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CISG CASE PRESENTATION

China 10 July 2006 Shanghai No. 2 Intermediate People's Court [District Court] (Cloth case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/060710c1.html]

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

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Case identification

DATE OF DECISION: 20070610 (10 July 2006)

JURISDICTION: People's Republic of China

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: Unavailable

CASE NAME: Shanghai Shan Shan Rui Yuan Trading Co. Ltd. v. Lanificio Ing. Loro Piano & C.S.P.A. Italy

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Italy (defendant)

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

GOODS INVOLVED: Cloth for suits


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 58

Classification of issues using UNCITRAL classification code numbers:

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

58A [Time for payment: buyer to pay when goods placed at buyer's disposal]

Descriptors: Price

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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/25]: <http://aff.whu.edu.cn/cisgchina/en/news_view.asp?newsid=53>

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 [10 July 2006]

Shanghai Shan Shan Rui Yuan Trading Company Limited v. Lanificio Ing. Loro Piana & C.S.P.A. Italy

Translation [*] by Farah Poon [**]

CIVIL JUDGMENT

[...]

The Plaintiff, Shanghai Shan Shan Rui Yuen Trading Company Limited [Buyer] of the People's Republic of China, sued the Defendant, Lanificio Ing. Loro Piana & C.S.P.A. Italy [Seller], for breach of contract. The Intermediate People's Court of Shanghai accepted the case and, in accordance with the law, the Court formed a collegiate bench and heard the case in public on 30 May 2006. The [Buyer] appointed agents: Ding Or Jun and Wang Ding Jun. The [Seller] appointed agents: Lin Wai and Jin Chiao Yuen. They were present at the hearing. The hearing is now finished.

The [Buyer] stated that the [Seller] contracted with it. On 28 July 2004, the parties signed a Confirmation Sales Agreement (the "agreement"). It stated that:

(1)   The [Seller] would provide 1,500m cloth;
 
(2)   The contract price is US $43,300;
 
(3)   Deposit: 30% of the contract price;
 
(4)   The remaining payment (70% of the contract price) would be transferred to the designated bank account of the [Seller] after the delivery of the goods;
 
(5)   The date of delivery would be on the same date of the cloth leaving the factory.

In the appendix to the agreement, the [Seller] guaranteed that the latest delivery date would be 30 November 2004. Consequently, the [Buyer] signed a contract with a client to produce suits using the abovementioned cloth. The [Buyer] then transferred 30% of the contract price (US $12,990) to the designated bank account of the [Seller] on 5 August 2004. But the [Seller] breached the agreement afterwards. It was not until 3 December 2004 that the [Seller], through its Shanghai Branch, provided to the [Buyer]'s client its notice of delivery. However, the client could not finish its manufacturing because of the delay. The client then terminated its contract with the [Buyer]. For this reason, the [Buyer] tried to negotiate with the [Seller] by letter of 6 December 2004. The [Buyer] announced the avoidance of the agreement and sought to have [Seller] return the deposit of US $12,990 upon receipt of the negotiation letter. But the negotiation failed. The [Buyer] then commenced this proceeding against the [Seller] for the reimbursement of US $12,990.

The [Buyer] presented the following evidence to the Court to verify its allegations:

(1)   The Sales Confirmation Agreement signed by the [Buyer] and the [Seller] in order to confirm that the parties had signed an agreement;
 
(2)   A notice to transfer and other related receipts to confirm the [Buyer] had paid the [Seller] US $12,990;
 
(3)   A facsimile stating that the [Seller] urged that the remaining 70% of the contract price be paid on 3 December 2004. This evidence verified the delay in the delivery of the goods and this constituted a breach in agreement. Also it confirmed the [Seller] had already received the 30% deposit;
 
(4)   A Notice of Production, a Confirmation of Production and a Memorandum to confirm that the [Buyer] had informed its client to arrange production of the suits. Due to the delay in the delivery of the goods, the client terminated the order and the [Buyer] suffered a loss;
 
(5)   A facsimile the [Buyer] sent to the [Seller] on 6 December 2004. This confirmed that the [Buyer] requested the avoidance of the agreement and demanded the deposit US $12,990 from the [Seller].

The [Seller] refuted these allegations, stating that according to the agreement, the [Buyer] was to pay the full contract price before the delivery of the goods. The [Buyer] also had to contact the forwarder company and inform the [Seller] of the flight number and cargo information. The [Buyer] had not paid the full contract price and had not sent written information to the [Seller] about the flight number and cargo information. Therefore, the [Seller] could not deliver the goods to the [Buyer] on time. The [Seller] disagreed with the request by the [Buyer] concerning the avoidance of the agreement and stated that [Buyer] was not entitled to have the deposit returned. The [Seller] had prepared the goods. If the [Buyer] paid the full amount of money and informed the [Seller] about the flight number and cargo information, the [Seller] could have delivered the goods immediately; thus the [Seller] requested that the agreement be carried on.

The Court verified that:

      On 28 July 2004, the [Buyer] signed an agreement with the [Seller]. In the agreement, the [Seller] was obliged to produce the cloth for the [Buyer] and the payment method was 30% / 70% TT before the delivery. The contract price was US $43,300. The goods would be delivered by air and the buyer would have to make arrangements with the forwarder company.

      On 5 August 2004, the [Buyer] transferred 30% of the contract price (US $ 12,990) to the designated bank account of the [Seller]. During the hearing, the [Seller] also confirmed that it had received the deposit and that the [Buyer] had not paid the remaining 70% of the contract price.

During the hearing, the [Buyer] also confirmed that it had not provided the flight number and cargo information to the [Seller] in accordance with the agreement.

THE COURT'S JUDGMENT

(1) Jurisdiction over the case and governing law

This case involves a dispute over a Sales Agreement. The parties did not dispute the jurisdiction of the Court. As the parties come from People's Republic of China and Italy and the two countries are Contracting States of the United Nation Convention on Contracts for the international Sales of Goods (CISG), the rules of CISG shall prevail in this case.

(2) The allegations of the [Buyer]

According to Articles 53 and 58(2) of the CISG, the buyer should pay according to the price stipulated in the contract or in the CISG. If the contract involved transportation of the goods, the seller could deliver the goods to the buyer only when the buyer had paid the contract price. In this case, the [Buyer] failed to pay the contract price to the [Seller] and failed to provide flight information to the [Seller] according to the agreement. Thus, there was no factual and legal support for the [Buyer]'s request for reimbursement of the deposit of US $12,990 from the [Seller]. The Court did not support this allegation. In relation to the [Buyer]'s allegation that the [Seller] might change the quantity of the goods so the [Buyer] was unable to pay the [Seller] the contract price and provide the flight information, the Court stated that the [Buyer] had never received any confirmation from the [Seller] concerning a change in quantity of goods. The [Buyer] was obligated to comply with the agreement, pay the contract price and arrange the transportation. The [Buyer] now refused to carry on the agreement because the [Seller] might change the quantity of the goods. The Court found this argument unconvincing and ruled that it had no legal basis at all.

According to Articles 1(1)(a), 53, 58(2) of CISG and Provision 64 (1) and 237 of the Civil Procedure Law of the People's Republic of China, the Court held that:

(1)    The [Buyer]'s allegations and requests are rejected;
 
(2)    The cost for the hearing, i.e., RMB 3,666 will be borne by the [Buyer]

If any party refuses to accept the judgment, the [Buyer] can appeal to Shanghai Supreme Court within 14 days after the judgment is served and the [Seller] can appeal within 30 days after the judgment is served. The appellant shall also submit the letter to appeal and adequate copies according to the number of the [Seller].


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 [Buyer] and Defendant of Italy is referred to as [Seller]

** Farah Poon grew up and studied in Hong Kong. She is a freelance translator and interpreter whohas finished her studies in the Juris Doctor program.

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