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CONTRACT LAW OF P. R. CHINA 2
Sources:International Trade Law, Time:2017-03-06 15:51, Click:, Comment
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Article 65 Performance by a Third Person
Where the parties prescribed that a third person render performance to the obligee, if the third person fails to perform or rendered non-conforming performance, the obligor shall be liable to the obligee for breach of contract.
Article 66 Simultaneous Performance
Where the parties owe performance toward each other and there is no order of performance, the parties shall perform simultaneously. Prior to performance by the other party, one party is entitled to reject its requirement for performance. If the other party rendered non-conforming performance, one party is entitled to reject its corresponding requirement for performance.
Article 67 Consecutive Performance
Where the parties owe performance toward each other and there is an order of performance, prior to performance by the party required to perform first, the party who is to perform subsequently is entitled to reject its requirement for performance. If the party required to perform first rendered non-conforming performance, the party who is to perform subsequently is entitled to reject its corresponding requirement for performance.
Article 68 Right to Suspend Performance
The party required to perform first may suspend its performance if it has conclusive evidence establishing that the other party is in any of the following circumstances:
(i) Its business has seriously deteriorated;
(ii) It has engaged in transfer of assets or withdrawal of funds for the purpose of evading debts;
(iii) It has lost its business creditworthiness;
(iv) It is in any other circumstance which will or may cause it to lose its ability to perform.
Where a party suspends performance without conclusive evidence, it shall be liable for breach of contract.
Article 69 Notification upon Suspension of Performance; Termination
If a party suspends its performance in accordance with Article 68 hereof, it shall timely notify the other party.
If the other party provides appropriate assurance for its performance, the party shall resume performance. After performance was suspended, if the other party fails to regain its ability to perform and fails to provide appropriate assurance within a reasonable time, the suspending party may terminate the contract.
Article 70 Difficulty in Rendering Performance Due to Combination
Where after effecting combination, division, or change of domicile, the obligee failed to notify the obligor, thereby making it difficult to render performance, the obligor may suspend its performance or place the subject matter in escrow.
Article 71 Right to Reject Early Performance; Exception
The obligee may reject the obligor‘s early performance, except where such early performance does not harm the obligee‘s interests.
Any additional expense incurred by the obligee due to the obligor‘s early performance shall be borne by the obligor.
Article 72 Right to Reject Partial Performance; Exception
An obligee may reject the obligor‘s partial performance, except where such partial performance does not harm the obligee‘s interests.
Any additional expense incurred by the obligee due to the obligor‘s partial performance shall be borne by the obligor.
Article 73 Subrogation; Limitation
Where the obligor delayed in exercising its creditor‘s right against a third person that was due, thereby harming the obligee, the obligee may petition the People‘s Court for subrogation, except where such creditor‘s right is exclusively personal to the obligor.
The scope of subrogation is limited to the extent of the obligee‘s right to performance. The necessary expenses for subrogation by the obligee shall be borne by the obligor.
Article 74 Obligee‘s Right to Cancel Manifestly Unreasonable Act by Obligor
Where the obligor waived its creditor‘s right against a third person that was due or assigned its property without reward, thereby harming the obligee, the obligee may petition the People‘s Court for cancellation of the obligor‘s act. Where the obligor assigned its property at a low price which is manifestly unreasonable, thereby harming the obligee, and the assignee was aware of the situation, the obligee may also petition the People‘s Court for cancellation of the obligor‘s act.
The scope of cancellation right is limited to the extent of the obligee‘s right to performance. The necessary expenses for the obligee‘s exercise of its cancellation right shall be borne by the obligor.
Article 75 Time Limit for Exercising Obligee‘s Cancellation Right
The obligee‘s cancellation right shall be exercised within one year, commencing on the date when it became, or should have become, aware of the cause for cancellation. Such cancellation right is extinguished if not exercised within five years, commencing on the date of occurrence of the obligor‘s act.
Article 76 A Party‘s Internal Change Not Excuse for Nonperformance
Once a contract becomes effective, a party may not refuse to perform its obligations thereunder on grounds of any change in its name or change of its legal representative, person in charge, or the person handling the contract.
Chapter Five: Amendment and Assignment of Contracts
Article 77 Amendment; Amendment Subject to Approval
A contract may be amended if the parties have so agreed.
Where amendment to the contract is subject to any procedure such as approval or registration, etc. as required by a relevant law or administrative regulation, such provision applies.
Article 78 Ambiguous Amendment Not Effective
A contract term is construed not to have been amended if the parties failed to clearly prescribe the terms of the amendment.
Article 79 Assignment of Rights; Exceptions
The obligee may assign its rights under a contract in whole or in part to a third person, except where such assignment is prohibited:
(i) in light of the nature of the contract;
(ii) by agreement between the parties;
(iii) by law.
Article 80 Duty to Notify When Assigning Rights; Revocation of Assignment Subject to Assignee‘s Consent
Where the obligee assigns its rights, it shall notify the obligor. Such assignment is not binding upon the obligor if notice was not given.
A notice of assignment of rights given by the obligee may not be revoked, except with the consent of the assignee.
Article 81 Assumption of Incidental Right in Case of Assignment
Where the obligee assigns a right, the assignee shall assume any incidental right associated with the obligee‘s right, except where such incidental right is exclusively personal to the obligee.
Article 82 Assigned Rights Subject to Accrued Defenses of Obligor
Upon receipt of the notice of assignment of the obligee‘s right, the obligor may, in respect of the assignee, avail itself of any defense it has against the assignor.
Article 83 Availability of Set-off to Obligor
Upon receipt of the notice of assignment of the obligee‘s right, if the obligor has any right to performance by the assignor which is due before or at the same time as the assigned obligee‘s right, the obligor may avail itself of any set-off against the assignee.
Article 84 Delegation of Obligations Subject to Consent by Obligee
Where the obligor delegates its obligations under a contract in whole or in part to a third person, such delegation is subject to consent by the obligee.
Article 85 Availability of Defenses to New Obligor
Where the obligor has delegated an obligation, the new obligor may avail itself of any of the original obligor‘s defenses against the obligee.
Article 86 Assumption of Incidental Obligation in Case of Delegation
Where the obligor delegates an obligation, the new obligor shall assume any incidental obligation associated with the main obligation, except where such incidental obligation is exclusively personal to the original obligor.
Article 87 Assignment Subject to Approval
Where the obligee‘s assignment of a right or the obligor‘s delegation of an obligation is subject to any procedure such as approval or registration, etc. as required by a relevant law or administrative regulation, such provision applies.
Article 88 Concurrent Assignment and Delegation
Upon consent by the other party, one party may concurrently assign its rights and delegate its obligations under a contract to a third person.
Article 89 Provisions Applicable to Concurrent Assignment
Where a party concurrently assigns its rights and delegates its obligations, the provisions in Article 79, Articles 81 to 83, and Articles 85 to 87 apply.
Article 90 Effect of Combination or Division of Contract Party
Where a party has effected combination after it entered into a contract, the legal person or organization of any other nature resulting from the combination assumes the rights and obligations thereunder. Where a party has effected division after it entered into a contract, unless otherwise agreed by the obligee and obligor thereunder, the legal persons or other organizations resulting from the division jointly and severally assume the rights and obligations thereunder.
Chapter Six: Discharge of Contractual Rights and Obligations
Article 91 Conditions for Discharge
The rights and obligations under a contract are discharged in any of the following circumstances:
(i) The obligations were performed in accordance with the contract;
(ii) The contract was terminated;
(iii) The obligations were set off against each other;
(iv) The obligor placed the subject matter in escrow in accordance with the law;
(v) The obligee released the obligor from performance;
(vi) Both the obligee‘s rights and obligor‘s obligations were assumed by one party;
(vii) Any other discharging circumstance provided by law or prescribed by the parties occurred.
Article 92 Post-discharge Obligations
Upon discharge of the rights and obligations under a contract, the parties shall abide by the principle of good faith and perform obligations such as notification, assistance and confidentiality, etc. in accordance with the relevant usage.
Article 93 Termination by Agreement; Termination Right
The parties may terminate a contract if they have so agreed.
The parties may prescribe a condition under which one party is entitled to terminate the contract. Upon satisfaction of the condition for termination of the contract, the party with the termination right may terminate the contract.
Article 94 Legally Prescribed Conditions Giving Rise to Termination Right
The parties may terminate a contract if:
(i) force majeure frustrated the purpose of the contract;
(ii) before the time of performance, the other party expressly stated or indicated by its conduct that it will not perform its main obligations;
(iii) the other party delayed performance of its main obligations, and failed to perform within a reasonable time after receiving demand for performance;
(iv) the other party delayed performance or otherwise breached the contract, thereby frustrating the purpose of the contract;
(v) any other circumstance provided by law occurred.
Article 95 Time Limit for Termination; Extinguishment of Termination Right
Where the law or the parties prescribe a period for exercising termination right, failure by a party to exercise it at the end of the period shall extinguish such right.
Where neither the law nor the parties prescribe a period for exercising termination right, failure by a party to exercise it within a reasonable time after receiving demand from the other party shall extinguish such right.
Article 96 Termination by Notification; Termination Subject to Approval
The party availing itself of termination of a contract in accordance with Paragraph 2 of Article 93 and Article 94 hereof shall notify the other party. The contract is terminated when the notice reaches the other party. If the other party objects to the termination, the terminating party may petition the People‘s Court or an arbitration institution to affirm the validity of the termination.
Where termination of a contract is subject to any procedure such as approval or registration, etc. as required by a relevant law or administrative regulation, such provision applies.
Article 97 Remedies in Case of Termination
Upon termination of a contract, a performance which has not been rendered is discharged; if a performance has been rendered, a party may, in light of the degree of performance and the nature of the contract, require the other party to restore the subject matter to its original condition or otherwise remedy the situation, and is entitled to claim damages.
Article 98 Settlement and Winding-up Provisions Not Affected by Discharge
Discharge of contractual rights and obligations does not affect the validity of contract provisions concerning settlement of account and winding-up.
Article 99 Set-off; Set-off Not Subject to Condition
Where each party owes performance to the other party that is due, and the subject matters of the obligations are identical in type and quality, either party may set off its obligation against the obligation of the other party, except where set-off is prohibited by law or in light of the nature of the contract.
The party availing itself of set-off shall notify the other party. The notice becomes effective when it reaches the other party. Set-off may not be subject to any condition or time limit.
Article 100 Set-off Involving Non-identical Subject Matters
Where each party owes performance to the other party that is due, and the subject matters of the obligations are not identical in type and quality, the parties may effect set-off by mutual agreement.
Article 101 Conditions Giving Rise to Right to Place Subject Matter in Escrow
Where any of the following circumstances makes it difficult to render performance, the obligor may place the subject matter in escrow:
(i) The obligee refuses to take delivery of the subject matter without cause;
(ii) The obligee cannot be located;
(iii) The obligee is deceased or incapacitated, and his heir or guardian is not determined;
(iv) Any other circumstance provided by law occurs.
Where the subject matter is not fit for escrow, or the escrow expenses will be excessive, the obligor may auction or liquidate the subject matter and place the proceeds in escrow.
Article 102 Duty to Notify in Case of Escrow
After placing the subject matter in escrow, the obligor shall timely notify the obligee or his heir or guardian, except where the obligee cannot be located.
Article 103 Risk of Loss; Fruits of Subject Matter Accrued during Escrow
Once the subject matter is in escrow, the risk of its damage or loss is borne by the obligee. The fruits of the subject matter accrued during escrow belong to the obligee. Escrow expenses shall be borne by the obligee.
Article 104 Taking Delivery of Subject Matter in Escrow Conditional upon Performance; Time Limit
The obligee may take delivery of the subject matter in escrow at any time, provided that if the obligee owes performance toward the obligor that is due, prior to the obligee‘s performance or provision of assurance, the escrow agent shall reject the obligee‘s attempt to take delivery of the subject matter in escrow as required by the obligor.
The right of the obligee to take delivery of the subject matter in escrow is extinguished if not exercised within five years, commencing on the date when the subject matter was placed in escrow. After deduction of escrow expenses, the subject matter in escrow shall be turned over to the state.

CONTRACT LAW OF P. R. CHINA 3
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