CIVIL LAW, CONTRACT LAW AND AGENCY LAW

ReadingsLecture Notes (available on iLearn)Blazey and Chan 2012 chapters 6 and 7 Contract Law of the PRC Order no. 15 1999Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Cases of Disputes over Sales and Purchase Contracts Order no 7. 2012 General Principles of the Civil Law of the PRC Order no. 37 1986 Civil Procedure Law of the People's Republic of China Order no. 59 2012

Class ActivityThe class will work together in a forum to answer the following questions

EPISODE FIVE OF THE SHANGHAI STORY

In January 2013 Dr Chan a member of the Healthy Fruit Drinks group has decided to buy 2000 moulds that can be used to contain fruit juice and can go in fridges and be frozen until transportation. Yao has a factory in Southern China and manufactures the moulds. Dr Chan sees an advertisement in a local Chinese paper advertising the moulds for sale at the equivalent of AU$30 each.

QUESTIONS

1.What sort of contract is this under the Contract Law of the PRC and the GPCL? State the relevant articles.

2. Dr Chan wants the moulds for $20 each.

Dr Chan goes to Yao’s factory. After several meetings and much frustration the price is agreed at $20 per mould and Dr Chan orders 1000 moulds. What information has to be contained in a written contract and does there have to be consideration? State the relevant articles.

3. Yao advises Dr Chan that Wei will act as his agent and will continue with the formalities of the contract. State which law applies and what articles are relevant and state what are the limitations of the agency agreement?

4. Dr Chan changes his mind about the order and instructs Wei that he only wants 500 moulds and not 1000. He sends a signed contract Wei and posts it in the mail on 21 August 2015. Yao in the meant time is very annoyed and on the evening of 21 August emails Dr Chan and says he wishes to void the contract. Can he do this and what is the effect of this?

5. Healthy Fruit drinks sent an email from Australia to a Chinese company in Shanghai called Excellent Fruit Drink Machines. The Email was sent on 1 August 2015 and said: ‘Please quote us price for 3 machines. This was followed by a letter from Excellent Fruit Drink Machines to Healthy Fruit drinks dated 6 August 2015, and delivered to the Australian office on 10 August 2015. It said ‘We can supply 3 machines at a cost AU$550 each. Delivery would be in 3 monthly shipments commencing on 1 August 2015 to your Chinese Factory’.

In an Email dated 10 August, and delivered on the same day, from health Fruit Drinks to Excellent Fruit Drink Machines it said: ‘Your offer to supply 3 machines is accepted. Formal order follows’.

An Order form dated 12 August 2015, and delivered on 17 August 2015, from Healthy Fruit Drinks ordering 3 machines.

Then Healthy Fruit Drinks decided they only wanted 2 machines and sent an Email dated 14 August to Excellent Fruit Drink Machines which stated: ‘Re machines - reduce order to 2 machines otherwise same terms’.

In a letter dated 18 August 2015 and delivered on 22 August from Excellent Fruit Drink Machines it said: ‘Thank you for your order. We note your acceptance of our terms’.

Healthy Fruit Drinks asks Tom their lawyer if there is a concluded contract between them and Excellent Fruit Drinks and if so, what is its date and what are its terms (especially quantity, price, and so on)? Tom quotes the relevant sections of the Civil law and Chinese Contract Law in his reply. Healthy Fruit Drinks asks Tom what happens in the event the dispute cannot be settled.

6.. Assume Healthy Fruit Drinks and a Pineapple Company enter a contract on 22 August 2015 where Healthy Fruit Drinks agreed to buy 5000 tons of pineapples, at 300 Yuan per ton. The contract states that all the pineapples must be delivered between 24 August and 26 August 2015. The date of payment it to be 21 August, 2015 by a lump sum payment. However, on 22 August 2015, the Pineapple Company sends Healthy Fruit Drinks a formal notice by letter that it would not be able to perform the contract as a result of lack of sources of pineapples. On 24 August 2015, Healthy Fruit Drinks emailed the Pineapple Company and requested them to return the payment. In addition, Healthy Fruit Drinks retained the right of claim for compensation.

They had had previous dealings about a month previously. In July 2015, Healthy Fruit Drinks owed the Pineapple Company some money, which still remains to be paid. On 25 August 2015, the Pineapple Company deducted the amount owed by Healthy Fruit Drinks for the payment made for the current transaction and returned the balance to them. Healthy Fruit Drinks insisted that the total amount for the current dealings should be returned by the Pineapple Company. On 30 August 2015 the Healthy Fruit Drinks took the case to the People’s Court and made a claim for the balance retained by them as well as for damage caused by their breach of contract.

(a) According to relevant provisions in the Chinese Contract Law, was there a valid contract?

(b) Was there a valid termination of contract when the Pineapple Company gave the formal notice that stop performance of the contract?

(c) Can the Pineapple Company deduct the debt owed by Healthy Fruit Drinks from the current payment owed by Healthy Fruit Drinks?

7. A and B were farmers. A leased some farm lands from his village; B leased a small dam from the same village. After a heavy rail, B’s dam burst and flooded A’s farm land. Before the storm, A and B entered a contract where A agreed to use water from B’s dam and paid a reasonable amount of money each year. B also agreed in the contract that he would compensate A if the dam caused any damage to A’s farm land. After the flood, there was no harvest. A claimed compensation from B and B refused to pay.

(a) According to relevant provisions of the Contract Law, who should be liable for A’s loss?

(b) Do you think B should compensate A? Explain.

8. Tianjin Food Corporation and an Australian company, Healthy Food Pty Ltd, set up a food processing joint venture in Tianjin. In the joint venture contract, the Australian company agreed to transfer a new food processing technology to the joint venture. The Australian company will use the new technology as part of the capital investment. You are instructed to draft a technology transfer contract on behalf of Healthy Food Pty Ltd in accordance with the relevant provisions of the Contract Law.

9. You will need to refer to the Construction Law of the PRC to answer the following questions.

1. What is required to gain approval from the Chinese government to build a factory? 2. Once approved the Healthy Fruit Drinks group will need to enter into many contracts. You are to list the various contracts that you think are necessary in order to build the factory. You are to refer to the relevant legislation in this regard.3. You will need to discuss how you will proceed with the building and the type of problems that can occur. You need to consider safety issues, quality control and legal liability. These issues will be discussed in class.