Case on sales and goods contract

8/12/2019 Case on sales and goods contract

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Name - vijay partap singh , roll no.- 50

Case 1169: CISG [1; 35]; 53; 74; [78]

Peoples Republic of China: China International Economic & Trade Arbitration

Commission [CIETAC]

26 November 1998

Original in Chinese

Published in English: http://cisgw3.law.pace.edu/cases/981126cl.html

Abstract prepared by Aaron Bogatin

A German buyer and a Chinese seller entered into a contract for the purchase of

leather gloves. The contract stated the way the goods were to be packaged,

including number and weight of the boxes, and their delivery CIF (cost, insurance,

freight) Hamburg, Germany.

The China International Economic and Trade Arbitration Commission (formerlyknown as the Foreign Economic and Trade Arbitration Committee of China Council

for the Promotion of International Trade, hereafter, the "Arbitration Commission")accepted the case according to:

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The arbitration clause in the sales contract signed by Claimant [Seller], ChinaWuhan __ Import & Export Company, and Respondent [Buyer], Germany __Company, on 12 January 1995; and

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The written arbitration application submitted by [Seller] on 16 September 1997.

Since the amount in dispute in this case is less than renminbi [RMB] 500,000,according to Article 64 of the Arbitration Rules (effective 1 October 1995), thesummary procedure is applicable.

Because the parties failed to jointly appoint or ask the Director of the ArbitrationTribunal to appoint the sole arbitrator, pursuant to Article 65 of the Arbitration Rules,the Director of the Arbitration Commission appointed Mr. P as the sole arbitrator toform the Arbitration Tribunal to hear this case.

The Arbitration Tribunal held a court session in Beijing on 26 August 1998. The[Seller] sent an arbitration agent to the court session who made a statement on the

case and answered the Arbitration Tribunal's questions. The [Buyer] did not attendthe court session.


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After the court session, the Secretariat of the Arbitration Commission notified the[Buyer] of the court session and forwarded the [Seller]'s supplementary statementand evidence, asking the [Buyer] whether it needed a second court session,informing that the [Buyer] could still make a statement or present its opinions. And on19 October 1998, the [Buyer] submitted a defense.

Pursuant to Article 73 of the Arbitration Rules, this case should have been concludedon 26 September 1998 ; however, due to special reasons, the Arbitration Tribunalasked the Secretary-General of the Arbitration Commission for a two-monthpostponement of making judgment, which was approved. This case has now beenconcluded. The Arbitration Tribunal handed down its award within the aforesaid timelimit.

The following are the facts, the Tribunal's opinion and award.

I. FACTS

On 12 January 1995, the [Buyer] and the [Seller] signed the aforesaid contract bywhich the [Buyer] purchased gloves on the following terms:

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Products : 2,500 dozen 88-PASA leather gloves and 2,500 dozen 88-PBSAleather gloves, totaling 5,000 dozen;

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Price : The total price is US $45,375;

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Packaging : The goods shall be packaged in paper boxes with 10 dozen in eachbox; each box should weigh 16kg;

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Shipping term : CIF Hamburg.

On 5 February 1995, the [Buyer] issued an irrevocable sight L/C with the [Seller] asthe beneficiary.

During the performance of the contract, the parties had disputes on modification ofthe contract, thickness of leather, weight of the box, and on payment for the goods.The parties failed to resolve the disputes after negotiations and having beenmediated by Wuhan Mediation Center and Hamburg Mediation Center; therefore, the

[Seller] filed this arbitration application.[POSITION OF THE PARTIES]

[Seller] 's position

The [Seller] alleges that:

After the [Buyer] issued the L/C, the parties reached an agreement on decreasingthe weight of each box, modifying the L/C, and for the [Seller] to provide samplegoods as the basis for delivery.


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On 14 February 1995, the [Seller] asked to modify the box weight to 13 ~ 14 kg/box,which was rejected by the [Buyer]. The [Buyer] could only accept 15kg/box.

Later the two parties confirmed the samples, and the [Seller] agreed to deliver thegoods.

After receiving the goods, the [Buyer] discovered that the leather of the gloves wasvery thin, and each box weighed less than 11kg. On 30 May 1995, the [Buyer]notified the [Seller] of these problems.

Later, the [Buyer] came to China again to negotiate the resolution of the dispute;however, the negotiation failed because the [Seller] had no intention to resolve theproblem. The [Buyer] had to resell the goods at a discount price and paid US$1,975.90 to the [Seller] through Bank of China.

The [Buyer] alleges that:

1. The [Buyer] has fulfilled its contract obligations;2. The [Seller] and the carrier ignored their contract obligations, and should bear

the responsibilities accordingly;3. The [Seller] and the carrier should bear the entire loss.

The [Buyer] asks the Arbitration Tribunal to:

1. Dismiss the [Seller]'s arbitration claims; and2. Rule that the [Seller] is obligated to bear the arbitration fee.

II. OPINION OF THE ARBITRATION TRIBUNAL

1. The applicable law

The parties in this case did not stipulate the applicable law in their contract.Considering the fact that the places of business and registration places of the [Seller]and [Buyer], China and Germany, are Contracting States of the United NationsConvention on Contracts for the International Sales of Goods (hereafter, the"CISG"), therefore, the CISG should be applied.

2. [Buyer]'s responsibility for contract violation

After investigation, it was found that on 25 March 1995, the [Seller] delivered thegoods from Shanghai, and on 30 May 1995, the goods were received by the [Buyer].On the same day, the [Buyer] raised objection to the quality of the goods. The partieshave no dispute on the aforesaid facts.

According to Article 53 of the CISG, "the [Buyer] must pay the price for the goodsand take delivery of them as required by the contract and this Convention." The[Buyer] asserts that it has paid US $1,975.90 to the [Seller]. However, the [Seller]denied this assertion of the [Buyer] and the [Buyer] failed to provide any evidenceproving it had made payment on the goods; therefore, the Arbitration Tribunal doesnot accept this assertion. The [Buyer] has accepted the goods without making


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payment; therefore, according to the CISG, the [Buyer] has fundamentally breachedthe contract.

The Arbitration Tribunal notes that even though the [Buyer] failed to provide aninspection certificate showing the defects on the goods, the [Seller] had agreed to

exchange the goods and promised to bear the cost. In addition, from the statementsmade by the two parties, the Arbitration Tribunal deems that there are defects on thegoods ; therefore, it was reasonable to resell the goods at a 30% discount.

3. Resolution of the [Seller]'s arbitration claim

(1) Price for the goods: Considering the [Buyer]'s contract violation and thequality of the goods: the Arbitration Tribunal holds that [Buyer] shall pay 70% of thecontract price to the [Seller], i.e., US $45,375 70% = US $31,762.50;

(2) Bank interest: The Arbitration Tribunal notes that loss of bank interest was notforeseeable by the [Buyer] ; therefore, the [Seller] shall bear it on its own;

(3) [Buyer] shall bear the [Seller]'s actual cost for processing this case, which isUS $1,200;

(4) [Seller] shall bear 40% of the arbitration fee, and [Buyer] shall bear 60%.

Case on sales and goods contract

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