Introduction

According to a recent judgment in China, reward to Douyin anchors (抖音主播) in the form of Douyin coins could be an enforceable gift. The outcome raises concern as to potential misappropriation of gifts on social media causing family to suffer monetary loss. Against this background, our article will discuss the laws on enforceable gifts in the PRC and Hong Kong and touch on the possible circumstances in which users or their connected persons could demand a refund.

Background

In a Chinese judgment (2020) Zhejiang 01 Minzhong No. 3982, a Douyin user (male) rewarded a Douyin anchor (female) Douyin coins of approximately RMB 350,000. The wife of the Douyin user objected to the reward and requested a refund on the following basis:

1.        The Douyin anchor clearly knew that the reward belongs to the joint property of the Douyin user and his wife.

2.        Transfer of property within marriage shall not occur arbitrarily by one party through platforms such as Douyin.

3.        There was improper relationship between the Douyin user and Douyin anchor which violated public order and good customs.

Relevant PRC laws

Article 17 of the Supreme People’s Court’s Interpretation on Several Issues Concerning the Application of the Marriage Law of the People’s Republic of China stipulates that a husband or wife shall have equal rights to deal with property jointly owned by the husband and wife. When dealing with the joint property of husband and wife due to daily needs, either party has the right to decide. When making important decisions about the joint property of husband and wife due to non-daily life needs, both husband and wife shall negotiate on an equal footing and reach a consensus. If there is reason to believe that it is the joint intention of the husband and wife, neither the husband nor wife shall use disagreement or ignorance against a bona fide third person.

Article 52 of the Contract Law of the People’s Republic of China stipulates that a contract is invalid if (i) one party enters into a contract by fraud or coercion, harming national interests; (ii) there is malicious collusion to harm the interests of the state, the collective or a third party; (iii) the contract serves to cover up illegal purposes in a legal form; (iv) the contract harms the public interests of society; or (iv) the contract violates mandatory provisions of laws and administrative regulations.

Article 153 of the General Principles of the Civil Law of the People’s Republic of China stipulates that civil legal acts that violate public order and good customs are invalid.

PRC judgment

The Court held that when there was consideration and payment between the Douyin user and the Douyin anchor, a network service contract was established. Once the Douyin user transferred the property rights, the contract was completed and it could not be revoked. Hence, the request for refund could not be justified on the basis of contract law.

With regard to the transfer of property within marriage by one party, since the Douyin anchor obtained the Douyin coins from good faith acquisition, the wife of Douyin user could not object to the reward of Douyin coins based on her ignorance of the payment. The Douyin anchor had no obligation to investigate whether the reward of Douyin coins was the common intention of both the Douyin user and his wife. As there was no sufficient evidence to prove that there was an improper relationship between the Douyin user and the Douyin anchor, the wife’s request for refund of Douyin coins shall be dismissed.

However, it is to note that in previous judicial decisions, the Court sometimes allowed the spouse to call back the gift: see (2017) Zhejiang 0302 Minchu No. 8985; (2017) Lu 0705, Republic of China 1832 and (2018) Wan 1822 Min Chu No.164.

One of the distinguishing factors differentiating the present case from the previous judicial decisions is the popularity of Douyin. As shown in this judgment, the court’s adjudication took into consideration the vast number of users on the Douyin platform. According to the “2019 Douyin Data Report” released by Douyin, the number of daily active users was around 400 million. Grave injustice would result if any user’s spouse could request refund from Douyin anchors on the grounds of ignorance of payment. As this judgment is particularly given in the context of Douyin, one should note that different outcome is possible in other similar but not identical scenarios.

The law in Hong Kong

Under the matrimonial law of Hong Kong, there is no concept of “joint property”. In other words, each spouse has the legal title to his or her properties and the other spouse does not have legal title to such properties. Only upon petitioning for divorce will the concept of matrimonial assets appear and the court will be tasked to decide whether a particular asset should be included in the marital pot and to divide the matrimonial assets between the parties. Under section 7 of the Matrimonial Proceedings and Property Ordinance (Cap 192), the court will take into account the income, earning capacity, financial needs, standard of living of the parties, age, disability, contributions made by the parties during marriage etc., in deciding financial provision for a party and the children.

If the scenario of the PRC case above happens in Hong Kong, the wife of the Douyin user could not make a claim on the grounds that the Douyin coins are “joint property” as Hong Kong law does not recognize such a concept.

When it comes to contract law, a contract requires offer, acceptance, consideration and the intention to be contractually bound. In particular, the consideration must be adequate but need not be sufficient. In the scenario above, no consideration was involved so there was no contract, and the Douyin coins were a gift instead. In equity, a gift has to be perfected by transferring the property. Under the “everything necessary” approach (Milroy v Lord [1862] EWHC J78), the donor of the gift must have done everything necessary to be done in order to transfer the property and render the settle binding upon him; and under the “within power” approach (Re Rose [1952] EWCA Civ 4), the donor must have done everything within his power to transfer the property. In the scenario of the above PRC case, the Douyin user had done everything necessary and everything within his power to transfer the Douyin coins to the Douyin anchor, so the settlement was binding and the Douyin user’s wife, who had no legal title to the Douyin coins, could not demand a refund.

Conclusion

The PRC law and the Hong Kong law recognize different concepts, and in particular, there is no “joint property” under the matrimonial law of Hong Kong, so each spouse has the legal title to his or her own assets and can freely decide how to dispose of them. Whilst the contract law in the PRC recognizes the concept of a gift, the same is enforceable in equity in Hong Kong. Different concepts in different jurisdictions may give rise to different results on the same fact pattern, so it is always advisable to consult your local lawyer.