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CISG CASE PRESENTATION

China 24 June 2005 Shanghai No. 2 Intermediate People's Court [District Court] (Children's furniture case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/050624c1.html]

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

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Case identification

DATE OF DECISION: 20050624 (24 June 2005)

JURISDICTION: People's Republic of China

TRIBUNAL: Shanghai No. 2 Intermediate People's Court [District Court]

JUDGE(S): Jiang Nan (Chief Judge), Cui Xuejie, Wang Yimin

CASE NUMBER/DOCKET NUMBER: 127 (2004) HEZMW(S)CZ

CASE NAME: Shanghai Donglin International Trade Co. Ltd. v. Johnson Trading Australia Pty Ltd

CASE HISTORY: Unavailable

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

BUYER'S COUNTRY: Australia (defendant)

GOODS INVOLVED: Children's furniture


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 74 [Also cited: Articles 53 ; 59 ]

Classification of issues using UNCITRAL classification code numbers:

74C [Damages: causation]

Descriptors: Damages

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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/20]: <http://aff.whu.edu.cn/cisgchina/en/news_view.asp?newsid=58>

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

Shanghai No. 2 Intermediate People's Court [24 June 2005]

Donglin International Trade Co. v. Johnson Trading Australia Pty

Translation [*] by Wenwen LIANG [**]

[...]

[PARTICULARS OF THE PROCEEDING]

Johnson Trading Australia Pty Ltd (hereinafter "[Buyer]") brought proceedings in this Court on 11 October 2004 over a sales contract dispute with Shanghai Donglin International Trade Co. Ltd. (hereinafter "[Seller]") involving Shanghai Jianwei Wood Co. Ltd., an interested third party. Gao Changzhi acted as legal counsel for [Buyer].

After accepting the case, a Court panel was established and trial opened. On 27 December 2004, during the trial, [Seller] filed a counterclaim. After review, this Court accepted the counterclaim which was then served on [Buyer]'s legal counsel Gao Changzhi. On 13 May 2005, this Court organized a conciliation attended by [Buyer]'s legal counsel Gao Changzhi, [Seller]'s authorized agents Ji Yongbao and Li Jie, [Seller's supplier]'s legal representative Yan Jianhong and authorized agent Cai Weici. On the same day, all parties signed the subpoena to the hearing.

On 14 June 2005, a hearing was held to examine the original claim and the counterclaim. The [Seller], Defendant in the original claim and Plaintiff in the counterclaim, attended the hearing represented by [Seller]'s authorized agents, Ji Yongbao and Lijie. The [Buyer], Plaintiff in the original claim and Defendant in the counterclaim, was absent from the hearing without giving any explanation despite being duly summoned. On 20 June 2005, this Court declared the original claim of [Buyer] as withdrawn. After that, this Court continued the trial on the counterclaim, which is now closed.

[SELLER'S PLEADING]

The [Seller] pleaded as follows:

The [Seller] is a long established foreign trade agency. In July 2003, the [Buyer] requested, via its representative Gao Changzhi, that the [Seller] be the export agency for its furniture manufacturer in China, Jianwei Co., the interested third party in this case. On 15 July 2003, the [Seller] and the [Buyer] entered into a Sales Agreement stipulating that the [Seller] would supply the [Buyer] with children's solid wood beds (model MB-01, MBT-01), children's five drawer chests, baby and children strollers and dining chairs, totalling RMB 911,654.80, payment FOB Shanghai, as well as the price, quality, inspection and time of delivery of the goods.

As required by the [Buyer], the [Seller] entered into a separate Sales Agreement with Jianwei Co. (hereafter referred to as "[Seller's supplier]"), stipulating that [Seller's supplier] would provide the [Seller] with children's furniture as stipulated in the above Agreement totalling RMB 459,062.90. Afterwards on 25 September 2003, the [Buyer]'s representative, Gao Changzhi, confirmed that [Seller's supplier] had delivered for shipment the MB-01 children's solid wood beds. On 27 October 2003, the [Buyer]'s representative, Gao Changzhi, confirmed that [Seller's supplier] had delivered for shipment 140 MB-01 beds, 50 MB-T beds, 18 five drawer chests and 77 small strollers. Furthermore, the [Buyer]'s representative, Gao Changzhi, confirmed that [Seller's supplier] has delivered for shipment 1 MB-01 and 15 five drawer chests under the disputed Agreement, as well as 10 six drawer chests, 15 bookcases, 3 versatile chests and 1 two drawer chest not under the Agreement but requested by the [Buyer]. The [Seller] delivered the above goods to the carrier for shipment on 19 September, 27 September and 1 November 2003, respectively. The carrier issued three separate marine bills of lading. The [Seller] posted the three bills of lading to the [Buyer] which has taken delivery of all the furniture. In summary, the [Seller] has supplied to the [Buyer] furniture totalling RMB 310,540.16 manufactured by [Seller's supplier]. On 28 November 2003 and 1 July 2004, the [Buyer] faxed the [Seller] questioning the quality of the furniture. The [Seller] alleges that that, although the [Seller] has entered into a Sales Agreement with [Seller's supplier], all of the provisions of the Agreement were negotiated between the [Buyer] and [Seller's supplier]; it was [Buyer]'s representative Gao Changzhi, with the authority of the [Buyer], who was responsible for the quality inspection of the furniture, and that the [Buyer] dealt directly with [Seller's supplier] when disputes over the quality occurred. Thus there is a relationship of foreign trade agency between the [Seller] and [Seller's supplier]. [Seller's supplier] commenced proceedings against [Seller] in the Baoshan District People's Court of Shanghai which handed down Judgment (No. 546 (2004) BME(S)CZ) on 10 October 2004 ordering the [Seller] to pay [Seller's supplier] the price of the goods totalling RMB 210,540.16 plus interest of RMB 3,692 and to bear the litigation fee of RMB 5,723.

The [Seller] alleged that:

   -    The [Buyer] is obliged to make payment after taking delivery of the goods despite the dispute over the quality of the goods as the [Buyer] never produced a legally effective inspection report.
 
   -    After paying the [Seller] RMB 100,000.00, the [Buyer] refused to pay the remaining RMB 210,540.16, alleging quality defects. The [Buyer]'s allegation is not sound; the [Buyer] should pay the remaining money and compensate the [Seller] for the economic loss.

After failure to resolve the dispute with the [Buyer], the [Seller] requests this Court to order the [Buyer] to pay the remaining RMB 210,540.16 and compensate the [Seller] for the loss of RMB 6,415.

The [Seller] produced the following evidence in support of its pleading:

1.   The Sales Agreement between the [Seller] and the [Buyer], dated 15 July 2003.
 
2.   The Sales Agreement between the [Seller] and [Seller's supplier], concluded in July 2003.
 
Evidence Exhibits 1 and 2 were submitted to provide proof of the sales relationship between the [Seller] and the [Buyer].
 
3.   Shipment documents signed by the [Buyer]'s representative Gao Changzhi, dated 25 September 2003;
 
4.   Shipment documents signed by the [Buyer]'s representative Gao Changzhi, dated 17 September 2003.
 
5.   Shipment documents signed by the [Buyer]'s representative Gao Changzhi, dated 27 October 2003.
 
6.   Marine bills of lading, dated 19 September, 27 September and 1 November 2003.
 
7.   Postal certificates, dated 20 September and 3 November 2003.
 
8.   Certificates of place of origin, dated 18 September, 27 September and 28 October 2003.
 
9.   Fumigation / disinfection certificates, dated 19 September, 26 September and 29 October 2003 issued by a competent Chinese Exit-Entry Inspection and Quarantine Bureau.
 
10.   Faxes to the [Seller] from the [Buyer] questioning the quality of the goods, dated 28 November 2003 and 1 July 2004.
 
11.   Judgment (No. 546 (2004) BME(S)CZ) handed down by the Baoshan District People's Court of Shanghai, dated 10 October 2004.
 
Evidence Exhibits 3 to 11 were submitted to provide proof that the [Buyer] confirmed the shipment of the disputed goods, that the [Seller] has delivered the disputed goods to the carrier for shipment and sent to the [Buyer] the three marine bills of lading, and that the [Buyer] has confirmed taking delivery of the goods and payment of money in the amount of RMB 100,000.00.
 
12.   A written letter to the [Buyer] from the [Seller], dated 8 December 2003. It is submitted as proof of the [Seller]'s effort to resolve the dispute with the [Buyer].

[COURT RULING]

It has been established that the facts pleaded by the [Seller] are true except for the total amount of the disputed goods.

It has been also established that the [Buyer] confirmed the total amount of the disputed goods taken by the [Buyer] was RMB 308,720.06 while claiming loss against the [Seller] resulting from quality defects in the goods.

The economic loss of RMB 6,415 claimed by the [Seller] in this case is RMB 3,292 as interest on arrears plus RMB 5,723 as litigation fee determined in the Judgment (No. 546(2004)BME(S)CZ) given by the Baoshan District People's Court of Shanghai.

This Court considers itself to be competent in this case since the delivery is FOB Shanghai and the [Buyer] did not raise any jurisdictional challenge. The United Nations Convention on Contracts for the International Sale of Goods (hereinafter the "CISG") is applicable to the dispute under the Agreement since the Agreement did not stipulate the law applicable to dispute resolution or exclude the application of the CISG and both Australia and China are Contracting States to the CISG.

After concluding a legally effective sales contract, the [Seller] performed its obligation of delivering the goods and the [Buyer] confirmed taking delivery of the goods totalling RMB 308,720.06 provided by the [Seller]. After a payment of RMB 100,000.00 for the goods, the [Buyer] refused to make any further payment alleging quality defects. The [Buyer]'s allegation of defective goods is not sound for lack of sufficient and persuasive evidence. The [Buyer] should pay the [Seller] the arrears of RMB 208,720.06.

Since the [Seller] entered into separate Sales Agreements, respectively, with the [Buyer] and with [Seller's supplier], actually establishing two separate sales relationships, this Court does not sustain the [Seller]'s claim that the [Seller] is acting as an export agency. In addition, due to the two separate legal relationships, the fact that the [Buyer] did not pay the [Seller] cannot justify the [Seller]'s failure to make timely payment to [Seller's supplier], for lack of causation. This Court does not sustain the [Seller]'s claim against the [Buyer] for the economic loss resulting from damages ordered in the court judgment over the dispute between [Seller] and [Seller's supplier].

In conclusion, pursuant to Article 243, 245 and 130 of the Law of Civil Procedures of the PRC and Article 53 and 59 of the CISG, this Court hands down the following judgment:

   1.   [Buyer] shall pay to the [Seller] the balance of the price of the goods of RMB 208,720.06 within 10 days after this judgment takes effect.
 
   2.   The other claims of [Seller] are dismissed.

[Buyer] shall bear the litigation fee of this case of RMB 5,764.

This judgment is subject to appeal which should be filed with this Court with copies filed with the Shanghai High People's Court. The number of copies should be the same as the number of the counterparties. For the [Seller], an appeal should be made within 15 days as of service of the judgment. For the [Buyer], the appeal should be made within 30 days as of service of the judgment.

Chief Judge: Jiang Nan
Acting Judge: Cui Xuejie
Acting Judge: Wang Yimin

24 June 2005

Clerk: Zhu Xiaolei


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Counterclaimant Donglin Co. of the People's Republic of China is referred to as [Seller]; Jianwei Co., also of the People's Republic of China, is referred to as [Seller's supplier]; and Defendant to the counterclaim Johnson Trading of Australia is referred to as [Buyer] Amounts in the currency of the People's Republic of China (renminbi) are indicated as [RMB].

** Wenwen LIANG, Ph.D. candidate, University of Manchester, UK; LL.M. Wuhan University, China.

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Pace Law School Institute of International Commercial Law - Last updated May 12, 2010
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