guiding cases in perspective tm 指导性案例透视 · (hereinafter referred to as “a certain...

Copyright 2016 by Stanford University

Guiding Cases in PerspectiveTM

指导性案例透视TM

Dr. Mei Gechlik

Founder and Director, China Guiding Cases Project

Minmin Zhang

Associate Managing Editor, China Guiding Cases Project

Yanzhou Chen

Editor, China Guiding Cases Project

Guiding Case No. 1: CGCP Annotations

April 30, 2016 Edition∗

∗

The citation of this piece is: Mei Gechlik, Minmin Zhang, & Yanzhou Chen, Guiding Case No. 1: CGCP

Annotations, STANFORD LAW SCHOOL CHINA GUIDING CASES PROJECT, Guiding Cases in PerspectiveTM, Apr. 30,

2016, http://cgc.law.stanford.edu/guiding-cases/guiding-case-1/. The authors thank Oma Lee for assisting in the

translation of the Chinese version of this piece into English and Jordan Corrente Beck for editing the English

version.

Guiding Cases in PerspectiveTM is a unique serial publication of the China Guiding Cases Project that

identifies the original judgments selected by the Supreme People’s Court, examines their transformation into

Guiding Cases, and explores the treatment of the Guiding Cases in subsequent cases.

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I. The Process of Selecting Guiding Case No. 1

Shanghai Centaline Property Consultants Limited v. TAO Dehua, An Intermediation

Contract Dispute (“Guiding Case No. 1” or “GC1”) is one of the guiding cases (“GCs”)

included in the first batch of GCs released by the Supreme People’s Court (“SPC”) on

December 20, 2011.1 Its original judgments are the (2009) Hong Min San (Min) Chu Zi No.

912 Civil Judgment rendered by the Hongkou District People’s Court of Shanghai

Municipality2 and the (2009) Hu Er Zhong Min Er (Min) Zhong Zi No.1508 Civil Judgment

rendered by the No. 2 Intermediate People’s Court of Shanghai Municipality.3

This case was selected as a GC through the following process (see Chart 1):4

1. On December 31, 2010, the Office for the Work on Case Guidance of the SPC sent a

notice to all higher people’s courts nationwide on submitting candidate GCs for the

Office’s consideration.

2. On May 20, 2011, the Adjudication Committee of the Higher People’s Court of

Shanghai Municipality decided to recommend this case as a candidate GC to the SPC

after discussion.

3. After research and discussion, the Office for the Work on Case Guidance of the SPC

sent this case to the First Civil Tribunal for review and comment. The First Civil

Tribunal considered this case to have significance on guiding the adjudication of

similar cases and agreed to select it as a GC. On June 13, 2011, after discussion, the

Adjudication Committee of the SPC confirmed this case as a GC and released it on

December 20.

1 《上海中原物业顾问有限公司诉陶德华居间合同纠纷案》(Shanghai Centaline Property

Consultants Limited v. TAO Dehua, An Intermediation Contract Dispute), STANFORD LAW SCHOOL CHINA

GUIDING CASES PROJECT, English Guiding Case (EGC1), Jan. 9, 2012 Edition,

http://cgc.law.stanford.edu/guiding-cases/guiding-case-1. 2 The first-instance judgment has not been found and may have been excluded from publication.

Accordingly, these annotations focus on a comparison of GC1 and the second-instance judgment of the

underlying case. 3 《陶某某与上海中原物业顾问有限公司居间合同纠纷上诉案》（2009）沪二中民二（民）终字第

1508 号 (A certain TAO and Shanghai Centaline Property Consultants Limited, An Appeal Case on an

Intermediation Contract Dispute,(2009) Hu Er Zhong Min Er (Min) Zhong Zi No. 1508), STANFORD LAW

SCHOOL CHINA GUIDING CASES PROJECT, Guiding Cases in PerspectiveTM

, Guiding Case No. 1 Original

Second-Instance Judgment, Apr. 30, 2016, http://cgc.law.stanford.edu/guiding-cases/guiding-case-1/. 4 See最高人民法院案例指导工作办公室 (The Office for the Work on Case Guidance of the Supreme

People’s Court), 指导案例 1 号《上海中原物业顾问有限公司诉陶德华居间合同纠纷案》的理解与参照

(Understanding and Referring to Guiding Case No. 1, Shanghai Centaline Property Consultants Limited v. TAO

Dehua, An Intermediation Contract Dispute), 《人民司法·应用》 (THE PEOPLE’S JUDICATURE·APPLICATION),

Issue No. 7 (2012).

For the process of selecting Guiding Cases, see《最高人民法院关于案例指导工作的规定》

(Provisions of the Supreme People’s Court Concerning Work on Case Guidance), passed by the Adjudication

Committee of the Supreme People’s Court on Nov. 15, 2010, issued on and effective as of Nov. 26, 2010,

STANFORD LAW SCHOOL CHINA GUIDING CASES PROJECT, English Guiding Cases Rules, June 12, 2015 Edition,

http://cgc.law.stanford.edu/guiding-cases-rules/20101126-english/.

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Chart 1: The Process of Selecting Guiding Case No. 1

II. Comparison Between Guiding Case No. 1 and Its Original Judgment

1. Basic Facts of the Case

Based on the “Basic Facts of the Case” section of GC1, the following table compares

the similarities and differences between GC15 and the original second-instance judgment:

Guiding Case No. 1

Original Second-Instance Judgment

1 The court handled the case and ascertained:

(1) In the second half of 2008, the original property

right holder, LI, went to multiple housing intermediary

companies to list for sale the house involved in this

case.

Essentially the same.

(2) On October 22, 2008, a certain real-estate brokerage

limited company in Shanghai took defendant TAO

Dehua to see the house; on November 23, a certain real-

estate consulting limited company in Shanghai


5 《上海中原物业顾问有限公司诉陶德华居间合同纠纷案》(Shanghai Centaline Property

Consultants Limited v. TAO Dehua, An Intermediation Contract Dispute), STANFORD LAW SCHOOL CHINA

GUIDING CASES PROJECT, Guiding Cases in PerspectiveTM

, Guiding Case No. 1 Highlighted Edition, Apr. 30,

2016, http://cgc.law.stanford.edu/guiding-cases/guiding-case-1/.

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Guiding Case No. 1


(hereinafter referred to as “a certain real-estate

consulting company”) took TAO Dehua’s wife, a certain

Ms. CAO, to see the house; and, on November 27,

plaintiff Shanghai Centaline Property Consultants

Limited (hereinafter referred to as “Centaline

Company”) took TAO Dehua to see the house and

signed the Written Confirmation of Request to Buy Real

Estate with TAO Dehua on the same day.

(3) Clause 2.4 of the Written Confirmation stipulated

that [where] within six months of TAO Dehua’s

examining the real estate, TAO Dehua or [any] person

associated with TAO Dehua, including his principal,

agent, representative, and undertaker, used information,

opportunities, or other such conditions provided by

Centaline Company to reach a sale and purchase

transaction with a third party without going through

Centaline Company, TAO Dehua should pay Centaline

Company liquidated damages of 1% of the actual

closing price for the sale and purchase of the real estate.

Essentially the same, but also mentions that

another act that can constitute breach of

contract is the “conclusion of sale and

purchase transaction with the seller”.

(4) At the time, Centaline Company quoted 1.65 million

yuan for the house [in question], while the [above-

mentioned] real-estate consulting company quoted 1.45

million yuan and actively negotiated with the seller on

price.

Essentially the same, but does not mention

“while the [above-mentioned] real-estate

consulting company quoted 1.45 million

yuan and actively negotiated with the seller

on price.”

(5) On November 30, under intermediation by this real-

estate consulting company, TAO Dehua and the seller

signed a housing sale and purchase contract with a

closing price of 1.38 million yuan. Later, the buying

and selling parties completed the procedure for

transferring registration and TAO Dehua paid the real-

estate consulting company a commission of 13,800

yuan.


2

Centaline Company claimed: TAO Dehua used sale

information provided by Centaline Company regarding

a certain house [located] at Number X, Zhuzhou Road,

Hongkou District, Shanghai Municipality, intentionally

bypassed the intermediary, and directly signed, on his

own [accord], a housing purchase contract with the

seller, violating the stipulations of the Written

Confirmation of Request to Buy Real Estate[, a

confirmatory contract to purchase real estate through

the plaintiff]. [This constituted] an act of malicious

“bypassing”. [Centaline Company] requested that the

court order TAO Dehua pay, in accordance with the

[terms of the parties’] contract, liquidated damages of

16,500 yuan.

Essentially the same, but without the

following expressions:

“Hongkou District”;

“intentionally bypassed the intermediary”;

“directly signed, on his own [accord], a

housing purchase contract with the seller”;

and

“[This constituted] an act of malicious

“bypassing”.

3

TAO Dehua defended his position, claiming: The

original property rights holder of the house involved in

this case, a certain LI, had entrusted multiple

intermediary companies with selling the house.

Essentially the same, but without the

following expressions:

“TAO Dehua did not use the information

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Guiding Case No. 1


Centaline Company neither exclusively controlled the

housing information nor acted as an exclusive agent in

the sale. TAO Dehua did not use the information

provided by Centaline Company; there did not exist any

act [amounting to] breach of contract by “bypassing”.

provided by Centaline Company”; and

“‘bypassing’”.

Overall, the “Basic Facts of the Case” section of GC1 is largely based on the original

second-instance judgment, but the GC uses the term “bypass”, which does not appear in the

original second-instance judgment.

2. Reasons for the Adjudication

The Hongkou District People’s Court of Shanghai Municipality rendered the first-

instance judgment: Defendant TAO Dehua should, within ten days of this judgment’s coming

into effect, pay plaintiff Centaline Company liquidated damages of 13,800 yuan. Dissatisfied

with the judgment, TAO Dehua appealed to the No. 2 Intermediate People’s Court of

Shanghai Municipality, which rendered a judgment: (1) Repeal the (2009) Hong Min San

(Min) Chu Zi No. 912 Civil Judgment of the Hongkou District People’s Court of Shanghai

Municipality. (2) Centaline Company’s litigation claim requesting that TAO Dehua pay

liquidated damages of 16,500 yuan is not supported.

GC1 quite clearly provides the adjudication reasons of the No. 2 Intermediate

People’s Court of Shanghai Municipality, but there are still differences. Based on the

“Reasons for the Adjudication” section of GC1, the following table compares the similarities

and differences between GC1 and the original second-instance judgment:

Guiding Case No. 1


1

The Written Confirmation of Request to Buy Real Estate

signed by Centaline Company and TAO Dehua was of

the nature of an intermediation contract, and the

stipulation of Clause 2.4 prohibiting “bypassing” was a

standard clause commonly found in intermediation

contracts for the sale and purchase of housing. The

intent of [the clause] was to prevent the buyer from

using housing information provided by the intermediary

company but “bypassing” the intermediary company to

purchase the house so as to make the intermediary

company unable to obtain the commission that it

deserved. The stipulation did not include circumstances

that exempted one party from liability, increased the

other party’s liability, or ruled out the other party’s

primary rights, and [, thus, it] should be determined to

be valid.

Essentially the same meaning, but without

the following expression:

“was a standard clause commonly found in

intermediation contracts for the sale and

purchase of housing. The intent of [the

clause] was to prevent the buyer from using

housing information provided by the

intermediary company but “bypassing” the

intermediary company to purchase the house

so as to make the intermediary company

unable to obtain the commission that it

deserved.”

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Guiding Case No. 1


2

According to this clause, the key to determining

whether the buyer breached the contract by “bypassing”

is to see whether the buyer used housing information,

opportunities, or other such conditions provided by the

intermediary company. If the buyer did not use the

information, opportunities, or other conditions provided

by the intermediary company, but obtained the same

housing information through other proper means of

which the public could learn, the buyer had the right to

choose an intermediary company with a lower quoted

price and better service to facilitate formation of a

housing sale and purchase contract without constituting

a breach of contract by “bypassing”.

No such expressions, but provides more

detail regarding when various intermediary

companies provided the buyer with the

housing information and whether those

companies facilitated the negotiation about

the price between the buyer and the seller.

3

In this case, the original property rights holder listed the

same house for sale through multiple intermediary

companies; TAO Dehua and his family members

separately came to know the same housing information

through different intermediary companies and [one of

these] intermediary companies facilitated formation of

the housing sale and purchase contract. Therefore, TAO

Dehua did not use information or opportunities

provided by Centaline Company and [his acts] did not

constitute breach of contract. Centaline Company’s

litigation claim was not supported.


Overall, there are quite a few differences between the “Reasons for the Adjudication”

section of GC1 and the original second-instance judgment. The analysis of these differences

touches on the reasons for selecting GC1 as a GC, which are discussed below.

III. Reasons for Selecting Guiding Case No. 1

GC1 involves the issue of “bypassing” that frequently occurs in the sale and purchase of second-hand housing intermediation disputes. “Bypassing” means “the phenomenon in

which a buyer selects housing through an intermediary company’s intermediation services,

but intentionally bypasses the intermediary company to directly reach a sale transaction with

the owner of the house or to reach a sale transaction with the owner of the house through

other intermediary companies.”6 According to the Office for the Work on Case Guidance of

the SPC, GC1 was selected because it addresses the issue that “in practice, there have been

different understandings of the legal validity of the clause prohibiting bypassing stipulated in

an intermediation contract for the sale and purchase of housing and of what circumstances

constitute a breach of contract by bypassing”.7 On this, the SPC provides the following

summary in the “Main Points of the Adjudication” section of GC1, which reads:

6 最高人民法院案例指导工作办公室 (The Office for the Work on Case Guidance of the Supreme

People’s Court), supra note 4, at 30. 7 See id.

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In an intermediation contract for the sale and purchase of housing, stipulations

prohibiting a buyer from using housing information provided by an

intermediary company to sign a housing sale and purchase contract with a

seller while bypassing the intermediary company are legal and valid.

However, when a seller lists the same house for sale through multiple

intermediary companies and the buyer can obtain the same housing

information through other proper means of which the public can learn, the

buyer has a right to choose an intermediary company with a lower quoted

price and better service to facilitate formation of a housing sale and purchase

contract. Such acts do not [entail the] use of housing information from the

intermediary company with whom [the buyer] has previously contracted;

therefore, [they] do not constitute a breach of contract.

Because the original second-instance judgment of GC1 is “in conformity with legal

provisions and stipulations agreed by the parties, in line with the legal spirit of fairness and

reasonableness, is conducive to encouraging intermediate companies to gain competitive

advantages by providing intermediary services of high quality at good prices, promotes

healthy competition in the intermediation market for second-hand housing, and is conducive

to protecting the buyer’s legal right to choose in the purchase of housing”, the SPC

determined that this case “provides guidance on the adjudication of similar cases” and

selected it as a GC.8

IV. Brief Comments

With respect to the similarities and differences between GC1 and the original second-

instance judgment and to the reasons for selecting the case as a GC, the authors have the

following observations.

1. Guiding Case No. 1 Does Not Analyze in Detail the Legal Validity of a Clause

Prohibiting Bypassing

Although GC1 was selected because, among other reasons, of the fact that, in

practice, parties have different understandings of “the legal validity of the clause prohibiting

bypassing stipulated in an intermediation contract for the sale and purchase of housing”,9

GC1 does not analyze this issue in detail. The relevant analysis was instead provided by the

Office for the Work on Case Guidance of the SPC after the issuance of GC1.

With respect to the legal validity of a clause prohibiting bypassing, the original

second-instance judgment states:

[The contract at issue in this case contained] a clause regarding liability arising

from breach of contract when a client bypasses an intermediary. [This clause]

aims at protecting the rights and interests that an intermediary company should

8 See id. 9 Id.

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enjoy in accordance with law as the intermediary [of its client]. [The clause]

does not include circumstances that exempt one party from liability, increase

the other party’s liability, or rule out the other party’s primary rights, and [,

thus, it] should be determined to be valid.

The “Reasons for the Adjudication” section of GC1 provides:

[in this case,] the stipulation of Clause 2.4 prohibiting “bypassing” was a

standard clause commonly found in intermediation contracts for the sale and

purchase of housing. The intent of [the clause] was to prevent the buyer from

using housing information provided by the intermediary company but

“bypassing” the intermediary company to purchase the house so as to make

the intermediary company unable to obtain the commission that it deserved.

The stipulation did not include circumstances that exempted one party from

liability, increased the other party’s liability, or ruled out the other party’s

primary rights, and [, thus, it] should be determined to be valid.

Further, the “Main Points of the Adjudication” section of GC1 states:

In an intermediation contract for the sale and purchase of housing, stipulations

prohibiting a buyer from using housing information provided by an

intermediary company to sign a housing sale and purchase contract with a

seller while bypassing the intermediary company are legal and valid.

After the issuance of GC1, the Office for the Work on Case Guidance of the SPC gave

a detailed analysis on the above-mentioned issue. The Office first explained why a clause

prohibiting bypassing is a type of standard clause:

In practice, a clause prohibiting bypassing is usually prepared beforehand in a

contract by the intermediary company. Then, [the contract] is directly

presented to the principal [i.e. the client] for signature to confirm [his or her

approval of the content] during the intermediation. This type of clause that is

prepared in advance for repetitive use and is not negotiated with the other

party when the contract is signed is a standard clause by nature.10

Because clauses that prohibit bypassing are standard clauses in contracts between a client and

an intermediary, they must comply with Article 40 of the Contract Law of the People’s

Republic of China, (the “Contract Law”), which provides:11

Where a standard clause has a circumstance stated in Article 52 or Article 53

of this Law, or the party which supplies the standard clause exempts itself

from liability, increases the other party’s liability, or rules out the other party’s

10

最高人民法院案例指导工作办公室 (The Office for the Work on Case Guidance of the Supreme

People’s Court), supra note 4, at 31. 11 《中华人民共和国合同法》 (Contract Law of the People’s Republic of China), passed and issued on

Mar. 15, 1999, effective as of Oct. 1, 1999, Article 40, http://www.npc.gov.cn/wxzl/wxzl/2000-

12/06/content_4732.htm.

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primary rights, the clause shall be invalid.

Article 52 of the Contract Law provides:12

A contract shall be invalid under any of the following circumstances:

(1) one party enters into the contract by means of fraud or coercion, harming the

State’s interests;

(2) there is malicious collusion to harm the interests of the State, a collective, or a

third party;

(3) an illegal purpose is concealed under the guise of legal forms;

(4) public interests are harmed; or

(5) [the contract] violates the mandatory provisions of laws and administrative

regulations.

Article 53 provides:13

The following exemption clauses in a contract are invalid:

(1) [a clause] that causes personal injury to the other party;

(2) [a clause] that, due to intent or gross negligence, causes property damage

to the other party.

The Office for the Work on Case Guidance of the SPC does not consider standard clauses

prohibiting bypassing raise the sort of concern Article 52 and Article 53 [of the Contract

Law] are meant to address. Its reasons are as follows:

Because stipulations prohibiting bypassing usually do not involve content that

would harm the interests of the State, a collective, a third party, or the public

interest in the society. Their main aim is to prevent dishonest acts of buyers,

rather than having an “illegal purpose”. Laws and administrative regulations

also do not have provisions stopping parties from [entering into contracts

with] clauses prohibiting bypassing. Moreover, such clauses are not liability

exemption clauses. Therefore, they do not fall under the circumstances

provided in Article 52 and Article 53 of the Contract Law.14

(emphasis

added)

Regarding whether a clause prohibiting bypassing involves situations where “the

party which supplies the standard clause exempts itself from liability, increases the other

party’s liability, or rules out the other party’s primary rights”, as provided in the Contract

Law, the Office for the Work on Case Guidance of the SPC first stated that “increasing [the

other party’s] liability means the standard clause covers obligations that the other party

should not bear under normal circumstances” and “ruling out [the other party’s] primary

rights refers to ruling out the primary rights that the other party should enjoy under normal

12

Id. Article 52. 13

Id. Article 53. 14


People’s Court), supra note 4, at 31.

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circumstances.” 15

Therefore, in order to determine whether a clause prohibiting bypassing

increases the other party’s liability and/or rules out the other party’s primary rights, one

should, based on the nature of the specific contract, decide the two parties’ obligations and

rights “under normal circumstances”. The Office for the Work on Case Guidance of the

SPC’s analysis is as follows:

Based on the nature of an intermediation contract for the sale and purchase of

second-hand housing, the intermediary company’s primary obligation is to,

according to the principal’s request, honestly report to the principal

opportunities for entering into a contract and offer intermediary services

facilitating contract formation. [The intermediary company’s] right is to

receive remuneration after the formation of the contract that it facilitates. The

principal’s primary right is to receive information and services. His primary

obligation is to pay remuneration when the intermediary company has

facilitated the formation of the contract.16

The Office for the Work on Case Guidance of the SPC points out that the purpose of a clause

prohibiting bypassing is to prevent a buyer from avoiding the performance of his own

contractual obligations, i.e., bypassing the intermediary so as not to pay the intermediary the

remuneration it is owed. Therefore, such a clause does not involve situations where “the

party which supplies the standard clause exempts itself from liability, increases the other

party’s liability, or rules out the other party’s primary rights”, as provided by the Contract

Law. 17

Two points are worth considering. First, since the Office for the Work on Case

Guidance of the SPC has analyzed in detail the above issues, shouldn’t the analysis be

included in GC1 to ensure that courts handling subsequent cases can make a more accurate

reference to the GC? Second, the SPC only listed “Article 424 of the Contract Law of the

People’s Republic of China” in the “Related Legal Rule(s)” section of GC1. That provision

states:

An intermediation contract is a contract, in which the intermediary [agrees to]

report to the principal opportunities for entering into a contract or provide [the

principal] with intermediary services to facilitate contract formation and, [in

return,] the principal [agrees to] pay remuneration.

Article 424 has no direct relevance to solving the legal issues in GC1. Based on the above

discussion, in the authors’ opinion, the SPC should list Article 40, Article 52, and Article 53

of the Contract Law in the “Related Legal Rule(s)” section to increase the reference value of

GC1.

2. The Statements in Guiding Case No. 1 about the Circumstances that

Constitute a Breach of Contract by Bypassing Are Not Based on the

Original Second-Instance Judgment 15 Id. 16 Id. 17

Id.

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With respect to what circumstances would constitute a breach of contract by

bypassing, the original second-instance judgment actually has no clear explanation of this

issue. On the issue of whether the buyer in this case improperly used the information and

opportunities provided by the intermediary company and then entrusted others to conclude

the transaction, thereby breaching the contract, the original second-instance judgment

provides:

According to the Contract Law and stipulations agreed upon by both parties, if

the principal, for the purpose of not paying or paying less commission,

improperly impedes the satisfaction of conditions for commission payment,

such as concluding the transaction in private between the buyer and seller or

entrusting others to conclude the transaction, the conditions would be deemed

to have been satisfied and the principal should pay the intermediary the

commission.

The original second-instance judgment then proceeds to lay out facts of this case in detail: the

seller of the house entrusted three intermediary companies to sell the house, but none of them

was entrusted exclusively; all of the three intermediary companies provided TAO Dehua with

information related to the house involved in the case and opportunities for entering into a

contract, as well as provided intermediary services by letting [TAO Dehua] view the housing

on-site; but Centaline Company was not the first company to report to TAO Dehua the

contracting opportunities or provide him with the house-viewing services; Centaline

Company only provided TAO Dehua with house-viewing intermediary services once and did

not intermediate between the buyer and the seller regarding the price; another company,

through provision of its intermediary service, facilitated both the buyer and the seller to reach

a sale transaction at a lower price. Finally, the second-instance judgment concludes:

Therefore, TAO [Dehua] did not, for the purpose of avoiding paying

commission, privately reach a transaction with the seller of the housing or

improperly use Centraline Company’s information and opportunities and then

entrusted others to conclude the transaction. Therefore, his acts did not

constitute a breach of contract.

With respect to what circumstances constitute a breach of contract by bypassing, the

“Reasons for the Adjudication” section of GC1 provides:

[T]he key to determining whether the buyer breached the contract by

“bypassing” is to see whether the buyer used housing information,

opportunities, or other such conditions provided by the intermediary company.

If the buyer did not use the information, opportunities, or other conditions

provided by the intermediary company, but obtained the same housing

information through other proper means of which the public could learn, the

buyer had the right to choose an intermediary company with a lower quoted

price and better service to facilitate formation of a housing sale and purchase

contract without constituting a breach of contract by “bypassing”.

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Then, the “Reasons for the Adjudication” section of GC1 states:

In this case, the original property rights holder listed the same house for sale

through multiple intermediary companies; TAO Dehua and his family

members separately came to know the same housing information through

different intermediary companies and [one of these] intermediary companies

facilitated formation of the housing sale and purchase contract. Therefore,

TAO Dehua did not use information or opportunities provided by Centaline

Company and [his acts] did not constitute breach of contract. Centaline

Company’s litigation claim was not supported.

Finally, the above statements are summarized as the “Main Points of the Adjudication” of

GC1, which includes the following:

[W]hen a seller lists the same house for sale through multiple intermediary

companies and the buyer can obtain the same housing information through

other proper means of which the public can learn, the buyer has a right to

choose an intermediary company with a lower quoted price and better service

to facilitate formation of a housing sale and purchase contract. Such acts do

not [entail the] use of housing information from the intermediary company

with whom [the buyer] has previously contracted; therefore, [they] do not

constitute a breach of contract.

It can be seen from the above analysis that the “Reasons for the Adjudication” section

of GC1 directly mentions the concept of “bypassing” and defines the conditions for a breach

of contract by “bypassing”. However, the original second-instance judgment actually

contains no reference to the term “bypass”, nor does the court use the above standards to

determine whether the buyer’s acts breached the intermediation contract that it signed with

the intermediary company. Without the factual basis behind the original second-instance

judgment, GC1 only provides a rather vague standard.

This vague standard could result in confusion in subsequent adjudication, as reflected

in the following example: a buyer learns of a certain housing for the first time from

information provided by intermediary company A. Although the buyer’s will to purchase the

housing has been formed, he does not purchase it immediately. Instead, he actively contacts

intermediary companies B, C and D to see whether the seller puts the same housing up for

sale through these intermediary companies. In reality, there is a high chance that this could

happen. Thus, the buyer again obtains information about this housing from intermediary

companies B, C and D, and, finally, chooses the intermediary company that offers the lowest

quoted price and best service to facilitate formation of the housing sale contract. According

to the “Main Points of the Adjudication” of GC1, in this situation, because “the buyer can

obtain the same housing information through other proper means of which the public can

learn, the buyer has a right to choose an intermediary company with a lower quoted price and

better service to facilitate formation of a housing sale and purchase contract. Such acts do not

[entail the] use of housing information from the intermediary company with whom [the

buyer] has previously contracted; therefore, [they] do not constitute a breach of contract.”

2016.04.30 Edition


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Is this conclusion fair to intermediary company A? In the above example, the buyer

intentionally bypasses intermediary company A to reach a sale transaction with the owner of

the house through other intermediary companies; but because the standard in GC1 is vague,

in the sense that it has no reference to whether the buyer “intentionally” bypassed

intermediary company A, the acts of the buyer would not constitute a breach of contract.

What is interesting is that, as discussed in Part III of this piece, the Office for the Work on

Case Guidance of the SPC defines “bypassing” as “the phenomenon in which a buyer selects

housing through an intermediary company’s intermediation services, but intentionally

bypasses the intermediary company to directly reach a sale transaction with the house owner

or to reach a sale transaction with the house owner through other intermediary companies.”18

Yet, the word “intentionally” is not incorporated into the “Main Points of the Adjudication”

of GC1.

18


People’s Court), supra note 4, at 30.

guiding cases in perspective tm 指导性案例 透视 · (hereinafter referred to as “a certain...

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guiding cases in perspective tm 指导性案例透视 · (hereinafter referred to as “a certain...