1
Case Facts
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In October 2017, Company A commissioned Company B to produce circuit boards, and both parties signed a “Printed Circuit Board Processing Contract” with a total amount of 141,036 yuan. The contract also specified the product’s specifications, quantity, delivery location, and a quality dispute period of 7 days, with payment to be made upon delivery. Late payments would incur a 2% monthly interest, and compensation for quality issues would not exceed twice the price of the PCB.
Subsequently, Company B delayed the delivery of the corresponding circuit boards to Company A in two batches. Company A processed the delivered circuit boards but discovered quality issues such as oxidation and unfilled vias during the assembly process, which caused a halt in Company A’s production line, ultimately preventing timely delivery to its customers. As a result, Company A submitted the boards for inspection to a relevant testing agency, which issued a test report.
The two parties engaged in further negotiations but could not reach an agreement. Company B only acknowledged that some circuit boards had oxidation issues and claimed that they could be used after a simple cleaning, denying any deduction of payment. In contrast, Company A claimed losses including rework costs, material damage, and compensation to customers.
2
Key Evidence
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1. “Printed Circuit Board Processing Contract”: The contract stipulates that Company B processes PCB circuit boards for Company A, detailing the board thickness, dimensions, layers, quantity, unit price, delivery location, and method. It also includes fees for testing fixtures and expedited processing, totaling 141,036 yuan. If the purchaser finds quality issues after receiving the goods, they must notify the contractor in writing within 7 days; otherwise, the goods are deemed acceptable. Payment is to be made upon delivery. If the contractor’s product quality issues cause losses to the purchaser, both parties should negotiate amicably, with the maximum compensation not exceeding twice the PCB price. Late payments incur a 2% monthly penalty.
2. Emails: At the end of November 2017, Company A sent an email to Company B indicating delays in delivery (the last batch of products was delivered in mid-November) and serious product quality issues (oxidation of incoming PCBs), which caused Company A to fail to deliver on time, resulting in significant losses. On March 12, 2018, Company A sent another email to Company B, requesting compensation for rework costs, material damage, and customer compensation due to quality issues.
3. Delivery Notes: The delivery notes show that Company B delivered goods to Company A in two batches on November 13 and November 17, 2017.
4. Test Report: Company A unilaterally commissioned a testing agency to inspect the products, and the test report indicated quality issues such as oxidation and unfilled vias.
3
Interpretation of Disputed Focus
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1. Does Company B acknowledge the existence of quality issues with the products?
Since Company A failed to provide corresponding evidence proving the product quality issues, the test report it provided was unilaterally commissioned and did not prove that the final product quality issues were caused by the circuit boards themselves after Company A’s processing. However, since Company B acknowledged the existence of quality issues with oxidized boards, this quality issue can be recognized.
2. Should Company A pay Company B for the goods, and how much should be paid? Should Company B compensate, and how much should be compensated?
Due to Company B’s late delivery and the agreed expedited fee, the contract price should be adjusted to 117,470 yuan after deducting the corresponding portion of the expedited fee, and overdue payment penalties should be paid at a rate of 2% per month as stipulated in the contract. Company B should compensate Company A for losses caused by the oxidation quality issues, but Company B only acknowledged a small portion of the products had oxidation issues and claimed they had been addressed, while Company A failed to provide further evidence, leading the court to ultimately determine that Company B should compensate 2,000 yuan.
4
Judgment Result
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1. Company B shall compensate Company A for losses of 2,000 yuan within ten days from the date this judgment takes effect;
2. Company A shall pay Company B processing fees of 117,470 yuan and overdue payment penalties within ten days from the date this judgment takes effect.
5
Risk Prevention Recommendations
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1. In the event of a quality dispute, if an appraisal is necessary, both parties should jointly commission the appraisal or apply for judicial appraisal during litigation. Unilateral appraisals are often not recognized by the other party, making it impossible to directly prove the existence of quality issues.
2. During court hearings, one should be cautious in acknowledging facts that are unfavorable to oneself and respond accordingly only after ensuring the completeness of evidence.
6
Legal Regulations
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1. “Civil Code of the People’s Republic of China” (formerly “Contract Law of the People’s Republic of China”, “General Principles of Civil Law”, etc.) Articles 509, 577, 770;
2. “Civil Procedure Law of the People’s Republic of China” Article 67 (formerly Article 64);
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Source: People’s Court Cases
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