Supplier Awarded RMB 316,800 in Unpaid Steel Scrap and Transport Fees After Buyer Defaults on Payment

Supplier Awarded RMB 316,800 in Unpaid Steel Scrap and Transport Fees After Buyer Defaults on Payment

CASE OVERVIEW

A civil judgment from a court in Northern China addressed a dispute over a contract for the sale of stainless steel scrap. The plaintiff, a supplier, claimed that the defendant, a metal materials factory, failed to pay for delivered goods and transportation services. The court ruled in favor of the plaintiff, ordering the defendant to pay RMB 316,800 plus overdue interest.

CASE BACKGROUND AND FACTS

The plaintiff, Mr. Lin, supplied stainless steel scrap to the defendant, a metal materials factory located in Northern China. The parties conducted business without a formal written contract, relying on oral agreements and delivery records. On May 12, 2010, the parties conducted a settlement. At that time, they confirmed that the defendant owed Mr. Lin a total of RMB 316,800, which covered both the purchase price for the scrap steel and the transportation fees incurred for delivery.

Despite the settlement, the defendant did not make any payment. Mr. Lin made repeated requests for payment, but the defendant continued to default. On October 9, 2010, Mr. Lin filed a lawsuit with the court, seeking an order requiring the defendant to pay the full amount of RMB 316,800. He also requested interest on the overdue amount, calculated from the date of settlement until the date the court would determine payment was due. The interest rate was to be based on the benchmark loan interest rate published by the People’s Bank of China for the same period and tier.

COURT PROCEEDINGS AND EVIDENCE

The court accepted the case on the same day it was filed. It formed a collegial panel to hear the matter. A public trial was held on January 10, 2011. Mr. Lin appeared in court and presented his case. The defendant, however, did not attend the trial. The court noted that the defendant had been properly served with notice of the proceedings but failed to appear without any valid reason.

To support his claims, Mr. Lin submitted a single piece of evidence: a receipt and supply list. This document recorded the delivery of stainless steel scrap and the settlement on May 12, 2010. It showed the total amount owed as RMB 316,800. The defendant did not attend the trial to challenge this evidence. Because the defendant did not appear, the court considered that the defendant had waived its rights to present evidence and to cross-examine the plaintiff’s evidence. The court reviewed the receipt and supply list, found it to be credible, and accepted it as proof of the facts alleged by Mr. Lin.

COURT FINDINGS AND JUDGMENT

The court found that the sale of stainless steel scrap between Mr. Lin and the metal materials factory was a valid transaction. Both parties had expressed their genuine intentions, and the transaction was legal and effective. The court held that the defendant had an obligation to pay for the goods it had received. Since the defendant failed to pay the amount due, the court ruled that the defendant must make immediate payment.

The court ordered the defendant to pay Mr. Lin the sum of RMB 316,800 for the unpaid purchase price and transportation fees. The court also ordered the defendant to pay overdue interest on this amount. The interest was to be calculated from May 12, 2010, using the monthly rate equivalent to the benchmark loan interest rate published by the People’s Bank of China for the same period and tier. This interest would accrue until the date the court determined payment was due. The court further stated that if the defendant failed to pay within the time specified in the judgment, it would be subject to an additional penalty of double the interest on the debt for the period of delay, as provided by law. The court also ordered the defendant to bear the court costs of RMB 6,052.

KEY LEGAL PRINCIPLES

The court applied Article 130 of the Contract Law of the People’s Republic of China, which defines a sales contract as a contract where the seller transfers ownership of the subject matter to the buyer and the buyer pays the price. The court also relied on Article 159 of the same law, which requires the buyer to pay the purchase price according to the agreed amount. The judgment further cited Article 130 of the Civil Procedure Law, which governs default judgments when a defendant fails to appear after proper service.

PRACTICAL INSIGHTS

This case illustrates the importance of maintaining clear records of commercial transactions. Even without a formal written contract, a supplier can enforce payment rights by presenting reliable documentary evidence, such as delivery receipts and settlement statements. The case also shows that courts in China will hold defaulting buyers liable for overdue interest from the date the debt is confirmed. Businesses should note that failing to respond to a lawsuit can lead to a default judgment, where the court accepts the plaintiff’s claims without challenge.

LEGAL REFERENCES

Contract Law of the People’s Republic of China, Articles 130 and 159. Civil Procedure Law of the People’s Republic of China, Articles 130 and 229.

DISCLAIMER

This article is for informational purposes only and does not constitute legal advice. Readers should consult a qualified attorney for advice on specific legal matters.