VI

When a company cooperates with a sponsor in terms of the placement of advertisements, if there is agreement in the contract, the length and number of embedding advertisements shall comply with the contract; otherwise it constitutes a breach of contract.If there is no clear contractual arrangement, the sponsor may directly deduct the corresponding amount of the unfulfilled broadcast or missing broadcast according to the contract.When the number of embedding advertisements becomes one of the payment terms of the contract, the sponsor shall promptly confirm the accuracy of the number; otherwise it may be deemed to have no objection and shall perform the payment obligation.

Case 1: Company Y signed a contract with Company J, stipulating that Company Y would provide an online Spring Festival Gala advertising service for Company J and the advertisement would be broadcast for a total of 10 times.Company J would pay a contract sum of RMB 2,600,000 yuan.After the contract was signed, Company J refused to pay Company Y for advertising with because the actual advertising sample was inconsistent with the agreement in terms of advertising content and duration.Therefore,Company Y appealed to the court.((2015) Yi Zhong Min (Shang) Zhong Zi No.2598)

The court held that: Company J only rebroadcast the gala seven times on its TV station, and the content of the rebroadcast did not include certain parts which were agreed in the contract.There was a case of unfulfilled broadcast and missing broadcast, so Company Y constituted a breach of contract.According to the agreement, Company J could directly deduct the corresponding amount of less broadcast or missed broadcast, and only pay the advertising fee for the actual content rebroadcast that Company J has actually performed.

Case 2: Company Z and Company G signed a TV Drama Cooperation Agreement, which agreed that Company G would be responsible for Company Z’s customer, Company H, to make embedding advertisements of Company H’s brands and products in the TV series.They made the following agreement on the second payment: After the shooting was completed, Company G would provide the Company Z with a high-resolution sample.When Company Z receives the sample, it shall confirm the number of the embedding advertisements (only confirm the number, not review the quality) and 30% of the total amount of sponsorship fee shall be paid to Company G within 60 days.Company Z asserted that Company G did not confirm the number of embedding advertisements with it and there was a risk that the TV series may not be broadcast so it terminated the contract.Company G argued that the sample had been delivered to Company Z via mail and it also gave an optical disc containing the sample to Company Z.Company G had fulfilled its obligations under the agreement.Company Z had not raised an objection to the sample and shall fulfill its second payment.((2018)Hu 01 Min Zhong No.99)(https://www.daowen.com)

The court held that: The two parties disputed whether the conditions for the second payment of Company Z were fulfilled according to the agreement.The second payment terms that they agreed upon are: “After the shooting is completed, the Company G provided Company Z with a high-resolution sample.When Company Z receives the sample, it shall confirm the number (only confirm the number, but not review the quality) and pay money to Company G within 60 days.” The facts show that Company G sent the agreed number of samples to Company Z.Company Z claimed that the number of samples had not been confirmed because of the lawsuit, but the closure of the communication channels between the two parties due to lawsuits was not a legitimate reason for not confirming the number of samples.Company Z did not raise an objection to the number of embedding advertisements within 60 days after receiving the samples, which should be regarded as the recognition of the number of embedding advertisements.

Company Z argued that payment should be suspended because there was doubt about whether the disputed TV series could be broadcast on the agreed platform as scheduled.However, the obligation to inform Company Z about the progress of the shooting process as stipulated in the agreement is not a prerequisite for Company Z to make the second payment, and Company Z’s defense proposal about the right of first performance lacks factual basis.

In summary, the court held that the terms of the second payment in the agreement had been fulfilled.Company Z failed to pay the money according to the agreement, and did not performed within a reasonable period after being urged by Company G.Its behavior has constituted a fundamental breach of contract.According to the agreement, Company G had the right to terminate the contract.Case 2 differs from Case 1 in this way: In Case 1, Company Y had unfulfilled broadcasts during the actual performance of the contract; in Case 2, though, the two parties agreed to pay only after confirming the number, so the court determined that Company Z recognized the conditions for payment when it did not raise an objection within the agreed time.