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CONTRACT LAW OF P. R. CHINA
Sources:International Trade Law, Time:2012-08-01 14:59, Click:, Comment
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CONTRACT LAW OF P. R. CHINA

Adopted and Promulgated by the Second Session of the Ninth National People‘s 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 lawful 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 standing, 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 parties 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 Fairness
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 contract, 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. The 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 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 in 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, telex, 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 thereof;
(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 contract 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 party‘s manifestation of intention to enter into a contract with the other party, which shall comply with the following:
(i) Its terms are specific 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 party‘s manifestation of intention to invite the other party to make an offer thereto. A delivered price list, announcement of auction, 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 reaches 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 been designated, the time when the electronic message first enters into any of the recipient‘s 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 Revocation 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 irrevocable;
(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 revokes 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 offeree‘s manifestation of intention to assent to an offer.
Article 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 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 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 in 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.
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 effective 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 Acceptance
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 advises 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 after 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 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 of 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 timely 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 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 formed upon execution of the confirmation letter.

 


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