- 1. Information on case:
Appellant (formerly the defendant): XXX (China) Co., Ltd.
- Agency: Genuineways Inc.
- Appellee (formerly the plaintiff): Guangzhou XXX Computer Technology Co., Ltd.
- Court of second instance: Guangzhou Intermediate People's Court
2. Verdict:
- The civil judgment of first instance (<2006> Tianhe Min Er Chu Zi No. 14xx) by Guangzhou Tianhe District People's Court is revoked, the Appellee's claims are rejected, and the court costs of the first instance and the second instance should both be borne by the Appellee.
3. Analysis of Case:
Details of Case The Appellant, to promote sales of ink cartridges, launched a premium sales campaign of “buy two and get one for free” through general agents and distributors including the Appellee among the consumers. The distributors, after collecting coupons attached to ink cartridge packaging from the consumers, gave ink cartridges to consumers in exchange for coupons, and later submitted the coupons to the Appellant, who would, under the premium sales campaign rules, give the Appellee compensation and reward. Later the Appellee, in the circumstance of breach of the premium sales campaign rules and procedures, gave 10,982 coupons to an employee of the Appellant’s Guangzhou office and the employee issued a receipt. After receival of the coupons, the Appellant checked the same and found that the coupons were not attached to ink cartridge packaging boxes. Thus the Appellant did not agree to give the Appellee compensation or reward. Finally the Appellee filed a lawsuit against the Appellant with Guangzhou Tianhe District People's Court, for compensation and reward totalizing 5601 ink cartridges or RMB453, 681, as well as damages for breach of contract and litigation fees, etc.
Judgments The court of first instance held that the Appellee was a distributor of the Appellant and there existed a contractual relation between the two parties. According to the receipt issued by the Appellant’s employee, it was confirmed that the coupons received by the Appellant from the Appellee were real and valid. Regarding the coupons delivered by the Appellant in the court, it could not confirm that these coupons were delivered by the Appellee and hence no cross-examination should be made as to authenticity. Ultimately, the court of first instance supported the claims of the Appellee.
Unsatisfied with the judgment of first instance, the Appellant entrusted Genuineways to file an appeal on behalf of it,
The court of second instance heard the case and held that the sales campaign launched by the Appellant was applicable to all distributors including the Appellee. The submission of the coupons by the Appellee to the Appellant was not in conformity with the procedures prescribed by the sales campaign rules, and there existed defects in the procedure of submission; in the circumstances that the Appellee did not provide any counterevidence, it was determined that the batch of coupons were determined as delivered by the Appellee; the scratched coupons presented by the Appellant in the first and second instances were not affixed to the back of the ink cartridge packaging boxes, but, attached to the other papers after removed from the back of the ink cartridge packaging boxes, which was in violation of the sales campaign rules (i.e., "Coupons should not be removed from the back of ink cartridge packaging boxes or photocopied); such activity is of fraudulence, substantially deviating from the purpose and significance of the sales promotional campaign and brought damages to the Appellant’s interests. Finally the court of second instance supported the grounds for review filed by the Appellant and changed the original judgment.
- 4. Comments by the Agent
- The different decisions made by the two courts are caused: firstly by the difference in determining the legal relation between the parties, and secondly by the different evidence chosen in deciding if the two parties performed the obligations to each other (i.e., the court of first instance judged based on the receipt, while the court of second instance based on the coupons), which ultimately led to different conclusions.
The agent, based on the facts occurring in the sales campaign, claimed that the legal relation between the two parties was entrustment contractual relation rather than sales contractual relation; it is wrong for the court of first instance to regard the receipt as decisive evidence, based on sales contractual relation. The receipt in the entrustment contractual relation is only a process of delivering the coupons. Only the coupons are the most important and decisive evidence to determine if the Appellee completed the entrusted matter.
It is the agent’s above claims that made the court of second instance to reconsider the legal relation and the rights & obligations between the two parties and to shift the center of gravity of evidence from the receipt to the coupons, which finally led to overturn of the judgment of first instance and protection of the Appellant’s legal interests.
