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DeHeng Successfully Represented Client in Shipbuilding

 Contract Dispute before Supreme People's Court

2020-06-09


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Recently, DeHeng received a decision from the Supreme People's Court that there was no work-for-hire contract between Singaporean company A (the shipowner) and PRC company B, and that B was not a joint contractor and does not need to undertake joint liabilities, and rejected the retrial application of A. 


Commissioned by the PRC company B, DeHeng put together a team headed by Peng Xianwei, partner of its Beijing office, with primary support from Wu Yanan and other lawyers. They searched and studied similar court decisions on the shipbuilding contract and the joint work-for-hire contract made in recent years, and produced comprehensive defense opinions. In the end, the court rejected the Singaporean company's application and ruled that B is not liable.


The Supreme People's Court held that regarding the establishment of the legal relationship of a work-for-hire contract, it requires the parties to the contract to have the intention to establish such a contract, and that the offer and its acceptance are essential for contract establishment. Although the contract signed between the shipyard C and the trading company B is called "Joint Work-for-hire Contract for Shipbuilding", it is legally independent from the Shipbuilding and Purchase Contract, so it cannot be considered as an agreement on work-for-hire between the Singaporean company A, the shipyard C and the trading company B. Moreover, during the contract performance, there was no evidence to prove that the trading company B joined the Shipbuilding and Purchase Contract as a joint contractor. The final result of this case has positive reference for determining the elements of contract formation in future similar cases.


Case summary: 

Singaporean company A filed a lawsuit, claiming that it had signed a Ship Building and Purchase Contract as the ship owner with shipyard C on shipbuilding matters. Later, the shipyard C and the trading company B signed a Joint Work-for-hire Contract, agreeing that the latter would provide shipbuilding funds for the shipyard. Hence, the Singaporean company A claimed that the trading company B was a joint contractor of the Ship Building and Purchase Contract, and required B and C to assume joint legal liabilities for the shipbuilding.

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