DISPUTES OVER CONTRACTS FOR PURCHASE AND SALE OF GOODS AND NOTES WHEN DISPUTING AT THE COURT

Purchase and sale of goods is an inevitable transaction that occurs in daily life. The market is operated by the purchase and sale of goods transactions, the purchase and sale of goods boost the supply and demand of consumers and sellers. However, it is inevitable to avoid disagreements and disputes arising in the process of purchasing and selling goods. So what is a dispute over a contract for purchase and sale of goods from a legal viewpoint and how to resolve such disputes, especially when resolving disputes over contracts for purchase and sale of goods in Court.

1. Purchase and sale of goods in accordance with the law

The nature of goods purchase and sale is a civil transaction, the seller transfers his/her ownership of the property to the buyer and the buyer transfers money to the seller. This transaction occurs every day in the life of each person, from small transactions such as buying food to massive transactions conducted by businesses and organisations. Objects of goods purchase and sale transactions are assets in accordance with the law, including objects, money, valuable papers and property rights.

According to the provisions of commercial laws, the purchase and sale of goods is a commercial activity established between the buyer and the seller with equivalent rights and obligations, whereby the seller is obliged to deliver goods, transfer ownership of goods to the buyer and receive payment; the buyer is obliged to pay the seller, receive goods and the ownership of goods as agreed[1]. The purchase and sale of goods activities in the commercial sector are often carried out on a larger scale than the usual purchase and sale of goods activities, the subject of the contract is mainly enterprises and the parties often establish a relationship of purchase and sale of goods through a contract of purchase and sale of goods.

A contract for purchase and sale of goods is an agreement established based on the will of the parties to the contract, whereby the parties undertake to perform their rights and obligations on the transfer of goods, ownership of goods, delivery method, value of goods, payment method and other related rights and obligations of each party arising during the performance of the contract. A contract for the sale of goods may be made through verbal or written engagement or specific acts depending on the will of the parties to the contract.

2. Common disputes over the purchase and sale of goods

In any civil or commercial relationship, it is difficult to avoid disputes arising between subjects. In the contract of purchase and sale of goods, there is no exception. Disputes over contracts for purchase and sale of goods take place when there is a disagreement between the parties in the contractual relationship that one of the parties finds their rights and interests affected or the other party fails to fulfil, inadequately perform or improperly perform the obligations as agreed between the parties in the concluded contracts for the sale of goods.

In practice, the most common disputes over contracts for purchase and sale of goods may include disputes due to the seller’s late delivery, the seller’s delivery of goods in the wrong type and quantity as committed in the signed contract of sale of goods, the buyer’s breach of payment obligations, etc. However, the most common dispute over contracts for the purchase and sale of goods is the dispute about the buyer’s breach of payment obligations.

Disputes over contracts for the purchase and sale of goods have the following characteristics:

• Contradictory element

The contradictory factor occurs when a party disagrees with the conduct of the other party in the performance of the contract for purchase and sale of goods and may affect their rights and interests, or the contradictory takes place between the disagreement over how the contract is performed or the issues arising during the implementation of the purchase and sale relationship.

• There is a breach of contract by one of the parties

A breach of contract means the failure to perform, inadequately perform or improperly perform obligations under an agreement entered into between the parties to a contract for the purchase and sale of goods[2]. The breach of this contract may be the failure in fulfilling the delivery obligation; inadequate delivery; improper place of delivery; the quality of goods is not guaranteed as in the commitment; late payment or insufficient payment of the amount committed.

A breach of contract is a ground for a dispute in a contract for the purchase and sale of goods because it has affected the legitimate rights and interests of the parties to the contract. The terms and obligations stipulated in the contract of purchase and sale of goods are mandatory, the parties must ensure compliance as well as monitor the other party in the performance of their respective obligations. If the parties fail to perform the commitments in the contract, whether unintentionally or intentionally, they are also considered to be in breach of the contract for the purchase and sale of goods.

• There is damage to the violated party:

When a party has damage to rights or property when entering into a contract for the purchase and sale of goods, there will inevitably be a breach of the contract for purchase and sale of goods. At that time, the damage to the violated party is the basis for constituting the dispute over the contract for purchase and sale of goods. The damaged party may request the damaging party in the dispute othe ver contract for purchase and sale of goods if the following conditions are met: (i) there is a breach of contract; (ii) there is actual damage; and (iii) the breach of contract is the direct cause of the damage.

3. Settlement of disputes over the purchase and sale of goods in Court

When a dispute occurs, especially a dispute over a contract for the sale of goods, the parties should prioritise the settlement of disputes. The method of dispute settlement depends on the choice and will of the parties in the contract relationship. Current methods of dispute settlement include negotiation, mediation, settlement at arbitration or Court[3]. In this article, the analysis will focus on the form of dispute settlement of goods purchase contract in the Court.

Settlement of disputes over contracts for purchase and sale of goods at Courts means the method of settling commercial disputes at trial bodies in the name of the State power, which is implemented by the Courts in a strict and strict order and procedures as prescribed by law. The effective judgements of the Courts are ensured by the coercive power of the state. The Court shall only settle disputes over contracts for purchase and sale of goods upon request of the parties and such disputes must fall under the jurisdiction of the Court. The Court has jurisdiction to settle disputes over contracts for purchase and sale of goods as specified in the Civil Procedure Code 2015.

Settlement of disputes over contracts for purchase and sale of goods through Courts shall be conducted in a strict order and procedure through two levels of Court adjudication: first-instance and appellate. The parties may appeal to the appellate Court if the first-instance judgment does not satisfy the aspirations of the parties. The judgment of the appellate Court is decisive and enforceable. This is a difference from the method of settlement of disputes over contracts for purchase and sale of goods in the form of arbitration, because when resolving through two levels of trial in the Court, it will facilitate the trader in reclaiming his/her legitimate rights and interests, and with the method of dispute resolution through arbitration procedures, the decision of the arbitration is valid and cannot be changed. However, there exists a disadvantage in making an appeal to the appellate Court which is that the parties will be costly and time-consuming because having to go through multiple levels of adjudication will affect the production and business processes of the parties. It is also due to this specificity that the procedures for resolving disputes through the Court are more inflexible because they have been prescribed by law.

Above is an overview of Disputes over contracts for purchase and sale of goods and Notes when disputing at Court. If you have difficulty in finding a Law Firm to advise and support in the legal aspect related to the banking practice, please contact us.

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[1] Article 3.8 of the Law on Commercial 2005

[2] Article 3.12 of the Law on Commercial 2005

[3] Article 317 of the Law on Commercial 2005