Story 3 What If Courier Loses Package?

Standard-Form Contracts

"Happy Birthday! Did you receive my present?" Lily was on a long-distance call with her old friend Sally back in Laos.

Sally was one of her childhood friends whom she treasured the most. After moving to China, Lily had not seen her but she missed Sally dearly. Every year, they would send each other a birthday present as a gesture of friendship. This year, she bought Sally a silver necklace with the words 'Lily and Sally' engraved on the locket and a childhood picture of them in the locket.

"No, I have not received anything. I think it has not arrived yet." Sally replied.

"That is impossible. I sent it two weeks ago by courier. It should have arrived at least a few days ago." Lily said anxiously.

"Don't worry. I have you in my heart and gifts are only material things that cannot resemble our friendship." Sally said with a comforting tone.

Lily went to the courier immediately the next day to ask about her parcel. "I sent a package with a necklace in it two weeks ago to Laos. Has it arrived? Can you help me check?"

"Hold on right there. It says on my computer that the parcel has arrived already."customer service told her.

"My friend has not received it. Please check again and confirm with the delivery man. It is very important."

"It appears that the parcel has been lost then. Don't worry, we shall reimburse you. You paid 20 Yuan for delivery costs, so you shall be paid 40 Yuan as compensation for your lost package."

"What? 40 Yuan? I bought the necklace for 1,000 Yuan! You must pay me the whole amount!"

"I am sorry but it is company policy to compensate twice the amount of delivery costs if a package is lost. Twice of 20 Yuan is 40 Yuan, so 40 Yuan and not a penny more shall be compensated. Please sign here to state that you have received your compensation."

"That is ridiculous! Company policy? Your mistake cost me 1,000 Yuan, and you are only going to pay 40 Yuan? I am sure this is against the law!"

"Well, you signed the courier contract, and that means you have read the terms of service. If you don't believe me, you can check the back of your receipt when you go home. The terms and conditions state that only twice the amount of delivery costs shall be paid in the case of a lost package. Next time, if you want to ensure that you get the full amount in compensation, you can buy our insurance."

When Lily went home and checked the receipt, she did find such terms printed in f ine print on the back. She blamed herself for not reading it carefully enough to fall into such a trap.

What can Lily do in this case?

Law in a Minute

This is a prime example of unfair terms in a consumer contract. This may also happen to you.

In legal terms, the contract Lily signed herself into is called a standard-term contract. The terms and conditions are set by one of the parties, the courier, and Lily, the other party, has no ability to negotiate more favourable terms and thus fulling into a "take it or leave it" position.

The customer usually does not bother to read the terms, as they are in fine print and he/she does not understand the complicated legal language. Even if such unfair terms are spotted, he or she is in no position to bargain.

Although such standard term contracts have the advantages of saving time for both parties, mitigating risks in advance, and reducing operating costs, it undermines the principle of freedom of contract, and the drafting party can use its superior economic status to formulate clauses that are beneficial to themselves but not the consumer.

According to the Civil Code, the business operator may not formulate provisions to exclude, limit or reduce the consumer rights or exempt itself from its liabilities or increase the consumer's liabilities, or include other provisions unacceptable or unfair to the customer. Such provisions shall be deemed invalid.

Legal Basis

Consumer Protection Law of the People's Republic of China

Article 26

Business operators using standardized agreements in business activities shall, in a conspicuous manner, remind consumers to pay attention to the quality, quantity, prices or costs of the goods or services, the duration and manner of performance, safety precautions and risk warnings, after-sales service, civil liability, and other information strongly tied to the interests of consumers, and provide explanations as requested by consumers.

Business operators must not, use standard-clause contracts, notices, declarations, on-site posters, or other means, to eliminate or restrict consumer rights, to reduce or avoid the responsibilities of business operators, to increase the responsibilities of consumers, or to make other such unreasonable and unfair rules against consumers, and must not use standard-clause contracts or technical assistance measures to compel consumers into a transaction.

Where standard-clause contracts, notices, declarations, on-site posters, or other such sources contains the rules listed in the above in the preceding paragraph, that content is void.

Civil Code of the People's Republic of China

Article 496

A standard clause refers to a clause formulated in advance by a party for the purpose of repeated use which has not been negotiated with the other party when concluding the contract.

Upon concluding a contract, where a standard clause is used, the party providing the standard clause shall determine the parties' rights and obligations in accordance with the principle of fairness, and shall, in a reasonable manner, call the other party's attention to the clause concerning the other party's major interests and concerns, such as a clause that exempts or alleviates the liability of the party providing the standard clause, and give explanations of such clause upon request of the other party. Where the party providing the standard clause fails to perform the aforementioned obligation of calling attention or giving explanations, thus resulting in the other party's failure to pay attention to or understand the clause concerning his major interests and concerns, the other party may claim that such clause does not become part of the contract.

Article 497

A standard clause is void under any of the following circumstances:

(1) existence of a circumstance under which the clause is void as provided in Section 3 of Chapter VI of Book One and Article 506 of this Code;

(2) the party providing the standard clause unreasonably exempts or alleviates himself from the liability, imposes heavier liability on the other party, or restricts the main rights of the other party; or

(3) the party providing the standard clause deprives the other party of his main rights.

Article 498

Where a dispute arises over the understanding of a standard clause, the clause shall be interpreted in accordance with its common understanding. Where there are two or more interpretations of a standard clause, the clause shall be interpreted in a manner unfavourable to the party providing the standard clause. Where a standard clause is inconsistent with a non-standard clause, the non-standard clause shall prevail.

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