Deals & Cases

General Civil Disputes 2020-06-08
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DR & AJU Successfully Represents Advertisement Agency, by Arguing the Advertisement Agreement Should Be Interpreted as a Fixed Fee Agreement and Not a Cost Reimbursement Agreement

Advertisement agency A entered into a yearly advertisement agreement with a car manufacturer B and performed marketing services on behalf of B including advertisement for the year of 2015 and 2016. A subsequently requested B to pay the commissions but B refused to pay. DR & AJU represented plaintiff A in the litigation for commissions against defendant B, and recently obtained a complete win at the district court in favor of the plaintiff.

The main dispute of this case was whether the advertisement agreement was a fixed fee agreement or a cost reimbursement agreement. DR & AJU explained in depth from various perspectives why this advertisement agreement should be deemed as a fixed fee agreement despite provisions which may be interpreted as those of a cost reimbursement agreement. The defendant in response argued the advertisement agreement is a cost reimbursement agreement, and that the plaintiff demanded exaggerated costs, of which the defendant does not have a duty to pay. However, the court adopted DR & AJU’s arguments, holding that the advertisement agreement is a fixed fee agreement and therefor the defendant has a duty to pay the previously agreed amount as commissions.

The above precedent is crucial for cases where the agreement document does not specify whether it is a cost reimbursement agreement. Under the circumstances, DR & AJU had successfully argued that the circumstantial evidence such as the true intention of the parties entering the agreement should be accounted to determine the characteristic of the agreement.