orSign up

Follow us:
wechat

Trading disputes caused by a business card

2017-April-5       Source: Newsgd.com

Since a business card bears basic business information of an individual or a company, it is often regarded as a kind of identity document. However, completely relying on a business card may cause many legal risks.

Exchanging business cards is the first step for businessmen to start a new cooperation. Since a business card bears basic business information of an individual or a company, it is often regarded as a kind of identity document. However, completely relying on a business card may cause many legal risks. It is highly suggested to identify and check business status of trading parties before concluding a contract.

Case:

During a trade fair, Mr. Harris visited a booth branded as Rose Ltd. and was interested in some products. He received a business card which showed “David Ma, Sales Manager of Sunrise Co. Ltd” from the salesman in the booth. After negotiation, they agreed to conclude a contract in which the seller was Sunrise Co. Ltd, and the buyer was Mr. Harris’ company Quest Ltd. Having signed the contract, Mr. Harris made the payment to Sunrise’s company bank account.

Two months later, when Mr. Harris received the goods Sunrise Ltd delivered, he found the goods of serious quality problems, so he required David to replace the goods or return the fund. David declined at first, and after several times of phone discussion, David disappeared. Mr. Harris had to go to the factory according to the address printed on the business card given by David. But the factory manager said that “we are not Sunrise Co. Ltd. David is not our employee. Sunrise Ltd. is a trade agent company which purchases goods from our factory.” Upon hearing this, Mr. Harris was astonished.

Analysis:

As Mr. Harris signed the contract completely relying on David’s business card, Quest Ltd was trapped into legal risks. Concerning this case, the following points could be considered by Quest Ltd to claim for compensation:

1. Quest Ltd may claim against Sunrise Ltd directly based on the contract. Firstly, the signed contract and David’s business card show that David was Sunrise’s agent and he signed the contract on behalf of Sunrise Ltd; secondly, the payment document shows that Sunrise Ltd received full payment; and thirdly, the delivery document shows that the goods were delivered by Sunrise Ltd. All these evidence together could prove that Quest Ltd and Sunrise Ltd constitute a real contractual relationship. Since the goods are unqualified, Sunrise Ltd shall bear the liability to replace the goods or return the fund based on the contract.

2. Since Rose Ltd is not the trading party in the contract, Quest Ltd may claim against Rose Ltd only if Quest Ltd could collect sufficient evidence to prove that there was a close relationship between Quest Ltd and Rose Ltd. The evidence may contain: (1) pictures and documents to prove that Sunrise Ltd was the actual exhibitor and Rose Ltd was the owner of this Booth; (2) the industrial and commercial registration information of these two companies to prove that their staff are completely overlapped or there is an affiliated relationship between them; and (3) written documents sent by David affixed with Rose Ltd company’s official seal, etc. The more sufficient the evidence is, the more likely it is for Rose Ltd to be held liable. However, the outcome can not be guaranteed as the tribunal may hold different opinions.

3. Since the Factory was the actual producer of the goods, Quest Ltd may claim against the Factory if Quest Ltd could submit some written evidence showing that the Factory authorized Sunrise Ltd to be its agent and to sell the goods to Quest Ltd. on its behalf.

Advice:

Although the Canton Fair has strict regulatory measures to avoid the situation appeared in the Case, similar situation might still appear in some small booths. To prevent such trade disputes in the coming 121st Canton Fair, the following measures are strongly recommended:

1. To check the booth owner and identify the trading party

During Canton Fair, the booth owner shall have its name on the brand of the booth. Before business negotiation, you should confirm whether the actual exhibitor is the same as the booth owner. If not, you may also ask the booth owner to sign the contract as a trading party to avoid the legal risks.

2. To check the business status of the trading party

A business card might be a kind of evidence but it shall never be regarded as a business license. Before concluding a contract, you shall check the business license of the trading party and keep a copy of it. On the business license, you should pay attention to: (1) Name of the Company, which should be consistent with the entity as shown on all legal documents (such as invoice, contract, sales order, etc.); (2) Incorporation Date and the Operation Period, which shows whether the company is still legally existed or not; and (3) Legal Nature, which shows whether the shareholders of this entity shall assume limited liability; etc. And if you want to confirm a Chinese company’s business status, you can also log on Chinese AIC system for a double check.

3. To have a site visit before concluding a contract

A site visit is recommended especially when you start business with a new supplier. During the site visit, you can check whether this company has abundant stock, sufficient equipment and professional staff to produce all the goods of your order.

4. To confirm all the business information written in the contract

After all the background investigation in your trading partner, you should also make sure all the business information of both parties is correctly written in the contract, especially the company name, contact information and bank account, so that the parties within the contract can be fully protected by law.

(This information is provided, in friendship, by Lawyer Min Chow (曹卓敏) & Joyce Yang (杨君子) from Guangdong International Business Law Firm. It is not any legal opinion or legal grounds addressed to any organization or individual. For inquiry, please send emails to min-chow@lawyerchn.con & ojunzi@126.com.

Editor: Steven

Scan to share on WeChat

Scan to follow us on WeChat

0
Most popular
Day |
Week |
Month
Key Words

Home|About us|Contact us|Southcn.com

© 2015 WWW.NEWSGD.COM. All rights reserved.

2015 WWW.NEWSGD.COM. All rights reserved.|Registered number 020074| 粤公网安备 44010402000511号