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Made In China - Getting what you paid for |
Australian and Chinese legal systems are fundamentally different. In Chinese law there is no binding effect of previous Chinese legal decisions, but there is an increasing trend in the courts for later tribunals to carefully examine reported cases with similar factual scenarios. In practice, a concept of 'persuasive authority' is building within Chinese law. |
In 2004 a US buyer took his case against a Chinese seller of stocks of ginger to the Chinese People's Courts. |
The ginger which had been delivered in New York was wet and rotten and did not accord with applicable US standards. The buyer got rid of the ginger and incurred other costs, such as inspection and waste collection fees, in the process. |
The Chinese People's Court found that the UN Convention on contracts for the international sale of goods and Chinese law should be applied in resolving the dispute. It found that the seller had a "quality conformity obligation" which was "the most important contractual obligation that a seller must perform". |
The time limit for the buyer to make a claim was hotly disputed, as the UN Convention states the buyer must give the seller notice within two years of receipt of the goods. Chinese law allows four years to respond. The court acknowledged that the question of the time limit for claims under international sale of goods contracts was a highly controversial issue in the Chinese legal community. Here, it found it reasonable to interpret the two-year time limit rule as a "specific quality deficiency time limit". |
It is important to properly identify international commercial disputes and respond quickly and assertively. |
Those who import goods from China would do well to review their China-sourcing contracts, take prompt action to address contractual risks and implement timely mechanisms for identifying sale-of-goods problems and for making claims against defaulting parties. |
