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Win the Case of Vessel Sales Contract

1、 Basic Facts of the Case
In January, 2019, the plaintiff Wang company (hereinafter referred to as the plaintiff) and the defendant Qingdao Wei company (hereinafter referred to as the defendant) signed the Vessel Sale Contract (hereinafter referred to as “contract”) through negotiation, which agreed that the plaintiff would sell vessel to the defendant at the price of usd 2 million, and the plaintiff should help the defendant to transfer the ownership of vessel. The defendant fully understood and accepted the situation of the vessel. After the signing of the contract, the plaintiff delivered the vessel to the defendant, but defendant still owed the plaintiff usd 1 million after paying advance payment. Therefore, the Win & Win Law Firm on behalf of plaintiff filed a lawsuit to Qingdao Maritime Court, requesting the defendant to pay the balance money and interest and bear the penalty for breach of contract.

Defendant’s reply: the vessel involved in the case lacks vessel certificate and other information, and the vessel’s annual inspection has not been carried out, and according to the relevant vessel management regulations, the above-mentioned vessel can not be transferred. Therefore, the purpose of signing the contract between the two parties has been unable to be realized. The plaintiff violated the contract first, so they had right not to perform the payment. The defendant filed a counterclaim, asking for the termination of the contract between the two parties in accordance with the law, and asked the plaintiff to compensate for the loss of breaching of contract.


2、 Relevant Laws And Regulations
Article 23 of The Property Law of The People’s Republic of China: “the establishment and transfer of the real right of chattels shall take effect upon delivery, unless otherwise provided by law.” Article 24 of The Property Law of The People’s Republic of China: “the establishment, alteration, transfer and elimination of property rights such as vessels, aircraft and motor vehicles shall not antagonize bona fide third parties without registration.”


3、 Case Analysis
In this case, when the plaintiff delivered the vessel, the certificate of ownership of vessel, nationality certificate and other relevant certificates were delivered to the defendant. The vessel involved in the case has passed the annual inspection after delivered to the defendant, and the defendant has been occupying and using the vessel involved. According to the provisions of Article 23 of The Property Law of The People’s Republic of China, real right of the movable property was changed upon delivery. The vessel involved in this case belongs to movable property. After the plaintiff delivered the vessel to the defendant, the defendant obtained the ownership of vessel involved in the case. According to the provisions of Article 23 of the Property Law, even if the ownership of vessel can not be transferred, it will only have no antagonistic effect on the bona fide third party, and will not affect the realization of the purpose of the defendant’s contract. There is no basis for the defendant to ask for the termination of the contract.
The two parties finally reached a settlement in the second instance of Shandong Higher People’s Court. The defendant paid the remaining vessel money to the plaintiff at last.

 

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