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Car Owner Brings 4S Store to Court for Wrong Type of Tires
[2019-03-15]

   

It wasn’t until a year later when there was a flat tire did a car owner found that the tires weren’t default run-flat tires. Believing that 4S store had committed a fraud, the car owner sued to court, requesting refund of the car payment and three times of the payment as compensation. Recently, the People's Court of Pudong New Area, Shanghai Municipality decided in the first instance that the 4S store wasn’t guilty of fraud but shall compensate RMB 50,000 yuan for infringement on the consumer's right to know.



[Case Review]


On April 29, 2017, Ms. Xu bought a car from an Automobile Repair & Service Company at a cost of RMB 247,000 yuan and gave it to her daughter, Miss Yang.


On March 7, 2018, Miss Yang had a flat tire while driving. Later, Ms. Xu, the car owner, learned in the repair process that the tires were just ordinary tires rather than standard run-flat tires bundled with this model.   


Ms. Xu contacted the 4S store and dialed the official customer service hotline for many times to verify, learning that the car purchased should be equipped with run-flat tires.


Ms. Xu believed that, the 4S store as a dealer had committed fraud by intentionally selling her a car with ordinary tires instead of run-flat tires. She said that the car was bought for her daughter, who needs to drive on the highway. She bought this model mainly because it is equipped with run-flat tires. However, it turned out that the car purchased was equipped with ordinary tires. Both she and her daughter had no idea of this and were led to believe they were run-flat tires, posing a great threat to her daughter's safety when driving.


According to Article 55 of the Law of the People's Republic of China on Protection of Consumer Rights and Interests, business operators which fraudulently provide commodities or services shall refund the payment made for the commodity purchased with additional three times of the payment as compensation. Hence, Ms. Xu sued to the People's Court of Pudong New Area, Shanghai Municipality, requesting justice in accordance with the law.


The 4S store admitted the fact that the car tires weren't run-flat tires but argued that it was unaware of this when selling the car. It wasn’t until one year later when the plaintiff raised doubts did it submit a technical report and communicate with the car manufacturer. After investigation, the manufacturer confirmed on July 16, 2018 that the problem resulted from a defect of the production line assembly. It has reported this to AQSIQ and ordered the dealer to replace the tires for free.
The defendant held that both non run-flat tires and run-flat tires are factory-certified tires. Non run-flat tires can also be installed in the car involved and function normally. Such an assembly default wouldn't pose any threat to driving safety. It didn't make any demolition, replacement or repair. As the price of non run-flat tires doesn’t differ much from run-flat tires, it had no motive to change the tires deliberately.     


The defendant believed that it shouldn't bear the duty of due diligence. The tire assembly defect of the car involved wasn't found during sale, delivery and vehicle license application. In addition, car dealers across the nation had been unwittingly selling the same batch of cars with the defect for a long time and no one had found out about it, which fully proved that the tire assembly defect was beyond the normal and reasonable attention scope of anyone. The 4S store was totally unaware of the defect when selling the car, and it didn't have any subjective intent to commit fraud. It requested the court to dismiss the plaintiff's claims.



[Case Study]   


The People's Court of Pudong New Area, Shanghai Municipality held that fraud occurs in two ways, that is, intentional provision of false information and intentional concealment of facts. The latter should be determined in this case, i.e. whether the defendant intentionally concealed the fact that the tires were non run-flat tires.       


The court found that it wasn’t until the plaintiff filed a complaint and the defendant submitted a technical report that the car manufacturer investigated and identified a defect of the assembly line for the same batch of cars, which suggested that the defendant had no subjective intent of concealing. The court also found that run-flat tires are marked "MOE" on the outer ring and sold at RMB 1392 yuan, while non run-flat tires are marked "MO" on the outer ring and sold at RMB 1038 yuan. The price difference is very small. If the defendant committed fraud intentionally by concealing the tire assembly defect, it would bear the risk of paying three times the purchase price as compensation, which was obviously against the common sense. Hence, the court deemed that existing evidence was insufficient to prove the defendant's fraud in the sale of cars.
The court also pointed out that Ms. Xu, as a buyer, has the right to know the true condition of the commodities purchased and used or services received. Although the defendant had no intent of fraud as it didn't find out that the car tires weren’t factory default tires, it should have examined the tire before delivery. With regard to its argument that tire assembly defect was beyond the normal and reasonable attention scope of everyone, the court held that run-flat tires and non run-flat tires were slightly different in appearance, which could be detected after careful examination. As a professional dealer, the defendant could have found this defect should it examine the car carefully. The duty of due diligence was not overly demanding for the defendant.    


In view of the importance of tires to driving safety, the defendant's infringement on the consumer's right to know and the specific circumstances of the case, the judge decided a compensation of RMB 50,000 yuan and dismissed Ms. Xu's other claims.


 
[Relevant Laws]
1. Contract Law of the People's Republic of China


Article 8 A lawfully established contract shall be legally binding on the parties thereto, each of whom shall perform its own obligations in accordance with the terms of the contract, and no party shall unilaterally modify or terminate the contract.


The contract established according to law is protected by law.


Article 93 The parties may terminate a contract if they reach a consensus through consultation.


...


Article 107 If a party fails to perform its obligations under a contract, or its performance fails to satisfy the terms of the contract, it shall bear the liabilities for breach of contract such as to continue to perform its obligations, to take remedial measures, or to compensate for losses.


2. Law of the People's Republic of China on Protection of Consumer Rights and Interests


Article 55 Business operators which fraudulently provide commodities or services shall, as required by consumers, increase the compensation for consumers' losses, and the increase in compensation shall be three times the payment made by a consumer for the commodity purchased or the service received or be RMB 500 yuan if the increase as calculated before is less than RMB 500 yuan, except as otherwise provided for by the law.


Where business operators knowingly provide consumers with defective commodities or services, causing death or serious damage to the heath of consumers or other victims, the victims shall have the right to require business operators to compensate them for losses in accordance with Articles 49 and 51 of this Law and other provisions of laws, and have the right to claim punitive compensation of not more than two times the amount of losses incurred.


(Author: Wang Zhiguo, the People's Court of Pudong New Area, Shanghai Municipality)


 

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