Attorney Larry Resolves Cross-Border Contract for Work Dispute via Mediation, Client Successfully Recovers Payment

An Australian company needed custom-made products and signed a contract with a company in Zhejiang, China. The Australian client provided its own design plans and draft drawings, and also paid the advance of about $50,000 as required, but never received products that met the agreed standards.

Later, disputes arose between the two parties over issues such as product quality and inspection methods. The Chinese supplier refused to deliver the products or provide compensation. After failed negotiations, the Australian company engaged the legal team of Attorney Larry Zhou from Landing (Shenzhen) Law Office to handle the matter.

There were three main key points in this case:

First, the nature of the contract needed to be clarified. Our side argued that this was an international sales of goods contract and therefore the CISG should apply, while the defendant claimed it was a processing and work contract governed by Chinese laws.

Second, the product quality standards were not fully defined when the contract was signed, and the defendant used this as an excuse to shirk responsibility.

Third, the defendant had only one shareholder, so it was necessary to determine whether the shareholder's assets were independent from the company's assets in order to pursue the shareholder's joint liability.

After taking on the case, our legal team thoroughly reviewed all the evidence, including communication records, payment receipts, and product testing videos. We focused on several key tasks:

First, based on the customization requirements and rights and obligations clauses in the contract, we established that the defendant had a core obligation to deliver qualified products according to the customization standards.

Second, through subsequent communication records and sample feedback, we reconstructed the step-by-step confirmation process of the quality standards, proving that the samples provided by the defendant did not meet the requirements.

Third, in response to the evidence submitted by the defendant claiming that mass production had been completed and that their own production costs should be deducted as losses, we challenged the authenticity of the relevant procurement contracts and payment receipts, and pointed out that they were not directly relevant to this case and could not prove that the supplier had actually completed mass production.

After the trial, the court adopted all of our arguments, finding that the supplier had failed to deliver qualified products as required, rendering the contract impossible to perform. The court ordered the supplier to return the payment and pay interest. It also found that the shareholder of the supplier had failed to prove that their personal assets were independent from the company's assets, and ruled that the shareholder bear joint liability for repayment.

The case went through both first-instance and second-instance proceedings. During the second-instance stage, in order to help the Australian client recover the funds as quickly as possible, we communicated with the supplier from the client's perspective and reached a settlement. The case was ultimately concluded through mediation, and the Australian client successfully received the payment and was very satisfied with the outcome.