【Cases Title】Shanghai Zhongyuan Property Consultancy Co., Ltd. v. Tao Dehua【案例标题】上海中原物业顾问有限公司诉陶德华居间合同纠纷案Type of Dispute: Economic1st Inst date: 06-23-20091st Inst Court: HONGKOU DISTRICT PEOPLE'S COURT OF SHANGHAI MUNICIPALITY2nd Inst date: 09-04-20092nd Inst Court: NO.2 INTERMEDIATE PEOPLE'S COURT OF SHANGHAI MUNICIPALITYShanghai Zhongyuan Property Consultancy Co., Ltd. v. Tao Dehua(intermediary contract dispute)(Issued upon deliberation and adoption by the Judicial Committee of the Supreme People's Court on December 20, 2011)Keywords: civil; intermediary contract; purchase and sale of used homes; breach of contractJudgment's Key PointsIn an intermediary contract for the purchase and sale of used homes, a clause that prohibits the purchaser from concluding a real estate purchase contract with the seller by using housing information provided by the agency but without the involvement of the agency is legal and valid. However, where the seller lists the same home at multiple real estate agencies and the purchaser acquires information on the same home through other proper channels available to the public, the purchaser has the right to select the agency with a low quoted price and good service to facilitate the formation of a real estate purchase contract, which is not a use of the housing information provided by the agency with which the purchaser has previously signed an agreement and thus does not constitute a breach of contract.Relevant Legal ProvisionsArticle 424 of the Contract Law of the People's Republic of ChinaBasic FactsPlaintiff Shanghai Zhongyuan Property Consultancy Co., Ltd. (hereinafter referred to as “Zhongyuan Company”) alleged that: Defendant Tao Dehua, by using information provided by Zhongyuan Company regarding a property located at Zhuzhou Road, Hongkou District of Shanghai Municipality, deliberately bypassed the real estate agency and directly concluded a real estate purchase contract in private with the seller. In violation of the provisions of the Confirmation of Prospective Real Estate Purchase, Tao's act is an act of maliciously concluding a deal without the involvement of the real estate agency. Hence, Zhongyuan Company requested the court to order Tao Dehua to pay liquidated damages of 16,500 yuan.Defendant Tao Dehua contended that: The original owner, Li (first name withheld), of the property at issue authorized multiple agencies to sell the property. Zhongyuan Company was nota sole agency with an exclusive control of information regarding the property, and Tao Dehua did not use information provided by Zhongyuan Company. Thus, there was no breach of contract for concluding a deal without the involvement of the real estate agency.At trial, the court found that: In the second half of 2008, in order to sell the property at issue, the original homeowner, Li, listed it at multiple real estate agencies. On October 22, 2008, a realtor from a real estate agency company in Shanghai brought Tao Dehua to the property; on November 23 of the same year, an agent from a real estate consultancy company in Shanghai (hereinafter referred to as the "real estate consultancy company") brought Tao Dehua's wife, Cao (first name withheld), to the property; and on November 27 of the same year, an agent from Zhongyuan Company brought Tao Dehua to the property, and both parties signed a of Confirmation of Prospective Real Estate Purchase on the same day. According to the provision of Article 2.4 of the Confirmation of Prospective Real Estate Purchase, where, within six months after Tao Dehua inspected the property, Tao Dehua, his principal, agent, representative, or designee, or any other person associated with him concluded a deal regarding the property with any third party by using any information, opportunity or other condition provided by Zhongyuan Company, bypassing Zhongyuan Company, Tao Dehua should pay Zhongyuan Company liquidated damages of 1% of the actual purchase price for the property as agreed with the seller. Zhongyuan Company's quoted price for the property was 1.65 million yuan. However, the quoted price of the real estate consultancy company was 1.45 million yuan, and this company actively negotiated the price further with the seller. On November 30, through brokerage of the real estate consultancy company, Tao Dehua and the seller concluded a real estate purchase contract at a purchase price of 1.38 million yuan. Afterwards, both parties underwent the formalities for the transfer of real estate, and Tao Dehua paid a commission fee of 13,800 yuan to the real estate consultancy company.JudgmentOn June 23, 2009, the Hongkou District People's Court of Shanghai issued a civil judgment (No. 912 [2009], First, Civil Division III, Hongkou) as follows: The defendant Tao Dehua should, within 10 days from the effective date of this judgment, pay liquidated damages of 13,800 yuan to Zhongyuan Company. After this judgment was pronounced, Tao Dehua filed an appeal. On September 4, 2009, the No. 2 Intermediate People's Court of Shanghai issued a civil judgment (No. 1508 [2009], Final, Civil Division II, No. 2 Intermediate, Shanghai) as follows: (1) the civil judgment (No. 912 [2009], First, Civil Division III, Hongkou) was overruled; and (2) the claim of Zhongyuan Company that Tao Dehua should pay liquated damages of 16,500 yuan was not granted.Judgment's ReasoningIn the final judgment in effect, the court determined that: The Confirmation of Prospective Real Estate Purchase was in the nature of an intermediary contract. Article 2.4 thereof was a standard clause common in intermediary contracts for the purchase and sale of real estate to prohibit deals made directly between the purchaser and the seller without the involvement of the agency.This standard clause was intended to prevent a purchaser from buying a property by using information provided by an agency but without the involvement of the agency, as it would result in the agency being unable to obtain the agreed commission fee. Since such a clause did not exempt one party from any liability, increase the other party's liability or exclude any primary right of the other party, it should be held valid. According to this clause, it was crucial to check whether the purchaser took advantage of the housing information and opportunities provided by the alleging agency when determining whether the purchaser breached a contract by making a deal without the involvement of the agency. If the purchaser obtained information regarding the same property through other proper channels available to the public instead of using the information provided by the alleging agency, the purchaser had the right to select the agency with a low quoted price and good service to facilitate the formation of a real estate purchase contract, which did not constitute a breach of contract for making a deal without the involvement of the alleging agency. In this case, the original homeowner sold the same home through multiple agencies. Tao Dehua and his family learned of information regarding the same property from various agencies, and concluded a real estate purchase contract through another agency. Tao Dehua did not use information and opportunities provided by Zhongyuan Company, and therefore his act did not constitute a breach of contract. Thus, the appellate court did not support the claim of Zhongyuan Company.。
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