Luxury Car Sale Dispute: Court Orders Partial Refund of 12,000 RMB Deposit in Eastern China Contract Case
Luxury Car Sale Dispute: Court Orders Partial Refund of 12,000 RMB Deposit in Eastern China Contract Case
CASE OVERVIEW
A civil court in Eastern China ruled on a contract dispute between two automotive companies involving the sale of luxury Mercedes-Benz vehicles. The court ordered the defendant to refund a partial deposit of 12,000 RMB but denied the plaintiff’s claim for additional damages related to a third-party purchase. The case highlights key principles of contract performance and burden of proof under Chinese law.
CASE BACKGROUND AND FACTS
On March 26, 2010, Plaintiff Longao Company and Defendant Hengtong Automobile Trading Company entered into three separate vehicle sales contracts. The contracts covered two Mercedes-Benz S350 sedans at 1.37 million RMB each and one Mercedes-Benz S400 sedan at 1.4288 million RMB. All three vehicles were scheduled for delivery by June 30, 2010.
The plaintiff paid a deposit of 30,000 RMB per vehicle, totaling 90,000 RMB. The defendant delivered the two S350 vehicles, and those contracts were fully performed. However, the S400 vehicle was not delivered as agreed. The defendant also failed to return the 30,000 RMB deposit for the undelivered vehicle in a timely manner.
The plaintiff claimed that the defendant’s breach forced it to purchase an S400 from another dealer at an additional cost of 12,200 RMB. The plaintiff also claimed travel expenses of over 8,000 RMB incurred during the emergency purchase. Additionally, the plaintiff alleged it paid 5,000 RMB in compensation to its own customer due to the delayed delivery.
COURT PROCEEDINGS AND EVIDENCE
The court held two hearings on November 16 and December 17, 2010. Both parties presented evidence and arguments.
The plaintiff submitted six pieces of evidence: the three sales contracts, a bank deposit slip showing the 30,000 RMB deposit payment, a third-party sales contract showing the additional 12,200 RMB cost, a deposit account statement showing a payment of 41,120 RMB, a payment voucher showing a 5,000 RMB customer compensation, and a delivery receipt for the second vehicle.
The defendant submitted two pieces of evidence: bank transfer records showing a total refund of 368,000 RMB and a delivery notice claiming the defendant notified the plaintiff to pick up the third vehicle.
The court admitted the plaintiff’s contracts and deposit slip. The court rejected the third-party sales contract, the deposit account statement, and the payment voucher as insufficient to prove the claimed losses. The court accepted the defendant’s bank transfer records but rejected the delivery notice due to lack of supporting evidence.
COURT FINDINGS AND JUDGMENT
The court found that the three contracts were valid and binding on both parties. The contract for the S400 vehicle was not performed. The plaintiff paid a 30,000 RMB deposit for this vehicle. The defendant refunded 308,000 RMB on June 2, 2010, and 60,000 RMB on July 21, 2010.
The parties disagreed on the nature of the refunds. The defendant claimed the 368,000 RMB total included 290,000 RMB for vehicle payment and 78,000 RMB for deposits on all three vehicles, leaving only 12,000 RMB outstanding. The plaintiff argued that 18,000 RMB of the refund represented profit from a resale of the second vehicle.
The court held that the plaintiff failed to provide sufficient evidence to support its claim that 18,000 RMB was profit. Therefore, the court accepted the defendant’s calculation, finding that the defendant owed only 12,000 RMB in unpaid deposit. The court also rejected the plaintiff’s claim for 12,200 RMB in additional purchase costs due to lack of evidence.
The court ordered the defendant to refund 12,000 RMB to the plaintiff with interest calculated from October 28, 2010, to January 28, 2011, with additional interest accruing until full payment. The court dismissed all other claims.
KEY LEGAL PRINCIPLES
The court applied Article 60, Paragraph 1 of the Contract Law of the People’s Republic of China, which requires parties to fully perform their contractual obligations. The court also applied Article 64, Paragraph 1 of the Civil Procedure Law of the People’s Republic of China (2007 version), which places the burden of proof on the party asserting a claim.
This case demonstrates that a plaintiff must provide clear and convincing evidence to support claims for damages, including indirect losses. The court will not infer losses or profits without proper documentation.
PRACTICAL INSIGHTS
Businesses entering into commercial contracts should maintain detailed records of all payments and communications. When a contract fails, parties should document the reasons for non-performance and any attempts to mitigate losses. Claims for additional damages, such as costs incurred from alternative purchases, require direct evidence linking the breach to the specific loss.
Parties should also clearly document the purpose of any refunds or payments made after a contract breach. Ambiguous payments can lead to disputes over how funds should be allocated.
LEGAL REFERENCES
Contract Law of the People’s Republic of China, Article 60, Paragraph 1
Civil Procedure Law of the People’s Republic of China (2007), Article 64, Paragraph 1
DISCLAIMER
This article is for informational purposes only and does not constitute legal advice. Laws and regulations may vary by jurisdiction. Readers should consult a qualified legal professional for advice specific to their situation.