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App developer liable for failure to provide clear disclosure of business operators

english.bjinternetcourt.gov.cn | Updated: 2022-08-16

     

Case summary

Plaintiff surnamed Liu said he successfully pre-ordered and paid for a purchase from a self-operated shop at an online shopping platform, and received a confirmation email from the platform. But later the order was canceled and deleted by the platform. The feedback from the service staff was that the order was automatically intercepted and canceled by the system, and could not be recovered. They suggested that Liu reorder the purchase. Liu filed a complaint to the consumer service hotline but still failed to reach a settlement.

Liu claimed that the shopping platform breached the contract by unilaterally canceling and deleting a paid order. He sued the app's developer, company A, at the Beijing Internet Court (BIC), requesting that company A should fulfill the contract and compensate him with 1 yuan ($0.15) for economic losses.

The defendant company A argued that it did not qualify as a proper defendant as it was neither the operator nor the seller of the app, which was company B, an associated company to company A.

Focuses of the dispute:

Did company A qualify as a proper defendant? And was it liable for the breach of the contract?

After trial, the BIC concluded that:

1. Company A qualified as the proper defendant.

In this case, the plaintiff Mr. Liu provided evidence that company A was the developer of the online shopping platform app. On the app, there was no clear information disclosure as to the actual business operator of the app. For consumers, the main measure to find out the management body of an app is to check the information of the developer and the supplier of the app. In the absence of evidence to the contrary provided by company A, company A should be deemed as the management body of the app and should take responsibility as the operator and seller of the commodities in its self-operated stores.

2. Company A was liable for breaching the contract.

In this case, Liu's successful payment of the pre-ordered purchase established an information network sales contract between him and company A. It was true intent of both parties and should be deemed as a valid contract. Company A canceled the purchase unilaterally and refused to deliver the commodity without justifiable reasons, which constituted a breach of contract. Liu's request for A to fulfill the delivery obligation should be supported with de facto and de jure basis. As for compensation, Liu communicated with the service staff and complained to related departments, in vain. Therefore, Liu's claim for economic losses was reasonable and should be supported.

Details of the judgement:

The BIC issued the first instance judgement which ruled that the defendant company A shall deliver the commodity involved to the plaintiff and compensate one yuan as economic losses within seven days of the judgement. The defendant appealed. The second instance judgement upheld the original one.  The verdict is now in force.

Tips from the judge:

According to related laws, e-commerce platform operators shall take the civil liabilities of commodity sellers or service providers for the businesses marked as self-operated. If the information of commodity or service released by the e-commerce operator meets the offer conditions, and the user selects the commodity or service and submits the order successfully, the contract is concluded. The operator shall operate in good faith. Unilateral cancellation of orders without reasons will constitute a breach of the contract.

The fast development of the internet and the smart phone industry has made shopping via phones a common way of consumption. But the variety of entries for shopping via phones, as well as the ambiguities of information disclosure of business entities, have brought challenges for consumers to safeguard their rights and interests when disputes happen.

Therefore, app developers or suppliers have an obligation to inform the operator and dispute settlement approaches to customers in a clear, prominent and reasonable manner. In the absence of such information, the app developers or suppliers shall take the liability for its self-operated goods and service in order to ensure smooth consumer rights protection.