眾律國際法律事務所

Taiwan’s High Court recognizes unjust enrichment in reversal of lower court's decision

承前篇：勝訴！本所所長范國華律師與本所郭凌豪律師代理案件經最高法院判決發回更審！（ 最高法院 109 年台上字第 759 號民事判決 ）

On August 12, 2020, the High Court Case n. 759 completely reversed the decisions of the appeal and district courts, recognizing a clear case of unjust enrichment of the disputed values. Another victory for Zoomlaw Attorneys-at-Law, the law firm to seek for high stakes appeals and expert legal consultation.

This appeal regards to a purchase agreement signed between VIVIAN & VINCENT INTERNATIONAL TRADING COMPANY LTD. (appellant), and BISMARCK INDUSTRIES INC. (defendant), in the end of 2012, procuring 15 military vehicles to be divided in 4 batches of 1 unit, 4 units, 5 units, and 5 units; for a total value of NT$28.5 million (approx. 970,000 USD), with an initial deposit of NT$9 millions (approx.306,000 USD). This agreement was a partial subcontract of a military equipment tender realized by the Ministry of National Defense of the Republic of China.

The disputes started with the second batch of 4 vehicles that were delivered but did not yet go through the inspection and acceptance of the Ministry of National Defense. In July 2014, the defendant, who did not possess cash flow for the 3rd batch materials, asked the appellant for an advancement payment for the 2nd batch. Despite having no obligation to do so, as the delivery of the goods was not yet complete, the appellant delivered 4 checks with a total value of NT$5.2 millions (approx. 180,000 USD) as advanced payment for the defendant’s turnover.

Different issues emerged, and the purchase contract was unilaterally terminated by the defendant on November 17, 2014, on the grounds that the payment for the 2nd batch was delayed, claiming breach of contract. With no further remedies, the appellant terminated the contract on September 20, 2017, based on provision of the purchase agreement stipulating that “the orderer may terminate the contract at any time before the completion of the inspection”, and, also on the prerogative given by article 511 of the taiwanese Civil Law.

The defendant argues that the 2nd batch has already been delivered, inspected and accepted by the Ministry of National Defense, hence, the NT$5.2 millions checks of payment should be paid. In addition, it claims the remaining NT$6 millions (approx. 204,000 USD) of deposit for the remaining 10 vehicles as compensation for breach of contract and suffered damages.

Contrastingly, the appellant claimed that the reason for the disputed NT$5.2 millions checks and the NT$6 millions deposit do not exist, being a case of unjust enrichment, requesting the return of the checks and the remaining value of the deposit.

The district court gave cause to the defendant and ordered the appellant to pay the NT$5.2 millions, and established the NT$6 millions as compensation for appellant’s breach of contract, a decision that was later maintained by the Appeal Court. Based on the understanding that the disputed purchase contract could not be fulfilled due to the reasons attributable to the appellant, consubstanciated on article 249, paragraph 2 of the taiwanese Civil Law, that reads: “If the contract cannot be performed owing to a circumstance to which the party who gave the earnest money is imputed, such party shall not claim for the return of the earnest money”.

On final appeal, the high court understands that the purchase agreement stipulates the unilateral termination of the contract by the ordering party, i.e. the appellant, before the second inspection, regardless of the reason to do so, that will not affect the validity of the termination of the contract. With the valid termination of the purchase agreement on September 20, 2017, the defendant lost its legal claim for the NT$5.2 millions checks, and the NT$6 millions deposit, therefore, retaining these disputed values constituted unjust enrichment, ordering their restitution to the appellant.

CONCLUSION

The high court decision on this case is a perfect example that the lower courts are not always right, nevertheless, it is not appealing just for the sake of appeal. Thus, procure a specialized law firm for legal consultation and know your chances of success on an appeal.