Dispute over a sales contract of goods prior to fulfilling obligations outside the contract

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On April 26, 2024, the People's Court of H District, Bac Lieu Province issued Judgment No. 01/2024/KDTM-ST regarding a dispute over a sales contract of goods.

The plaintiff is N1 One Member Limited Liability Company (N1 Company), represented by Mr. N under authorization from the company. The defendant is Võ Văn M, a business household.

Mr. M and company N1 began trading cement from June 2019. The transactions were initially based on verbal agreements without a formal contract. According to their agreement, Company N1 would sell cement to Mr. M. During the transaction process, when Mr. M did not have enough money to pay the company, they agreed to a consignment sale (delivery first, payment later). Starting from around November 2022, Mr. M consistently delayed payments for the goods. On January 19, 2023, both parties reconciled their accounts and confirmed that Mr. M owed the company 20,000,000 VND. Despite numerous reminders, Mr. M has not paid this debt to the company. 


After reconciling the accounts, the two parties did not agree on a repayment schedule or on any interest terms. The company promised to install a signboard for Mr. M, but the installation of the signboard was not agreed upon as a condition for Mr. M to pay the debt. These two transactions are unrelated. Company N1 filed a lawsuit demanding that Mr. Vo Van M, the business owner, pay the outstanding debt of 20,000,000 VND plus statutory interest from January 19, 2023, until full payment.


Mr. Vo Van M, representing Vo Van M's business, argued that they owe Company N1 20,000,000 VND for the purchase of cement. However, due to the company's failure to install the promised signboard, Mr. M refuses to settle the debt with the company.


The People's Court of District H concludes as follows:


The transaction of goods between Company N1 and the business household of Mr. Vo Van M did indeed occur in reality. Both parties acknowledge that Mr. Vo Van M currently owes Company N1 an outstanding amount of 20,000,000 VND for unpaid goods. The company's promise to install a signboard for Mr. Vo Van M is unrelated to the obligation to pay for the goods. There was no agreement between the parties that failure to install the signboard would exempt Mr. Vo Van M from paying for the goods. Therefore, Mr. Vo Van M's delay in payment to Company N1 lacks any valid basis.


Accordingly, the People's Court of District H has decided to accept Company N1's lawsuit against Mr. Vo Van M's business household, demanding payment of the outstanding amount of 20,000,000 VND for the purchased goods, and an interim interest amount calculated up to April 26, 2024, totaling 3,617,917 VND.


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