Guiding Case No. 23

SUN Yinshan v. Nanjing Auchan Hypermarket Co., Ltd. Jiangning Store, A Sale and Purchase Contract Dispute

GC No.:
23
GC Date of Release:
2014/01/26
GC Batch No.:
6
Area(s) of Law:
Keyword(s):
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Full Text of the Guiding Case

Keyword(s)

Main Points of the Adjudication

Where a consumer has purchased food that does not conform to food safety standards, and demands that the seller or the producer pay damages ten times the price [of the food] in accordance with provisions in the food safety law [1] or compensate [the consumer] in accordance with other compensation standards prescribed by law, the people’s court should support [the consumer], regardless of whether, at the time of purchase, the consumer already knew that the food did not conform to safety standards.

Article 96, Paragraph 2 of the Food Safety Law of the People’s Republic of China

Basic Facts of the Case

On May 1, 2012, plaintiff SUN Yinshan (孙银山) purchased 15 packs of “Yutu Brand” sausages at defendant Nanjing Auchan Hypermarket Co., Ltd. Jiangning Store (南京欧尚超市有限公司江宁店) [2] ([hereinafter] referred to as “Auchan Hypermarket Jiangning Store”). The quality assurance period [3] of 14 packs of those sausages, priced at RMB 558.6, had already expired. Immediately after paying [for the sausages] at the cashier, SUN Yinshan went directly to the service desk to claim compensation. Afterward, because negotiations failed, [SUN Yinshan] brought suit in court, demanding that Auchan Hypermarket Jiangning Store pay damages in the amount of RMB 5,586, ten times the price of the 14 packs of sausages.

Results of the Adjudication

On September 10, 2012, the Jiangning District People’s Court of Nanjing Municipality, Jiangsu Province, rendered the (2012) Jiang Ning Kai Min Chu Zi No. 646 Civil Judgment: [the court orders] defendant Auchan Hypermarket Jiangning Store to pay plaintiff Sun Yinshan compensation in the amount of RMB 5,586 within ten days of the judgment’s coming into legal effect. After the judgment was pronounced, neither party appealed. The judgment has already come into legal effect. [4]

Reasons for the Adjudication

In the effective judgment, the court opined:

On the issue of whether plaintiff SUN Yinshan was a consumer [as defined by law]. Article 2 of the Law of the People’s Republic of China on Protection of Consumer Rights and Interests provides:

Where, for the purpose of [meeting] the consumption needs of [daily] life, consumers purchase and use commodities or receive services, their rights and interests are protected by this Law. [Areas] that are not provided for in this Law are protected by other related laws and regulations.[5]

The concept of “consumer” is relative to [the concepts of] “seller” and “producer”. As long as the commodity purchased and used or the service received through a market transaction is for the purpose of [meeting] the needs of individual and family life, rather than for the purpose of [meeting] the needs of either production and business activities or occupational activities, [the buyer] should be recognized as a consumer [who buys the commodity or service] “for the purpose of [meeting] the consumption needs of [daily] life” and [should] thereby fall within the regulatory scope of the law on protection of consumer rights and interests.[6] In this case, neither the plaintiff nor the defendant had any objections concerning the fact that SUN Yinshan bought sausages from Auchan Hypermarket Jiangning Store. Thus, it could be determined that SUN Yinshan carried out an act of purchasing commodities. SUN Yinshan did not use the purchased sausages for any resale business. Neither did Auchan Hypermarket Jiangning Store provide evidence to prove that [SUN Yinshan] purchased commodities for production and business. SUN Yinshan’s claim for compensation, arising from his purchase of food whose quality assurance period had already expired, was an exercise of a legal right. Therefore, Auchan Hypermarket Jiangning Store’s defense, claiming that SUN Yinshan was not a consumer [because he purposefully] “bought fake [commodities] to claim compensation”, could not stand.

On the issue of whether defendant Auchan Hypermarket Jiangning Store should be considered to have knowingly sold food that did not conform to food safety standards. Article 3 of the Food Safety Law of the People’s Republic of China (hereinafter referred to as the “Food Safety Law”) provides:

Food producers and business operators should engage in production and business activities in accordance with laws, regulations, and food safety standards, be responsible to society and the public, ensure food safety, be receptive to social supervision, and bear social responsibility.

Article 28, Item 8 of this law provides that food whose quality assurance period has expired is a type of food that is prohibited for production and business. Food sellers have a legal obligation to ensure food safety, and should, of their own accord, timely clear out food that does not conform to safety standards. As a food seller, Auchan Hypermarket Jiangning Store should store food according to the requirements that safeguard food safety, timely inspect food for sale, and clear out food whose quality assurance period has expired. But Auchan Hypermarket Jiangning Store continued to display on the shelves and sell “Yutu Brand” sausages whose quality assurance periods had already expired. [It] did not perform its legal obligation [and] could be considered to have sold food that [it] knew did not conform to food safety standards.

On the issue of the liability borne by defendant Auchan Hypermarket Jiangning Store. Article 96, Paragraph 1 of the Food Safety Law provides:

Where [a person] violates provisions of this Law, causing personal, property, or other harm, [he] shall bear responsibility for compensation in accordance with law.

Paragraph 2 [of the Food Safety Law] provides:

Where [an entity] produces food that does not conform to food safety standards or sells food that [the entity] knows does not conform to food safety standards, the consumer, in addition to demanding compensation for losses, can also demand that the producer or seller pay damages ten times the price [of the food].

When a seller sells food that [it] knows does not conform to safety standards, the consumer can claim, at the same time, [both] compensation for losses and [additional] damages ten times the price [of the food], or claim damages ten times the price [of the food] alone. In this case, plaintiff SUN Yinshan only demanded that Auchan Hypermarket Jiangning Store pay damages ten times the price [of the food]. [This] was an act of a party disposing his rights of his own volition, and [the court] should offer support. Defendant Auchan Hypermarket Jiangning Store claimed that [because] the plaintiff knowingly purchased food whose [quality assurance] period had already expired in the hope of exploiting [the defendant’s] mistake in order to seek benefits, [the plaintiff] should not be granted damages ten times [the price of the food]. With respect to this claim, because the aforementioned law provides that consumers have the right to obtain damages ten times the price [of the food], because the benefits derived from the compensation are benefits that should be protected by law, and because the law does not contain restrictive provisions with regard to consumers’ subjective shopping motives, the defendant’s claim was not supported.

Endnotes

*           The citation of this translation of the Guiding Case is: 《孙银山诉南京欧尚超市有限公司江宁店买卖合同纠纷案》(SUN Yinshan v. Nanjing Auchan Hypermarket Co., Ltd. Jiangning Store, A Sale and Purchase Contract Dispute), China Guiding Cases Project, English Guiding Case (EGC23), April 4, 2014 Edition, available at https://cgc.law.stanford.edu/guiding-cases/guiding-case-23.

This document was primarily prepared by W.A. Heaton, Oma Lee, MAI Caiyao, Thomas Rimmer, Michael Schmale, and WEI Ting. The document was finalized by Ted Karch, Jordan Corrente Beck, Dimitri Phillips, and Dr. Mei Gechlik. Minor editing, such as splitting long paragraphs, adding a few words included in square brackets, and boldfacing the headings to correspond with those boldfaced in the original Chinese version, was done to make the piece more comprehensible to readers. The following text, otherwise, is a direct translation of the original text and reflects formatting of the Chinese document released by the Supreme People’s Court.

The following Guiding Case was discussed and passed by the Adjudication Committee of the Supreme People’s Court of the People’s Republic of China and was released on January 26, 2014, available at http://www.chinacourt.org/article/detail/2014/01/id/1209330.shtml. See also《最高人民法院关于发布第六批指导性案例的通知》 (The Supreme People’s Court’s Notice Concerning the Release of the Sixth Batch of Guiding Cases), Jan. 26, 2014, available at http://rmfyb.chinacourt.org/paper/images/2014-01/29/03/2014012903_pdf.

[1]           Translators’ note: the term “食品安全法” (“food safety law”) as used here likely refers to 《中华人民共和国食品安全法》 (Food Safety Law of the People’s Republic of China). See 《中华人民共和国食品安全法》 (Food Safety Law of the People’s Republic of China), promulgated on Feb. 28, 2009 and effective as of June 1, 2009, available at http://www.gov.cn/flfg/2009-02/28/content_1246367.htm.

[2]           Translators’ note: the name “南京欧尚超市有限公司” is translated here as “Nanjing Auchan Hypermarket Co., Ltd.” in accordance with the translation used on the company’s website, http://www.auchan.com.cn/AboutUs.aspx.

[3]           Translators’ note: the term “保质期” (“quality assurance period”) is defined by law as “the period of time during which pre-packaged food subjected to the storage conditions specified on the label can maintain its quality” (“预包装食品在标签指明的贮存条件下保持品质的期限”). Food Safety Law of the People’s Republic of China, supra note 1, art. 99.

[4]        Translators’ note: the original text reads “判决已发生法律效力”. According to Article 155 of the Civil Procedure Law of the People’s Republic of China, judgments and rulings that “have already come into legal effect” are judgments and rulings of the Supreme People’s Court as well as judgments and rulings which, according to law, may not be appealed or which have not been appealed within the prescribed time limit. See 《中华人民共和国民事诉讼法》 (Civil Procedure Law of the People’s Republic of China), promulgated on Apr. 9, 1991, amended on Oct. 28, 2007 and Aug. 31, 2012, available at http://www.gov.cn/flfg/2012-09/01/content_2214662.htm.

[5]           Translators’ note: the original text reads “本法未作规定的,受其他有关法律、法规保护”. This sentence is unclear and prompts one to wonder how “other related laws and regulations” can cover all of the areas that are not covered by this law.

[6]           Translators’ note: the term “消费者权益保护法” (“law on protection of consumer rights and interests”) likely refers to 《中华人民共和国消费者权益保护法》 (Law of the People’s Republic of China on Protection of Consumer Rights and Interests). See 《中华人民共和国消费者权益保护法》 (Law of the People’s Republic of China on Protection of Consumer Rights and Interests), promulgated on Oct. 31, 1993, amended on Aug. 27, 2009 and Oct. 25, 2013, available at http://npc.people.com.cn/n/2013/1028/c14576-23353525.html.