In the international trade invoice issued by the supplier, there always has the article which states the valid of price is three days or several days, for protecting the rights of supplier. However, after three days, the buyer paid the supplier the deposit; after the supplier receives the deposit, then the suppler increases the price; if the buyer does not pay the increase price, the supplier terminates the contract and did not refund the deposit, is that right?
For analyzing the issue, we have reviewed the court case in the Tianjin Higher Court. In that case, at the beginning of the business, the fact is that the buyer delayed paying deposit for several days, but at that time, the supplier only expressed that they received the deposit, but did not express that delaying of payment by buyer, nor claim for the delaying damages; But in the court hearing, the supplier claims the buyer delayed payment and constituted violation of contract; The court considers the supplier does not have right to terminate the contract.
The court considers that if the seller determines the grace payment date for the buyer in accordance with Article 63 and Article 64 (1) of the United Nations Convention on Contracts for the International Sale of Goods, and the buyer does not fulfill the payment obligation or declare that it will not do so within the prescribed time before the end of the grace payment date, the seller has the right to terminate the contract. However, if the seller does not require the buyer to pay within the grace period, the seller has no right to claim that the contract has been terminated. In general, the actual payment of the buyer is later than the agreed date does not constitute a fundamental breach of contract.
United Nations Convention on Contracts for The International Sale of Goods (1980)
Article 25
A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.
Article 63
(1) The seller may fix an additional period of time of reasonable length for performance by the buyer of his obligations.
(2) Unless the seller has received notice from the buyer that he will not perform within the period so fixed, the seller may not, during that period, resort to any remedy for breach of contract. However, the seller is not deprived thereby of any right he may have to claim damages for delay in performance.
Article 64
(1) The seller may declare the contract avoided:
(a) if the failure by the buyer to perform any of his obligations under the contract or this Convention amounts to a fundamental breach of contract; or
(b) if the buyer does not, within the additional period of time fixed by the seller in accordance with paragraph (1) of article 63, perform his obligation to pay the price or take delivery of the goods, or if he declares that he will not do so within the period so fixed.
(2) However, in cases where the buyer has paid the price, the seller loses the right to declare the contract avoided unless he does so:
(a) in respect of late performance by the buyer, before the seller has become aware that performance has been rendered; or
(b) in respect of any breach other than late performance by the buyer, within a reasonable time:
(i) after the seller knew or ought to have known of the breach; or
(ii) after the expiration of any additional period of time fixed by the seller in accordance with paragraph (1) of article 63, or after the buyer has declared that he will not perform his obligations within such an additional period.
