Contract Law of the People's Republic of China
CHAPTER 1 GENERAL PROVISIONS
CHAPTER 2 CONCLUSION OF CONTRACTS
CHAPTER 4 PERFORMANCE OF CONTRACTS
CHAPTER 5 MODIFICATION AND ASSIGNMENT OF CONTRACTS
CHAPTER 6 TERMINATION OF THE RIGHTS AND OBLIGATIONS OF CONTRACTS CHAPTER 7 LIABILITY FOR BREACH OF CONTRACTS
CHAPTER 8 MISCELLANEOUS PROVISIONS
SPECIFIC PROVISIONS
CHAPTER 9 CONTRACTS FOR SALES
CHAPTER 10 CONTRACTS FOR SUPPLY AND USE OF ELECTRICITY, WATER, GAS OR HEATING
CHAPTER 11 CONTRACTS FOR DONATION
CHAPTER 12 CONTRACTS FOR LOANS
CHAPTER 13 CONTRACTS FOR LEASE
CHAPTER 14 CONTRACTS FOR FINANCIAL LEASE
CHAPTER 15 CONTRACTS FOR WORK
CHAPTER 16 CONTRACTS FOR CONSTRUCTION PROJECTS
CHAPTER 17 CONTRACTS FOR TRANSPORTATION
SECTION 1 GENERAL RULES
SECTION 2 CONTRACTS FOR PASSENGER TRANSPORTATION
SECTION 3 CONTRACTS FOR GOODS TRANSPORTATION
SECTION 4 CONTRACTS FOR MULTI-MODAL TRANSPORTATION
CHAPTER 18 CONTRACTS FOR TECHNOLOGY
SECTION 1 GENERAL RULES
SECTION 2 CONTRACTS FOR TECHNOLOGY DEVELOPMENT
SECTION 3 CONTRACTS FOR TECHNOLOGY TRANSFER
SECTION 4 CONTRACTS FOR TECHNICAL CONSULTANCY AND TECHNICAL SERVICE CHAPTER 19 CONTRACTS FOR STORAGE
CHAPTER 20 CONTRACTS FOR WAREHOUSING
CHAPTER 21 CONTRACTS FOR COMMISSION
CHAPTER 22 CONTRACTS FOR BROKERAGE
CHAPTER 23 CONTRACTS FOR INTERMEDIATION
SUPPLEMENTARY PROVISIONS
Article 1 This Law is formulated with a view to protecting the lawful rights and interests of the parties to contracts, maintaining the social economic order and promoting the progress of the socialist modernization drive.
Article 2 A contract in this Law refers to an agreement establishing, modifying and terminating the civil rights and obligations between subjects of equal footing, that is, between natural persons, legal persons or other organizations.
Agreements involving personal status relationship such as on matrimony, adoption, guardianship, etc. shall apply the provisions of other Laws.
Article 3 The parties to a contract shall have equal legal status. No party may impose its will on the other party.
Article 4 The parties shall have the rights to be voluntary to enter into a contract in accordance with the law. No unit or individual may illegally interfere.
Article 5 The parties shall abide by the principle of fairness in defining the rights and obligations of each party.
Article 6 The parties must act in accordance with the principle of good faith, no matter in exercising rights or in performing obligations.
Article 7 In concluding and performing a contract, the parties shall abide by the laws and administrative regulations, observe social ethics. Neither party may disrupt the socio-economic order or damage the public interests.
Article 8 As soon as a contract is established in accordance with the law, it shall be legally binding on the parties. The parties shall perform their respective obligations in accordance with the terms of the contract. Neither party may unilaterally modify or rescind the contract.
The contract established according to law shall be under the protection of law.
CHAPTER 2 CONCLUSION OF CONTRACTS
Article 9 In concluding a contract, the parties shall have appropriate civil capacity of right and civil capacity of conduct.
The parties may conclude a contract through an agent in accordance with the law.
Article 10 The parties may conclude a contract in written, oral or other forms.
Where the laws or administrative regulations require a contract to be concluded in written form, the contract shall be in written form. If the parties agree to do so, the contract shall be concluded in written form.
Article 11 The written forms mean the forms which can show the described contents visibly, such as a written contractual agreement, letters, and data-telex (including telegram, telex, fax, EDI and e-mails).
Article 12 The contents of a contract shall be agreed upon by the parties, and shall contain the following clauses in general:
(1) title or name and domicile of the parties;
(2) contract object;
(3) quantity;
(4) quality;
(5) price or remuneration;
(6) time limit, place and method of performance;
(7) liability for breach of contract; and
(8) methods to settle disputes.
The parties may conclude a contract by reference to the model text of each kind of contract.
Article 13 The parties shall conclude a contract in the form of an offer and acceptance.
Article 14 An offer is a proposal hoping to enter into a contract with other parties. The proposal shall comply with the following stipulations:
(1) Its contents shall be detailed and definite;
(2) It indicates the proposal of the offeror to be bound in case of acceptance.
Article 15 An invitation for offer is a proposal for requesting other parties to make offers to the principal. Price forms mailed, public notices of auction and tender, prospectuses and commercial advertisements, etc. are invitations for offer.
Where the contents of a commercial advertisement comply with the terms of the offer, it may be regarded as an offer.
Article 16 An offer becomes effective when it reaches the offeree.
If a contract is concluded by means of data-telex, and a recipient appoints a specific system to receive the data-telex, the time when the data-telex enters the system shall be the time of arrival; if no specific system is appointed, the time when the data-telex first enters any of the recipient's systems shall be regarded as the time of arrival.
Article 17 An offer may be withdrawn, if the withdrawal notice reaches the offeree before or at the same time when the offer arrives.
Article 18 An offer may be revoked, if the revocation reaches the offeree before it has dispatched an acceptance.
Article 19 An offer may not be revoked, if
(1) the offeror indicates a fixed time for acceptance or otherwise explicitly states that the offer is irrevocable; or
(2) the offeree has reasons to rely on the offer as being irrevocable and has made preparation for performing the contract.
Article 20 An offer shall be null and void under any of the following circumstances:
(1) The notice of rejection reaches the offeror;
(2) The offeror revokes its offer in accordance with the law;
(3) The offeree fails to make an acceptance at the time when the time limit for acceptance expires;
(4) The offeree substantially alters the contents of the offer.
Article 21 An acceptance is a statement made by the offeree indicating assent to an offer.
Article 22 Except that it is based on transaction practices or that the offer indicates an acceptance may be made by performing an act, the acceptance shall be made by means of notice.
Article 23 An acceptance shall reach the offeror within the time limit fixed in the offer.
Where no time limit is fixed in the offer, the acceptance shall arrive in accordance with the following provisions:
(1) If the offer is made in dialogues, the acceptance shall be made immediately except as otherwise agreed upon by the parties;
(2) If the offer is made in forms other than a dialogue, the acceptance shall arrive within a reasonable period of time.
Article 24 Where the offer is made in a letter or a telegram, the time limit for acceptance commences from the date shown in the letter or from the moment the telegram is handed in for dispatch. If no such date is shown in the letter, it commences from the date shown on the envelope. Where an offer is made by means of instantaneous communication, such as telephone or facsimile, the time limit for acceptance commences from the moment that the offer reaches the offeree.
Article 25 A contract is established when the acceptance becomes effective.
Article 26 An acceptance becomes effective when its notice reaches the offeror. If an acceptance needn't be notified, it becomes effective when an act of acceptance is performed in accordance with transaction practices or as required in the offer.
Where a contract is concluded in the form of data-telex, the time when an acceptance arrives shall apply the provisions of Paragraph 2, Article 16 of this Law.
Article 27 An acceptance may be withdrawn, but a notice of withdrawal shall reach the offeror before the notice of acceptance reaches the offeror or at the same time when the acceptance reaches the offeror.
Article 28 Where an offeree makes an acceptance beyond the time limit for acceptance, the acceptance shall be a new offer except that the offeror informs the offeree of the effectiveness of the said acceptance promptly.
Article 29 If the offeree dispatches the acceptance within the time limit for acceptance which can reach the offeror in due time under normal circumstances, but the acceptance reaches the offeror beyond the time limit because of other reasons, the acceptance shall be effective, except that, the offeror informs the offeree promptly that it does not accept the acceptance because it exceeds the time limit for acceptance.
Article 30 The contents of an acceptance shall comply with those of the offer. If the offeree substantially modifies the contents of the offer, it shall constitute a new offer. The modification relating to the contract object, quality, quantity, price or remuneration, time or place or method of performance, liabilities for breach of contract and the settlement of disputes, etc., shall constitute the substantial modification of an offer.
Article 31 If the acceptance does not substantially modifies the contents of the offer, it shall be effective, and the contents of the contract shall be subject to those of the acceptance, except as rejected promptly by the offeror or indicated in the offer that an acceptance may not modify the offer at all.
Article 32 Where the parties conclude a contract in written form, the contract is established when both parties sign or affix a seal on it.
Article 33 Where the parties conclude the contract in the form of a letter or data-telex, etc., one party may request to sign a letter of confirmation before the conclusion of the contract. The contract shall be established at the time when the letter of confirmation is signed.
Article 34 The place of effectiveness of an acceptance shall be the place of the establishment of the contract.
If the contract is concluded in the form of data-telex, the main business place of the receipient shall be the place of establishment. If no main business place, its habitual residence shall be considered to be the place of establishment. Where the parties agree otherwise, the place of establishment shall be subject to that agreement.
Article 35 Where the parties conclude a contract in written form, the place where both parties sign or affix a seal shall be the place where the contract is established.
Article 36 A contract, which shall be concluded in written form as provided for by the laws and administrative regulations or as agreed upon by the parties, shall be established, as the parties do not use the written form, but one party has performed the principal obligation and the other party has received it.
Article 37 A contract, which is concluded in written form, shall be eslablished, if one party has performed its principal obligation and the other party has received it before signiture or affixing with a seal.
Article 38 In case the State issues a mandatory plan or a State purchasing order task based on necessity, the relevant legal persons or other organizations shall conclude contracts between them in accordance with the rights and obligations as stipulated by the relevant laws and administrative regulations.
Article 39 Where standard terms are adopted in concluding a contract, the party which supplies the standard terms shall define the rights and obligations between the parties abiding by the principle of fairness, request the other party to note the exclusion or restriction of its liabilities in reasonable ways, and explain the standard terms according to the requirement of the other party.
Standard terms are clauses which are prepared in advance for general and repeated use by one party and which are not negotiatied with the other party in concluding a contract.
Article 40 When standard terms are under the circumstances stipulated in Article 52 and Article 53 of this Law, or the party which supplies the standard terms exempts itself from its liabilities, weights the liabilities of the other party, and excludes the rights of the other party, the terms shall be null and void.
Article 41 If a dispute over the understanding of the standard terms occurs, it shall be interpreted according to general understanding. Where there are two or more kinds of interpretation, an interpretation unfavourable to the party supplying the standard terms shall be preferred. Where the standard terms are inconsistent with non-standard terms, the latter shall be adopted.
Article 42 The party shall be liable for damages if it is under one of the following circumstances in concluding a contract and thus causing losses to the other party:
(1) disguising and pretending to conclude a contract, and negotiating in bad faith;
(2) concealing deliberately the important facts relating to the conclusion of the contract or providing deliberately false information;
(3) performing other acts which violate the principle of good faith.
Article 43 A business secret the parties learn in concluding a contract shall not be disclosed or unfairly used, no matter the contract is established or not. The party who causes the other party to suffer from losses due to disclosing or unfairly using the business secret shall be liable for damages.
CHAPTER 3 EFFECTIVENESS OF CONTRACTS
Article 44 The contract established according to law becomes effective when it is established.
With regard to contracts which are subject to approval or registration as provided for by the laws or administrative regulations, the provisions thereof shall be followed.
Article 45 The parties may agree on some collateral conditions relating to the effectiveness of a contract. The contract with entry-into-force conditions shall be effective when such conditions are accomplished. The contract with dissolving conditions shall be null and void when such conditions are accomplished.
To unfairly prevent the conditions from being accomplished by one party for its own interests shall be regarded as those conditions have been accomplished. To unfairly promoting the accomplishment of such conditions by one party shall be regarded as non-accomplishment.
Article 46 The parties may agree on a conditional time period as to the effectiveness of the contract. A contract subject to an effective time period shall come into force when the period expires. A contract with termination time period shall become invalid when the period expires.
Article 47 A contract concluded by a person with limited civil capacity of conduct shall be effective after being ratified afterwards by the person's statutory agent, but a pure profit-making contract or a contract concluded which is appropriate to the person's age, intelligence or mental health conditions need not be ratified by the person's statutory agent.
The counterpart may urge the statutory agent to ratify the contract within one month. It shall be regarded as a refusal of ratification that the statutory agent does not make any expression. A bona fide counterpart has the right to withdraw it before the contract is ratified. The withdrawal shall be made by means of notice.
Article 48 A contract concluded by an actor who has no power of agency, who oversteps the power of agency, or whose power of agency has expired and yet concludes it on behalf of the principal, shall have no legally binding force on the principal without ratification by the principal, and the actor shall be held liable.
The counterpart may urge the principal to ratify it within one month. It shall be regarded as a refusal of ratification that the principal does not make any expression. A bona fide counterpart has the right to withdraw it before the contract is ratified. The withdrawal shall be made by means of notice.
Article 49 If an actor has no power of agency, oversteps the power of agency, or the power of agency has expired and yet concludes a contract in the principal's name, and the counterpart has reasons to trust that the actor has the power of agency, the act of agency shall be effective.
Article 50 Where a statutory representative or a responsible person of a legal person or other organization oversteps his/her power and concludes a contract, the representative act shall be effective except that the counterpart knows or ought to know that he/she is overstepping his/her powers.
Article 51 Where a person having no right to disposal of property disposes of other persons' properties, and the principal ratifies the act afterwards or the person without power of disposal has obtained the power after concluding a contract, the contract shall be valid.
Article 52 A contract shall be null and void under any of the following circumstances:
(1) A contract is concluded through the use of fraud or coercion by one party to damage the interests of the State;
(2) Malicious collusion is conducted to damage the interests of the State, a collective or a third party;
(3) An illegitimate purpose is concealed under the guise of legitimate acts;
(4) Damaging the public interests;
(5) Violating the compulsory provisions of the laws and administrative regulations.
Article 53 The following immunity clauses in a contract shall be null and void:
(1) those that cause personal injury to the other party;
(2) those that cause property damages to the other party as a result of deliberate intent or gross fault.
Article 54 A party shall have the right to request the people's court or an arbitration institution to modify or revoke the following contracts:
(1) those concluded as a result of serious misunderstanding;
(2) those that are obviously unfair at the time when concluding the contract.
If a contract is concluded by one party against the other party's true intentions through the use of fraud, coercion or exploitation of the other party's unfavorable position, the injured party shall have the right to request the people's court or an arbitration institution to modify or revoke it.
Where a party requests for modification, the people's court or the arbitration institution may not revoke the contract.
Article 55 The right to revoke a contract shall extinguish under any of the following circumstances:
(1) A party having the right to revoke the contract fails to exercise the right within one year from the day that it knows or ought to know the revoking causes;
(2) A party having the right to revoke the contract explicitly expresses or conducts an act to waive the right after it knows the revoking causes.
Article 56 A contract that is null and void or revoked shall have no legally binding force ever from the very beginning. If part of a contract is null and void without affecting the validity of the other parts, the other parts shall still be valid.
Article 57 If a contract is null and void, revoked or terminated, it shall not affect the validity of the dispute settlement clause which is independently existing in the contract.
Article 58 The property acquired as a result of a contract shall be returned after the contract is confirmed to be null and void or has been revoked; where the property can not be returned or the return is unnecessary, it shall be reimbursed at its estimated price. The party at fault shall compensate the other party for losses incurred as a result therefrom. If both parties are at fault, each party shall respectively be liable.
Article 59 If the parties have maliciously conducted collusion to damage the interests of the State, a collective or a third party, the property thus acpuired shall be turned over to the State or returned to the collective or the third party.
CHAPTER 4 PERFORMANCE OF CONTRACTS
Article 60 The parties shall perform their obligations thoroughly according to the terms of the contract.
The parties shall abide by the principle of good faith and perform the obligations of notice, assistance and maintaining confidentiality, etc. based on the character and purpose of the contract or the transaction practices.
Article 61 Where, after the contract becomes effective, there is no agreement in the contract between the parties on the terms regarding quality, price or remuneration and place of performance, etc. or such agreement is unclear, the parties may agree upon supplementary terms through consultation. In case of a failure in doing so, the terms shall be determined from the context of relevant clauses of the contract or by transaction practices.
Article 62 If the relevant terms of a contract are unclear, nor can it be determined according to the provisions of Article 61 of this Law, the provisions below shall be applied:
(1) If quality requirements are unclear, the State standards or trade standards shall be applied; if there are no State standards or trade standards, generally held standards or specific standards in conformity with the purpose of the contract shall be applied.
(2) If the price or remuneration is unclear, the market price of the place of performance at the time concluding the contract shall be applied; if the government-fixed price or government-directed price shall be followed in accordance with the law, the provisions of the law shall be applied.
(3) If the place of performance is unclear, and the payment is currency, the performance shall be effected at the place of location of the party receiving the payment; if real estate is to be delivered, the performance shall be effected at the place of location of the real estate; in case of other contract objects, the performance shall be effected at the place of location of the party fulfilling the obligations.
(4) If the time limit for performance is unclear, the obligor may at any time fulfill the obligations towards the obligee; the obligee may also demand at any time that the obligor performs the obligations, but a time period for necessary preparation shall be given to the obligor.
(5) If the method of performance is unclear, the method which is advantageous to realize the purpose of the contract shall be adopted.
(6) If the burden of the expenses of performance is unclear, the cost shall be assumed by the obligor.
Article 63 In cases where the government-fixed price or government- directed price is followed in a contract, if the s