People's Court Case Database: Article 13 of the Rules for Adjudication of Liability for Breach of Contract in Sales Contract

Author: Xu Zhongxing

Transferred from: Jurisprudence 45 degrees

1. The basis for adjudication of disputes over fraud in the sale of household cars

——Guiding Case No. 17 of the Supreme People's Court: Zhang Li v. Beijing Heli Huatong Automobile Service Co., Ltd., a dispute over a sales contract

Gist of the adjudication: (1) If it is necessary to purchase a car for family life consumption, and a fraud dispute occurs, it may be handled in accordance with the "Law of the People's Republic of China on the Protection of Consumer Rights and Interests". (2) Where a car seller undertakes to sell a new car to a consumer that has not been used or repaired, and the consumer discovers that it is a used or repaired car after purchase, and the seller cannot prove that it has fulfilled its obligation to inform and has been recognized by the consumer, it constitutes sales fraud, and the consumer demands that the seller compensate for the loss in accordance with the Consumer Rights and Interests Protection Law, the people's court shall support it.

Case No.: First instance: (2007) Chao Min Chu Zi No. 18230, second instance: (2008) Er Zhong Min Zhong Zi No. 00453

Trial court: First instance: Beijing Chaoyang District People's Court, second instance: Beijing No. 2 Intermediate People's Court

Warehousing number: 2013-18-2-084-002

2. Whether consumers who purchase food that does not meet food safety standards can claim punitive damages

——Guiding Case No. 23 of the Supreme People's Court: Sun Yinshan v. Nanjing Auchan Supermarket Co., Ltd., a dispute over a sales contract at Jiangning Store

The gist of the adjudication: If a consumer purchases food that does not meet food safety standards and requires the seller or producer to pay compensation ten times the price in accordance with the provisions of the Food Safety Law or other compensation standards prescribed by law, the people's court shall support it, regardless of whether he knew that the food did not meet the safety standards at the time of purchase.

Case No.: (2012) Jiangning Kaimin Chu Zi No. 646

Trial court: Jiangning District People's Court of Nanjing City, Jiangsu Province

Warehousing number: 2014-18-2-084-001

3. Determination of whether the existence of defects in the goods in the international sale of goods constitutes a fundamental breach of contract

——Guiding Case No. 107 of the Supreme People's Court: Sinochem International (Singapore) Co., Ltd. v. ThyssenKrupp Metallurgical Products Co., Ltd., a dispute over an international sale of goods contract

Gist of the adjudication: (1) If the parties to an international sale of goods contract are located in a country that is a contracting party to the United Nations Convention on Contracts for the International Sale of Goods, the provisions of the Convention shall prevail. The United Nations Convention on Contracts for the International Sale of Goods shall not apply if the parties to a contract for the international sale of goods expressly exclude the application of that Convention. (2) In a contract for the international sale of goods, the goods delivered by the seller, although defective, shall not be deemed to constitute a fundamental breach under the United Nations Convention on Contracts for the International Sale of Goods, provided that the buyer is able to use or resell the goods with reasonable effort.

Case No.: First instance: (2009) Su Min San Chu Zi No. 0004, second instance: (2013) Min Si Zhong Zi No. 35

Trial court: Jiangsu Provincial High People's Court of first instance, Supreme People's Court of second instance

Warehousing number: 2019-18-2-084-001

4.4S store concealed the vehicle insurance accident and was sentenced to three times the price of the car

——Luo v. Jiangmen Automobile Sales Service Co., Ltd., a dispute over a sales contract

The gist of the adjudication: If an insurance accident has occurred in the subject matter of the transaction (car) and the seller fails to perform a complete and sufficient notification obligation to the consumer, and causes the consumer to conduct the transaction contrary to the true intention, the seller's behavior is a passive concealment of facts, which constitutes fraud to the consumer, and the consumer has the right to request an increase in compensation of three times the loss in accordance with the law.

Case No.: First instance: (2021) Yue 0705 Min Chu No. 11513, second instance: (2022) Yue 07 Min Zhong No. 4310

Trial court: First instance: Xinhui District People's Court, Jiangmen City, Guangdong Province, Second instance: Intermediate People's Court of Jiangmen City, Guangdong Province

Warehousing number: 2023-16-2-084-005

5.4 Punitive damages can be applied to the concealment of information that the S store has sold the car, which constitutes fraud

——Huang Moumou v. Jiangsu Automobile Sales Company, a case of dispute over a sales contract

The gist of the adjudication: Where business operators deliberately conceal important information about goods, seriously infringing on consumers' right to know, and their conduct constitutes sales fraud, and consumers request compensation for losses at three times the price of the purchased goods, the people's court should support it. Consumers have the right to know the truth about the goods they purchase or use or the services they receive, and business operators have the obligation to provide consumers with true and comprehensive information about the goods. An automobile sales company in Jiangsu deliberately concealed the fact that the vehicles involved in the case had been sold and delivered to others, seriously infringing on consumers' right to know, and its behavior has constituted sales fraud, and it should bear punitive damages liability of three times the price of the goods.

Case No.: First instance: (2015) Dan Min Chu Zi No. 4828, second instance: (2016) Su 11 Min Zhong No. 1609, retrial: (2020) Su 11 Min Zai No. 98

Trial court: First instance: Danyang Municipal People's Court, Jiangsu Province, second instance: Zhenjiang Intermediate People's Court, Jiangsu Province, and retrial: Zhenjiang Intermediate People's Court, Jiangsu Province

Warehousing number: 2023-16-2-084-007

6. Where food is deliberately paid in small amounts on multiple occasions and compensation of 1,000 yuan is claimed for each settlement, the base amount for calculating punitive damages shall be determined within the total amount of payment to the extent of reasonable living consumption needs

——Zhang v. Shanghai Fresh Food Co., Ltd., a dispute over a sales contract

The gist of the adjudication: The purchaser deliberately makes several or dozens of small payments in a single transaction, and in accordance with the provisions of Article 148, Paragraph 2 of the Food Safety Law of the People's Republic of China on the calculation of 1,000 yuan for each settlement if the amount of increased compensation is less than 1,000 yuan, and the punitive damages are calculated cumulatively according to the number of settlements, which is not in line with the usual trading habits of consumers, and is consistent with the Food Safety Law of the People's Republic of China. The punitive damages system provided for in paragraph 2 of Article 148 is inconsistent with the spirit. The people's court shall, within the scope of reasonable living expenses, take the total amount of the price paid by the purchaser in installments as the base for calculating punitive damages, and order the producer or operator to pay punitive damages 10 times the price.

Case No.: First instance: (2016) Hu 0115 Min Chu No. 27746, second instance: (2016) Hu 01 Min Zhong No. 10490

Trial court: Shanghai Pudong New Area People's Court of first instance, Shanghai No. 1 Intermediate People's Court of second instance

Warehousing number: 2024-07-2-084-002

7. Support the purchaser's claim for punitive damages within the scope of reasonable living expenses

——Sha v. Anhui Food Technology Co., Ltd., a sales contract dispute

Gist of the Adjudication: When applying Article 3 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Food and Drug Dispute Cases, the people's court shall combine it with Article 2 of the Law on the Protection of Consumer Rights and Interests and Article 148 of the Food Safety Law to support the "purchaser's" claim for punitive damages of 10 times the price within the scope of "living consumption needs".

Case No.: First instance: (2021) Hu 7101 Min Chu No. 345, second instance: (2021) Hu 03 Min Zhong No. 86

Trial courts: Shanghai Railway Transport Court of first instance, Shanghai No. 3 Intermediate People's Court of second instance

Warehousing number: 2024-07-2-084-004

8. The company does not have the status of a consumer under the Consumer Rights Protection Law, and cannot claim punitive damages in accordance with the Law

——Jia v. Beijing XX Company, a dispute over a sales contract

The gist of the adjudication: (1) As an enterprise legal person, the company's capacity for conduct should be determined according to the business license, that is, it is engaged in the production and business activities specified in the business license, and there is no need for living consumption, so the company does not have the identity of a consumer under the Consumer Rights Protection Law. Where the company requests punitive damages in accordance with the Law on the Protection of Consumer Rights and Interests, the people's court will not support it. (2) In the event that one of the parties to the case cannot claim punitive damages in accordance with the Consumer Rights Protection Law because it does not have the status of a consumer in the legal sense, it is not excluded that it can claim its rights under the adjustment scope of the Civil Code, the Product Quality Law and other laws as a buyer of goods and a service contract.

Case No.: First instance: (2017) Jing 0111 Min Chu No. 9277, second instance: (2018) Jing 02 Min Zhong No. 7119

Trial court: First instance: Beijing Fangshan District People's Court, second instance: Beijing No. 2 Intermediate People's Court

Warehousing number: 2023-08-2-084-013

9. Determination of the liability of the counter lessor to the consumer

——Liu v. Beijing XX Company and Zhejiang XX Company, a sales contract dispute

The gist of the adjudication: (1) If the counter is leased for sale, when determining the seller who has a sales contract relationship with the consumer, firstly, it shall be determined on the basis of the entity specified in the written voucher issued to the consumer at the time of the transaction or the subject with the seal; If the entity issuing the invoice is inconsistent, it should also be determined that the counter lessee is the seller; finally, if the lease is actually an affiliated business, the counter lessor should be determined to be the seller. (2) The counter lessor shall be responsible for the supervision and management of the seller who leases the counter, and the seller shall have the right to require the counter lessor to bear the corresponding liability if the seller violates the law during the lease period, whether it is breach of contract damage or tort damage, in accordance with the provisions of Article 43 of the Law of the People's Republic of China on the Protection of Consumer Rights and Interests. The counter lessor has the right to recover from the seller after assuming responsibility.

Case No.: First instance: (2018) Jing 0101 Min Chu No. 9001, second instance: (2018) Jing 02 Min Zhong No. 8350

Trial court: Beijing Dongcheng District People's Court of first instance, Beijing No. 2 Intermediate People's Court of second instance

Warehousing number: 2023-08-2-084-014

10. The non-breaching party fails to request performance within a reasonable period of time, resulting in the breaching party being unable to achieve the purpose of the contract

——A Shanghai Water Equipment Co., Ltd. v. Suqian Decoration Engineering Co., Ltd., a dispute over a sales contract

Gist of the adjudication: According to Article 580 of the Civil Code, if the breaching party fails to perform a non-monetary debt or the performance of a non-monetary debt does not conform to the agreement, but the non-breaching party fails to request performance within a reasonable period of time, resulting in the breaching party being unable to achieve the purpose of the contract, the breaching party also has the right to terminate the rights and obligations of the contract. Among them, the identification path of a reasonable period is agreed by the parties in advance, supplemented by agreement after the fact, determined in accordance with the terms of the contract or transaction customs, and with reference to the provisions of the law. The reasonable period shall conform to the expectations of the parties and the general evaluation standards of the public, and be determined in accordance with the principle of good faith in accordance with factors such as the type, subject matter, nature, purpose, performance, and transaction habits of the contract involved in the case. The expiration of a reasonable period of time should lead to the breaching party's unattainable state of being protected under the law, and the continued performance of the contract is obviously unfair to the breaching party.

Case No.: First instance: (2020) Hu 0116 Min Chu No. 10613, second instance: (2021) Hu 01 Min Zhong No. 2526

Trial court: Shanghai Jinshan District People's Court of first instance, Shanghai No. 1 Intermediate People's Court of second instance

Warehousing number: 2024-08-2-084-006

11. If the liability for overdue payment is not agreed, small and medium-sized enterprises may request large enterprises to pay interest on overdue payment at a daily interest rate of 5/10,000

——A product (Guangzhou) Co., Ltd. v. Shanghai Engineering Bureau Group Co., Ltd., an urban rail transit engineering branch, et al., a sales contract dispute

The gist of the adjudication: If a party claims that it is a small and medium-sized enterprise, the people's court may refer to the Provisions on the Classification Standards for Small and Medium-sized Enterprises formulated by the Ministry of Industry and Information Technology and other departments, and make a comprehensive determination based on factors such as the number of employees, operating income, total assets, and actual business conditions of the enterprise; The relevant provisions, that is, if a large enterprise delays the payment of small and medium-sized enterprises when purchasing goods and does not agree on the interest rate for overdue interest, the overdue interest shall be paid at the rate of 5/10,000 per day of the daily interest rate;

Case No.: (2021) Hu 0113 Min Chu No. 13707

Trial court: Shanghai Baoshan District People's Court

Warehousing number: 2023-08-2-084-027

12. Refer to the opinion of the Advisory Committee of the United Nations Convention on Contracts for the International Sale of Goods to determine the standard for calculating interest

-- A German medical technology company v. a Ningbo company in a dispute over an international sale of goods contract

Gist of the Adjudication: Article 84 of the United Nations Convention on Contracts for the International Sale of Goods stipulates that the seller shall pay interest when returning the price, but does not stipulate the standard for calculating the interest rate. Therefore, when accurately understanding the relevant provisions of the United Nations Convention on Contracts for the International Sale of Goods, the opinions of the Advisory Committee of the United Nations Convention on Contracts for the International Sale of Goods may be appropriately consulted.

Case No.: First instance: (2021) Zhe 02 Min Chu No. 824, second instance: (2022) Zhe Min Zhong No. 1205

Trial court: Ningbo Intermediate People's Court of Zhejiang Province for first instance and Zhejiang Provincial High People's Court for second instance

Warehousing number: 2024-10-2-084-001

13. Determination that the export commodities subject to statutory inspection constitute a fundamental breach of contract

-- Company U v. a manufacturing company in Cangzhou, a dispute over an international sale of goods contract

The gist of the adjudication: (1) If the goods that need to be subject to statutory inspection in accordance with the "Import and Export Commodity Inspection Law of the People's Republic of China" have completed the inspection procedures in accordance with national regulations, they cannot be automatically deemed to be in compliance with the contract. (2) The United Nations Convention on Contracts for the International Sale of Goods (CISG) systematically and elaborately stipulates the time limit for objections to the quality of goods (i.e., the exclusion period), but in terms of the statute of limitations, the CISG neither expressly stipulates nor lacks a "general principle" to fill this legal loophole. This loophole can only be filled by invoking national law with the help of private international law provisions, in accordance with article 7, paragraph 2, CISG. In determining whether a fundamental breach of contract under the CISG is constituted, attention should also be paid to the distinction between the exclusion period of the notification obligation and the statute of limitations. Generally speaking, when a party to a contract sues in mainland China for avoidance of a contract for fundamental breach of contract in accordance with the CISG, two prerequisites must be met, otherwise it will lead to the loss of the right to sue or win the lawsuit: first, the performance of the notification obligation in accordance with the CISG must be completed within two years of discovering that the goods are not in conformity with the agreement, and second, the lawsuit must be filed within the four-year statute of limitations for international sales contracts under the laws of the mainland.

Case No.: First instance: (2014) Er Zhong Min San Chu Zi No. 7, second instance: (2015) Jin Gao Min Si Zhong Zi No. 2

Trial court: Tianjin No. 2 Intermediate People's Court of first instance, Tianjin High People's Court of second instance

Warehousing number: 2023-10-2-084-005

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