The author presses: There are many pits and mines related to virtual currency trading, as well as mining machines. How to avoid pit lightning protection is a problem that buyers and sellers of mining machines, especially buyers, need to pay special attention to.
The price of virtual currency has risen and fallen, and disputes over the trading of mining machines have occurred from time to time. From time to time, there will be disputes related to the sale and purchase of mining machines, and rights protection information will appear in the judgments of relevant courts and media reports. For example, the recent A-share listed company Huatie Technology's subsidiary Huatie Hengan, Zhongying Internet's subsidiary color technology and related suppliers to purchase mining machine disputes and so on.
In the industry practice of “pay before delivery”, it is not uncommon for the buyer to pay the payment, the seller’s delay in delivery, insufficient delivery or non-delivery, and the quality of the mined machine may still exist. The ambiguity of the aspect.
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In the current judicial environment, what claims can be made by buyers for the default of mining machine sellers, and which of them may be supported by Chinese courts? Based on the current laws and regulations and some jurisprudence of some local courts on mining machinery sales disputes since 2017, the author briefly summarizes and analyzes the following, and the mining machine buyer can get some experience and lessons from risk prevention and rights relief.
1. The validity of the sale contract
From the point of view of the function and properties of the mining machine, it is generally considered that the mining machine is a kind of machine equipment specially used for computing and generating virtual currency, and has property attributes. Judging from the current jurisprudence, the courts involved in the lawsuit generally consider that contracts involving the trading of mining machines are valid.
For example, in the case of “Chen’s v. Zhejiang Communication Technology Co., Ltd. Network Shopping Contract Dispute”, the Hangzhou Internet Court considered that the Bitcoin mining machine is a machine and equipment specially used to calculate and generate bitcoin. It has property attributes, China’s laws and administrative regulations. The production, holding and legal circulation of Bitcoin is not prohibited, nor is it prohibited to buy or sell Bitcoin mining machines. Therefore, the contract for the sale and purchase of mining machines is legally established and effective.
However, if the “Guidelines for Industrial Structure Adjustment Guidance” finally issued by the National Development and Reform Commission is consistent with the previously published “Draft for Comment”, the virtual assets “mining” activities (the production process of virtual assets such as Bitcoin) will be listed in the “elimination class”. Under the "backward production process equipment", the activity of producing virtual currency through mining will belong to the field where market participants are prohibited from entering. Under this circumstance, whether the contract for the sale and purchase of virtual currency equipment for the purpose of mining is Still effective, there are doubts.
2. Request for contract cancellation
According to the "Contract Law" and other relevant provisions, if one party claims to terminate the contract, it must have an agreed or statutory dismissal. In some mining machine dispute cases, the parties did not clearly stipulate in the contract that the buyer can unilaterally terminate the contract. In the event of a seller default, the buyer can only rely on legal reasons (such as the occurrence of force majeure, the contract purpose cannot be achieved). The contract is terminated, the buyer returns, and the seller returns the payment and interest received.
According to the provisions of Article 94 of the Contract Law, the statutory termination of the contract is as follows: (1) The purpose of the contract cannot be achieved due to force majeure; (2) Before the expiration of the performance period, one of the parties expressly indicates or indicates by their own actions. Failure to perform the main debt; (3) Delay in the performance of the main debt by one of the parties, and fail to perform within a reasonable period of time after being urged; (4) Delay in performance of the debt by one of the parties or other breach of contract may result in failure to achieve the purpose of the contract; Other situations.
(1) Rescuing the contract on the grounds of force majeure
According to the provisions of the General Principles of the Civil Law and the Contract Law, force majeure refers to objective situations that cannot be foreseen, cannot be avoided, and cannot be overcome. Such as natural disasters, wars, social anomalies (such as strikes, riots, etc.) are force majeure.
In the case of “Chen’s v. Zhejiang Communication Technology Co., Ltd. online shopping contract dispute case”, the buyer was issued by the People’s Bank of China, the Central Network Information Office, the Ministry of Industry and Information Technology, the State Administration for Industry and Commerce, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission. The Announcement on Preventing the Risk of Subsidy Issuance Financing constitutes force majeure, resulting in the inability to fulfill the contract for the purpose of the contract, but it has not been supported by the court. In this case, the mining and sales contract for both parties was signed on January 4, 2018, and the above announcement was issued on September 4, 2017. This announcement is an incident that occurred before the signing of the sale and purchase contract between the two parties. The characteristics of force majeure "unforeseeable" are therefore not a cause of force majeure.
Further, even if the announcement time is later than the contract signing time, the introduction of legal policies is generally not a force majeure, but a change in the situation. If the buyer requests to terminate the contract on the basis of the change of circumstances, the court shall determine the case according to the fairness and the actual situation of the case.
(2) Rescuing the contract on the grounds of “seven days no reason to return”
In the mining machine purchase and sale contract, the buyer usually purchases the mining machine for the purpose of obtaining virtual currency income through mining machine mining. Under this circumstance, the buyer advocates the application of the “seven-day no-reas return” system under the Consumer Protection Law, which may make it difficult to obtain court support.
According to the Consumer Protection Law, consumers need to purchase, use or accept services for their daily consumption, and their rights are protected by this Law. The operator sells the goods by means of internet, television, telephone, mail order, etc. The consumer has the right to return the goods within seven days from the date of receipt of the goods, and there is no need to explain the reasons (that is, the "seven days no reason to return" system). According to the above provisions, the consumer behavior protected by the law is the behavior of consumers purchasing goods or services for the needs of daily consumption, and is the consumer's living consumption behavior rather than the producer's production and consumption behavior.
For example, the Hangzhou Internet Court pointed out in the judgment of “Chen Mou’s Network Communication Contract Dispute in Zhejiang Communication Technology Co., Ltd.” that the Bitcoin mining machine is used to generate special equipment for Bitcoin, and the plaintiff purchased the mining machine. It is specially used to produce bitcoin. Its behavior belongs to the production tool of investment funds. It is not for the needs of daily consumption. It is not covered by the Consumer Protection Law. Therefore, the relevant provisions of “seven days no reason to return” are not applicable.
(3) Rescission of the contract on the grounds of other legal matters
In the mining machine sales contract, if there are other legal reasons for the cancellation, the buyer may exercise the statutory right of rescission accordingly.
For example, in the case of “Fu Lingling and Fan Cunyi's contract of sale and purchase”, the buyer and the seller reached an agreement for the purchase of the mining machine, but the seller delivered only part of the mining machine within the agreed time, and the remaining mining machines have not been delivered, and no further delivery has been made. may. The court held that the circumstances were stipulated in Article 94 (4) of the Contract Law – the delay in the performance of the debt by the seller caused the contract to be unsuccessful, the seller’s actions constituted a fundamental breach of contract, and the buyer had the right to request the termination of the contract. .
3. The way of liability for breach of contract
According to the "Contract Law" and other provisions, if one party fails to perform its contractual obligations or fulfills its contractual obligations, the form of liability for breach of contract mainly includes the continuation of performance, remedial measures, compensation for losses, deposit liabilities, and liquidated damages.
In the mining machine sales dispute, the buyer as the observant party may, according to the contractual agreement and legal provisions of both parties, require the seller to bear the corresponding form of breach of contract liability.
(1) Request to continue to perform
According to Article 110 of the Contract Law, if one of the parties fails to perform non-monetary debts or the non-monetary debts are not in conformity with the agreement, the other party may request performance, except for one of the following circumstances: (1) Legal or factual (2) The subject matter of the debt is not suitable for compulsory performance or the performance fee is too high; (3) The creditor does not require performance within a reasonable period of time.
In the dispute over the sale and purchase of a mining machine, if the buyer has performed the contract and the seller fails to deliver the mining machine as agreed in the contract, the buyer may request the seller to continue to perform the contract unless there is a situation in which the contract listed in the above provisions cannot continue to be performed.
For example, in the case of "Fu Lingling, Fan Cunyi's sales contract dispute" and "Fu Lingling and Duan Xiaojie's sales contract dispute", the defendant delivered only part of the mining machine to the plaintiff within the time agreed by both parties, and the remaining mining machines could not be delivered. The contract could not be continued, and the purpose of the contract could not be fulfilled. Therefore, at the request of the plaintiff, the court ordered the contract to be terminated.
(2) Take remedial measures
According to the provisions of Article 110 of the Contract Law, if the quality does not conform to the agreement, it shall be liable for breach of contract in accordance with the agreement of the parties. There is no agreement on the liability for breach of contract or the agreement is not clear. In accordance with the provisions of Article 61 of this Law (that is, after the contract takes effect, if the parties have no agreement on the quality, price or remuneration, place of performance, etc., or the agreement is not clear, it may be supplemented by agreement. If it is not possible to reach a supplementary agreement, it shall not be determined according to the relevant terms of the contract or the trading habits. The injured party may reasonably choose to require the other party to undertake repair, replacement, rework, return, reduction of price according to the nature of the target and the size of the loss. Or liability for breach of contract, such as remuneration.
In the mining machine sales contract, if the mining machine delivered by the seller does not meet the quality problem stipulated in the contract, and the parties have not agreed on the liability for breach of contract or the agreement is not clear, and the supplementary agreement has not been reached, the buyer may reasonably choose to require the seller to undertake the repair. , replacement, re-production, return, reduction of price or remuneration and other liability for breach of contract.
(3) Compensation for losses
According to the first paragraph of Article 113 of the Contract Law, if one of the parties fails to perform the contractual obligations or the performance of the contractual obligations does not conform to the agreement and causes losses to the other party, the amount of damages shall be equivalent to the losses caused by the breach of contract, including The benefits that can be obtained after the performance of the contract, but must not exceed the losses that may be caused by breach of contract when the contracting party has foreseen or should have foreseen the contract.
According to the interpretation of the above provisions and judicial practice in the Interpretation of Contract Law by the Legal Work Committee of the Standing Committee of the National People's Congress, the losses that the observant party can claim compensation from the breaching party include direct losses and indirect losses, where direct losses generally refer to Direct reduction in property; indirect loss refers to the loss of expected benefits (ie, loss of benefits).
According to Article 9 of the "Guiding Opinions of the Supreme People's Court on Several Issues Concerning the Trial of Civil and Commercial Contract Dispute Cases under the Current Situation", in the case where the current market entity default situation is more prominent, the breach of contract usually leads to the loss of the available benefits. According to the nature of the transaction, the purpose of the contract and other factors, the loss of profit can be mainly divided into production profit loss, loss of operating profit and loss of resale profit. In the default of a sales contract for production equipment and raw materials, the loss of the buyer’s profit due to the default of the seller is usually a loss of production profits. In successive series of sales and purchase contracts, the loss of the profit of the seller of the subsequent resale contract due to the breach of contract by the original contract is usually a loss of resale profit.
(A) loss of interest
In the case that the buyer has paid the full purchase price in accordance with the contract of sale, but the seller only delivered part of the mining machine, the buyer may request the seller to return the price corresponding to the part of the unlicensed mining machine, and pay the corresponding interest on the capital to The date of payment is clear.
In the case of “Qu Peng, Foshan Yupeng Feiyue Technology Co., Ltd.” and “Dispute between Mr. Fu Lingling and Duan Xiaojie”, the plaintiffs paid the full purchase price and the defendant failed to deliver the contract. For all mining machines, the court ruled that the plaintiff's plaintiff paid interest on the date of the prosecution or contract cancellation until the defendant actually returned the unpaid portion of the payment (interest at the same period of the People's Bank of China loan interest rate).
(B) Loss of virtual currency income
After the signing of the mining machine contract, if the seller does not deliver the full amount and timely delivery according to the contract, there may be cases where the buyer cannot obtain the mining machine for mining in time and thus lose the virtual currency income.
For the loss of the profit of the virtual currency in these cases, whether it is a loss of available benefits, from the current jurisprudence, it is more difficult for the buyer to support the indirect losses.
For example, in the case of "Fan Cunyi and Chen Xi Trading Contract Dispute", the Intermediate People's Court of Zhumadian City of Henan Province did not support the loss of Bitcoin income caused by the plaintiff's claim that the defendant could not deliver the mining machine for the following two reasons: (a Whether the amount of income claimed by the mining machine for the plaintiff cannot be determined, the mining income calculation table and the bitcoin price screenshot submitted by the plaintiff cannot prove the loss, and (b) according to the People's Bank of China, Ministry of Industry and Information Technology On December 3, 2013, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission jointly issued the Notice on the Prevention of Bitcoin Risk. Bitcoin is a specific virtual commodity. It has the legal status equivalent to currency and cannot and should not be used as currency in the market. Therefore, the plaintiff’s request is insufficiently supported and violates the provisions of laws and regulations and is not supported.
Judging from the above discussion of the court, in the case, the plaintiff’s claim was not supported by the court not only because the evidence provided by the plaintiff was insufficient to prove whether the mining machine could generate the amount of proceeds claimed by the plaintiff, but also because its claim violated the law. From this point of view, further, even if the buyer can provide sufficient evidence to prove that the seller has not lost the bitcoin revenue due to the contract delivery, and even the defendant recognizes the loss, the court may also use the current regulatory policy for bitcoin. The reason for the negative evaluation of the monetary attribute does not support the plaintiff's claim.
(C) Loss of mining machine price increase
The price of mining machines usually changes with the price trend of virtual currency and the changes in supply and demand. After the signing of the mining machine contract, if the price of the mining machine market rises sharply and the seller is unwilling to continue to perform the contract, the buyer may consider asking the seller to compensate the loss of the mining machine price, but there is uncertainty in whether the court can obtain support from the court. .
In the case of "Fan Cunyi and Chen Xi Trading Contract Dispute", the seller (the defendant) did not deliver the mining machine to the buyer (the plaintiff). The buyer claimed that he suffered the loss of the mining machine price and provided him with the seller’s WeChat chat. Record and record materials. However, the Intermediate People's Court of Zhumadian City of Henan Province considered that the evidence was only the unilateral statement of the plaintiff. At the same time, the amount of the loss caused by the price increase of the mining machine and the basis for calculation were not clearly stated in the lawsuit, and the plaintiff did not provide other The evidence confirms its claim, so the court did not support the plaintiff’s claims.
Judging from the judgment of the court, if the plaintiff can prove the amount of the loss caused by the price increase of the mining machine and the basis for calculation, and the defendant also approves, the plaintiff's claim may be supported by the court. However, in the actual disputes, the defendant's recognition of the plaintiff's possibility of such losses is unlikely, and the plaintiff's claim may be difficult to obtain court support.
The author noticed that the buyer's price increase loss claim in the mining machine sales contract is somewhat similar to the buyer's housing price loss claim in the second-hand housing sales contract. After the signing of the house sale and purchase contract, the buyer will be required to compensate the seller for the price increase due to the high price of the house and the seller’s breach of contract and the refusal to perform the obligation to pay the house. In the general judicial practice, if the two parties fail to negotiate to determine the loss of housing price increase, the court will consider the performance of the observant party, the amount of the deposit, the price of the house and the reasonable expectations of both parties, as appropriate. However, in the dispute over the sale and purchase of mining machines, if the buyer advocates the loss of the price increase of the mining machine, will the court compare and refer to the principle of determining the price increase in the sale of the house, and there is no precedent.
(D) The seller has not supplied the goods, and the buyer has lost the purchase price for the resale contract.
In the legal relationship of the general sale of goods, if the parties have concluded or can foresee that the buyer’s purchase of the goods is not for personal use, but is used for resale to the relevant third party to earn the difference, the seller delays delivery. Or no delivery, resulting in the buyer's loss of the available benefits under the resale contract, the buyer can usually ask the seller to compensate for the loss.
In the mining machine dispute, if the seller signs the contract with the buyer, it is predicted that the buyer will resell to a specific third party to obtain the difference income after the purchase, but the seller still fails to deliver the goods according to the agreement, resulting in the buyer not being able to obtain the resale contract. Whether the court will support the implementation of the gains available, and under what circumstances, to what extent will support the buyer’s claims, is uncertain.
In the dispute between “Fu Lingling and Duan Xiaojie”, the buyer has paid the entire contract price according to the sales contract, but the seller only delivered part of the mining machine, and the buyer has previously reached a mining resale agreement with the relevant third party and has received The purchase price of the third party is not a breach of contract with the third party. The buyer has purchased the corresponding mining machine and delivered it to the third party at the current market price (higher than the price of the buyer purchasing the mining machine from the buyer). The buyer had requested the seller to compensate for the loss caused by the seller’s failure to supply the goods in time and the buyer’s purchase of the high price for the resale contract, but the buyer voluntarily gave up the claim in the lawsuit.
(4) Deposit penalty
According to Article 115 of the "Contract Law", the parties may, in accordance with the "People's Republic of China", stipulate a guarantee for the payment of the other party. After the performance of the debt, the deposit shall be refunded or recovered. If the party paying the deposit fails to perform the agreed debt, it has no right to request a refund of the deposit; if the party receiving the deposit fails to perform the agreed debt, it shall return the deposit twice.
If there is an agreement on the deposit in the mining contract, and the buyer has paid the deposit, assuming that the seller has not shipped or only shipped part of the mining machine, it is a non-performance or incomplete performance of the contract, which constitutes a breach of contract and the buyer has the right. The seller is required to double the deposit.
In the case of “Quipeng, Foshan Yupeng Feiyue Technology Co., Ltd.”, in the case of the partial dispute of the defendant, the Foshan Intermediate People’s Court of Guangdong Province applied the proportion of the defendant’s content in accordance with the unfulfilled part of the contract. A penalty for double return deposits.
(5) Liquidated damages
Article 114 of the Contract Law stipulates that the parties may stipulate that when a party breaches the contract, it shall pay a certain amount of liquidated damages according to the breach of contract, and may also agree on the calculation method of the amount of damages arising from the breach of contract. If the agreed liquidated damages are lower than the losses caused, the parties may request the people's court or the arbitration institution to increase; if the agreed liquidated damages are excessively higher than the losses caused, the parties may request the people's court or the arbitration institution to appropriately reduce them. Article 116 of the Contract Law stipulates that if the parties agree to a breach of contract and agree to a deposit, the other party may choose to apply the liquidated damages or deposit clause when the party defaults.
If there is a breach of contract in the sales contract and the seller defaults, the buyer may request the seller to pay the agreed liquidated damages. However, the liquidated damages and the deposit cannot be applied at the same time, and the seller has the right to choose one. Moreover, if the amount of liquidated damage is excessively higher than the loss suffered by the buyer, the seller may request the judiciary to reduce the amount of compensation; otherwise, the buyer may request an increase in the amount of compensation.
Even in the case of disputes over the sale and purchase of ordinary goods, there are still many vague and controversial aspects of how to deal with related claims in theory and judicial practice. When the target goods for sale and purchase are virtual currency mining machines, there will inevitably be more problems in the understanding and application of the law, such as the validity of the mining machine sales contract in the legal change environment, whether the buyer’s identity is the consumer or Producers, related losses (especially loss of available benefits) advocate whether they can get support.
There are many pits and mines related to virtual currency trading, as are mining machines . How to avoid pit lightning protection is a problem that buyers and sellers of mining machines, especially buyers, need to pay special attention to. In order to reduce the possibility of risk occurrence and reduce losses, the mining machine buyers first need to care about and understand the relevant policy orientation. Secondly, when signing the sales contract, they agree on the quantity, price, quality standard, delivery and payment term of the subject matter. The unilateral termination of the contract and the liability for breach of contract; finally, in the case of disputes, actively collect evidence and seek the help of professional lawyers.
Author: Zhang Ling, a partner at law firm Han
Disclaimer: This article only represents the author's personal opinion and does not represent the opinions of the organization. The contents of this article do not constitute legal advice and investment advice. To reprint or cite any of the content in this article, please include the author's name.