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Pizza Hut loses 6.8 million yuan lawsuit

PIZZA Hut, the well-known American restaurant chain, was ordered by a Shanghai court to pay 6.8 million yuan (US$1.03 million) in compensation for closing an outlet near the city's Zhongshan Park before its property lease was up.

Changning District People's Court also ordered Shanghai Xianglong Real Estate Investment Co Ltd, the property owner, to return the 200,000 yuan security deposit to Pizza Hut.

In 1996, Pizza Hut signed a lease contract with Kaixuanmen company to rent a house beside the park until 2016. The contract right was transferred to Xianglong in 1998 with Pizza Hut's agreement.

Pizza Hut asked to terminate the contract ahead of schedule in August 2008 because the restaurant was in deficit. Though Xianglong disagreed, Pizza Hut closed the restaurant in October 2008 and refused to pay rent any more, the court heard.

Xianglong sued Pizza Hut in January 2009 to seek a three-month rent. Pizza Hut countercharged asking the court to judge the contract ceased at the end of October 2008.

The court ruled Pizza Hut had violated the contract and should pay 3.35 million yuan for three months' rent and interest. It also ordered the contract to be terminated to prevent further losses on both sides.

Xianglong sued again last September, asking for a compensation of 6.8 million yuan for breach of contract.
Pizza Hut argued the contract was ruled by the court to be terminated, so it was not liable, and it also asked Xianglong to return the security deposit of 200,000 yuan.

The court ruled Pizza Hut had violated the contract though it ordered to terminate the contract in the previous lawsuit. So Pizza Hut should pay the penalty.

Xianglong also agreed to return the security deposit.


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