Data

Date:
21-09-2005
Country:
China
Number:
(2004) Min Si Ti Zi Di No. 4
Court:
Supreme Court of the People's Republic of China
Parties:
Panda S.r.l. v. Shunde Westband Furniture Co., Ltd.

Keywords

SCOPE OF CISG – SUPPLY OF GOODS FOR DISPLAY PURPOSES - CISG NOT APPLICABLE

Abstract

An Italian company and a Chinese company entered into an agreement pursuant to which the former was to be the exclusive supplier of furniture manufactured in Italy to be marketed in China. The agreement provided that some furniture would be diplayed in order to promote sales. After having delivered three instalments of furniture, the Italian company filed a lawsuit against the Chinese counterpart seeking to recover the price of the goods plus a penalty for delayed payment. The Chinese company contended that it was not obliged to pay for the goods as, the goods had been delivered only for display purposes, no transfer of ownership had occurred.

By applying Chinese law, the Court of First Instance declared the contract between the parties invalid and therefore rejected both parties' claims. The seller appealed, claiming the application of CISG.

The Second Instance Court decided to apply CISG (Art. 1(1)(a)), and found the Chinese company liable for payment of the price plus interest according to Arts. 53 and 78 CISG.

The Chinese company applied to the Supreme Court for retrial. The Supreme Court held that, since the contract between the parties was not merely one for the sale of goods, Chinese law had to be applied in order to determine whether the furniture delivered in three instalments was for display only or to be sold. Taking into account the agreement's provisions, the Court reached the conclusion that the parties had intended their contract as a framework agreement for delivery of the goods for the purpose of display, and setting out the conditions for future, possible individual sales of furniture.

Finally, the Court awarded the Chinese company the storage costs and ordered the Italian supplier to take back the goods.

Fulltext

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Source

Original in Chinese:
- available at the Wuhan University Institute of International Law,
http://aff.whu.edu.cn/cisgchina/en/index.asp

English Translation:
- available at the University of Pace website, http://www.cisg.law.pace.edu}}