Accurate Determination of Non-written International Goods Purchase and Sales Contract Entities to Standardize the Foreign Trade Agency Model of International Trade ——Arab C Company v. Shenzhen H Company on International Goods Purchase and Sales Contract

Basic Facts

From January to March 2013, company C sent two orders for goods purchase to Wuxi company Y twice by e-mail. Shipper H issued two commercial invoices to company C. The applicant in the invoice was company C and the shipper was company H, stating “all other information is performed with reference to the applicant’s two orders.” Company C opened an irrevocable sight L/C with the company H as the beneficiary. Company H withdraws the L/C and preceded it to the company S (which was found to be the same company as company Y) via bank transfer after receiving the payment. Company S delivered the goods to company H, which declared and exported them to the customs. Later, due to product quality dispute, company C sued company H to the Qianhai Court and asked company H to bear the liability for breach of contract on product quality.

 

Judgement

The court held that the buyers and sellers in the goods purchase and sales contract relationship in this case did not sign a formal written contract. The transaction involved in this case was completed through two orders, two invoices and one L/C. From the contents of the two invoices and the L/C, it can be seen that the identity of company H is the “shipper” and company H have not signed the goods purchase and sales contract with company C in its own name. However, company H, company Y (or company S) and company C were all aware that the transaction is in the fulfillment of the obligations under the above two orders. Therefore, the seller of the purchase and sales contract in this case shall be company S and company Y. The evidence provided by company C cannot prove that it had a sales contract relationship with company H. It shall bear the responsibility for the inability to provide evidence, and its claim for the liability of company H for compensation has no legal and factual basis. The court decided to reject the lawsuit request of company C.

 

Significance

This is a typical dispute case arising from the use of foreign trade agents to conduct transactions in the international goods purchase and sales contract. The transaction involved in this case was completed through two orders, two invoices and one L/C. The contractual subjects pointed to by these documents contradict each other and the court has comprehensively determined all the facts and evidence. In determining the contractual subjects under the foreign trade agency transaction, the court accurately grasped the most essential element, namely whether the relative parties of the transaction was clear about the existence of such a foreign trade agency relationship, and whether detailed information disclosure on the identity of the counterparty was obtained. If the transaction party knew that the subject who signed the contract (or order) with him is the trading agent, the corresponding legal liability should be attributed to the real seller. This case establishes the criteria for the determination of buyers and sellers in the foreign trade agency model and provides reference for the Judgement if such cases. At the same time, it is conducive to regulating the complex international goods relationship involving multiple parties, clarifying the rights and obligations of all parties, promoting the perfection of the foreign trade agency model, and guiding the international trade regulations to proceed in an orderly manner.