Gas Supplier Wins Payment Dispute for CNY 167,534.6
A gas supplier in Southern China City obtained a court order requiring a lighting technology company to pay overdue gas supply bills totaling CNY 167,534.6 plus interest. The court found that the buyer’s failure to make the first installment payment triggered an acceleration clause, allowing the supplier to demand the full outstanding amount immediately. The defendant did not appear in court or contest the claim.
The plaintiff, a specialty gas supplier (referred to as the Gas Company), delivered various industrial gases to the defendant, a lighting technology firm (the Lighting Company). By December 5, 2011, the Lighting Company acknowledged owing CNY 167,534.6 and signed a written payment commitment. The commitment provided for installment payments: CNY 57,534.6 due by December 25, 2011, CNY 40,000 each in February and March 2012, and CNY 30,000 in April 2012. The Lighting Company made no payments under this plan, prompting the Gas Company to file suit on January 12, 2012.
At the March 20, 2012 hearing, the Gas Company presented three pieces of evidence: its business license, the Lighting Company’s corporate registration records, and the signed payment commitment letter. The Lighting Company had been properly served but did not attend the hearing, thereby waiving its right to cross-examine or rebut the evidence. The court admitted all exhibits, noting their authenticity was uncontested. Prior to the hearing, the court had also granted the Gas Company’s application for asset preservation, sealing equipment and glass tubes at the defendant’s premises.
The court held that the debt of CNY 167,534.6 was clearly established by the payment commitment and was not disputed. Although only the first installment had technically matured by the time of filing, the court ruled that the Lighting Company’s default on that first installment justified the Gas Company in demanding the entire balance immediately. The court ordered full payment within ten days of the judgment. Regarding interest, the court awarded interest on the overdue first installment from December 26, 2011, and on the full principal from January 12, 2012 (the day after the lawsuit was filed), at the central bank’s benchmark lending rate.
The legal basis was Articles 159 and 161 of the Contract Law of the People’s Republic of China, which require a buyer to pay the agreed price for goods and to pay when due. The court reasoned that where parties agree to installment payments, the seller may accelerate the entire outstanding balance upon the buyer’s failure to pay any installment. This principle prevents a defaulting buyer from using the installment schedule to delay payment while the seller incurs further losses. The court also noted that interest should be calculated separately for each matured portion, but since the lawsuit covered the full amount, interest on the entire debt ran from the day after filing.
This case reinforces that signed payment commitments are enforceable contracts. Buyers who fail to honor installment plans risk immediate liability for the full balance plus interest from the date of breach. The court also ordered the Lighting Company to bear all litigation costs, including CNY 1,825.35 in reduced court fees and CNY 1,357.67 in preservation fees, totaling CNY 3,183.02. The judgment underscores the importance of adhering to payment schedules in commercial gas supply agreements.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.