Rationally Defining and Applying the Collateral Obligations of Carriage Contract Safeguarding and Promoting Healthy and Orderly Development of International Cargo Transportation Industry —— a case of S company v Y company in a carriage contract dispute

Basic Facts

S company and Y company signed a Cooperation Agreement on Transnational E-commerce Logistics Service and agreed that Y company was to provide transnational e-commerce logistics services for S company. On October 28, 2015, S Company delivered the packaged Bluetooth watch and DVD HD box to Y Company and entrusted Y Company to ship the goods to the United States of America. Y Company delivered the goods to UPS for mailing. Later, Y Company informed S Company that the goods were detained by US Customs due to lack of Bluetooth authorization. If there was no Bluetooth authorization, the goods would not be processed by US Customs. During the period, Y Company told S Company to ship the goods back to Hong Kong. On January 19, 2016, UPS informed Y Company that if there was no authorization, the goods would be processed one month later, and then US Customs processed the goods involved as jetsam. The claim of the plaintiff S Company against the defendant Y Company failed so S Company brought the case to the Qianhai Court.

Judgement

The court held that, according to the agreement and transaction practices, the plaintiff had the right to know the actual state of the goods in transit and to fully protect the interests of the shipper. The defendant did not explicitly inform prosecutor of the consequence that the goods would be destroyed if they were detained without the authorization, which resulted in the plaintiff’s loss of opportunity for a final remedy and has, to a certain extent, allowed the occurrence of the loss of goods. The defendant didn’t fully fulfill the obligation in the agreement. The goods delivered by the plaintiff was not authorized to use the trademark and was hence detained by US Customs as a violation of intellectual property goods. Therefore, both parties had certain faults in the occurrence of damages and shall each bear responsibility for their own breach of contract. The court judged that the plaintiff’s share of the losses should include the trademark authorization fee, and other losses should be borne by the defendant.

Significance

The collateral obligations of contract is raised based on the principle of faithfulness in civil and commercial transactions. Whether the fulfillment of collateral obligations is in place has an important impact on the undertake of contractual liability. In international cargo transportation contract, the carrier bears the trust of the shipper. The carrier has the obligation and responsibility to fully understand the relevant laws and policies of cross-border transport, especially in the country of destination, and professionally guarantee the smooth performance of the carriage contract, otherwise it will bear the corresponding legal responsibility. This case provides an in-depth explanation of the collateral obligations in international cargo transportation contract and provides judgement ideas for handling such cases. At the same time, it reminds international commercial entities to prudently deal with the issues of intellectual property rights conflicts of cross-border commodity, understand in detail the policies of intellectual property rights protection of trade products in destination countries and regions, earnestly increase awareness of respect for intellectual property rights in order to avoid unnecessary losses arising from intellectual property rights defect.