The Signed Acknowledgment and the 0.3% Daily Penalty

The starting point is that Xinda’s PO was an offer and Kexin’s signed acknowledgment was a response that referred to additional standard terms. Because Xinda then signed and returned the acknowledgment, the better view is that the acknowledgment terms were assented to in writing, not merely left in silence. Under Civil Code art. 496, standard terms become part of a contract unless the provider failed to perform its duty to prompt attention to, or explain, a clause that exempts or limits the provider’s liability, increases the other party’s burden, or otherwise excludes the other party’s main rights. Clause 9 is a seller’s late-delivery liability, not an exemption of Kexin’s liability; clause 10 is a dispute-resolution clause. Xinda’s failure to read the reverse side does not by itself prevent incorporation, because a signed writing generally indicates assent. However, Xinda can still argue that clause 10 was buried and not reasonably brought to its attention. An arbitration clause must be in writing; a signed acknowledgment that clearly refers to arbitration in Shenzhen can satisfy that writing requirement. On these facts, both clauses are likely incorporated, but the arbitration clause is the weaker of the two because it affects procedural rights and was not specifically highlighted. If Xinda had simply accepted goods without signing, incorporation would be much more doubtful.

The penalty clause is valid in principle, but it is subject to judicial adjustment under Civil Code art. 585. The agreed penalty is 0.3% × 45 days = 13.5% of RMB 1,032,000, which equals RMB 139,320. Xinda’s proven actual loss is RMB 60,000 lost profit plus RMB 25,000 substitute-purchase cost, or RMB 85,000. The judicial test is whether the agreed sum is “excessively higher” than the loss. The commonly applied benchmark is that a penalty exceeding 130% of actual loss is generally treated as excessively high. Here 130% of RMB 85,000 is RMB 110,500. The claimed RMB 139,320 is about 164% of the loss, so a court would likely reduce the penalty to no more than RMB 110,500. The 0.3% daily rate is also extraordinarily high on an annualized basis, which supports reduction. Xinda cannot recover the full RMB 139,320 penalty and also separately recover the same RMB 85,000 loss, because the penalty is primarily compensatory. If the penalty were reduced below the proven loss, Xinda could claim the shortfall, but that is not the case here. Kexin should also check whether Xinda mitigated its loss as required by Civil Code art. 591.

Acceptance by conduct can form a contract even without signature. Under Civil Code art. 490, where the parties have not adopted a written form but one party has performed its main obligation and the other has accepted, the contract is formed. The terms may then be those contained in the acknowledgment, but only if they were validly incorporated. For standard terms, the provider must still satisfy the prompt-and-explain duty for clauses that exempt or limit its liability or increase the other party’s burden. Clause 9 is a penalty clause, not an exemption, so it is not automatically excluded by art. 496. But if the clause was only on the reverse side and Xinda had no reasonable notice of it, a court could find that it was not incorporated. The arbitration clause is even more vulnerable: accepting goods and paying the price may show assent to the sale, but it does not necessarily show a clear agreement to arbitrate. A court would ask whether Kexin specifically brought the arbitration clause to Xinda’s attention before or at the time of contracting. If not, clause 10 would likely fail, while clause 9 might still be treated as part of the contract if the acknowledgment was the only set of terms and Xinda knew terms existed. The result would therefore differ clause by clause.