The format of delivery film is unknown, which order comes first, watermark-free film and final payment？ (medium-length)

[Original] Text/Xi Yan

During the performance of the contract, Party A paid the first three production fees according to the contract. On March 1, 2019, Party B sent a WeChat to Party A, with the content that all the work has been completed. According to the industry practice, the final payment needs to be paid first for copying films, so you can watch films in Party B’s computer room or provide a low-quality watermark version to Party A.. A means that watermarking is understandable, but the low quality is incomprehensible. The low quality of B reply is only relative to the template, and it is also a high-definition version. On March 4th, 2019, Party A received the watermark and H264 format production results provided by Party B..

After that, Party A urged Party B for the final format agreed in the contract, and Party B insisted that the final payment of the fourth installment should be paid first, otherwise, Party A had the right to refuse to deliver the final piece. Both sides insisted on each other and finally reached a lawsuit.

Based on the analysis of the contents of the contract and the communication process between the two parties, we can see that:

First of all, there is no direct contract basis for both sides’ claims and insistence, but the basis of A’s viewpoint is more fragile, and both sides make requests beyond the scope of the contract.

Secondly, since there is no agreement in the contract and it is involved in the performance and must be solved, it is necessary to fill the contract loopholes. Article 61 of the original Contract Law of our country stipulates, "After the contract comes into effect, if the parties have not agreed on the quality, price or remuneration, place of performance, etc., or the agreement is unclear, they can supplement it by agreement; If a supplementary agreement cannot be reached, it shall be determined in accordance with the relevant provisions of the contract or trading habits. " There is no agreement in the contract on how to perform the contract from the completion of the work content to the delivery of the final format, and there is no agreement on the delivery form of the work content. At this time, it should be settled by both parties through consultation. In fact, both parties sign a supplementary agreement.

Thirdly, in fact, both sides consciously followed this procedure. Party B took the lead in making a proposal to Party A, which has the nature of an offer, and its content includes two parts: first, it is clear that the final payment should be settled after copying into pieces, and this rule exists as an industry habit; Second, there are two ways to review the film before the final payment is settled. Party A can first deliver the film with watermark or directly review the film at the site of Party B.. However, A’s reply and reaction to B’s suggestion includes two contents: it is understandable to add watermark, and a piece with watermark version has been received. This shows that Party A recognizes the industry practice proposed by Party B, and also agrees with Party B’s suggestion to submit a watermarked version first.

Furthermore, after the process of offer and acceptance, the two sides reached a new agreement, which is also a supplementary opinion on this matter. Its content should be: based on the industry practice that the final payment needs to be paid first for copying into pieces, Party B will first deliver the watermarked version to Party A for acceptance, and then Party A will pay the final payment after verification, and after receiving the final payment, Party B will deliver the pieces in the final format. The supplementary agreement is also an integral part of the contract and is binding on both parties, and both parties should strictly abide by it. After Party A received the film with watermark version from Party B, it recognized the quality of the film. At this time, Party A should pay the final payment of the fourth installment first, which is the requirement of fulfilling its obligations under the supplementary agreement. However, Party A directly requested Party B to deliver the film in the final format without paying the final payment, and Party B has the right to refuse based on the right of defense. In this case, there is no contractual basis for Party A’s request, and there is legal basis for Party B’s refusal.

To take a step back, even if the two sides fail to negotiate on this, Party A insists on not accepting Party B’s proposal and overturning its previous statement, and no supplementary agreement has been formed between the two sides, but according to the trading habits, the above conclusion can still be drawn. According to Article 61 of the original Contract Law, if the parties fail to reach a supplementary agreement, it shall be handled in accordance with the relevant provisions of the contract or trading habits. Because there are no other terms in the contract for reference, or even if there is no direct applicable relationship, the performance problem cannot be solved through the contract itself. Therefore, we should choose the second path, that is, the way of trading habits to break through, and it happens that there are industry practices in post-production, and the parties clearly put forward the industry practices as the basis in their performance.

The source of civil law in China is divided into two levels: one is law, and the other is custom. "Handling civil disputes shall be in accordance with the law; If there are no provisions in the law, customs can be applied, but they must not violate public order and good customs (Article 10 of the Civil Code). " Trading habits in the field of contract law include the following two items: (1) practices that are usually adopted in the local trading behavior or in a certain field or industry and are known or should be known when concluding a contract for the counterparty; (2) Customary practices frequently used by both parties. The first two items shall not violate the mandatory provisions of laws and administrative regulations. In this case, the final payment should be settled before the copy proposed by B, which should belong to the rules in the film post-production industry. For this rule, after B proposed it, Party A did not object, which can be regarded as its default, indicating that it also knows the existence of this rule. Therefore, even if there is no contract and law as the basis, the application of trading habits can solve the disputes between the two sides.