Seller Loses Claim for Unpaid Goods Over Weak Evidence of Delivery
The Eastern China City People’s Court dismissed a claim by a bentonite trading company seeking payment of CNY 336,800 in unpaid货款 from a furniture factory operator. The plaintiff, Heli Bentonite Trading Company, argued that the defendant had failed to pay for goods supplied between 2010 and 2011. However, the court ruled that the company did not provide sufficient evidence to prove that the goods had actually been delivered. The decision highlights the importance of maintaining clear delivery records in commercial transactions.
The plaintiff, represented by its legal representative Ms. Li and attorneys Mr. Lin and Mr. Xie, claimed that the defendant, Ms. Huang, who operates the Lida Furniture Factory as a sole proprietor, had purchased plastic pellets and other materials. According to the complaint, the plaintiff delivered goods worth CNY 1,898,850 by July 2011. The defendant had paid only CNY 1,562,050 by October 2011, leaving a balance of CNY 336,800. The plaintiff sought payment of the outstanding amount plus interest of CNY 14,004.14 calculated at 0.021% per day from July 30, 2011, to the date of actual payment. Ms. Huang, through her attorney Mr. Huang, argued that she had already paid in full for goods actually received. She admitted receiving VAT invoices totalling CNY 1,885,600 but contended that the actual goods delivered were worth only CNY 1,562,050. She claimed the remaining VAT invoices were fraudulent and asked the court to reject the claim.
During the hearing, the plaintiff submitted three pieces of evidence. The first was business registration information showing Ms. Huang as the operator of the furniture factory. The second was 21 VAT invoices, which the plaintiff said proved deliveries worth CNY 1,898,850. The third was a certificate from the local tax bureau confirming that the defendant had authenticated and deducted those VAT invoices. The defendant accepted the authenticity of the first and third items but challenged the second. She argued that invoices alone did not prove actual delivery, and that the plaintiff should have produced contracts or signed delivery notes. The court acknowledged that the invoices were genuine but stated that their evidentiary value on the issue of delivery would be assessed alongside other proof. The court also noted that the defendant had conceded during the hearing that she had received goods worth CNY 1,562,050 and had deducted all the VAT invoices, which the court treated as admissions against her own interest.
The court found that the plaintiff had failed to meet its burden of proof. Under relevant law on civil litigation evidence, the party asserting a contractual claim must prove the formation and performance of the contract. Here, the only evidence of delivery presented by the plaintiff was the set of VAT invoices. The court held that VAT invoices, while important for tax purposes, do not by themselves constitute direct proof that goods were actually transferred. The court reasoned that although tax rules require a genuine transaction for the issuance and deduction of VAT invoices, this is a regulatory requirement and does not automatically establish that a physical delivery occurred. No evidence showed a sequence for delivery and invoicing, nor any trade custom of invoicing before or simultaneously with delivery. In the current market, invoices and their deduction by the buyer serve only as indirect evidence of performance, not conclusive proof. Because the plaintiff’s evidence was indirect and did not form a complete chain of proof, the court concluded that the plaintiff had not discharged its substantive burden of proof.
The court’s legal analysis focused on the distinction between documentary evidence of payment obligations and proof of physical delivery. Under the Civil Procedure Law and relevant judicial interpretations, when a party disputes whether goods were actually delivered, the seller must produce corroborating evidence such as delivery receipts, signed waybills, or correspondence. VAT invoices alone are insufficient, especially when the buyer admits receiving only a portion of the invoiced amount. The court emphasized that the defendant’s admission regarding the lower value of goods did not shift the burden of proof to the plaintiff to prove the higher amount claimed. The plaintiff could not rely solely on the invoices and tax deduction to establish delivery of the disputed CNY 336,800 worth of goods. The court did not accept the argument that the defendant’s use of the invoices for tax deduction constituted an acknowledgment of receipt of the full invoiced quantity. Rather, the court viewed the deduction as merely confirming the invoicing, not the underlying physical transaction.
The court ultimately rejected all of the plaintiff’s claims and ordered the plaintiff to pay the litigation costs of CNY 3,280. This case serves as a reminder to businesses that invoices alone are not enough to prove delivery in a contract dispute. Sellers should maintain independent records of shipment and receipt, such as signed delivery notes, warehouse receipts, or correspondence, to support claims for unpaid amounts. Buyers, on the other hand, should ensure that any discrepancies between invoices and actual goods received are documented and communicated in writing. The decision reinforces the principle that the party asserting a claim bears the full burden of proof, and that indirect evidence must be sufficient to form a coherent and convincing picture.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.