Handling Attorney: Hu Guanglei

Basic Facts of the Case: 2 In June 2021, the plaintiff, Shenyang [Certain] Paper Co., Ltd., purchased machinery and equipment from the defendant, [Certain] (Liaoning) Robotics Co., Ltd., with a total contract price of 500,000 yuan. After signing the sales contract, the plaintiff paid a total of 400,000 yuan. However, the defendant failed to complete the equipment commissioning within the time stipulated in the contract. The plaintiff now wishes to return the equipment and recover the payment already made. In this case, the lawyer handling the case represents the plaintiff.

Case Highlights: The pre-litigation lawyer intervened early on, and under the lawyer’s guidance, the plaintiff obtained from the defendant Liu Moumou a termination agreement. The termination agreement clearly stated that despite repeated attempts at debugging, the equipment had still not been successfully debugged as of the date of the agreement. The defendant agreed to terminate the sales contract, and Liu Moumou also expressed willingness to assume joint repayment liability. The termination agreement was signed by Liu Moumou but remained unsigned by Company Moumou. Upon obtaining the termination agreement, the plaintiff promptly filed a lawsuit, naming both Liu Moumou and Company Moumou as co-defendants and applying for property preservation measures. As a result, the court legally froze the bank account of Company Moumou. During the litigation, Company Moumou argued that the actual sales contract had been concluded between the plaintiff and Liu Moumou alone; all aspects—including receipt of payment for the equipment, procurement of the equipment, and its installation and debugging—had been handled exclusively by Liu Moumou. Furthermore, the termination agreement was signed solely by Liu Moumou and remained unsigned by Company Moumou, so Company Moumou should not be held liable for refunding the payment. However, the lawyer handling the case contended that, according to the sales contract, Company Moumou had affixed its official seal, and Liu Moumou had signed the contract as “representative.” Liu Moumou was authorized to collect payment on behalf of Company Moumou, provide the equipment, and carry out installation and debugging. Moreover, Liu Moumou was also empowered to confirm the status of the equipment as uninstalled and undebugged. According to the sales contract, if the equipment was not installed and debugged within six months after the contract was signed, the plaintiff was entitled to demand a refund of the equipment payment. Therefore, Company Moumou should return the equipment payment, and since Liu Moumou explicitly stated in the termination agreement that he personally assumed joint repayment liability, Liu Moumou himself is also a party obligated to make the repayment. Based on the lawyer’s arguments, the court, after reviewing the case through both first- and second-instance proceedings, ultimately upheld the plaintiff’s claims.

Typical significance: As for the sales contract, it is generally quite difficult for the buyer to terminate the contract, because the buyer bears the burden of proof to demonstrate that the delivered subject matter does not meet the standards stipulated in the contract. The equipment purchased by the plaintiff was not entirely inoperable; rather, it experienced relatively frequent malfunctions. Therefore, without documented evidence confirming the equipment’s condition, it would be quite challenging to represent the case effectively. Moreover, the defendant company,某某, might merely be a shell corporation. If the court were to order only某某 Company to bear responsibility, there could be significant difficulties in enforcing the judgment. Hence, we should find ways to bring Liu Moumou personally into the case. In addition, taking measures for property preservation is also highly necessary. It is highly likely that Liu Moumou has been using the name of某某 Company to fulfill the contractual obligations. Given that the act of borrowing another’s name led to the freezing of某某 Company’s bank account, such a freeze would cause Liu Moumou far more inconvenience than if his own account had been frozen. After the trial, the plaintiff did not apply for enforcement; instead, Liu Moumou voluntarily fulfilled all repayment obligations and promptly sought to lift the freeze on某某 Company’s bank account. The facts have proven that all the measures we took both before and during the litigation were correct and genuinely effective.

Keywords: Dispute over sales and purchase contracts; return of equipment payment; joint liability for repayment; allocation of burden of proof; early involvement of counsel

Counseling Attorney: Hu Guanglei

Basic Facts of the Case: In June 2021, the plaintiff, Shenyang [Company Name] Paper Co., Ltd., purchased machinery and equipment from the defendant, [Company Name] (Liaoning) Robotics Co., Ltd., with a total contract price of 500,000 yuan. After signing the sales contract, the plaintiff paid a total of 400,000 yuan. However, the defendant failed to complete the equipment commissioning within the time stipulated in the contract. The plaintiff now wishes to return the equipment and recover the payment already made. In this case, the lawyer handling the case represents the plaintiff.

Case Highlights: The pre-litigation lawyer intervened early on, and under the lawyer’s guidance, the plaintiff obtained from the defendant Liu Moumou a termination agreement. The termination agreement clearly stated that despite repeated attempts at debugging, the equipment had still not been successfully debugged as of the date of the agreement. The defendant agreed to terminate the sales contract, and Liu Moumou also expressed willingness to assume joint repayment liability. The termination agreement was signed by Liu Moumou but remained unsigned by Company Moumou. Upon obtaining the termination agreement, the plaintiff promptly filed a lawsuit, naming both Liu Moumou and Company Moumou as co-defendants and applying for property preservation measures. As a result, the court legally froze the bank account of Company Moumou. During the litigation, Company Moumou argued that the actual sales contract had been concluded between the plaintiff and Liu Moumou alone; all aspects—including receipt of payment for the equipment, procurement of the equipment, and its installation and debugging—had been handled exclusively by Liu Moumou. Furthermore, the termination agreement was signed solely by Liu Moumou and remained unsigned by Company Moumou, so Company Moumou should not be held liable for refunding the payment. However, the lawyer handling the case contended that, according to the sales contract, Company Moumou had affixed its official seal, and Liu Moumou had signed the contract as “representative.” Liu Moumou was authorized to collect payment on behalf of Company Moumou, provide the equipment, and carry out installation and debugging. Moreover, Liu Moumou was also empowered to confirm the status of the equipment as uninstalled and undebugged. According to the sales contract, if the equipment was not installed and debugged within six months after the contract was signed, the plaintiff was entitled to demand a refund of the equipment payment. Therefore, Company Moumou should return the equipment payment, and since Liu Moumou explicitly stated in the termination agreement that he personally assumed joint repayment liability, Liu Moumou himself is also a party obligated to make the repayment. Based on the lawyer’s arguments, the court, after reviewing the case through both first- and second-instance proceedings, ultimately upheld the plaintiff’s claims.

Typical significance: As for the sales contract, it is generally quite difficult for the buyer to terminate the contract, because the buyer bears the burden of proof to demonstrate that the delivered subject matter does not meet the standards stipulated in the contract. The equipment purchased by the plaintiff was not entirely inoperable; rather, it experienced relatively frequent malfunctions. Therefore, without documented evidence confirming the equipment’s condition, it would be quite challenging to represent the case effectively. Moreover, the defendant company,某某, might merely be a shell corporation. If the court were to order only某某 Company to bear responsibility, there could be significant difficulties in enforcing the judgment. Hence, we should find ways to bring Liu Moumou personally into the case. In addition, taking measures for property preservation is also highly necessary. It is highly likely that Liu Moumou has been using the name of某某 Company to fulfill the contractual obligations. Given that the act of borrowing another’s name led to the freezing of某某 Company’s bank account, such a freeze would cause Liu Moumou far more inconvenience than if his own account had been frozen. After the trial, the plaintiff did not apply for enforcement; instead, Liu Moumou voluntarily fulfilled all repayment obligations and promptly sought to lift the freeze on某某 Company’s bank account. The facts have proven that all the measures we took both before and during the litigation were correct and genuinely effective.