Aishen Garment Co entered into a contract with Bulinger Store to sell 10,000 pieces of sportswear to the latter. Under the contract Aishen Garment Co would deliver the goods at Bulinger Store’s warehouse by 30 June 2012 and receive payment upon delivery of the goods.
Having found market conditions tough after the conclusion of the contract, Bulinger Store asked to decrease the quantity of goods, but Aishen Garment Co disagreed. At this moment, Bulinger Store learnt that a company named Conka Sales intended to buy the same garments and resell them to another province. Therefore, Bulinger Store concluded an agreement with Conka Sales to transfer the rights and obligations under its contract with Aishen Garment Co.
Bulinger Store sent a letter to Aishen Garment Co, notifying it that the rights and obligations under the contract had been transferred to Conka Sales. Aishen Garment Co did not reply to the letter.
On 15 June 2012, however, Aishen Garment Co sent a fax to advise Conka Sales to be prepared for receiving the goods. At the end of June Aishen Garment Co delivered 10,000 pieces of sportswear to the premises of Conka Sales and received the total price paid by Conka Sales. However, a certificate of inspection issued by an independent institute indicated that nearly 30% of the goods were below the quality standard. Therefore, Conka Sales intended to reject the goods. Aishen Garment Co insisted that there was no contractual relationship between them, since it was merely under its contract with Bulinger Store to directly deliver the goods to Conka Sales.
Required:
Answer the following questions in accordance with the Contract Law of China, and give your reasons for your answers:
(a) state whether there was a contractual relationship between Aishen Garment Co and Conka Sales; (8 marks)
(b) state whether Aishen Garment Co or Bulinger Store should be liable for the defects of the goods. (2 marks)