Court: Zhaoqing Intermediate People's Court (2024)
Facts: A Zhaoqing chemical enterprise (Company G) signed a chemical raw materials sales contract with a Hong Kong company (Company H), under which H was to supply imported raw materials for ceramic glaze production. During performance, the raw materials delivered by H had excessive heavy metal content, rendering G's glaze unqualified and causing about 5 million RMB in production line shutdown and finished product scrap losses. Failing to reach agreement on liability, G sued.
Holding:
(1) This Hong Kong-related sales contract dispute was tried with reference to foreign-related civil procedure rules, with parties agreeing to apply mainland Chinese law;
(2) The court held that H's non-conforming delivery constituted fundamental breach and H bore full liability;
(3) Considering actual losses, expected profits, and enforcement costs, the court ordered H to compensate G 5 million RMB plus interest.
Significance:
· Clarifies choice-of-law rules for Hong Kong-related commercial disputes, ensuring legal certainty for cross-border trade in the Greater Bay Area;
· Strengthens the quality warranty obligation in foreign-related sales contracts, guiding Guangdong manufacturers to mitigate cross-border procurement risks.