CNY 527,280 Coal Supply Dispute Resolved
Ms. Li, a coal supplier, brought a lawsuit against a ceramics company for unpaid coal delivery debts. The court found in favor of Ms. Li, ordering the company to pay the outstanding amount of 527,280 yuan. The case highlights the importance of corporate registration in determining liability for debts.
In 2010, Ms. Li and the defendant company, a ceramics manufacturer, reached an oral agreement for Ms. Li to supply coal. From April to September 2010, both parties settled payments as agreed. After September 2010, the company did not follow the original payment schedule. On April 9, 2011, the parties conducted a settlement. Ms. Li had delivered 750.2 tons of coal in March and April 2011, valued at 708,000 yuan. Before February 26, 2011, the company already owed 449,280 yuan. The company made payments totaling 610,000 yuan between February 26 and April 8, 2011, and an additional 20,000 yuan by bank transfer in June 2011. After accounting, the company still owed 527,280 yuan. Ms. Li demanded payment, but the company refused, leading to the lawsuit.
At trial, the court reviewed several pieces of evidence. The plaintiff submitted a hanging ledger stamped with the company’s official seal, confirming receipt of 750.2 tons of coal worth 708,000 yuan and recording past payments. A bank statement showed the 20,000 yuan transfer from the company to Ms. Li’s account. The defendant’s registration information from the local administration for industry and commerce listed the company’s legal representative as Mr. Yang, with the same business address. The court also heard testimony from both parties during the hearing.
The court held that the coal supply contract between Ms. Li and the defendant company was valid and legally binding. Both parties had performed under the contract, with the company making partial payments. The hanging ledger and bank records clearly established the outstanding debt of 527,280 yuan. The defendant argued that its legal representative had transferred the company to another individual, Mr. Song, in November 2009, and that the transfer agreement made Mr. Song responsible for all post-transfer debts. However, the court found that the defendant failed to provide any evidence that the change in ownership or legal representative had been registered with the company registry.
According to relevant law, the court cited provisions of the Company Law, including Article 3, which states that a company is a legal person with independent property and bears liability with its entire assets. Articles 7 and 13 require that changes to a company’s legal representative be registered with the company registry, and Article 33 provides that unregistered changes cannot be used against third parties. Since the defendant did not register the ownership change, it lacked public notice and could not rely on that change to avoid liability to Ms. Li. The court therefore rejected the defendant’s request to add Mr. Song as a party to the lawsuit. The court ordered the defendant company to pay Ms. Li 527,280 yuan within 30 days of the judgment, plus interest for delayed payment if applicable.
This case underscores a key principle in Chinese corporate law: internal ownership transfers or changes in management do not affect a company’s obligations to external creditors unless properly registered with the authorities. Companies that fail to update their registration records remain fully liable for debts incurred during their operations. For suppliers and business partners, verifying a company’s official registration status before entering into contracts is a prudent step. The judgment reinforces the legal framework that protects contractual rights and holds registered entities accountable.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.