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As an emerging business model, "live streaming" has developed rapidly in recent years, and many merchants are promoting their products through "live streaming". According to the Blue Book of the Ministry of Commerce's "Report on the High-Quality Development of the Live Broadcast E-commerce Industry (2022-2023)", in the first half of 2023, the cumulative live broadcast sales of key monitoring e-commerce platforms will be 1.27 trillion yuan, the number of live broadcasts will exceed 110 million, and the number of live broadcast products will exceed 70 million. However, there are also situations where the sales volume of the popular "live streaming sales" is less than expected, which makes merchants who originally wanted to use traffic to increase sales distressed, and disputes with the anchor over whether they should pay the "service fee". Recently, the Beijing No. 1 Intermediate People's Court concluded a case.
Yang Li
Master of Laws
Senior Judge III
Sun Liyao
Master of Laws
Second-level judge's assistant
01 / Brief facts of the case
On November X, 2020, Company A (Party A) signed the "Exclusive Live Broadcast Cooperation Contract" (hereinafter referred to as the "Live Broadcast Contract") with Company B (Party B) and Wang (Party B's artist), stipulating that Party A will provide Party B's artist Wang with an exclusive online live broadcast of the artist's Douyin account (hereinafter referred to as the live broadcast service), if the live broadcast sales performance is less than 1 million yuan (including 1 million yuan), the service fee of Company B is 150,000 yuan. The live broadcast service will be held on December X, and the duration of a single live broadcast shall not exceed 6 hours. The service fee must be settled within 20 days of the month following the end of the live streaming service. On the premise that both parties fully perform the corresponding obligations under this contract, if Party A fails to make payment at the agreed time and fails to take effective measures within 15 working days after receiving Party B's written reminder, Party A shall pay Party B liquidated damages equivalent to 1/10,000 of the unpaid amount for each overdue day from the second day of the expiration of the aforesaid 15 working days until it is paid.
Mr. Wang completed the live broadcast service on the day agreed in the contract, and after the end of the contract, Company B mailed a "Reminder Letter" to Company A, requesting settlement and payment of 150,000 yuan for the service fee.
Company A argued that the actual income of the live broadcast involved in the case was only more than 40,000 yuan, and Company B required Company A to pay the corresponding service fee of 150,000 yuan, which obviously violated the principle of fairness. Company A has invested in the cost of platform pushing, venue, personnel and other costs for this live broadcast, and the cost is much higher than the revenue, and it bears a service fee of 150,000 yuan, which is too heavy. In addition, according to the screenshot of Wang's account on the day the "Live Broadcast Contract" was signed, it showed that Wang's total number of fans on the live broadcast platform exceeded 10 million at that time, but on the day of the live broadcast, the peak number was about 2,000 people, the valley value was about 100 people, and the average number was only a few hundred, which was far from the number of tens of millions of fans. Company B believes that the Live Broadcast Contract is legal and valid, and both parties should perform the contract according to the contract. It is a normal commercial risk that the live broadcast sales are less than expected, and it should be borne by Company A, and it shall not refuse to pay the service fee of 150,000 yuan on this basis.
02 / Case-by-case
The focus of the dispute in this case was whether Company A should pay a service fee of RMB 150,000 to Company B in accordance with the provisions of the Live Broadcast Contract.
Article 509 of the Civil Code of the People's Republic of China (hereinafter referred to as the "Civil Code") stipulates that the parties shall fully perform their obligations in accordance with the agreement.
In this case, Company B and Mr. Wang had fulfilled their contractual obligations and there was no breach of contract, and Company A should also settle the service fee to Company B in accordance with the contract. The contract stipulates that if the live broadcast sales performance is less than 1 million yuan (including 1 million yuan), company B shall receive a service fee of 150,000 yuan, and no other payment conditions are set for company B to obtain a service fee of 150,000 yuan, and company A fails to pay the contract price within the agreed time and fails to pay it after being reminded, company A shall continue to perform its payment obligations and pay liquidated damages.
Accordingly, the court ordered Company A to pay Company B a service fee of RMB 150,000 and liquidated damages.
03 / Reasoning with cases
The purpose of the merchant to pay the "service fee" is to increase product sales, but the slightest carelessness will become "losing money and making money", in this case, whether the "service fee" that has been paid can be returned, and whether the unpaid needs to continue to pay, depending on the contract between the two parties.
(1) The types of "service fees" in common live broadcast contracts
Generally speaking, the merchant and the live broadcast party will sign a live broadcast contract to stipulate the rights and obligations of both parties, and the part of the contract about the "service fee" is very important, and the "service fee" composition mode is common in the following three types:
1. Pure commission, only a certain percentage of commission will be drawn according to sales, and no guaranteed service fee will be charged.
2. "Pit fee" + commission, "pit fee" is a guaranteed service fee charged according to the number of live broadcasts, that is, no matter how much sales, at least a fixed fee will be paid to the live broadcast party, and a commission will be drawn in proportion to a certain sales.
3. "Pit Fee" + Guaranteed Quantity, which stipulates the guaranteed sales of the live broadcast party, that is, the merchant will first give the live broadcast party a certain "pit fee", and the live broadcast party will guarantee that a certain sales amount will be achieved through its delivery activities, and then the merchant will pay a certain percentage of the commission to it, and if the sales amount is not completed, the "pit fee" that has been paid will be refunded.
(2) Payment of "Service Fee".
1. According to Article 509 of the Civil Code, the parties shall fully perform their obligations in accordance with the agreement. The livestreaming party shall conduct the livestreaming activities in accordance with the time, place, and content of the livestreaming as agreed in the contract, and the merchant shall provide the goods, livestreaming technical support, and pay service fees in accordance with the agreement. If the live broadcast contract stipulates a guaranteed service fee for the live broadcast party, the merchant shall pay the service fee according to the agreement, regardless of the sales situation. If the live broadcast contract stipulates that the service fee will be refunded if the sales do not meet the specific standard, then the live broadcast party shall also refund the service fee in accordance with the agreement if the sales do not meet the specific standard.
2. According to Article 577 of the Civil Code, if one of the parties fails to perform its contractual obligations or the performance of its contractual obligations does not conform to the agreement, it shall bear the liability for breach of contract such as continuing to perform, taking remedial measures or compensating for losses. If the live broadcaster has breaches of contract such as not broadcasting on time, not having enough broadcast time, or the content of the live broadcast not complying with the agreement, causing losses to the merchant, it shall bear the liability for breach of contract to the merchant.
Merchants should adhere to the supremacy of products, not only pay attention to "traffic", but also pay attention to "quality", and if a breach of contract is found during the live broadcast, they can collect and preserve evidence in a timely manner through screen recording, screenshots, etc., to protect their legitimate rights and interests.
04 / Links to legal provisions
《Civil Code》
Article 509 [Principles of Contract Performance]
The parties shall fully perform their obligations in accordance with the agreement.
The parties shall follow the principle of good faith and perform obligations such as notification, assistance, and confidentiality in accordance with the nature, purpose, and transaction habits of the contract.
In the process of performing the contract, the parties shall avoid wasting resources, polluting the environment and damaging the ecology.
Article 577 [Liability for breach of contract]
If one of the parties fails to perform its contractual obligations or its performance does not conform to the agreement, it shall bear the liability for breach of contract such as continuing to perform, taking remedial measures or compensating for losses.
Contributed by: Beijing No. 1 Intermediate People's Court, Qinghe Court, Qingpo Court
Authors: Yang Li, Sun Liyao