📑 Commercial cases · Awareness case
A British Company Ended a China Distribution Deal — A Guangzhou Court Applied English Law and Dismissed the Distributor's Claim · Yalla China
🤝 Governing law: 涉外民事关系法律适用法 / Law on the Application of Laws to Foreign-Related Civil Relations
A British company terminated a China distribution deal for a medical device with a Hong Kong distributor that had not bought the USD 500,000 annual minimum in 2020. The Guangzhou Intermediate Court applied the English law chosen in the contract and dismissed the damages claim.
Illustrative, general educational examples — not real specific facts and not legal advice; for awareness only. For an actual situation, consult a licensed lawyer.
From the SPC's first batch of typical cases on ascertaining and applying foreign law (China Chang'an Net, 10 July 2024): British company "Wei" agreed with Hong Kong medical-tech firm "Sheng" that Sheng would register the AlignRT radiotherapy patient-positioning system in China and distribute it there, with a right to terminate if Sheng bought less than USD 500,000 a year, and with English and Welsh law governing. Wei terminated for the 2020 shortfall; Sheng said its purchases exceeded the minimum and that two months of continued dealing by email and WeChat meant Wei had waived termination. Each side filed an expert report on English law; the Guangzhou Intermediate Court compared them and adopted Wei's: implied terms cannot override an express term, and waiver of a termination right needs clear evidence. The whole claim was dismissed and both sides accepted the judgment. Case no. (2021) Yue 01 Min Chu 543.
🎓 The lesson / takeaway
If your contract chooses a foreign law, Chinese courts will genuinely apply it, relying on expert reports. Read minimum-purchase clauses carefully and do not assume continued dealings waive the other side's right to terminate.
🕒 Updated: 16 March 2026