1. Background

The client was a Shenzhen trading company engaged in the import of Japanese craft beer. At the end of April 2025 it entered into a cooperation with a supply chain management company in Dongguan, which was to provide end-to-end logistics services covering collection overseas, booking, import carriage, customs declaration and inspection.

After the goods left Japan, because the transport route passed through a radiation-controlled area, they were refused entry on inspection and quarantine at Shenzhen Bao’an Airport and had to be destroyed; the goods were ultimately destroyed on the spot. The client disputed this and instructed Zhai Chenhong of Yingke Law Firm (Shenzhen) to bring proceedings before the First People’s Court of Dongguan against both the freight forwarder and the customs broker which had actually carried the goods, seeking compensation. The other side counterclaimed for its service fees.

2. Key difficulties and issues in dispute

The case was difficult and raised numerous issues.

• The freight forwarder had not affixed its seal to the Import Agency Agreement and argued on that basis that no agreement had been formed and that it bore no liability.

• The forwarder argued that the salesperson who had actually handled the matter had acted privately, on his own account, and that this had nothing to do with the company.

• The customs broker which performed the carriage argued that the route had been arranged by the forwarder, that it was responsible only for carriage, and that it should not be jointly liable.

• The forwarder raised defences such as the importer having chosen a non-compliant route in order to keep costs down, and the expected profit not having been net of costs, and brought a counterclaim.

In summary, the issues in dispute were: who the counterparty was; whether the forwarder should compensate the various losses; whether the freight should be refunded; whether the importer should pay the service fees; and whether the customs broker should be jointly liable.

3. Counsel’s approach

• Use apparent agency to fix the liable party: rely on the salesperson’s business card, a quotation bearing the company’s name, the text of the Import Agency Agreement, and the fact that company staff had received the agreement and reviewed it a second time, to argue that the importer had reason to believe that the salesperson was transacting on the company’s behalf.

• Reinforce formation of the contract by conduct: argue that although the agreement was not sealed, the parties had formed a contractual relationship by performance, and rely on the fact that the company’s staff had confirmed the transport documents in writing to rebut the assertion that the company knew nothing about the transaction.

• Build the evidential chain for the losses: match invoices, remittance vouchers, customs declarations, inspection and quarantine notices, destruction applications and certificates, and payment vouchers item by item to the loss of the goods, the freight, the destruction costs and the storage costs.

• Narrow the claim of counsel’s own motion: as to the expected profit, which lacked any basis in cost accounting, prepare a fallback position and focus the claim on direct losses fully supported by vouchers, so that a failure of proof on one head would not undermine the claim as a whole.

4. The court’s findings

On the counterparty: taking together the account-based communications, the business card showing the salesperson to be a business specialist of the company, the quotation bearing the company’s name and the agreement bearing the company’s name, the court found that the importer had reason to believe that the salesperson was transacting on the company’s behalf and, under Article 172 of the Civil Code, that the counterparty to the transaction was the freight forwarder.

On the losses: the court accepted the contention that the goods had failed to clear customs because the transport route passed through a radiation area, and found that the forwarder, as the counterparty to the transport contract, had failed to complete its transport obligation, so that the purpose of the contract could not be achieved and the goods were destroyed; it should accordingly compensate the loss of the goods together with the destruction and storage costs.

On the freight: the court held that the importer had dealt with the forwarder and paid into an account designated by the forwarder, and that the goods had ultimately not been imported; the forwarder should therefore refund the freight.

On the counterclaimed service fees: the court held that the goods had been refused entry through no fault of the importer, and the claim was not supported.

On the expected profit: the court held that some of the order forms did not correspond to the payment receipts, and that the importer had not informed the forwarder that the goods had already been sold on, so that the specific use and the sale were not foreseeable to the forwarder; the claim was refused under Article 584 of the Civil Code.

On joint liability: the court held that the contractual relationship between the forwarder and the customs broker and the transport contract in issue in these proceedings were not the same legal relationship, and the claim was not supported.

5. Outcome

The court ordered: (1) the freight forwarder to pay RMB 58,476.5 for the loss of the goods; (2) to refund RMB 21,034.76 in freight; (3) to pay RMB 2,994 in destruction costs and RMB 2,984.04 in storage costs; (4) the importer’s other claims in the principal action to be dismissed; and (5) the forwarder’s counterclaim to be dismissed in its entirety. The case acceptance fee and the pre-action property preservation fee were shared in proportion to liability.

6. Practical advice for importing businesses

• Always obtain a sealed contract: in this case liability was established through apparent agency, but the process was convoluted. Companies should insist on a company seal and a cross-page seal, and verify that the signing entity matches the business licence.

• Confirm the key milestones in writing: ask the counterparty to confirm in writing the transport route, the airport of departure, the customs documents and other key matters, and keep the record, so that responsibility can be traced directly if something goes wrong.

• Check compliance before shipment: for imports of food, agricultural products and the like, confirm in advance whether the transport route and the place of origin engage quarantine controls, and prepare documents such as a certificate of compliance for radiological testing.

• Fix the loss vouchers immediately: once goods have been seized, the contracts, invoices and payment vouchers for destruction costs, storage costs and similar expenses should be obtained and preserved promptly, failing which the claim is very likely to be refused for lack of evidence.