Court Rules Buyer Must Pay Unpaid Balance of 30,000 RMB for Injection Molding Machine in Contract Dispute

Court Rules Buyer Must Pay Unpaid Balance of 30,000 RMB for Injection Molding Machine in Contract Dispute

CASE OVERVIEW

A Chinese civil court in Eastern China has ordered a buyer, Mr. Zhuang, to pay 30,000 RMB in unpaid货款 and 2,512 RMB in overdue interest to a machinery supplier, Zhenxiong Marketing (Shenzhen) Co., Ltd. Ningbo Branch. The dispute arose from a 2008 sales contract for an injection molding machine priced at 95,000 RMB. The court entered a default judgment after the defendant failed to appear.

CASE BACKGROUND AND FACTS

On June 27, 2008, the plaintiff and the defendant entered into a written sales contract. The contract specified that the defendant would purchase one injection molding machine from the plaintiff for a total price of 95,000 RMB. The agreement included a special payment clause requiring full payment within six months after the machine was delivered.

The plaintiff delivered the machine on July 1, 2008. The defendant made partial payments but failed to pay the remaining balance of 30,000 RMB. Despite repeated demands, the defendant did not settle the outstanding amount. The plaintiff initiated legal proceedings on August 10, 2010, seeking payment of the principal sum plus interest on the overdue amount.

COURT PROCEEDINGS AND EVIDENCE

The case was initially assigned to a summary procedure before Judge Chen Guangxiu. After the defendant could not be located, the court converted the case to ordinary procedure and formed a collegial panel. A public hearing was held on January 28, 2011. The plaintiff’s authorized representative attended, but the defendant, having been properly served with summons, failed to appear without justification. The court proceeded with a default hearing.

The plaintiff submitted two key pieces of evidence: the original sales contract (numbered CHNB2008-0241) with attached special payment terms, and the delivery receipt dated July 1, 2008. Both documents were originals and mutually corroborated each other. The defendant did not submit any evidence or file a defense. The court accepted the plaintiff’s evidence, noting that the defendant had waived its right to cross-examine by failing to appear.

COURT FINDINGS AND JUDGMENT

The court found that a valid and legally binding sales relationship existed between the parties. The plaintiff had fully performed its obligation by delivering the machine on the agreed date. As the buyer, the defendant was obligated to pay the full purchase price within the contractual six-month period. The defendant’s failure to pay the remaining 30,000 RMB constituted a breach of contract.

The court ruled that the plaintiff’s claim for the outstanding principal was lawful and justified. Regarding the interest claim, the plaintiff originally sought 5,549 RMB but reduced it to 2,512 RMB during trial. This amount was calculated at an annual rate of 5.4 percent from January 2, 2009, to July 21, 2010. The court found that this rate did not exceed the benchmark loan interest rate published by the People’s Bank of China for the same period and therefore approved it.

The court ordered the defendant to pay the plaintiff 30,000 RMB in principal and 2,512 RMB in overdue interest within seven days of the judgment taking effect. Interest for the period after July 21, 2010, was to be calculated at the benchmark rate until full payment. The defendant was also ordered to bear the litigation costs of 989 RMB, including the case acceptance fee and publication fee.

KEY LEGAL PRINCIPLES

This case applies several fundamental principles of Chinese contract law. Under Article 107 of the Contract Law, a party that fails to perform its contractual obligations or performs them in a manner inconsistent with the agreement must bear liability for breach. Article 159 requires the buyer to pay the purchase price in accordance with the contract. Article 161 specifies that if no payment deadline is agreed, the buyer must pay upon receipt of the goods.

The court also applied procedural rules from the Civil Procedure Law. Article 130 allows a default judgment when a defendant has been properly served but fails to appear without valid reason. The court further noted that under Article 229, if the defendant delays payment, the amount due will be doubled as a penalty for delayed performance.

PRACTICAL INSIGHTS

This case highlights the importance of maintaining clear written contracts and delivery records. The plaintiff’s success relied on its ability to produce original signed documents that clearly established the terms of the sale and the fact of delivery. Businesses should ensure that all contracts include specific payment terms and that delivery receipts are properly signed and retained.

The case also demonstrates that courts will enforce payment obligations even when a defendant is absent. Default judgments are available when the defendant cannot be located or chooses not to participate. However, plaintiffs should be prepared for potential delays if the defendant’s whereabouts are unknown, as the court may need to convert from summary to ordinary procedure and issue public notices.

LEGAL REFERENCES

Contract Law of the People’s Republic of China: Articles 107, 159, 161
Civil Procedure Law of the People’s Republic of China (2007 Revision): Article 130

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.