Click on the image for details In recent years, the relationship between retailers and suppliers has gradually become one of the most important commercial relationships. With the increasingly tense relationship between retailers and suppliers, frequent contradictions, and a surge in economic cases, how to reasonably resolve disputes and unify judicial adjudication has become a top priority. This article analyzes the focus and approaches of retailer-supplier cases, hoping to offer some insights. The retailers discussed in this article include comprehensive hypermarkets (such as RT-Mart), specialized chain stores in building materials, home furnishings, and baby products (such as B&Q), as well as e-commerce platforms (such as Dangdang and Yihaodian). Generally speaking, based on the different contracts signed, the business cooperation models between retailers and suppliers can be mainly divided into two categories: concession counters and self-operated. A concession counter contract refers to a model where the retailer delivers the counter to the supplier for use and management, the goods are stored by the supplier themselves, and after sale, the retailer collects the payment, deducts fees according to the contract payment cycle, and pays the supplier monthly. In a self-operated contract, the supplier delivers the goods to the retailer, and the retailer pays the purchase amount monthly according to the contract payment cycle after deducting fees, with ownership of the goods transferring upon delivery. When hearing disputes over payment and fees between retailers and suppliers, the first step is to investigate the cooperation model between the two parties. The biggest difference between concession counters and self-operated is that in the concession counter model, the goods never undergo transfer or delivery; they are directly managed by the supplier, and the retailer collects the sales revenue, so there is no delivery or return, and the supplier has no delivery notes to provide. Other aspects are the same as self-operated. Focus 1: Determination of Delivery Amount ◆Delivery Notes The most direct way to determine the payment is to provide delivery notes. However, in practice, the following problems exist: Due to the large amount and long history of supplier deliveries, suppliers generally do not keep complete records. Some stores (such as Tesco) design delivery notes with only quantity, without unit price, amount, or total price, so even if there are delivery notes, they cannot prove the delivery amount. Some suppliers deliver through third-party logistics, and their delivery notes do not have the retailer's receipt confirmation. In the concession counter model, goods never transfer, so there are no delivery notes. ◆Delivery Amounts Recognized in Written Documents Confirmed by Both Parties ◆Delivery Amounts Reflected on Online Reconciliation Platforms Notarized by Suppliers In practice, some supermarkets' online reconciliation platforms clearly show the details and summaries of supplier delivery amounts, fee details, and outstanding payment details during the cooperation, such as the Century Lianhua system. If notarized by the supplier, and in the absence of conflicting evidence, such evidence should be given significant weight. ◆Value-Added Tax Invoices Issued by Suppliers and Certified by Retailers Whether a VAT invoice can serve as evidence of supplier delivery is inconsistent in judicial practice. Courts in East China recognize that VAT invoices certified by retailers can serve as evidence of delivery, but many courts in Beijing, Shenzhen, and other regions do not accept this view, especially after the Supreme People's Court issued the "Interpretation on Issues Concerning the Application of Law in Trial of Cases Involving Sales Contract Disputes" (hereinafter referred to as the "Interpretation") on May 10, 2012. The author believes that VAT invoices certified by retailers can certainly serve as evidence of delivery, for the following reasons: The cooperation between retailers and suppliers is stable and long-term, sharing risks, with rolling settlements, which is not a general sales relationship but a joint venture contract relationship, so the Interpretation does not apply. Legal disputes between retailers and suppliers generally have other evidence such as contracts and payment records to corroborate. Article 8 of the Interpretation stipulates: "If the seller only relies on special VAT invoices and tax deduction materials to prove that it has fulfilled its obligation to deliver the subject matter, and the buyer does not recognize it, the seller shall provide other evidence to prove the fact of delivery." Retailers generally pay monthly against VAT invoices, which can be matched one-to-one and serve as indirect evidence. In the transaction practices of both parties, it is impossible for a retailer to receive and certify a VAT invoice without actually receiving the goods. The legislative intent of Article 8 of the Supreme People's Court's Interpretation is to avoid situations in practice where, after a contract is signed, the seller may issue a special VAT invoice in advance at the buyer's request, and the buyer applies for certification normally, while the delivery of goods or provision of services is delayed or does not occur. Such situations do exist in practice. For example, A and B sign a purchase contract on January 1 of a certain year, stipulating that A purchases one piece of equipment from B for 100,000 yuan, with delivery on April 1. In February, A requests B to issue an invoice in advance; B issues it and A deducts it. In March, B's company changes and cannot deliver the machine on time. In this case, B's lawsuit based on the VAT invoice to demand payment for the equipment would obviously not be supported by the court. However, in litigation between retailers and suppliers, this situation does not exist. Retailers hold channel and market advantages and have strong bargaining power in cooperation with most suppliers. The supplier's invoicing process generally involves issuing the invoice after delivery based on the retailer's invoicing instructions (including amount and other requirements, sometimes through the retailer's online reconciliation platform). If not based on the retailer's instructions, the retailer's finance department will not accept the invoice or deduct it, and subsequent payment and transactions will not proceed smoothly. The retailer's payment is conditional on the supplier issuing the correct invoice and providing it. In short, without the retailer's instructions and reconciliation, the supplier cannot issue an invoice, and even if it does, it generally cannot enter the retailer's financial system. Focus 2: Legality of Rebates and Deduction Methods ◆Legality of Rebates Regarding rebates, some stores call them "monthly rewards" or "commissions," but essentially they are a form of backend gross profit where the retailer takes a certain percentage of sales revenue. One type is unconditional rebate, also known as guaranteed rebate, which violates the joint venture principle of sharing risks and benefits between retailers and suppliers and has always been prohibited by law. The second type is normal rebate, which is reasonable as consideration for the retailer providing sales channels. ◆Deduction Methods for Rebates There are two ways to pay or deduct normal rebates: one is to deduct before issuing the VAT invoice, i.e., the invoiced amount is the delivery amount minus the rebate, and the retailer cannot deduct the rebate again when paying based on the VAT invoice; the other is to deduct after issuing the VAT invoice, i.e., the invoiced amount is the delivery amount, and the retailer deducts the rebate when paying. The deduction method for rebates often becomes a focus of dispute in such cases. How to distinguish between pre-invoice deduction and post-invoice deduction? When signing the contract, both parties should reach a consensus on this issue and have clear provisions in the contract. However, in practice, many contracts signed between suppliers and retailers do not specify these details or are unclear, and even in practice, there are cases where part of the same rebate is deducted before invoicing and part after invoicing, or some years are pre-invoice and some years are post-invoice, making the trial of rebate issues more difficult. In practice, both forms of rebates exist. When the two parties have different statements and the contract has no clear provisions, it must be determined based on the specific circumstances and the judge's free evaluation. For example, in the online reconciliation system, the pre-invoice price and post-invoice price can be displayed, and based on the difference, it can be inferred whether the rebate has been deducted. Additionally, if the delivery note has a marked price, it can be determined based on the marked price on the delivery note and the amount on the VAT invoice. It can also be reasonably inferred based on whether the invoiced amount is consistent with the payment amount, and whether the payment amount is the invoiced amount minus the rebate amount. Focus 3: Deduction Methods for Returns For retailers that issue return invoices for returns, there is little dispute. The retailer providing the supplier's already-deducted return invoice can generally prove the retailer's return behavior and amount, and the retailer can directly deduct the return from the payment due to the supplier. For retailers that do not issue return invoices for returns, there is significant controversy over the deduction method for returns. The focus of the dispute is: If the plaintiff supplier uses VAT invoices as evidence of its delivery, it often claims that the return amount has already been directly deducted when issuing the invoice, i.e., the invoiced amount is the net amount after subtracting returns from the delivery amount, so when the two parties re-settle all payments and fees, the return portion should not be deducted again by the retailer. As the defendant, the retailer generally claims that the return amount is actually deducted when paying, so when settling whether the payment is fully settled and how much is settled, the return amount should be deducted. In practice, some suppliers note in the remarks column of the VAT invoice the delivery period and the deducted return order numbers, and based on the indicated information, the deduction method for each batch of returns can be clarified. Additionally, if there is an online reconciliation platform, the platform will also show delivery amounts, return amounts, and invoiced amounts, and based on the data on this platform, the deduction method for returns is clear at a glance. If neither of the above explicit pieces of information is available, it can be determined based on specific evidence, such as the reasonable inference from the amounts of delivery notes, return notes, and VAT invoices for a certain month, the duration of returns without invoices, and whether it complies with financial rules and regulations. Focus 4: Recognition of Various Fees From the perspective of this article, the fees charged by retailers to suppliers can be roughly divided into three categories. ◆Reasonable Fees The author believes that common non-guaranteed conditional rebates and promotional service fees directly related to the sale of the supplier's goods are reasonable fees. Retailers control sales channels and provide services for selling suppliers' goods. Obtaining sales channels also has costs, such as rent, management fees, financial costs, brand promotion, personnel costs, utilities, etc. Therefore, it is generally considered reasonable for retailers to charge a corresponding percentage of rebates based on the supplier's sales amount. For promotional fees such as poster fees and DM promotional fees that are directly related to the sale of the supplier's goods, the author believes that these are promotional services provided by the retailer to promote the supplier's goods, and charging corresponding promotional service fees complies with the principle of equal value and compensation in civil law and is valid. For promotional fees stipulated in the contract in practice, if the supplier does not recognize them and the retailer cannot provide corresponding promotional evidence, it should be determined based on the retailer's scale, when the promotion occurred, whether it is long ago, and whether retention is reasonable. ◆Fees Clearly Not Recognized by Law or Judicial Practice Fees clearly not recognized by law or judicial practice mainly include: guaranteed rebates and off-contract fees. Guaranteed rebates violate the principle of joint venture contracts where both parties jointly operate and share risks, and constitute the retailer transferring its own risks to the supplier. Even if agreed upon, they have no legal effect. Article 6 of the "Measures for Fair Trading between Retailers and Suppliers" implemented on November 15, 2006, also clearly stipulates that retailers shall not abuse their advantageous position to engage in the following unfair trading practices: (1) After signing a supply contract for specific goods and reaching agreement on specific specifications, models, styles, etc., refusing to accept the goods, unless the supplier is at fault or the supplier agrees and the retailer bears the resulting losses; (2) Requiring suppliers to bear liability for goods damage that was not agreed upon in advance; (3) Removing or withdrawing goods from shelves without justifiable reasons under conditions not agreed upon in advance or not in accordance with prior agreements, except when the retailer removes or withdraws goods based on laws, regulations, or administrative decisions made by administrative organs; (4) Forcing suppliers to provide unconditional sales rebates, or agreeing to make sales rebates conditional on a certain sales amount, and collecting rebates from suppliers when the agreed sales amount is not achieved; (5) Forcing suppliers to purchase designated goods or accept designated services. Additionally, Article 10 of these Measures stipulates: "If a retailer charges promotional service fees from a supplier, it shall obtain the supplier's consent in advance, sign a contract, and clearly stipulate the items, content, and duration of services; the items, standards, amounts, purposes, methods, and liability for breach of contract for the fees, etc." It can be seen that off-contract fees, which are unilaterally charged by retailers abusing their market dominance, are theoretically not recognized by law. However, if the retailer negotiates with the supplier in advance and obtains the supplier's consent, these off-contract fees can be recognized as legal and valid. ◆Fees Still in Dispute The channel fees charged by retailers are controversial, including entry fees, promoter management fees, information service fees, old store renovation fees, and other service fees not directly related to the sale of the supplier's goods. Judicial decisions in practice are also inconsistent. The view supporting these fees holds that "agreement prevails over law": Since the retailer and supplier have agreed on these fees, the supplier recognized the payment of these fees when signing the contract and sealed it, and the retailer also incurs certain costs in building sales channels and provides sales channel services as consideration for these fees. If it does not harm national, collective, or third-party interests, the contract is valid, and these fee clauses should also be recognized as valid. The view opposing these fees holds that according to the "Measures for Fair Trading between Retailers and Suppliers" (Order No. 17 of 2006) issued by the Ministry of Commerce and other four ministries, retailers shall not charge the following fees: "(1) Fees charged on the grounds of signing or renewing contracts; (2) Fees charged for requiring suppliers who have already obtained product barcodes in accordance with national regulations and can use them normally in the retailer's business premises to purchase in-store codes; (3) Barcode fees charged to suppliers using in-store codes that exceed actual costs; (4) Renovation or decoration fees charged to suppliers during store renovation or decoration that are not specifically used for the sales area of that supplier's specific goods; (5) Fees charged on the grounds of festivals, store anniversaries, new store openings, reopenings, corporate listings, mergers, etc., without providing promotional services; (6) Other fees that are not directly related to the sale of goods, should be borne by the retailer itself, or are charged without providing services." On December 19, 2011, the Ministry of Commerce and other four ministries issued the "Notice on Printing and Distributing the Work Plan for Cleaning Up and Rectifying Large Retail Enterprises' Illegal Charges to Suppliers," which stipulates that "retailers using market dominance to charge suppliers contract fees, handling fees, distribution fees, festival fees, store anniversary fees, new store opening fees, sales or settlement information inquiry fees, card swiping fees, barcode fees (new product entry fees), account opening fees (new supplier entry fees), unconditional rebates, etc., are all illegal charges." According to the "Answers to Several Questions in Contract Dispute Cases between Suppliers and Supermarkets" issued by Shanghai courts in September 2007, "If a supermarket does not provide promotional or labor services and charges fees in the name of festivals, store anniversaries, reopenings, corporate listings, or mergers, it is a disguised form of apportionment and is invalid, and the court will not support it." In the trial of such fees, this article believes that a comprehensive determination should be made based on the specific circumstances and whether the retailer has abused its advantageous position. -END-