- Zhejiang High People's Court
- Zhejiang Henghao Garment Co. Ltd. v. Trio Selection Inc.
CHOICE OF LAW OF A CONTRACTING STATE AS LAW GOVERNING THE CONTRACT - CISG APPLICABLE
CONCLUSION OF CONTRACT – ASSENT BY PERFORMANCE (ART. 18(3) CISG)
MODIFICATION OF CONTRACT (ART. 29 CISG) - WRITTEN FORM NOT NECESSARY - AGREEMENT NEEDED
BUYER'S OBLIGATIONS - PAYMENT OF PRICE (ART. 53 CISG) - SELLER'S RIGHT TO REQUIRE PAYMENT (ART. 62 CISG)
A Canadian buyer, involved in a business relationship with a Chinese manufacturer, placed an order with the latter for the purchase of 1,936 garments. After receiving the order, the seller started manufacturing and produced 1,697 garments, delivery and payment of which the buyer refused. Therefore, the seller filed a lawsuit against the buyer claiming payment of the purchase price. The buyer alleged that, as it had not authorized its agent to handwrite the goods' unit price in the purchase order, the parties had not reached agreement on this fundamental element of the contract.
The Court of First Instance ruled in favour of the buyer by applying Chinese law. In so doing, it found that the seller had violated the contractual specifications as to quantity and time of delivery of the goods. The seller appealed.
The Court of Appeal, after noting that the parties had chosen Chinese law as the law applicable to the contract, decided to apply CISG to the merits of the dispute.
Furthermore, the Court found that a valid contract had been formed between the parties (Art. 18(3) CISG), since the buyer had failed to raise objections with respect to the unit price indicated in the order by its agent and took instead steps to have the goods examined by an inspector.
Finally, the Court found that the parties had modified the original contract with respect to the delivery date and quantity, since the buyer’s agent had examined and accepted the goods (Art. 29 CISG). Therefore, the Court decided that the seller had fully performed its obligations under the new agreement, while the buyer was obliged to take delivery of the goods and to pay the purchase price under Arts. 53 and Art. 62 CISG.
Original in Chinese:
- available at the Wuhan University Institute of International Law,
- available at the University of Pace website, http://www.cisg.law.pace.edu}}