Data

Date:
24-12-2018
Country:
China
Number:
(2018) Su Minzhong No. 1332
Court:
Higher People's Court Jiangsu Province
Parties:
Horizon Trade Group LLC v. Wuxi Jiate Automobile Co., Ltd.

Keywords

REQUIREMENTS FOR OFFER - INDICATION OF THE GOODS, QUANTITY AND PRICE - SUFFICIENTLY DEFINITE (ART. 14 (1) CISG)

CONCLUSION OF CONTRACT - THROUGH CONDUCT INDICATING ASSENT (ART. 18(1) CISG)

Abstract

[Draft abstract prepared by Zhang Yingyuan and Chen Kejie, ZUEL-SUR School of Law and Economics, Wuhan]

A US-based corporation (buyer) entered negotiations with a Chinese company (seller) for the purchase of car accessories and complete cars. A dispute arose when the buyer alleged that the seller failed to deliver the agreed-upon goods within the specified timeframe, leading to economic losses for Horizon. The dispute initially went to trial at the Wuxi Intermediate People’s Court in Jiangsu Province, China, and was later appealed to the Higher People’s Court of Jiangsu Province. On trial, the seller contended, inter alia, that the relationship between the parties was not a sales contract but a service contract.

The court of first instance held that a contract of sale was concluded between the parties, as the seller issued a delivery note to the buyer, constituting an offer, and the buyer accepted it by remitting payment. Moreover, the Court ruled that the seller’s failure to deliver
the goods within the specified timeframe constituted a fundamental breach of contract. Thus, it was obliged to return the price received for the goods.

The Court of Appeal confirmed the lower Court's findings. In particular, it found that the relationship between the parties constituted a sales contract. Although a complete written contract was lacking, evidence such as the delivery note and payment certificate supported that conclusion. Indeed, the delivery note from the seller contained essential elements of a sales contract (Art. 14), and the buyer’s payment amounted to acceptance of the terms (Art. 18 CISG). On the contrary, the seller’s argument that the contract was a service contract lacked support, as the seller had failed to specify processing remuneration or payment method. Therefore, the lower Court's characterization of the contract as a sale and purchase agreement was correct.

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