After purchasing a new energy vehicle, purchasers frequently encounter software issues such as black screen restarts and fault alerts, and these problems persist despite multiple repairs, so can the purchasers request to terminate the contract? How would the People's Court rule?

[Case Review]

A company in Shanghai, for its business needs, purchased an imported new energy vehicle worth over CNY 970,000 from a 4S dealership. Unexpectedly, on the first day of picking up the vehicle, a fault occurred. While driving, the central control screen of the vehicle suddenly went black and restarted. Subsequently, problems such as loss of power while driving and persistent fault alerts were discovered. Over the next three months, the vehicle was returned to the factory for repairs multiple times, but the faults were never resolved. The purchasing company believed that the vehicle posed serious safety risks and proposed to terminate the contract. After multiple unsuccessful negotiations, the company sued the 4S dealership in court, demanding contract termination, a refund of the purchase price, and compensation for rental fees for an alternative vehicle at CNY 3,000 per day, among other expenses. The defendant, 4S dealership, argued that the vehicle's situation did not meet the conditions for return as specified in the "Three Guarantees" certificate and that the rental fees for the alternative vehicle requested by the plaintiff were unreasonable. After evaluation, no hardware issues that did not meet standards were found in the vehicle, but there was interference with the navigation system caused by the central control screen, which could seriously affect the normal driving of the driver.

After deliberation, the People's Court held that although the vehicle frequently experienced software failures that remained unresolved despite multiple repair attempts, the number and duration of repairs did not indeed meet the conditions for vehicle return specified in the "Three Guarantees" regulations. Although the evaluation results indicated no hardware issues, the black screen restart problem posed safety risks, not only affecting the plaintiff's use but also potentially leading to public safety issues under specific circumstances. Therefore, it could be deemed that the purpose of the contract could not be achieved, and the purchasing company of the plaintiff had the right to exercise its statutory right of termination. According to Article 563 of the Civil Code of the People's Republic of China (hereinafter referred to as the "Civil Code"), the court ruled to terminate the contract, ordered the 4S dealership to refund the purchase price of over CNY 970,000, and compensate the purchasing company CNY 20,000 for rental fees for an alternative vehicle.

[Judge's Remarks]

I. Reasonably utilize the "Three Guarantees" regulations to safeguard your rights

The "Three Guarantees" regulations represent the statutory responsibility of operators for product quality issues, namely, repair, replacement, and return. Their core lies in protecting consumers' rights when a product experiences performance failures (such as a black screen in a car or an appliance failing to start) that are not caused by the consumers. The "Three Guarantees" regulations implement a "seller responsible" system, where the seller must handle issues first and then seek compensation from the producer.

According to the Regulations on the Repair, Replacement, and Return of Household Automotive Products, in cases where a serious safety performance failure remains unresolved after two repairs, or the same quality issue has been repaired more than four times or for a cumulative total of over 30 days, the seller shall replace or return the product. Although the circumstances in this case did not constitute a return scenario under the "Three Guarantees" regulations, in addition to the "Three Guarantees" and contractual provisions, the court shall also consider the provisions of the Civil Code regarding statutory rights of termination, as well as the intelligent demands of consumers in the current era, to determine whether statutory rights of termination can be exercised and avoid contract deadlocks.

II. Give comprehensive consideration to the determination of statutory rights of termination

The statutory right of termination essentially allows one party (usually the non-breaching party) to actively terminate the contract when it can no longer be performed due to special circumstances. It primarily addresses contract deadlocks. According to relevant provisions of the Civil Code, when the other party severely breaches the contract or circumstances change, rendering the purpose of the contract unattainable, it provides the non-breaching party with an "exit mechanism" to "stop losses in a timely manner" and protect them from being burdened by an unreasonable contract.

The key to determining whether the plaintiff in this case could exercise its statutory right of termination lies in the interpretation of the "purpose of the contract" in the intelligent era. Consumers purchasing high-end new energy electric vehicles have demands that go beyond the "ability to drive" of fuel vehicles, focusing more on the diversity and centrality of functions provided by the central control screen. Considering the high usage demand for the screen by users and the fact that the vehicle in question is a well-known brand with a high sales price, the black screen restart has prevented the plaintiff from using the screen smoothly after purchase, seriously affecting the realization of the purpose of the vehicle purchase contract. More importantly, although the black screen restart issue itself does not constitute a serious safety performance failure, if it occurs in densely populated areas or on highways and the vehicle user relies on the multimedia screen, it may affect the safety of the driver and other members of the public. Therefore, in such circumstances, consumers have the right to exercise their statutory right of termination.

III. Actively and rationally respond to disputes involving intelligent vehicles

Currently, as vehicle functions become increasingly intelligent, corresponding disputes are also on the rise, with frequent software failures and other issues posing higher requirements for consumer rights protection and automotive sales services.

For consumers, it is essential to carefully inspect the vehicle upon pickup and immediately record on-site images, time, and location if any faults occur during driving, while preserving all repair documents and communication records. When encountering disputes, consumers shall rationally safeguard their rights based on their own circumstances and the nature of the issue, with legal grounds to support their claims. It is important to avoid making excessive demands for compensation items that are unlikely to be upheld while actively taking reasonable measures to prevent further escalation of losses.

For automotive sellers, if the vehicle requires repairs, they shall promptly and actively handle them, communicate and coordinate with consumers, and strive to resolve issues raised by consumers. If problems persist despite multiple and prolonged repairs, they shall promptly proceed with returns or replacements in accordance with the automotive "Three Guarantees" regulations, conscientiously safeguard consumer rights and interests.

[Representative Comments]

Zhu Shangmin, Deputy to the Shanghai Municipal People's Congress, Vice Chairman of the Songjiang District Federation of Industry and Commerce in Shanghai, and Chairman of Shanghai Guide Technology Co., Ltd.

With the rapid popularization of new energy vehicles and intelligent connected vehicle technologies, software systems have become the "new heart" and "new brain" of automobiles. The recurring black screen issue of the intelligent multimedia display in this case is by no means a trivial matter but a significant concern related to driver control and driving safety. The judge did not adhere to the traditional standard of hardware damage but keenly perceived the new characteristic of "software equals quality" in the intelligent era, effectively safeguarding the public's trust foundation in the intelligent automotive industry and the fairness bottom line of market transactions.

In this case, the People's Court, through legally reasonable and era-appropriate determinations, safeguarded the legitimate rights and interests of consumers, contributing to the construction of a healthier and more sustainable business environment and promoting the high-quality development of the new energy vehicle industry on the legal track. It provides beneficial references for similar disputes in the future, incentivizing enterprises to place greater emphasis on product quality and user safety, fostering a virtuous cycle where producers are responsible, sellers fulfill their duties, consumers act rationally, and regulators exert effective oversight, thereby contributing to the healthy development of China's overall new energy vehicle industry.

Legal Provision Reference

Article 563 of the Civil Code of the People's Republic of China states, The parties may terminate the contract under any of the following circumstances:... (4) One party delays in performing its debts or has other breaches that render the purpose of the contract unattainable; ...