Defining the Foundation of Right to Claim for Overseas Investment Disputes Protecting the Legitimate Rights and Interests of Domestic Residents’ Overseas Investment —— a case of Zhang v Y company in a brokerage contract dispute

Basic Facts

Having learned about real estate investment projects in Australia through Y Company, an overseas real estate sales company, Zhang signed an Advanced Order with Y company, booking a real estate located in Victoria, Australia. On June 4, 2015, Zhang signed the house purchasing contract and a brief Chinese introduction to key points. The document detailed important information concerning land information, transfer prices, and payment procedures of the real estate involved. After Zhang paid 5% of the house payment, a total of more than RMB 400,000 to the seller through Y company, the seller also signed the contract document. Later, Zhang believed that what presented in the contract was a townhouse, rather than a single house as promised previously. The house sold was seriously inconsistent with the contract. The Australian seller stated that according to the buyer’s request for termination of the contract, the buyer’s advance deposit would be transferred to the developer. In the event of the dispute between the two parties, Zhang sued the intermediary Y company to the Qianhai Court, requesting the cancellation of the contract and the return of the house payment.

Judgement

The court held that Y company provided introduction opportunities and intermediary services for Zhang to sign an overseas house purchasing contract, and obtained benefits from it, which was in line with the basic characteristics of the legal relationship in a brokerage contract. Zhang had signed a house purchasing contract with the Australian seller and paid 5% of the house payment as agreed. The intermediary Y company also paid the above amount to the seller as agreed. Zhang failed to perform the contract due to his own reasons. His claim that the purchasing contract was not established was inconsistent with the facts. Y company has already transferred the payment to the seller as agreed. If Zhang wanted to cancel the contract, he should base claims to the Australian seller based on the house purchasing contract. Zhang’s claim of asking Y company to return the above amount doesn’t comply with the provisions of the contract law, so the court rejected all the claims brought by Zhang.

Significance

This case is typical of the disputes caused by the intermediary company recommending domestic residents to buy property overseas. In recent years, many domestic residents have invested in property purchases overseas. Due to the differences in overseas purchase procedures, laws and policies, investors rely on intermediary services provided by real estate agencies, and investors tend to claim to the agencies when disputes arising during the purchase. Because of the different reasons for the losses, investors should choose a correct foundation of right to claim and the correct person for litigation and safeguarding legal rights. If the intermediary has already contributed to the purchase of the house and the purchasing contract has started to be performed, the investor should claim the right to the seller. If the investor claims damage compensation to the real estate agency, he must prove that the agency has violated the contract in the process of providing the intermediary service, otherwise it will be difficult to win the case. This case involves the identification of relevant legal relationships and application of law arising from overseas investment and house purchasing, which has certain reference value for judgement of similar cases, and is also conducive to guiding domestic residents to strengthen risk prediction and prevention when investing abroad, and to choose correct foundation of right to claim for litigation in case of disputes to better protect their legitimate rights and interests.