Jilin Province Higher Peoples Court of the People's Republic of China

Civil Judgment

　　（2003） Ji Min San Zhong Zi No. 20

Appellant （defendant in the first instance）： Feida Industrial Co., Ltd. of Zhuji City （former Feida Industrial Company of Zhuji City, Zhejiang Province）, 60 Huandongbei Road, Cheng'guan Town, Zhuji City, Zhejiang Province.

Legal representative： Zong Guangpei, general manager of the company.

Attorney ： Tian Dayuan, lawyer of Jilin Hengfeng Lawyers Office.

Appellee （plaintiff in the first instance）： Liquidating Group of Jiangnan Industrial Co., Ltd. of Hunchun City.

Representative： Jin Longhua, leader of the Liquidating Group.

Appellee （plaintiff in the first instance）： KOMARA Agricultural Industry Company of South Korea, 586-15 Lianshanqian Dong, Lianti District, Gangsoe City, Pusan, The Republic of.

Legal representative： Jiang Dajian, president of the company.

Attorney ： Wang Wenjun, lawyer of Jilin Youzheng Lawyers Office.

　　Appellant Feida Industrial Co., Ltd. of Zhuji City （hereafter referred to as Feida Co.） refused to accept the （2000） Y.Z.J.C.Z. No. 63 civil decision regarding the glove machine purchases and sales contract dispute between Feida Co and the appellees Liquidating Group of Jiangnan Industrial Co., Ltd. of Hunchun City （hereafter referred to as Liquidating Group） and KOMARA Agricultural Industry Company of The Republic of （hereafter referred to as KOMARA Co.） made by Intermediate Peoples Court of Korean Autonomous Prefecture of Yanbian, Jilin Province, the People's Republic of China as final and lodged an appeal to the Court. After accepting the case, the Court formed a collegial panel and opened a court session publicly. Attorney agent Tian Dayuan, authorized by the appellant Feida Co, Jin Longhua, representative of the appellee Liquidating Group and attorney agent Wang Wenjun, authorized by KOMARA Co., participated the court session and made their arguments. This case is decided now.

The first instance court identified facts by trial as follows： ⑴ On July 5, 1999, the business license of Jiangnan Company was revoked by Administration for Industry and Commerce of Hunchun City without participating in the annual examination and the company was informed that the credit and debt should be settled by itself. On June 1, 2001, Economic Development Bureau of Border Economic Cooperation Zone of Hunchun City issued the （2001） H.J.F. No. 53 document that determined Jiangnan Company to form a liquidating group and define members of the group and their duties. Public Order Division of Public Security Bureau of Hunchun City issued a confirming documentation certifying that： the official seal of the Liquidating Group had been put on file according to law. Jiang Nanchun, former legal representative of Jiangnan Company, submitted a written document explaining that： 1. Jiangnan Company, proposed by him, consented to form the Liquidating Group and appointed Song Mingnan as leader of the group, Jin Longhua as deputy leader, Lu Xiangji, Li Shunzi and Jin Changhao as members of the group； 2. He agreed that Jin Longhua should be responsible for the liquidation work and all related legal affairs. Therefore, the Liquidating Group that was formed in accordance with the legal procedure and shall be responsible for settlement of the credit and debt of Jiangnan Company has the qualification of subject of action. ⑵ Parties B Jiangnan Company and KOMARA Co. singed the fully automatic glove machine purchases and sales contract with Party A Feida Co. on May 6, 1998. The contract stipulated that： Party A shall order 680 sets of Songguo or Daojin brand F7-F10 type fully automatic glove machines made in Japan from Parties B （for the detailed plan of supply, refer to the fax from South Korea）； the time of delivery was from May 8, 1998 to January 8, 1999； RMB￥17000 per set F.O.R. Tumen Railway Station； place of delivery： Tumen Railway Station； full payment on delivery after arrival of the machines at Tumen Railway Station； the railway freight shall be borne by Party A； in case either party breaches the contract, the party breaching the contract shall compensate the other party with 20% of the total price of the part of the contract that is not performed as fine for breach of contract. The contract was sealed by Party A and signed by Zong Guangpei, legal representative of Party A, Jin Longhua, agent of Party B Jiangnan Company, sealed by KOMARA Co. and signed by Jiang Dajian, representative of KOMARA Co. After the contract was signed, the plaintiff delivered fully automatic glove machines and parts worth RMB￥793, 573 to the defendant. Feida Co. paid RMB￥471, 266 to the plaintiff for the glove machines and owes the plaintiff RMB￥322, 307. The special import duty pay-in warrant of Hunchun Customs and the agent import certificate of Hunchun Border Trade Company can certify that： Hunchun Border Trade Company which acted as an agent of Jiangnan Company imported 57 sets of glove knitting machines from South Korea on August 10, 1998 and Jiangnan Company paid Hunchun Border Trade Company RMB￥7700 for agency commission, certification, commodity inspection, port management and others. During performance of the contract, the correspondence between Zong Guangpei, legal representative of Feida Co. and Jin Longhua, authorized agent of Jiangnan Company, can certify that both parties have actually fulfilled the purchase and sales contract. Therefore, the fully automatic glove machines purchase and sales contract signed by and between the two plaintiffs and the defendant is the declaration of will of both parties and is a valid contract. In addition, to fulfill the contract, Jiangnan Company paid Feida Co. RMB￥4, 841.32 of freight in advance for the shipment of the glove machine. ⑶ Party A Feida Co. and Party B Jiangnan Company signed a reconciliation agreement on December 18, 1998. The agreement stated that： the contract on Party A's purchase of the complete-set footwear machine used by Party B's joint venture from Party B was signed by and between both Party A and Party B on July 24, 1997 and the contract on purchase of the fully automatic glove machines imported from South Korea that were operated by the joint venture between Party B and KOMARA Co., Pusan, South Korea, was signed by and between both parties on May 6,1998. During execution of the two contracts, the contracts couldn't be performed for reasons. Both parties had a dispute about relevant issues. Then Party B filed a suit in Intermediate Peoples Court of Korean Autonomous Prefecture of Yanbian, Jilin Province. Now both parties came to a reconciliation agreement through friendly negotiation between legal representatives of both parties as follows： 1. The total price of the footwear machines is calculated as RMB￥935,000, and Party A shall pay Party B RMB￥180,000 in lump sum for the footwear machines in addition to the money paid to Party B and the money paid by Party A in advance during sales； 2. The total price of the glove machines, seaming machines and fittings is calculated as RMB￥845, 308, and Party A shall pay Party B RMB￥80, 000 （eighty thousand yuan only） in lump sum in addition to RMB￥765, 308 paid by Party A for the glove machines, seaming machines and fittings； 3. Party A shall pay Party B RMB￥260, 000 （two hundred and sixty thousand yuan only） in lump sum of the above two items； 4. Party B shall immediately go through the formalities of withdrawing the action and unblocking the assets after the agreement is signed and at the same time, fax the non-pros award of Intermediate Peoples Court of Korean Autonomous Prefecture of Yanbian to Peoples Court of Zhuji City and send the original via EMS to Party A； 5. The agreement shall come into force after it is signed by legal representatives of both parties. Neither party shall make an objection against the other party for any reason or in any excuse. Neither party shall affix the responsibility of the other party； 6. After the agreement is signed, Party A shall pay Party B RMB￥260, 000 （two hundred and sixty thousand yuan only） in lump sum by the non-pros award of Intermediate Peoples Court of Korean Autonomous Prefecture of Yanbian. The agreement was signed by Zong Guangpei, legal representative of Feida Co., with the official seal of the company affixed to it, and signed by Jiang Nanchun, legal representative of Jiangnan Company, with the official seal of the company affixed to it. On December 22, 1998, Jiang Nanchun gave Feida Co a receipt that “ we received RMB￥245, 000 from Feida Co. for the footwear machines and glove machines. So far, all the money for the two kinds of machines has been received in full. The contract shall be terminated now, with the account settled.” Jiang Nanchun added his signature and affixed the official seal of Jiangnan Company to the receipt. KOMARA Co., the other party of the former glove machine purchases and sales contract, didn't participate in, know, consent to, or authorize the formation of the above agreement and receipt. The reconciliation agreement and receipt were reached by and between Jiangnan Company and Feida Co. without authorization, damaging the interest of KOMARA Co., the other party of the purchases and sales contract, so it was a unilateral act and the agreement was invalid. Jiangnan Company shall return RMB￥245, 000 received according to the invalid agreement to Feida Co. As both Jiangnan Company and Feida Co. had faults in reaching the reconciliation agreement, both parties shall take their respective responsibility for the losses arising from it. ⑷ That KOMARA Co. didn't deliver 40 sets of the glove machines was the individual act of KOMARA Co., which didn't have a direct relation with Feida Co., or was not stipulated in the fully automatic glove machine purchases and sales contract. Feida Co. didn't know KOMARA Co.'s management of the glove machine and other related situations and KOMARA Co. didn't have enough evidence of the cause of the loss of RMB￥627, 250, so the claim of KOMARA Co. couldn't be supported.

The first instance court concluded that： the fully automatic glove machines purchase and sales contract singed by and between the two plaintiffs and defendant was valid and the defendant shall pay the money owed for purchase the goods and take the liability for breach of contract. The two plaintiffs' claim that the defendant shall pay RMB￥322, 307, RMB￥64, 461 of fine for breach of contract and RMB￥4, 841.32 of freight is supported by the Court； the plaintiff KOMARA Co.'s claim for compensation of damages of RMB￥627, 250 on the defendant has no factual evidence, and cannot be supported by the Court. The claim made by the defendant that the plaintiffs' claim should be rejected, as they have no qualification of subject of action, and the, money for purchase of the glove machines and footwear machines had been settled in the reconciliation agreement reached by and between both parties on December 18, 1998, is untenable, and cannot be supported by the Court. In accordance with the stipulation of Article 6, Article 29 Section 3, Articles 31 and 32 of the Economic Contract Law of the People's Republic of China and the stipulation of Article 106 and Article 61 Section 1 of General Principles of the Civil Law of the Peoples Republic of China, it ordered as follows： 1. Feida Co. shall pay the Liquidating Group and KOMARA Co. RMB￥322, 307 for the fully automatic glove machines and fittings, RMB￥4, 841.32 of freight and RMB￥64, 461 of fine for breach of the contract, totaling RMB￥391, 609.32 within ten days from the date of effectiveness of the judgment； 2. The Liquidating Group shall return RMB￥245, 000 to Feida Co. within ten days from the date of effectiveness of the judgment. The total court acceptance fee is RMB￥20, 666, in which RMB￥8, 384 shall be borne by the defendant and RMB￥11, 282 by the plaintiff KOMARA Co……

In the appeal, Fei Da Company claims that：

　　1. In the first instance, all the while the reckoning group has never submitted/provided the legally established evidence. Yet the documents by the so-called Economy Development Bureau of Hui Cun Border Economy Corporation District are not legally valid, either. Therefore, it is a major mistake of the lawsuit that the reckoning group has acted as being the main body of the plaintiff；

　　2. The all-automatic glove machine purchase-sale contract, which was signed by the Farming Production Society and Fei Da Company on May 6, 1998, should be invalid. The reasons are that： （1） the contract should be invalid according to the 2nd item, Rule No. 3 in “Solutions Applicable to Some Issues in ‘Contract Law for the Economy Related to the Foreign Trade' ”by the People's Supreme Court, which stipulates that “The contracts made by the parties of our country, who have no rights for the foreign trade business ratified and issued by the state branch in charge, are invalid”. Because Fei Da Company has no right for the foreign trade business, so the very contract is invalid. （2）According to the Rule No.9 in “Law for the Foreign Trade, People's Republic of China》, the appellant, Fei Da Company, has had no the approval license from the foreign economy-trade department of the State Council, what is more, has had no definite or specific foreign trade business scope, hence, the contract signed by the two sides should be invalid because of having violated the compulsive rules of the state law. （3） According to Rule No. 10 in the Section I ”Solutions Applicable to Some Issues in ’Contract Law, People's Republic of China' “： ”The parties make the contract beyond the business scope, the people's court does not maintain the contract be invalid due to this. But the exceptions are these that violates the limited business by the state, the concessionary business, the business banned by the law, the administrative codes.“ The foreign trade business belongs to the business ratified by the State. Thus, the contract signed by the appellant and the Farming Production Society should be invalid.

　　3. The all-automatic glove machine purchase-sale contract signed by Jiang Nan Company and Fei Da Company on May 6, 1998, should be valid. The Farming Production Society should be excluded from the parties of this contract. The law should protect the terms of this contract.

　　4. The actual buying relationship of this case is that： Jiang Nan Company had bought the glove machine, then, sold it to Fei Da Company. Therefore, the court in charge of the first instance was wrong in identifying the facts.

　　5. The compromise agreement signed by Fei Da Company and Jiang Nan Company is legal and valid. Fei Da Company has carried out all the payment about this contract. So the responsibility for the payment should be dismissed.

　　6. The legal proceedings in the first instance have violated the law. During the first instance, the two appellees just postponed to pay the legal fare. The postponed date closed before November 12, 2002. However, so far the two appellees have not paid the legal fare yet. It has been illegal that the court in charge of the first instance had made a sentence under the condition that the court did not received the legal fare.

　　7. The first instance did not make it clear that the relationships of the specific rights and duties between the Reckoning Group and the Farming Production Society.

　　8. The first instance did not clearly identify the disputed amount of this case.

The Reckoning Group claims that：

　　1. The board of directors decided the foundation of the Reckoning Group after the study and discussion, which had officially declared to the departments concerned through the legal procedures, the foundation of which was ratified by the Foreign Fairs Office of Hui Cun Industrial and Commercial Administrative Management Bureau, by the Economy Development Bureau of Hui Cun Borders Economy Corporation District, by the Peace Section of Hui Cun Public Security Bureau, the purpose of which is to clear and settle accounts of the creditor's rights and the debt.

　　2. According to the 4th item, the 5th, the 6th and the 7th item in the all-automatic glove machine purchase-sale contract signed by the three parties on May 6, 1998, it is unnecessary for Fei Da Company to have the imports-exports business license ratified by the Foreign Economy andTrade Ministry. Hence, the contract signed by the three parties on May 6, 1998, is just an ordinary domestic purchase-sale contract, not an imports-exports purchase-sale contract, which should be considered valid.

　　3. The compromise agreement, which was signed by the legal representative Jiang NanCun of Jiang Nan Company and Fei Da Company on December 18, 1998, belongs to an invalid one.

　　4. The Farming Production Society claims that： the facts identified in the first instance are clear and the law applied is proper, requesting the court should turn down the appeal and maintain the judgment in the first instance.

Summarizing the appellant's appeal and the appellee's reply, also soliciting the opinions from the various parties, the focus of the case is that：

　　1. Whether does the Reckoning Group have qualifications for being the main body of the lawsuit of this case or not？

　　2. Whether is it valid or not that the all-automatic glove machine purchase-sale contract was signed by the three parties on May 6, 1998？

　　3. Whether is it valid or not that the compromise agreement was signed by Jiang Nan Company and Fei Da Company on December 18, 1998？

　　4. Whether is there anything illegal in the legal proceedings for the court in charge of the first instance？

In the second trial, the evidence provided by the various parties is the same as that in the first instance, there is no new evidence given by each of them. Therefore, in the second trial, what our court has found out is the same as what the former court found out in the first instance. Regarding the above-mentioned focal issues, what our court has generally analyzed is as follows：

　　（I） Whether does the Reckoning Group have the qualifications for being the main body of the lawsuit of this case or not？

　　The appellee, the Reckoning Group, thinks that, its foundation is legal, so it has the qualifications for being the main body of the lawsuit of this case. Furthermore, it has provided the document No. 53 Hui Jing Fa Zi [2001] “the Approved Reply Paper about the Foundation of the Reckoning Group by Hui Cun Jiang Nan Industry Ltd”, which proves that the foundation of the Reckoning Group has been approved by the state foreign trade branch in charge.

　　The appellant, Fei Da Company, has no objection to the authenticity of the document No.53 Hui Jing Fa [2001], which has been provided by the Reckoning Group. However, Fei Da Company thinks that Hui Nan Company is the privately owned business, the Reckoning Group should have been established by the Board of Directors. Fei Da Company has also provided the document No.125 Hui Jing Fa [1993] by the Economy Development Bureau of Hui Cun Border Economy Cooperation District, which is about “The Ratified Reply Paper to the Application for Establishing Hui Cun Jiang Nan Industry Ltd in the Border Economy Cooperation District by Jiang Nan Industry Ltd and the Fibre Society （which is the only one in South Korea）”； Fei Day Company has also provided the list of the board of directors, which proves that Jiang Nan Company is the privately owned business. Thus, the Reckoning Group doesn't have the qualifications for being the main body of the lawsuit of this case, which should have been acted as by the member of the board of directors.

In questioning the evidence, the appellee, the Reckoning Group, claims that： they have no objection to the authenticity about the document No.125 Hui Jing Fa [1993] and the list of the board of directors. But Jiang Nan Company is a joint venture between China and the foreign country. It is not the privately owned business, which has been claimed by the appellant. The Economy Development Bureau of Hui Jiang Border Economy Cooperation District has the right to set up a reckoning group.

Our court thinks that： Jiang Nan Company is the joint venture that has been set up by China Hui Cun Jiang Nan Industry Ltd. and the Fibre Society （which is the only one in South Korea）. According to the document No.125 Hui Jing Fa [1993] provided by the appellant and according to the business legal representative's license of Jiang Nan Company provided in the first instance by the appellee, the Reckoning Group, this does sufficiently prove that Jiang Nan Company is a joint venture, not a privately owned business which has been claimed by the appellant, Fei Da Company. According to Rule No. 3 in “Business Law for the Domestic and Abroad Joint Venture, People's Republic of China》, Rule No.2, the 2nd item of Rule No. 3 in”Methods for Reckoning in Joint Venture Business》, the Economy Development Bureau of Hui Cun Border Economy Cooperation District, as being the state economy-trade branch in charge of the foreign trade business, has the right to decide setting up a reckoning group in the joint venture, Jiang Nan Company. In summary, the foundation of the Reckoning Group is legal and it has the qualifications for being the main body of the lawsuit of this case. Therefore, it is untenable that the appellant, Fei Da Company, has claimed that the Reckoning Group has no qualifications for being the main body of the lawsuit of the case.

　　（II）Whether is it valid or not that the“All-automatic Glove Machine Purchase-Sale Contract》has been signed by Jiang Nan Company, the Farming Production Society and Fei Da Company on May 6, 1998？

　　The appellant, Fei Da Company, thinks that, the actual buying relationship of this case is that, Jiang Nan Company sold the glove machine to Fei Da Company after Jiang Nan Company had bought the glove machine from the Farming Production Society. There are differences between the purchase price of Fei Da Company and that of Jiang Nan Company. Because Fei Da Company has no license ratified and issued by the state economy-trade branch in charge of the foreign trade, Fei Da Company has no right to carry out the foreign trade business. Thus, the contract signed by Fei Da Company and the Farming Production Society has violated the compulsive rules of the state law. Yet that doesn't influence the effectiveness of the purchase-sale contract between Fei Da Company and Jiang Nan Company. The Farming Production Society should be excluded from the parties of this contract. Consequently, it is maintained that the purchase-sale contract between Jiang Nan Company and Fei Da Company should be legal and valid. The law should protect the contents of the items in this contract. These have been provided： the special tariff payment paper （Imports and Exports, Hui Cun Customs）, the certificate that Hui Cun Border Trade Company imported 52 knitting machines from South Korea for Fei Da Company, the evidence of the fees for the agency, for the certificate, for the commodity check-up, for the port, for the customs, etc., which were all paid by Jiang Nan Company to Hui Cun Border Trade Company.

The appellee, the Farming Production Society and the Reckoning Group, thinks that： the all-automatic glove machine purchase-sale contract involved in this case has been signed through the three parties' negotiations, Jiang Nan Company, the Farming Production Society and Fei Day Company. In the contract, the promised sites for the delivery and the goods check-up are all inside the border of China. Therefore, the contract should not be regarded as the foreign-trade-related contract. It is just an ordinary domestic purchase-sale contract. So it is a valid contract.

Our court thinks that： Fei Da Company as being the first side and the Farming Production Society, Jiang Nan Company as being the second sides, signed “All-automatic Glove Machine Purchase-Sale Contract》on May 6, 1998, in which the marked goods ”all-automatic glove machine“ are provided by the main body of one side the Farming Production Society, the business of South Korea. Though the sites for the delivery and the goods check-up are all in China, the contract can't be considered as ”the ordinary domestic purchase-sale contract“. The contract should be considered as the imports & exports purchase-sale contract according to the main body and the object of the contract. ”Contract Law for the Economy Relevant to the Foreign Trade, People's Republic of China“ and the judicial explanations concerned are applicable to the dissension arisen in the contract. According to the 2nd item, Rule No. 3 in ”Solutions Applicable to Some Issues in ‘Contract Law for the Economy Related to the Foreign Trade' “ by the People's Supreme Court： ”The contracts made by the parties of our country, who have no the foreign trade business right ratified and issued by the state branch in charge, are invalid“. According to Rule No. 13 in ”Law for the Foreign Trade, People's Republic of China“which stipulates”The organization or the individual, who have no license for the foreign trade business, can entrust the agent in charge of the foreign trade to run the business in the domestic country within his business range“, because neither Fei Da Company nor Jiang Nan Company has no right to run the foreign trade business and they cannot directly sign the goods purchase-sale contract with the foreign businessman, so the ”All-automatic Glove Machine Purchase-sale Contract“is invalid due to being unqualified for the main body of the contract.

　　（III） Whether is it valid or not that the compromise agreement was signed by Jiang Nan Company and Fei Da Company on December 18, 1998？

　　The appellant, Fei Da Company, thinks that, the all-automatic glove knitting machine, which is disputed in this case, was sold by Jiang Nan Company to Fei Da Company after Jiang Nan Company had bought it from the Farming Production Society. There is direct buying relationship between the appellant Fei Da Company and Jiang Nan Company. Yet there is no direct buying relationship between Fei Da Company and the Farming Production Society. Therefore, the compromise agreement signed by Jiang Nan Company and Fei Day Company should be valid.

　　The appellees, the Reckoning Group and the Farming Production Society, both claims that, the compromise agreement signed by Fei Day Company and Jiang Nan Company should be invalid. The reason is that the main body of one side has not participated in “All-automatic Glove Machine Purchase-Sale Contract”.

Our court thinks that： the two respects of the law relationship are involved in “The Compromise Agreement” signed by Jiang Nan Company and Fei Da Company on December 18, 1998. One is the compromise agreement that has been reached by Jiang Nan Company and Fei Da Company because of the arrears for the purchase-sale of the socks knitting machine between the two sides； the other is the compromise agreement reached by Jiang Nan Company when they had dissension while their carrying out “All-automatic Glove Machine Purchase-Sale Contract”, which is involved in this case. For this case is about the settlement of the dissension arisen in the purchase-sale of the all-automatic glove machine between Fei Da Company and Jiang Nan Company, the Farming Production Society. So the promise in the “Compromise Agreement”, that “Fei Da Company should pay Jiang Nan Company ￥180,000Yuan as the payment for the socks knitting machine”, has no relation with this case because of belonging to another relationship of the law. Our court will not judge the effectiveness of this item. The promise in the “Compromise Agreement”, that “Fei Da Company should pay Jiang Nan Company ￥80,000Yuan as the payment for the glove machine, the rolling machine and the fittings”, is the compromise agreement reached by Jiang Nan Company and Fei Da Company when their dealing with the dissension arisen from “All-automatic Glove Machine Purchase-Sale Contract”. Although another party, the Farming Production Society, has not participated in the agreement, yet Fei Da Company does not have the right for the foreign trade business considering the signing and the implementation of “Full-automatic Glove Machine Purchase-Sale Contract”. So Fei Da cannot participate in signing the foreign trade contract； actually it has not had the direct buying relationship with the Farming Production Society. It is Jiang Nan Company that has entrusted Hui Cun Border Trade Campany （who has the right to do the foreign trade business） to import 57 glove machines from South Korea； and has also paid the relevant fees to Hui Cun Border Trade Company. Then, Jiang Nan Company sold the machines to Fei Da Company. Even if Fei Da Company didn't pay all the payment for the goods, the Farming Production Society could but claim rights from Hui Cun Border Trade Company and Jiang Nan Company according to the foreign trade contract, the Farming Production Society cannot claim rights from Fei Da Company. Moreover, Jiang Nan Company can claim rights from Fei Da Company according to its contract with Fei Da Company, in which the actual buying relationship has taken place between Jiang Nan Company and Fei Da Company. Therefore, because “All-automatic Glove Machine Purchase-Sale Contract”, which was signed by Jiang Nan Company, the Farming Production Society and Fei Da Company, is invalid, the Farming Production Society cannot have direct economic contact with Fei Da Company who has no rights for the foreign trade business. So the Jiang Nan Company's dissension from this contract, and then the compromise agreement reached with Fei Da Company have no relation with the Farming Production Society, the agreement should be considered valid. Because Jiang Nan Company has already come to the compromise agreement with Fei Da Company about the arrears for the glove machines, and actually the agreement has been completely implemented, it is untenable that Jiang Nan Company started a lawsuit against it.

　　（IV） Whether has the sentence of the first instance court violated the legal proceedings？

　　The first instance court made the sentence under the circumstance that Jiang Nan Company and the Farming Production Society had not paid the legal cost. It doesn't belong to the legal violation of the legal proceedings. Thus, it is untenable that the appellant claims the legal proceedings of the first instance should be illegal due to this.

　　Summarizing all the about-mentioned, it is untenable that the Reckoning Group and the Farming Production Society claims that Fei Da Company should pay the goods payment and compensate for the loss, and it is not supported by the law. This request is unreasonable and should be turned down. The facts that the first instance has identified are clear, yet there was certain improper place in the law applied. According to Rule No.2 in “Contract Law for the Economy Related to the Foreign Trade, People's Republic of China”, the 2nd item of Rule No.3 in “Solutions Applicable to Some Issues in ‘Contract Law Related to the Foreign Trade' ”by the People's Supreme Court, and （II） in the first item of Rule No.153 in “Code of Civil Law, People's Republic of China”, the sentence is as follows：

　　1. Withdrawing the civil judgment No.63 Yan Zhou Jing Chu Zi （2000） by the People's Intermediate Court of YanBian Korean-Nationality Autonomous Prefecture, Jilin Province, People's Republic of China；

　　2. Turning down the lawsuit requests by the Reckoning Group of Hui Cun Jiang Nan Industry Ltd. and the Farming Production Society of KOMARA, South Korean.

　　3. The fees for the first instance and the second instance, RMB￥41,332, shall be borne by the Reckoning Group of Hui Cun Jiang Nan Industry Ltd. and the Farming Production Society of KOMARA, the Republic of Korea.

This judgment is the final judgment.

　　Presiding judge： Wang Xiaodong

　　Acting judge： Wang Donglin

　　Acting judge： Jiangtao

　　Jilin Province Higher Peoples Court

　　（Seal）

　　June 10, 2003

　　Clerk： Niu Feng

(This article is transferred from Baidu Wenku, here thank Baidu Wenku for providing quality resources.）