Haidian Court rules in China's first crowdfunding case | Practical Law
A district level People’s Court has upheld the validity of a crowdfunding contract in what is believed to be the first case in China to expressly deal with crowdfunding.
A district level People’s Court has upheld the validity of a crowdfunding contract in what is believed to be the first case in China to expressly deal with crowdfunding.
On 15 September, Haidian District People's Court in Beijing upheld the validity of a crowdfunding contract created to finance a limited partnership restaurant. Beijing Nuomiduo Restaurant Management Co Ltd (Nuomiduo) entered into a commissioned finance services agreement with Beijing Feidu Network Services Co Ltd (Feidu), which agreed to finance the project through its licensed crowdfunding platform. Both parties performed their financial obligations under the contract, but a dispute arose over the style and cost of the business premises selected by Nuomiduo. After settlement talks stalled, Nuomiduo and Feidu each attempted to terminate the contract early and assert claims against the other for damages. The court upheld the validity of the contract for the following reasons:
Feidu did not violate laws and regulations related to crowdfunding (mainly because there are no such laws or regulations in force at this time).
Feidu operated lawfully, including the use of YeePay to handle online payments, and implemented risk management controls, project supervision and other mechanisms designed to protect against potential abuse of the crowdfunding model.