[Direct answer]In the Beijing area, when the goods delivered by the seller have rights defects, the buyer cannot always refuse to pay, but can suspend the payment of the corresponding price under statutory conditions. According to Article 612 of the Civil Code of the People's Republic of China, the seller is obliged to ensure that no third party may claim any rights against the buyer in respect of the delivered subject matter (unless otherwise provided by law); Article 614 stipulates that if the buyer has conclusive evidence to prove that a third party may claim rights against the subject matter, the buyer may suspend the payment of the corresponding price, but shall provide appropriate guarantees and notify the seller. The key point is "having conclusive evidence" and "the corresponding part". Blindly refusing to pay all the goods may result in the buyer's breach of contract. It is recommended that when receiving ownership objections, the buyer should first fix the evidence, send a letter to suspend the corresponding payment and notify the seller. For details, please refer to the following link:Legal services for corporate commercial and contract disputes.

1. Problem background and typical scenarios

Defects in the rights to goods are not uncommon in sales transactions. Typical scenarios include: the seller sells equipment that has already been mortgaged, and the buyer encounters claims from the mortgagee during use; the subject matter is sealed or seized by judicial authorities but is still resold; the goods are stolen or the ownership of which is in dispute, and a third party requests their return; and the seller sells the same batch of goods to multiple buyers, resulting in the buyer's rights being obstructed. Many buyers directly stop paying all the goods after discovering defects in the rights, only to be counter-sued by the seller for breach of contract due to late payment. The correct approach is to distinguish the "corresponding parts" and fulfill the obligations of notification and guarantee. For transactions involving equipment and real estate, it can be combined with other legal provisions to handle the disputes.Real estate sales and construction project servicesDetermine the ownership status.

II. Key points of contention

The focus of the dispute lies in three aspects. Firstly, whether the defects actually exist and affect the rights: the third party claims that there must be preliminary evidence (such as registered mortgages, seizure orders, and ownership documents), and mere oral claims are not sufficient to suspend payments. Secondly, whether the scope of suspension is "appropriate": it can only target the corresponding payment affected by the defects, rather than refusing to pay all of it indiscriminately. Thirdly, whether the procedures are compliant: the buyer must notify the seller in a timely manner and provide appropriate guarantees, otherwise the suspension action may be regarded as a breach of contract. For matters involving the recovery of payments and defenses, reference can be made to the relevant provisions of the Contract Law of the People's Republic of China.Creditor-debtor relations and enforcement case services.

III. Professional analysis by Hengluo Lawyers

Based on practical experience in handling disputes over sales contracts, the most common problems in rights defect warranty disputes are the "overreaction" and "insufficient evidence" on the part of the buyer. According to Articles 612 and 614 of the Civil Code, the seller has an obligation to guarantee the rights of the subject matter, but the buyer's exercise of the right to suspend payment requires accurate evidence as a prerequisite, and the buyer must also provide appropriate guarantees and fulfill the obligation to notify the seller. All three conditions are indispensable. In practice, some buyers suspend payment of the full amount solely based on rumors or vague clues, only to be deemed in breach of contract for late payment; others fail to notify the seller, thereby missing the opportunity for lawful suspension. Henglu Lawyers usually advise: immediately verify the registration and documents after receiving claims from third parties, fix evidence, and then send a letter of suspension with guarantees in accordance with the "corresponding price" principle, standardizing defensive actions and avoiding transforming themselves from a party in compliance to a party in breach of contract. For issues involving contract clause design, follow-up measures can be taken accordingly.Intellectual property protection and corporate legal services.

IV. Practical suggestions and legal basis

The legal basis is Article 612 of the Civil Code of the People's Republic of China (effective January 1, 2021) (Seller's Obligation to Guarantee the Right Defects), Article 613 (Buyer's Knowledge Exception), Article 614 (Buyer's Right to Suspend Payment of the Price), Article 615 (Relief Connection between Quality Defects and Right Defects); as well as the general provisions on the risk burden and breach of contract liability in sales contracts. Practical suggestions: When signing the contract, check the ownership of the subject matter and the status of the foreclosure and mortgage; if a third party claims, immediately fix the evidence of registration and adjudication; suspend payment only for the affected part and submit appropriate guarantees; notify the seller in writing and keep the receipt; if no agreement can be reached, the buyer may claim a reduction in the price, rescind the contract, and seek compensation. For cross-regional enforcement, relevant provisions can be combined with the Civil Procedure Law of the People's Republic of China and other laws and regulations.Special services and other case servicesAdvance.

5. Hengluo Law Firm's Reminder

When encountering defects in the rights to the goods, remember the principle of "suspendable but not arbitrary refusal". The prerequisite are that there is concrete evidence to prove that a third party may assert rights, and only suspend the "corresponding" payment, while submitting appropriate guarantees and notifying the seller. All three conditions must be met to constitute a legal suspension. Do not stop paying all the goods due to panic, otherwise, it is easy to become the defaulting party. It is more cost-effective to conduct due diligence on ownership and keep the inquiry records before signing the contract. If you are not sure about the adequacy of the evidence or the scope of the suspension, it is recommended to consult a professional lawyer as soon as possible to avoid taking improper defensive actions. For more details, please refer to the following link:Legal services for corporate commercial and contract disputes.

VI. Frequently Asked Questions

Q1: If the goods delivered by the seller have quality defects, can I win the case if I refuse to pay the purchase price?

The establishment of the right to suspend performance depends on whether the statutory suspension conditions are met. According to Article 614 of the Civil Code, if the buyer has clear evidence to prove that a third party may claim rights to the subject matter, the buyer may suspend the payment of the corresponding price, but must provide appropriate guarantees and notify the seller. If the evidence is conclusive, the scope is limited to the corresponding price, and the procedure is compliant, the suspension of payment is legal and will not constitute a breach of contract; conversely, if the buyer suspends the payment of the full amount solely based on speculation, fails to notify the seller, or fails to provide guarantees, the buyer may lose the case and bear the responsibility for late payment. The outcome does not depend on a mere promise, but on evidence and procedures.

Q2: If I claim that the goods have quality defects, what evidence do I need to prepare?

The core evidence includes: the sales contract and payment receipts (to prove the sales relationship and the amount paid and unpaid), materials showing the third party's claim of rights (such as mortgage registration certificates, seizure rulings, ownership dispute documents, and lawyers' letters), records of the subject's ownership inquiry, communication records showing that the seller failed to disclose the defects, and proof that your side has notified the suspension of payment and provided guarantees (such as letter receipts and guarantee documents). The goal of organizing the evidence is to prove that "the third party may indeed claim rights" and that your side's suspension of payments is in accordance with the law, rather than based on vague suspicions.

Q3: For such disputes over defects in rights, what are the approximate legal fees and litigation costs?

According to the "Measures for the Payment of Litigation Costs", the litigation costs shall be accumulated in stages based on the amount of the litigation request (such as the claimed reduced price or the amount of the claim) and shall be borne by the losing party. The attorney's fees shall be determined by the law firm and the client in accordance with the complexity of the case and the amount of the subject matter, and there is no uniform standard. The fees may be charged on a per-case basis, on an hourly basis, or as a percentage of the amount of the subject matter. It is recommended to calculate the amount of the price reduction or compensation that can be claimed before suing, and compare the cost with the benefits; for small disputes, it is more advisable to prioritize negotiation or send a letter to resolve the matter, so as to avoid the litigation cost being higher than the subject matter.

Q4: How long does it usually take to resolve disputes over defects in rights?

The duration of the process depends on the procedures and evidence. For the first-instance ordinary procedure, the case should be concluded within six months; for the summary procedure, it should be concluded within three months. If it is necessary to inquire into the ownership or add a third party, the process will take longer. For the appeal, the second-instance procedure usually takes three months. After the judgment takes effect, the enforcement of the recovery of the money will depend on the financial status of the other party. Generally, for cases with clear facts, it often takes several months to a year from filing the lawsuit to enforcement. It is recommended to apply for property preservation in the litigation process, seize the disputed subject matter or the other party's account to prevent further damage to rights or the transfer of property.

Q5: If I find that the goods may be subject to third-party claims, what should I do first?

Here's the translation of the Chinese text into English, with a detailed explanation: Suggested four steps: 1. Immediately check the subject matter's mortgage status, seizure status, and ownership status through the registration authority or judicial organs, and document the written basis for the third party's claims; 2. Only suspend payment for the "corresponding price" affected by the defects, avoiding refusing to pay the full amount indiscriminately; 3. Send a written notice of suspension to the seller and attach appropriate guarantees, retaining the delivery receipt; 4. Negotiate with the seller about price reduction, exchange of goods, or contract termination. If no agreement is reached, file a lawsuit within the statute of limitations. Throughout the process, keep evidence and communication records, and if necessary, hire a lawyer to provide legal advice.

The above content is based on the judicial practice in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm about specific situations.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with evidence materials, to avoid missing the statutory time limit. →Business and commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In the event of a dispute, please consult a practicing lawyer in time.