- Shanghai First Intermediate Court
- Salem Street North American LLC v. Shang Shang Stainless Steel Pipe Co. Ltd.
BUYER'S OBLIGATIONS - PAYMENT OF PRICE (ART. 53 CISG)
SELLER'S RIGHT TO REQUIRE PAYMENT (ART. 62 CISG)
RIGHT TO INTEREST IN CASE OF LATE PAYMENT (ART. 78 CISG)
INTEREST RATE - RATE GENERALLY APPLIED IN INTERNATIONAL TRADE FOR CONTRACTUAL CURRENCY (DOLLARS) - LIBOR RATE APPLICABLE
A Chinese seller and a US buyer concluded a contract for the sale of stainless steel pipes. According to the contract, every pipe had to be tested via ultrasound. The seller delivered the goods under the contract and sent the buyer all the relevant documents, including the inspection reports. Those reports indicated that the pipes had passed the ultrasonic testing. However, due to an alleged non-conformity of the goods, the buyer paid only part of the purchase price. The seller then brought an action against it claiming the outstanding price plus interest.
The Court of First Instance held that the dispute at hand was an international commercial dispute between parties situated in Contracting States of CISG, which was therefore the law applicable to the contract (Art. 1(1)(a) CISG). As to the merits, the Court found that the seller had performed its obligation to deliver the goods under the contract, and thus the buyer was bound to pay the entire purchase price (Arts. 53 and 62 CISG). Moreover, the seller was entitled to interest on the sum in arrears (Art. 78 CISG), at the rate currently used in international trade with respect to dollars, the currency in which payment had to be made under the contract. To this end, the Court applied the annual London International Bank Offered Rate (LIBOR). Finally, with regard to the quality of the pipes, the Court found that the buyer had failed to prove the non-conformity of the goods.
The buyer appealed arguing that the non-conformity of the goods constituted a fundamental breach of the contract, thereby entitling it to a reduction of the price (Art. 50 CISG).
The Court of Appeal confirmed the decision of the lower Court, stating that the latter had clearly ascertained the facts in dispute and had correctly applied CISG. Therefore, the buyer’s appeal was dismissed.
Original in Chinese:
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- available at the University of Pace website, http://www.cisg.law.pace.edu}}