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1、CONTRACT LAW OF P. R. CHINAAdopted and Promulgated by the Second Session of the Ninth National Peoples Congress on March 15, 1999. Translated & Compiled by John Jiang & Henry Liu GENERAL PRINCIPLES Chapter One: General Provisions Article 1 Purpose This Law is formulated in order to protect the lawfu
2、l rights and interests of contract parties, to safeguard social and economic order, and to promote socialist modernization. Article 2 Definition of Contract; Exclusions For purposes of this Law, a contract is an agreement between natural persons, legal persons or other organizations with equal stand
3、ing, for the purpose of establishing, altering, or discharging a relationship of civil rights and obligations. An agreement concerning any personal relationship such as marriage, adoption, guardianship, etc. shall be governed by other applicable laws. Article 3 Equal Standing of Parties Contract par
4、ties enjoy equal legal standing and neither party may impose its will on the other party. Article 4 Right to Enter into Contract Voluntarily A party is entitled to enter into a contract voluntarily under the law, and no entity or individual may unlawfully interfere with such right. Article 5 Fairnes
5、s The parties shall abide by the principle of fairness in prescribing their respective rights and obligations. Article 6 Good Faith The parties shall abide by the principle of good faith in exercising their rights and performing their obligations. Article 7 Legality In concluding or performing a con
6、tract, the parties shall abide by the relevant laws and administrative regulations, as well as observe social ethics, and may not disrupt social and economic order or harm the public interests. Article 8 Binding Effect; Legal Protection A lawfully formed contract is legally binding on the parties. T
7、he parties shall perform their respective obligations in accordance with the contract, and neither party may arbitrarily amend or terminate the contract. A lawfully formed contract is protected by law. Chapter Two: Formation of Contracts Article 9 Capacity; Contract through Agent In entering into a
8、contract, the parties shall have the appropriate capacities for civil rights and civil acts. A party may appoint an agent to enter into a contract on its behalf under the law. Article 10 Forms of Contract; Writing Requirement A contract may be made in a writing, in an oral conversation, as well as i
9、n any other form. A contract shall be in writing if a relevant law or administrative regulation so requires. A contract shall be in writing if the parties have so agreed. Article 11 Definition of Writing A writing means a memorandum of contract, letter or electronic message (including telegram, tele
10、x, facsimile, electronic data exchange and electronic mail), etc. which is capable of expressing its contents in a tangible form. Article 12 Terms of Contract The terms of a contract shall be prescribed by the parties, and generally include the following: (i) names of the parties and the domiciles t
11、hereof; (ii) subject matter; (iii) quantity; (iv) quality; (v) price or remuneration; (vi) time, place and method of performance; (vii) liabilities for breach of contract; (viii) method of dispute resolution. The parties may enter into a contract by referencing a model contract for the relevant cont
12、ract category. Article 13 Offer-Acceptance A contract is concluded by the exchange of an offer and an acceptance. Article 14 Definition of Offer An offer is a partys manifestation of intention to enter into a contract with the other party, which shall comply with the following: (i) Its terms are spe
13、cific and definite; (ii) It indicates that upon acceptance by the offeree, the offeror will be bound thereby. Article 15 Invitation to Offer An invitation to offer is a partys manifestation of intention to invite the other party to make an offer thereto. A delivered price list, announcement of aucti
14、on, call for tender, prospectus, or commercial advertisement, etc. is an invitation to offer. A commercial advertisement is deemed an offer if its contents meet the requirements of an offer. Article 16 Effectiveness of Offer, Offer through Electronic Message An offer becomes effective when it reache
15、s the offeree. When a contract is concluded by the exchange of electronic messages, if the recipient of an electronic message has designated a specific system to receive it, the time when the electronic message enters into such specific system is deemed its time of arrival; if no specific system has
16、 been designated, the time when the electronic message first enters into any of the recipients systems is deemed its time of arrival. Article 17 Withdrawal of Offer An offer may be withdrawn. The notice of withdrawal shall reach the offeree before or at the same time as the offer. Article 18 Revocat
17、ion of Offer An offer may be revoked. The notice of revocation shall reach the offeree before it has dispatched a notice of acceptance. Article 19 Irrevocable Offer An offer may not be revoked: (i) if it expressly indicates, whether by stating a fixed time for acceptance or otherwise, that it is irr
18、evocable; (ii) if the offeree has reason to regard the offer as irrevocable, and has undertaken preparation for performance. Article 20 Extinguishment of Offer An offer is extinguished in any of the following circumstances: (i) The notice of rejection reaches the offeror; (ii) The offeror lawfully r
19、evokes the offer; (iii) The offeree fails to dispatch its acceptance at the end of the period for acceptance; (iv) The offeree makes a material change to the terms of the offer. Article 21 Definition of Acceptance An acceptance is the offerees manifestation of intention to assent to an offer. Articl
20、e 22 Mode of Acceptance; Acceptance by Conduct An acceptance shall be manifested by notification, except where it may be manifested by conduct in accordance with the relevant usage or as indicated in the offer. Article 23 Timely Dispatch of Acceptance An acceptance shall reach the offeror within the
21、 period prescribed in the offer. Where the offer does not prescribe a period for acceptance, the acceptance shall reach the offeror as follows: (i) Where the offer is made orally, the acceptance shall be dispatched immediately, unless otherwise agreed by the parties; (ii) Where the offer is made in
22、a non-oral manner, the acceptance shall reach the offeror within a reasonable time. Article 24 Commencement of the Period for Acceptance Where an offer is made by a letter or a telegram, the period for acceptance commences on the date shown on the letter or the date on which the telegram is handed i
23、n for dispatch. If the letter does not specify a date, the period commences on the posting date stamped on the envelop. Where the offer is made through an instantaneous communication device such as telephone or facsimile, etc., the period for acceptance commences once the offer reaches the offeree.
24、Article 25 Contract Formed upon Effectiveness of Acceptance A contract is formed once the acceptance becomes effective. Article 26 Effectiveness of Acceptance A notice of acceptance becomes effective once it reaches the offeror. Where the acceptance does not require notification, it becomes effectiv
25、e once an act of acceptance is performed in accordance with the relevant usage or as required by the offer. Where a contract is concluded by the exchange of electronic messages, the time of arrival of the acceptance shall be governed by Paragraph 2 of Article 16 hereof. Article 27 Withdrawal of Acce
26、ptance An acceptance may be withdrawn. The notice of withdrawal shall reach the offeror before or at the same time as the acceptance. Article 28 Late Acceptance An acceptance dispatched by the offeree after expiration of the period for acceptance constitutes a new offer, unless the offeror timely ad
27、vises the offeree that the acceptance is valid. Article 29 Delayed Transmission of Acceptance If the offeree dispatched its acceptance within the period for acceptance, and the acceptance, which would otherwise have reached the offeror in due time under normal circumstances, reaches the offeror afte
28、r expiration of the period for acceptance due to any other reason, the acceptance is valid, unless the offeror timely advises the offeree that the acceptance has been rejected on grounds of the delay. Article 30 Acceptance Containing Material Change The terms of the acceptance shall be identical to
29、those of the offer. A purported acceptance dispatched by the offeree which materially alters the terms of the offer constitutes a new offer. A change in the subject matter, quantity, quality, price or remuneration, time, place and method of performance, liabilities for breach of contract or method o
30、f dispute resolution is a material change to the terms of the offer. Article 31 Acceptance Containing Non-material Changes An acceptance containing nonmaterial changes to the terms of the offer is nevertheless valid and the terms thereof prevail as the terms of the contract, unless the offeror timel
31、y objects to such changes or the offer indicated that acceptance may not contain any change to the terms thereof. Article 32 Time of Formation in Case of Memorandum of Contract Where the parties enter into a contract by a memorandum of contract, the contract is formed when it is signed or sealed by
32、the parties. Article 33 Time of Formation in Case of Letters or Electronic Messages; Confirmation Letter Where the parties enter into a contract by the exchange of letters or electronic messages, one party may require execution of a confirmation letter before the contract is formed. The contract is
33、formed upon execution of the confirmation letter. Article 34 Place of Formation; Electronic Messages The place where the acceptance becomes effective is the place of formation of a contract. Where a contract is concluded by the exchange of electronic messages, the recipients main place of business i
34、s the place of formation of the contract; if the recipient does not have a main place of business, its habitual residence is the place of formation of the contract. If the parties have agreed otherwise, such agreement prevails. Article 35 Place of Formation in Case of Memorandum of Contract Where a
35、contract is concluded by a memorandum of contract, its place of formation is the place where the parties sign or seal the contract. Article 36 Effect of Failure to Conclude Contract in Writing Where a contract is to be concluded by a writing as required by the relevant law or administrative regulati
36、on or as agreed by the parties, if the parties failed to conclude the contract in writing but one party has performed its main obligation and the other party has accepted the performance, the contract is formed. Article 37 Effect of Failure to Sign in Case of Memorandum of Contract Where a contract
37、is to be concluded by a memorandum of contract, if prior to signing or sealing of the contract, one party has performed its main obligation and the other party has accepted the performance, the contract is formed. Article 38 Contract under State Mandatory Plan Where the state has, in light of its re
38、quirements, issued a mandatory plan or state purchase order, the relevant legal persons and other organizations shall enter into a contract based on the rights and obligations of the parties prescribed by the relevant laws and administrative regulations. Article 39 Standard Terms; Duty to Call Atten
39、tion Where a contract is concluded by way of standard terms, the party supplying the standard terms shall abide by the principle of fairness in prescribing the rights and obligations of the parties and shall, in a reasonable manner, call the other partys attention to the provision(s) whereby such pa
40、rtys liabilities are excluded or limited, and shall explain such provision(s) upon request by the other party. Standard terms are contract provisions which were prepared in advance by a party for repeated use, and which are not negotiated with the other party in the course of concluding the contract
41、. Article 40 Invalidity of Certain Standard Terms A standard term is invalid if it falls into any of the circumstances set forth in Article 52 and Article 53 hereof, or if it excludes the liabilities of the party supplying such term, increases the liabilities of the other party, or deprives the othe
42、r party of any of its material rights. Article 41 Dispute Concerning Construction of Standard Term In case of any dispute concerning the construction of a standard term, such term shall be interpreted in accordance with common sense. If the standard term is subject to two or more interpretations, it
43、 shall be interpreted against the party supplying it. If a discrepancy exists between the standard term and a non-standard term, the non-standard term prevails. Article 42 Pre-contract Liabilities Where in the course of concluding a contract, a party engaged in any of the following conducts, thereby
44、 causing loss to the other party, it shall be liable for damages: (i) negotiating in bad faith under the pretext of concluding a contract; (ii) intentionally concealing a material fact relating to the conclusion of the contract or supplying false information; (iii) any other conduct which violates t
45、he principle of good faith. Article 43 Trade Secrets; Liability for Disclosure or Improper Use A party may not disclose or improperly use any trade secret which it became aware of in the course of negotiating a contract, regardless of whether a contract is formed. If the party disclosed or improperl
46、y used such trade secret, thereby causing loss to the other party, it shall be liable for damages. Chapter Three: Validity of Contracts Article 44 Effectiveness of Contract A lawfully formed contract becomes effective upon its formation. Where effectiveness of a contract is subject to any procedure
47、such as approval or registration, etc. as required by a relevant law or administrative regulation, such provision applies. Article 45 Conditions Precedent; Conditions Subsequent; Improper Impairment or Facilitation The parties may prescribe that effectiveness of a contract be subject to certain cond
48、itions. A contract subject to a condition precedent becomes effective once such condition is satisfied. A contract subject to a condition subsequent is extinguished once such condition is satisfied. Where in order to further its own interests, a party improperly impaired the satisfaction of a condit
49、ion, the condition is deemed to have been satisfied; where a party improperly facilitated the satisfaction of a condition, the condition is deemed not to have been satisfied. Article 46 Contract Term The parties may prescribe a term for a contract. A contract subject to a time of commencement becomes effective at such ti