Eastern China Appellate Court Upholds Partial Payment Dispute in Calcium Powder Supply Contract for 122,896.80 Yuan

Eastern China Appellate Court Upholds Partial Payment Dispute in Calcium Powder Supply Contract for 122,896.80 Yuan

Case Overview
In a dispute over unpaid goods in a calcium powder supply contract, the Eastern China Intermediate People’s Court partially overturned a lower court ruling, ordering the buyer to pay 122,896.80 yuan in outstanding货款 plus 1,574 yuan in overdue interest. The appellate court found that the lower court had incorrectly treated a disputed 50,000 yuan cash payment as proven, despite inconsistencies with the parties’ established business practices.

Case Background and Facts
Starting in July 2009, a calcium powder factory (the buyer) began purchasing heavy calcium powder from a limited company (the seller). The buyer made partial payments over time. On February 8, 2010, both parties conducted a settlement and jointly issued a settlement certificate showing that as of December 25, 2009, the buyer owed 154,900 yuan. On that same day, the buyer paid 102,000 yuan, leaving a balance of 52,900 yuan. The seller issued a receipt for this payment.

Business continued between the parties after this settlement. On June 13, 2010, they conducted another settlement, producing a certificate stating that as of May 25, 2010, the buyer owed 190,000 yuan. This certificate also contained a handwritten notation reading “June 13, 2010 cash payment 50,000 yuan.” Following this, the buyer purchased additional calcium powder worth 109,209.30 yuan, making payments of 176,312.50 yuan on July 13 and July 28, 2010. The seller claimed that despite these payments, a total of 72,896.80 yuan remained unpaid, leading to the lawsuit.

Court Proceedings and Evidence
The seller appealed the lower court’s decision, arguing that the first-instance court had made two critical errors. The seller contended that the February 8, 2010 settlement showing 52,900 yuan owed was a separate debt that should not have been merged with the later June 13, 2010 settlement. The seller also argued that the 50,000 yuan cash payment notation on the June 13 certificate was forged by the buyer’s representative after the document was signed, as the seller had never issued a receipt for this amount, contrary to their standard practice for all cash transactions.

The buyer responded that the seller’s appeal lacked merit, asserting that all evidence had been properly examined at trial. The buyer noted that it had provided supporting evidence for the 50,000 yuan payment, though the lower court had not accepted this evidence. Neither party submitted new evidence during the appeal.

Court Findings and Judgment
The appellate court identified two key issues. Regarding whether the two settlements were independent, the court held that the June 13, 2010 certificate clearly stated it covered amounts owed “as of May 25, 2010,” and the document was signed by both parties without any notation limiting it to a specific period. Therefore, the later settlement properly superseded the earlier one, and the 52,900 yuan from February was not a separate, additional debt.

Regarding the 50,000 yuan cash payment, the court found the buyer’s claim unproven. The notation on the settlement certificate alone was insufficient to establish payment. The buyer failed to produce a receipt from the seller, which contradicted the established practice of issuing receipts for all cash transactions. The buyer also provided no other corroborating evidence. The court therefore rejected the buyer’s defense and ordered payment of this amount.

The appellate court modified the judgment to require the buyer to pay 122,896.80 yuan in principal (72,896.80 yuan plus the disputed 50,000 yuan) and 1,574 yuan in overdue interest calculated from August 29 to October 28, 2010. The seller’s other claims were dismissed.

Key Legal Principles
The court applied the principle that a later comprehensive settlement agreement between contracting parties supersedes earlier partial settlements, absent explicit language preserving prior obligations. The court also reinforced that a party claiming payment bears the burden of proof, and that payment claims must be supported by evidence consistent with the parties’ established business practices, such as receipts for cash transactions.

Practical Insights
This case demonstrates that businesses should maintain consistent documentation practices for all payments, especially cash transactions. A notation on a settlement certificate may not suffice to prove payment if it contradicts the parties’ normal procedures. When conducting multiple settlements, parties should clearly specify whether each settlement is independent or cumulative to avoid disputes over which obligations remain outstanding.

Legal References
Contract Law of the People’s Republic of China: Articles 107, 112, 159, 161
Civil Procedure Law of the People’s Republic of China (2007 Revision): Article 153, Paragraph 1, Item 3

Disclaimer
This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for specific legal matters.