sum payment of all fees; and the court’s criteria for assessing the value of “partial performance.” By representing Plaintiff Company A, we ultimately secured a favorable judgment confirming the termination of the contract, the refund of the vast majority of the fees, and interest.
(1) The Lump-Sum Payment Model Weakened the Plaintiff’s Ability to Exercise Control Over Performance
In this case, the plaintiff paid the entire service fee in a lump sum within three days of signing the contract, resulting in the complete loss of any means to exercise control over the defendant through payment during the subsequent performance process. For contracts with extended service periods and phased delivery of deliverables, one should resolutely seek phased payments (e.g., 30% upon signing, 30% upon issuance of the research report, 30% upon submission of the project proposal, and 10% upon final acceptance). If the other party insists on a lump-sum payment, the contractual liability for breach (such as liquidated damages for delayed performance) should be correspondingly increased.
(2) Specification of the “Contract Purpose”—From Abstract to Adjudicable
The court accepted our argument that “the contract purpose could not be achieved,” but this finding was by no means a foregone conclusion. In consulting contracts, the purpose often has a dual nature: a process-oriented purpose (obtaining consulting services) and a result-oriented purpose (ultimately facilitating cooperation). If the defendant argues that “the process-oriented purpose is achieved simply by providing the consulting documents,” it would be difficult to establish fundamental breach of contract.
The key to our victory in this case lay in concretizing and narrowing the scope of the contract’s purpose—the contract’s “Whereas” clause explicitly mentioned “accelerating cooperation with central state-owned enterprises,” and Article 1, Item 4 directly listed this as Party B’s core work. Therefore, the contract’s purpose in this case was not “to obtain any consulting advice,” but rather “to obtain a practical, actionable plan based on thorough research that can effectively advance cooperation with central state-owned enterprises.” The defendant’s method of performance failed to support this purpose.
When reviewing or drafting contracts, one should avoid allowing “purpose clauses” to become mere formalities. It is recommended to include a separate “Purpose of the Contract” clause in the preamble, using wording such as: “Party A enters into this contract for the purpose of …; any performance that does not conform to the aforementioned purpose shall not constitute proper performance,” thereby providing a direct basis for potential future breach-of-contract claims.
(3) Contract Acceptance Criteria Are Not Specific Enough, Leaving Room for Judicial Discretion
Although the contract specified the scope of work (research reports, project proposals, etc.), it did not clearly define the specific acceptance criteria for each deliverable. For example: What sections should a research report include? Must it contain raw data? Must it be signed by external experts? What level of detail should a project proposal achieve?
It was precisely because of these vague standards that the defendant was able to exploit the loophole by labeling the simple documents it had drafted as “research reports,” and the court also deemed these documents to “have some value,” thereby deducting 10,000 yuan at its discretion.
When drafting service contracts in the future, quantifiable and verifiable acceptance criteria should be established, and a clause may be included stating: “If a deliverable fails to meet the acceptance criteria, Party A has the right to refuse payment of the corresponding fees for that phase.”
V. Professional Value:
Upholding Contracts Through Expertise, Demonstrating Strength Through Successful Litigation
This case is a typical dispute arising from an investment and financing consulting services contract, with the focal points of the dispute centered on commercial litigation challenges such as service performance standards, the determination of fundamental breach, the consequences of contract termination, and the proportion of funds to be refunded. Attorney Liu Hongbei and his team, leveraging their in-depth understanding of contractual rules, meticulous examination of evidentiary details, and precise control of the trial’s pace, ultimately maximized the client’s interests and provided a practical precedent for similar service contract disputes.
King&Capital Law Firm has consistently adhered to a service philosophy of professionalism, prudence, efficiency, and accountability. Specializing in commercial dispute resolution, investment and financing compliance, and corporate legal counsel, the firm leverages its solid professional expertise and extensive practical experience to help corporate clients of all types mitigate risks, recover losses, and safeguard their rights and interests, thereby continuously building a trusted brand for commercial legal services.
