Due to the impact of the new variant of COVID-19, Shanghai recently pressed the "pause button". During the period of epidemic control, the majority of residents actively responded to the call to cooperate with the policy, and made their own contributions to the goal of "dynamic zeroing" in Shanghai. I believe that under the leadership of the Party and the government, the people of Shanghai will unite as one, and the goal of victory will eventually be achieved, and Shanghai, a great city, will also bloom again.

Due to the highly transmissible nature of Omixon, logistics and distribution in Shanghai, the last mile of livelihood material support during the control period, has been greatly impacted. In addition to government provided support materials, community owners have also utilized various social resources and adopted community group purchase methods to improve logistics and distribution efficiency to some extent, while also meeting the basic material procurement needs of community owners in the context of the epidemic.

This type of activity is also unfolding in full swing in the community where the author is located, and network posts such as "My Team Leader My Team" often appear in the circle of friends. Based on the latest situation and policy release of community group buying in the latest society, the author hopes to provide a reminder of the relevant legal risks of community group buying through text, in order to hope that all parties firmly abide by the legal bottom line and safeguard their legitimate rights and interests when conducting community group buying.

1、 What is community group buying

Community group buying is a kind of online and offline shopping and consumption behavior of residents' groups in real residential communities. It is a regional, niche, localized, and networked form of group buying relying on real communities. Generally, community group buying consists of merchants, platforms, "group leaders", and "group members" (i.e. consumers). For the platform, on the afternoon of December 22, 2020, the State Administration of Market Supervision and the Ministry of Commerce organized an administrative guidance meeting to standardize the order of community group buying, and proposed nine new rules for community group buying on the platform. Interested readers can search through Baidu and other methods to understand the relevant rules and requirements for the platform, in order to safeguard their legitimate rights and interests, As the platform is not the main body of community group buying under the epidemic situation covered in this article, it will not be expanded here, but will be analyzed from the perspective of merchants, "team leaders", and "team members".

2、 Legal Risks of Merchants

In addition to the normal and strict performance of product quality responsibilities under the Product Quality Law, the Consumer Protection Law, and related product rules, businesses should also abide by and strictly implement price laws such as the Price Law, the Provisions on the Practical and Clear Pricing of Goods and Services, the Provisions on the Prohibition of Price Fraud, and the Guiding Opinions on the Determination of Illegal Price Raising during the Epidemic Prevention and Control Period Laws, regulations, and policies, implement subject responsibilities, operate in compliance with the law, and provide consumers with reasonably priced goods and services based on production and operating costs.

The author notes that the Shanghai Higher People's Court issued the Third Series of Questions and Answers on the Application of Law in Cases Involving the COVID-19 (2022 Edition) on April 10, 2022, in which question 10 concerns the determination of contract effectiveness under the transaction at a price significantly higher than the market price during the epidemic; Question 11 concerns the legal liability of individual businesses for fraudulent acts such as selling counterfeit and inferior products.
From "significantly higher than market prices" to "bid up prices"

(1) Civil field

According to Article 148 of the Civil Code, if one party fraudulently causes the other party to commit a civil legal act against its true intentions, the fraudster has the right to request the people's court or arbitration institution to revoke it. "Article 149 If a third party commits a fraudulent act, causing one party to commit a civil legal act against its true intentions, and the other party knows or should have known of the fraudulent act, the fraudster has the right to request the people's court or an arbitration institution to rescind it.". "Article 150 If a party or a third party uses coercion to cause the other party to commit a civil juristic act against its true intentions, the coerced party has the right to request the people's court or an arbitration institution to rescind it.". "Article 151 If one party takes advantage of the other party's precarious situation or lack of judgment to significantly unfairly establish a civil juristic act, the aggrieved party has the right to request the people's court or arbitration institution to rescind it.". Article 153 Civil juristic acts that violate the mandatory provisions of laws and administrative regulations are invalid. However, unless the mandatory provisions do not invalidate the civil legal act. Civil legal acts that violate public order and good customs are invalid.

The Shanghai Higher People's Court believes that in principle, the autonomy of the parties to a contract should be respected. However, if the parties involved bid up the prices of basic livelihood commodities, epidemic prevention supplies, and other related materials during the epidemic period, disrupting the order of the market economy, the price clause shall be deemed invalid. "If a party enters into a contract based on fraud or coercion, or takes advantage of its advantageous position or the other party's precarious state, resulting in a significant unfairness of the contract, and the other party requests cancellation of the contract, the request for cancellation shall be supported.".

(2) Administrative field

According to Article 14 of the Price Law, business operators shall not engage in the following unfair pricing behaviors: (1) colluding with each other to manipulate market prices and harm the legitimate rights and interests of other business operators or consumers. Article 40: If a business operator commits any of the acts listed in Article 14 of this Law, it shall be ordered to make corrections, its illegal income shall be confiscated, and a fine of not more than five times the illegal income may be imposed; "If there are no illegal gains, a warning and a fine may be imposed;"; "If the circumstances are serious, it shall be ordered to suspend business for rectification, or its business license shall be revoked by the administrative department for industry and commerce.". "If the relevant laws provide otherwise for the punishment of the acts listed in Article 14 of this Law and the punishment authorities, the provisions of the relevant laws may apply.". "If any of the acts listed in Article 14, Items (1) and (2) of this Law is national in nature, it shall be recognized by the competent pricing department under the State Council;"; "If it belongs to a regional nature at or below the provincial level, it shall be determined by the competent pricing department of the people's government of the province, autonomous region, or municipality directly under the Central Government.".
On March 26, 2022, the Shanghai Municipal Market Supervision and Administration issued the "Guiding Opinions on the Determination of Illegal Behaviors of Raising Prices during the Epidemic Prevention and Control Period", which has specific requirements for the situation, scope of application, increase recognition standards, and administrative penalty range of illegal behaviors during the epidemic prevention and control period. Among them, the provisions involving administrative penalties are: in accordance with Article 6 of the "Administrative Penalty Provisions on Price Illegal Behaviors," order correction and confiscate illegal income, And impose a fine of not more than five times the illegal income; "If there are no illegal gains, a fine of not less than 50000 yuan but not more than 500000 yuan shall be imposed, and if the circumstances are serious, a fine of not less than 500000 yuan but not more than 3 million yuan shall be imposed;"; "If the circumstances are serious, it shall be ordered to suspend business for rectification, or its business license shall be revoked by the market supervision department.". "If a trade association or unit providing services for commodity trading commits any of the illegal acts specified in the preceding paragraph, it may be fined not more than 500000 yuan;"; "If the circumstances are serious, the registration administration authority shall cancel the registration and revoke the license according to law.". "If the illegal act is minor and has been promptly corrected without causing harmful consequences, no administrative penalty shall be imposed.".

(3) Criminal field

According to Article 225 of the Criminal Law, anyone who, in violation of State regulations, commits one of the following illegal business operations, disrupting market order, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and shall also, or shall only, be fined not less than one time but not more than five times the illegal income; "If the circumstances are especially serious, they shall be sentenced to fixed-term imprisonment of not less than five years, and shall also be fined not less than one time but not more than five times the illegal gains or have their property confiscated: (4) Other illegal business operations that seriously disrupt market order.". According to the Supreme Law, the Supreme People's Procuratorate, the Ministry of Public Security and the Ministry of Justice, the Opinions on Punishing the Illegal Crime of Preventing and Controlling the Pneumonia Epidemic Caused by novel coronavirus (IV), the crime of driving up prices is severely punished according to law. During the period of epidemic prevention and control, those who, in violation of relevant national regulations on market operation and price management, hoard and hoard, bid up the prices of protective supplies such as masks, goggles, protective clothing, disinfectants, or other items that are urgently needed for epidemic prevention and control, seek exorbitant profits, and obtain large amounts of illegal gains, or have other serious circumstances that seriously disrupt market order, shall be subject to the provisions of Item 4 of Article 225 of the Criminal Law, Convicted and punished for the crime of illegal business operations.

The Shanghai Higher People's Court held that commodity operators who intentionally bid up prices, hoard and hoard during the special period of epidemic prevention and control, violate the relevant market operation and price management regulations of the state, seriously affecting the market operation order, and comply with the provisions of Article 225 (4) of the Criminal Law, shall be convicted and punished for the crime of illegal business operations.

2. Legal responsibility for product quality

According to Article 1207 of the Civil Code, if the infringee knowingly produces or sells a product with defects, or fails to take effective remedial measures in accordance with the provisions of the preceding article, resulting in death or serious health damage to another person, the infringee has the right to request corresponding punitive compensation.

According to Article 55 of the Law on the Protection of Consumer Rights and Interests, if a business operator commits fraudulent acts in providing goods or services, it shall increase the compensation for the losses it has suffered at the request of the consumer, and the amount of increased compensation shall be three times the price of the consumer's purchase of the goods or the cost of receiving the service; "If the amount of additional compensation is less than 500 yuan, it shall be 500 yuan.". "If the law provides otherwise, such provisions shall prevail.". "If a business operator knowingly provides a defect in a commodity or service to a consumer, causing death or serious health damage to the consumer or other victims, the victim has the right to demand compensation from the business operator in accordance with the provisions of Articles 49, 51, and other laws of this Law, and has the right to demand punitive compensation of not more than twice the loss suffered.".

According to the second paragraph of Article 148 of the Food Safety Law, if a consumer produces food that does not meet food safety standards or knowingly operates food that does not meet food safety standards, in addition to claiming compensation for losses, they can also claim compensation from the producer or operator for ten times the price or three times the loss.

The Shanghai Higher People's Court believes that if there are fraudulent acts in the sale of epidemic prevention materials by merchants, the provisions on punitive damages such as Article 1207 of the Civil Code of the People's Republic of China and Article 55 of the Law of the People's Republic of China on the Protection of Consumer Rights and Interests should be accurately applied to maintain market order and protect the legitimate rights and interests of the people. At the same time, a letter should be sent in a timely manner to advise relevant administrative departments to investigate and deal with it; If a crime is involved, it shall be promptly transferred to the public security organ for handling.

It can be seen from this that whether it is "significantly higher than market prices" to "bid up prices", or legal liability for product quality, relevant laws and regulations in China have clearly stipulated laws and regulations from the civil, administrative, and criminal levels, and businesses must not make mistakes for thousands of years due to greed.