C Company Successfully Defends Distributor Contract Dispute

CHANG TSI
Insights

August01
2024

Our esteemed client, C Company, a prominent member of US Fortune 500 specializing in  consumer goods, recently faced legal action from its former Chinese distributor, X Company, alleging a breach of the distribution contract with a claim for CNY 750,000, inclusive of principal and interest. We undertook the role of legal representatives for C Company in this litigation. The Conghua District Court of Guangzhou has recently delivered a firstinstance judgment that rejected all claims put forth by X Company. In the Chinese judicial landscape, achieving a complete victory as a defendant is extremely challenging, and C Company is very satisfied with the outcome.

X Company, acting as C Company's distributor in China, encountered a financial discrepancy of approximately CNY 1.06 million, which it attributed to promotional expenses advanced on behalf of C Company. It insisted that C Company shall bear the cost. However, our meticulous investigation revealed that in 2020, a consensus was reached during a teleconference, stipulating that C Company would assume CNY 420,000 of the cost, while X Company would account for CNY 640,000. Post the teleconference, C Company promptly dispatched an email to X Company, delineating the negotiated terms in a tabular format with bold emphasis on the resolution of the disputed amounts. Despite the clarity and specificity of our communication, X Company remained unresponsive. Later, C Company dutifully remitted the agreed upon CNY 420,000 to X Company. It was only after the expiration of the cooperation term, nearly a year later, that X Company refuted the agreement to bear the CNY 640,000, demanding C Company to cover the 
amount along with interest, aggregating to CNY 750,000. 

Through a comprehensive analysis of the case's facts, evidence, and legal dynamics, we established that the email from C Company to X Company had a binding force. The email's format and substance alignes with the established transactional protocols between the parties, 
substantiating a mutual understanding and agreement. The absence of any evidence from X Company to suggest objections within a reasonable timeframe post email receipt strongly implies its acknowledgment of the email's content. The court has sided with our argumentation, affirming the binding nature of the email and the absence of timely objections from X Company. Consequently, all claims by X Company have been dismissed.

David Lee
Partner | Attorney at Law | Patent Attorney
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