Concrete Supply Dispute Leads to CNY 715,364.50 Judgment
A court in Eastern China City has ruled in favor of a concrete supplier in a dispute over unpaid delivery and late payment penalties. The plaintiff, a concrete company, sought payment of CNY 648,903.50 for goods supplied under a sales contract, plus CNY 66,461 in contractual late payment fees. The defendant, a construction company, did not appear at trial or submit a defense. The court entered judgment for the full amount claimed, including ongoing penalties until the debt is satisfied.
The case arose from a concrete supply agreement signed on October 21, 2010, between the plaintiff and the defendant. The contract set out each party’s rights and obligations. The plaintiff delivered concrete as required, but the defendant fell seriously behind on payments. By the time the lawsuit was filed, the defendant owed CNY 648,903.50 for delivered concrete. The plaintiff also demanded CNY 66,461 in late payment penalties calculated at 0.05 percent per day up to January 15, 2012, with further penalties to accrue until full payment.
At the hearing on February 15, 2012, the plaintiff appeared through its lawyers and presented evidence. The defendant was properly notified by the court but did not attend. The plaintiff submitted the original sales contract to prove the existence and terms of the relationship. It also provided a settlement statement and three detailed lists showing the outstanding amount. Because the defendant failed to appear, it was deemed to have waived its right to challenge the plaintiff’s evidence. The court accepted the documents as authentic since they were originals and corroborated each other.
The court found that the sales contract between the two companies was legally valid and binding. The defendant’s failure to pay within the agreed time constituted a breach of contract. The court held that the plaintiff’s claim for the principal amount of CNY 648,903.50 was lawful and justified. Regarding the late payment penalties, the contract contained a clear liquidated damages clause. The plaintiff had voluntarily reduced the penalty rate to 0.05 percent per day, which the court determined was within the legal limit. The court therefore ordered the defendant to pay both the principal and the calculated penalties.
Under Chinese contract law, a party that fails to perform its payment obligations must compensate the other party for losses. The court applied Article 114 of the Contract Law, which allows for agreed liquidated damages, and Articles 159 and 161, which require buyers to pay the price for goods received. Because the defendant was absent, the court also relied on procedural rules allowing judgment by default. The court emphasized that the penalty rate did not exceed the statutory ceiling, and the plaintiff’s reduction of the rate showed good faith. The defendant was also ordered to pay the court costs and preservation fees totaling CNY 9,677.
This case illustrates that suppliers who properly document their transactions can obtain swift remedies when buyers default. The court made clear that contractual penalty clauses will be enforced as long as they are not excessive. The judgment also highlights that a defendant’s failure to appear does not prevent the court from ruling on the evidence presented. Parties to commercial supply agreements should ensure their contracts contain clear payment terms and penalty mechanisms. The ruling has been made available for public reference, though readers should consider the specific facts of their own cases.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.