Comac SPA v Shanghai XunWei Mechanical and Electronic Equipment Co Ltd

Abstract

From August 2006 to December 2007, Shanghai XunWei Mechanical and Electronic Equipment Co Ltd (hereinafter referred to as XunWei Company) signed contracts with Italian Comac SPA (hereinafter referred to as Comac Company). XunWei Company entrusted Shanghai Foreign Economic Relations and Trade Industry Pudong Co Ltd (hereinafter referred to as Pudong Company) to import Comac floor washing and drying machines, floor sweepers, polishers and vacuum cleaners. Pudong Company signed sales contracts with Comac Company, and the payment for goods was settled between XunWei Company and Pudong Company. On 14 August 2006 and 14 February 2007, Comac Company issued two letters of authorisation, authorising XunWei Company to act as Comac’s authorised dealer/agent to be responsible for the sales and service of products in China. Comac Company would do its best to expand cooperation with XunWei Company and establish strong long-term business cooperation in the future. On 8 January 2008, Comac Company authorised another company, Beijing Kaibao Cleaning Equipment Company (hereinafter referred to as Kaibao Company), as the only authorised dealer in China, and informed Chinese users. On 4 February 2008, XunWei Company purchased the last batch of goods from Comac Company. Due to the authorisation of Comac Company to Kaibao Company, the inventory products of XunWei Company could not be sold. XunWei Company then sued Comac Company in court.