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CISG CASE PRESENTATION

China 11 May 2004 Wuhan Intermediate People's Court [District Court] of Hubei Province (Wuhan Zhongou Clothes Factory v. Hungary Wanlong International Tradet Company) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040511c1.html]

Primary source(s) of information for case presentation: Case text

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Case identification

DATE OF DECISION: 20040511 (11 May 2004)

JURISDICTION: People's Republic of China

TRIBUNAL: Wuhan Intermediate People's Court [District Court] of Hubei Province

JUDGE(S): Chen, Jun (Chief Judge); Ai, Zhihua (Judge); Chen, Yanping (Agent Judge)

CASE NUMBER/DOCKET NUMBER: Unavailable

CASE NAME: Wuhan Zhongou Clothes Factory v. Hungary Wanlong International Trade Company

CASE HISTORY: Unavailable

SELLER'S COUNTRY: People's Republic of China (plaintiff)

BUYER'S COUNTRY: Hungary (defendant)

GOODS INVOLVED: Coats and vests


Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 78

Classification of issues using UNCITRAL classification code numbers:

53A [Buyer's obligation to pay price of goods];

78B [Rate of interest]

Descriptors: Price ; Interest

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Chinese): Click here for Chinese text of case; see also CISG-China Case [IPC/10]: <http://aff.whu.edu.cn/cisgchina/en/news_view.asp?newsid=68>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Wuhan Intermediate People's Court of Hubei Province [11 May 2004]

Wuhan Zhongou Clothes Company v. Wanlong International Trade Company

Translation [*] by Meihua Xu [**]

[PROCEEDINGS]

PARTIES AND COUNSEL. Plaintiff (hereafter, [Seller]): Wuhan Zhongou Clothes Company; Address: Guozikoute No. 2 Hanyang District, Wuhan, Hubei; Legal Representative: Jiang, Yinbiao, manager. Representative Agent: Luo, Zhenghua, employee of the [Seller]. Defendant (hereafter [Buyer]): Wanlong International Trade Company; Address: Budapest 1107 Szallasu, 44-46, Hungary; Legal Representative: Liu, Zizhong, manager.

On 29 March 2002, This court accepted this case involving a dispute in an international sale of goods transaction between the [Buyer] and the [Seller]. The court formed a collegial bench to hear this case on 15 March 2004. The legal representative of the [Seller], Jiang, Yinbiao and [Seller]'s agent, Luo, Zhenghua, attended the court session. The court had sent a notice and a subpoena to the [Buyer]. However, its legal representative and agent failed to present at the court. This case has been concluded.

POSITION OF THE PARTIES

[Seller]'s position

The [Seller] alleges that:

On 28 June 1998, the [Buyer] and the [Seller] signed three contract confirmations by which the [Buyer] purchased from the [Seller] three containers of cotton coats and vests, totaling US $156,822.60. The [Buyer] has paid US $77,000 with US $79,822.60 in arrears. The [Seller] asks the court to direct the [Buyer] to pay to the [Seller] the remaining US $79,822.60 and the interest on the delayed payment.

The [Buyer] did not present any defense orally or by written document.

FACTS ASCERTAINED BY THE COURT AND RULING OF THE COURT

After investigation, it was ascertained that on 28 June 1998, the [Buyer] and the [Seller] signed three contract confirmations (hereafter, the "Contracts"), by which the [Seller] was to provide to the [Buyer] cotton coats and vests in different designs. The following are the terms in the Contracts:

  1. 9,000 children's cotton coats at a unit price of US $5.8/coat, FOB Wuhan;
  2. 12,000 cotton vests at a unit price of US $11/vest, FOB Wuhan;
  3. 6,000 __ cotton coats at a unit price of US $11/coat, FOB Wuhan.

The goods should be delivered to Hamburg, Germany by 5 September 1998; the [Buyer] shall pay a deposit of US $40,000 in advance, and the remaining amount shall be paid within forty days after the [Buyer] receives the goods at Hamburg.

After the conclusion of the Contracts, the [Seller] finished the procedures for the export customs application and handed over the goods to the carrier designated by the [Buyer], i.e., Transport Group AGE International (HK) Ltd (hereafter, "HK Transport") in three deliveries. On 24 August 1998, 14 September 1998, and 21 September 1998, respectively, HK Transport issued three B/Ls with the numbers of SZ/HAM-501982A, SZ/HAM-502132A, and SZ/HAM-502202 with the [Buyer] as the consignee. Later, KH Transport provided three original B/Ls to the [Buyer]. After the goods arrived at the destination port, Hamburg, the [Buyer] took delivery of the goods by providing the B/Ls. The following are the goods actually delivered by the [Seller]:

   -    320 cases of children's cotton coats, totaling 7,997 coats;
   -    257 cases of cotton vests, totaling 5,140 vests;
   -    263 cases of __ cotton coats, totaling 4,900 coats;

The price for the above totals US $156,822.60.

Based on the Wuhan -- Shenzhen -- Hamburg route schedule and the payment deadline arranged by the two parties, the [Buyer] should have made payment no later than 31 December 1998. The [Buyer] has paid US $77,000 with US $79,822.60 in arrears.

The aforesaid facts are evidenced by the sales confirmation, copy of the B/L, delivery list, and payment receipt. The court deems that they are reliable.

The court also deems that the [Buyer] and the [Seller] have an international sales relationship. Due to the dispute over the payment issue of the Contracts, the [Seller] filed this lawsuit against the [Buyer], who is from Budapest, Hungary.

The court has jurisdiction over this case based on the following:

   -    The price term in the Contracts was FOB Wuhan, and the delivery place, i.e.. the place for contract performance, was in Wuhan;
 
   -    Article 243 of the Civil Procedure Law of the PRC states that:

"For a lawsuit involving a contract dispute with a defendant that has no address in China, if the contract was performed in China, the People's Court of the place of performance of the contract has jurisdiction."

As the People's Court of the place of contract performance, this court has jurisdiction over this case. The parties failed to stipulate the applicable law. However, Article 1(1)(a) of the CISG states that:

"This Convention applies to contracts of sale of goods between parties whose places of business are in different States."

The [Seller]'s place of business is in China, and the [Buyer]'s is in Hungary. Both China and Hungary are Contracting States of the CISG. Therefore, the CISG shall be the applicable law in this case. In addition, for issues beyond the scope of the CISG, the law of the country which has the closest connection with the Contracts shall be applied. Since the Contracts were performed in China, Chinese law shall be applied.

The three Contracts signed between the [Buyer] and the [Seller] are in accordance with the provisions in the CISG, and the FOB term that was adopted in the Contracts is an international trade usage. Even though the carrier provided transshipment with a loading port of Shenzhen and Wuhan -- Shenzhen was a domestic route; however, the term of "FOB Wuhan" indicated that the goods should be delivered to Wuhan and to the carrier. This reflected the true minds of the two parties; therefore, the Contracts were effective.

During the performance of the Contracts, the [Seller] modified the quantity and delivery time of the Contracts. The [Buyer] raised no objection after accepting the B/L and taking delivery of the goods. Therefore, it should be deemed that the [Buyer] has accepted the modifications to the Contracts.

The price of the goods alleged by the [Seller] is calculated based on the actual quantity delivered by the [Seller] and the price term agreed by the parties. Its reliability has been confirmed.

The [Buyer] failed to make payment for the goods within the stipulated time after taking delivery of the goods. This violated the Contracts. The [Buyer] shall bear civil liability.

Article 53 of the CISG states that:

"The [Buyer] must pay the price for the goods and take delivery of them as required by the contract and this Convention."

Article 78 of the CISG stipulates that:

"If a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it ..."

Based on this, the court accepts the [Seller]'s claim to require the [Buyer] to pay the price in arrears and to pay the interest on the delayed payment. Based on articles 53 and 78 of the CISG and article 130 of the Civil Procedure Law of the PRC, the court rules that:

  1. [Buyer] shall pay to the [Seller US $79,822.60 for the price of the goods; and

  2. [Buyer] shall pay interest on the aforesaid delayed payment (calculated from 1 January 1999 to the day of the effective date of this award) based on the bank interest rate at the place of making payment, i.e., the bank loan interest rate on US dollars of the Bank of China at that time.

The [Buyer] shall make the aforesaid payment within thirty days of the effective date of this award.

The case acceptance fee for this proceeding is renminbi [RMB] 12,118, which shall be borne by the [Buyer] (the [Seller] has paid this amount in advance, therefore, the [Buyer] shall pay this amount together with the aforesaid payment).

For any objection to this decision, the Plaintiff [Seller] must appeal within fifteen days and the Defendant [Buyer] must appeal within thirty days with Hubei Higher People's Court after the arrival of the award with copies for the parties. The appellant shall pay the case acceptance fee of RMB 12,118 in advance when filing appeal. If the appellant fails to pay this fee within seven days after the deadline for appeal expires, it shall be deemed that the appellant voluntarily withdraws the appeal.

Chief Judge: Chen, Jun; Judge: Ai, Zhihua; Agent Judge: Chen, Yanping

Clerk: Xu, Lei

11 May 2004


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of the People's Republic of China is referred to as [Seller] and Defendant of Hungary is referred to as [Buyer]. Amounts in the currency of the United States (dollars) are indicated as [US $]; amounts in the currency of the People's Republic of China (renminbi) are indicated as [RMB].

** Meihua Xu, LL.M. University of Pittsburgh School of Law on an Alcoa Scholarship. She received her Bachelor of Law degree, with the receipt of Scholarship granted by the Ministry of Education, Japan, from Waseda University, Tokyo, Japan. Her focus is on International Business Law and International Business related case study.

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Pace Law School Institute of International Commercial Law - Last updated May 11, 2010
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