The Supreme Court rendered the 104-Tai-Shang-2384 Civil Decision of December 10, 2015 (hereinafter, the “Decision”), holding that when an obligee indicates receipt of payment and notifies the obligor to pay after the obligee’s receipt of such payment is delayed, if the obligor still fails to pay, the obligor shall still be liable for the payment delay.
According to the facts underlying this Decision, the Appellant asserted as follows. Both parties entered into a co-construction agreement (hereinafter, the “Agreement at Issue”), under which the Appellee provided the funding and the Appellant provided lands to co-construct a total of eight store houses. The Appellee obtained four houses under the Agreement at Issue and the construction was supposed to be completed for delivery by March 30, 2007 or by February 4, 2008 at the latest. However, the Appellee still has not completed the construction and delivery (i.e., handover and acceptance inspection) even to this day, not to mention that the Appellant could refuse to accept the houses at issue, which were also defective since their earthquake (pressure) resistance strength did not meet the guaranteed quality set forth in the agreement. Since the Appellee should have paid damages on a monthly basis due to his delay payment liability, this lawsuit was filed to compel the Appellee to complete and deliver the houses at issue and pay damages caused by the delay payment.
According to the Decision, when the performance of an obligation requires collaboration from the obligee, if the obligor’s performance is undermined for failure of the obligee to collaborate, although the obligee is liable for the delay in the receipt of payment, still his obligation is not extinguished accordingly. In addition, when the obligee indicates receipt of payment after the receipt is delayed or engages in the collaboration necessary for the receipt of the payment and notifies the obligor for payment, the obligor shall pay immediately or be liable for payment delay.
It was further held in the Decision that although the houses at issue were completed, still the Appellee refused to deliver the same to the Appellant. Therefore, whether the houses at issue exceeded the delivery deadline and whether such delivery failed for reasons attributable to the Appellee both require further investigation. The original trial court was rash in concluding that the Appellant could not claim damages for the payment delay simply on the ground the Appellant had refused to receive the houses at issue. Therefore, this Decision reversed and remanded the original decision.