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CONTRACT LAW OF P. R. CHINA 3
Sources:International Trade Law, Time:2017-03-06 15:52, Click:, Comment
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Article 105 Release
Where the obligee released the obligor from performance in part or in whole, the rights and obligations under the contract are discharged in part or in whole.
Article 106 Merger of Rights and Obligations
If the same party assumed all the rights and obligations under a contract, the rights and obligations thereunder are discharged, except where the contract involves the interests of a third person.
Chapter Seven: Liabilities for Breach of Contracts
Article 107 Types of Liabilities for Breach
If a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc.
Article 108 Anticipatory Breach
Where one party expressly states or indicates by its conduct that it will not perform its obligations under a contract, the other party may hold it liable for breach of contract before the time of performance.
Article 109 Monetary Specific Performance
If a party fails to pay the price or remuneration, the other party may require payment thereof.
Article 110 Non-monetary Specific Performance; Exceptions
Where a party fails to perform, or rendered non-conforming performance of, a non-monetary obligation, the other party may require performance, except where:
(i) performance is impossible in law or in fact;
(ii) the subject matter of the obligation does not lend itself to enforcement by specific performance or the cost of performance is excessive;
(iii) the obligee does not require performance within a reasonable time.
Article 111 Liabilities in Case of Quality Non-compliance
Where a performance does not meet the prescribed quality requirements, the breaching party shall be liable for breach in accordance with the contract. Where the liabilities for breach were not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the aggrieved party may, by reasonable election in light of the nature of the subject matter and the degree of loss, require the other party to assume liabilities for breach by way of repair, replacement, remaking, acceptance of returned goods, or reduction in price or remuneration, etc.
Article 112 Liability for Damages Notwithstanding Subsequent Performance or Cure of Non-conforming Performance
Where a party failed to perform or rendered non-conforming performance, if notwithstanding its subsequent performance or cure of non-conforming performance, the other party has sustained other loss, the breaching party shall pay damages.
Article 113 Calculation of Damages; Damages to Consumer
Where a party failed to perform or rendered non-conforming performance, thereby causing loss to the other party, the amount of damages payable shall be equivalent to the other party‘s loss resulting from the breach, including any benefit that may be accrued from performance of the contract, provided that the amount shall not exceed the likely loss resulting from the breach which was foreseen or should have been foreseen by the breaching party at the time of conclusion of the contract.
Where a merchant engages in any fraudulent activity while supplying goods or services to a consumer, it is liable for damages in accordance with the Law of the People‘s Republic of China on Protection of Consumer Rights.
Article 114 Liquidated Damages; Adjustment; Continuing Performance Notwithstanding Payment of Liquidated Damages
The parties may prescribe that if one party breaches the contract, it will pay a certain sum of liquidated damages to the other party in light of the degree of breach, or prescribe a method for calculation of damages for the loss resulting from a party‘s breach.
Where the amount of liquidated damages prescribed is below the loss resulting from the breach, a party may petition the People‘s Court or an arbitration institution to increase the amount; where the amount of liquidated damages prescribed exceeds the loss resulting from the breach, a party may petition the People‘s Court or an arbitration institution to decrease the amount as appropriate.
Where the parties prescribed liquidated damages for delayed performance, the breaching party shall, in addition to payment of the liquidated damages, render performance.
Article 115 Deposit
The parties may prescribe that a party will give a deposit to the other party as assurance for the obligee‘s right to performance in accordance with the Security Law of the People‘s Republic of China. Upon performance by the obligor, the deposit shall be set off against the price or refunded to the obligor. If the party giving the deposit failed to perform its obligations under the contract, it is not entitled to claim refund of the deposit; where the party receiving the deposit failed to perform its obligations under the contract, it shall return to the other party twice the amount of the deposit.
Article 116 Election Between Deposit or Liquidated Damages Clauses
If the parties prescribed payment of both liquidated damages and a deposit, in case of breach by a party, the other party may elect in alternative to apply the liquidated damages clause or the deposit clause.
Article 117 Force Majeure
A party who was unable to perform a contract due to force majeure is exempted from liability in part or in whole in light of the impact of the event of force majeure, except otherwise provided by law. Where an event of force majeure occurred after the party‘s delay in performance, it is not exempted from liability.
For purposes of this Law, force majeure means any objective circumstance which is unforeseeable, unavoidable and insurmountable.
Article 118 Duty to Notify in Case of Force Majeure
If a party is unable to perform a contract due to force majeure, it shall timely notify the other party so as to mitigate the loss that may be caused to the other party, and shall provide proof of force majeure within a reasonable time.
Article 119 Non-Breaching Party‘s Duty to Mitigate Loss in Case of Breach
Where a party breached the contract, the other party shall take the appropriate measures to prevent further loss; where the other party sustained further loss due to its failure to take the appropriate measures, it may not claim damages for such further loss.
Any reasonable expense incurred by the other party in preventing further loss shall be borne by the breaching party.
Article 120 Bilateral Breach
In case of bilateral breach, the parties shall assume their respective liabilities accordingly.
Article 121 Breach Due to Act of Third Person
Where a party‘s breach was attributable to a third person, it shall nevertheless be liable to the other party for breach. Any dispute between the party and such third person shall be resolved in accordance with the law or the agreement between the parties.
Article 122 Election of Remedy in Tort or in Contract
Where a party‘s breach harmed the personal or property interests of the other party, the aggrieved party is entitled to elect to hold the party liable for breach of contract in accordance herewith, or hold the party liable for tort in accordance with any other relevant law.
Chapter Eight: Other Provisions
Article 123 Applicability of Other Laws
Where another law provides otherwise in respect of a certain contract, such provisions prevail.
Article 124 Applicability to Non-categorized Contracts
Where there is no express provision in the Specific Provisions hereof or any other law concerning a certain contract, the provisions in the General Principles hereof apply, and reference may be made to the provisions in the Specific Provisions hereof or any other law applicable to a contract which is most similar to such contract.
Article 125 Contract Interpretation; Language Versions
In case of any dispute between the parties concerning the construction of a contract term, the true meaning thereof shall be determined according to the words and sentences used in the contract, the relevant provisions and the purpose of the contract, and in accordance with the relevant usage and the principle of good faith.
Where a contract was executed in two or more languages and it provides that all versions are equally authentic, the words and sentences in each version are construed to have the same meaning. In case of any discrepancy in the words or sentences used in the different language versions, they shall be interpreted in light of the purpose of the contract.
Article 126 Choice of Law in Foreign-related Contracts; Contracts Subject to Mandatory Application of Chinese Law
Parties to a foreign related contract may select the applicable law for resolution of a contractual dispute, except otherwise provided by law. Where parties to the foreign related contract failed to select the applicable law, the contract sh, all be governed by the law of the country with the closest connection thereto.
For a Sino-foreign Equity Joint Venture Enterprise Contract, Sino-foreign Cooperative Joint Venture Contract, or a Contract for Sino-foreign Joint Exploration and Development of Natural Resources which is performed within the territory of the People‘s Republic of China, the law of the People‘s Republic of China applies.
Article 127 Role of Regulatory Authorities
Within the scope of their respective duties, the authority for the administration of industry and commerce and other relevant authorities shall, in accordance with the relevant laws and administrative regulations, be responsible for monitoring and dealing with any illegal act which, through the conclusion of a contract, harms the state interests or the public interests; where such act constitutes a crime, criminal liability shall be imposed in accordance with the law.
Article 128 Dispute Resolution
The parties may resolve a contractual dispute through settlement or mediation.
Where the parties do not wish to, or are unable to, resolve such dispute through settlement or mediation, the dispute may be submitted to the relevant arbitration institution for arbitration in accordance with the arbitration agreement between the parties. Parties to a foreign related contract may apply to a Chinese arbitration institution or another arbitration institution for arbitration. Where the parties did not conclude an arbitration agreement, or the arbitration agreement is invalid, either party may bring a suit to the People‘s Court. The parties shall perform any judgment, arbitral award or mediation agreement which has taken legal effect; if a party refuses to perform, the other party may apply to the People‘s Court for enforcement.
Article 129 Time Limit for Action
For a dispute arising from a contract for the international sale of goods or a technology import or export contract, the time limit for bringing a suit or applying for arbitration is four years, commencing on the date when the party knew or should have known that its rights were harmed. For a dispute arising from any other type of contract, the time limit for bringing a suit or applying for arbitration shall be governed by the relevant law.
SPECIFIC PROVISIONS
Chapter Nine: Sales Contracts
Article 130 Definition of Sales Contract
A sales contract is a contract whereby the seller transfers title to the subject matter to the buyer, who pays the price.
Article 131 Additional Terms
In addition to the terms set forth in Article 12 hereof, a sales contract may include terms such as packing method, inspection standard and inspection method, method of settlement of account, and the language versions of the contract and the authenticity thereof, etc.
Article 132 Title or Disposal Power; Prohibition of or Restriction on Transfer
The seller shall have title to, or the power to dispose of, the subject matter for sale.
Where a law or administrative regulation prohibits or restricts the transfer of the subject matter, such provision applies.
Article 133 Passing of Title
Title to the subject matter passes at the time of its delivery, except otherwise provided by law or agreed by the parties.
Article 134 Conditional Sale
The parties may prescribe in the sales contract that title to the subject matter remain in the seller until the buyer has paid the price or has performed other obligations.
Article 135 Seller‘s Obligations with Respect to Title Transfer
The seller shall perform the obligations of delivering to the buyer the subject matter or the document for taking delivery thereof, as well as transferring title to the subject matter.
Article 136 Delivery of Related Materials by Seller
In addition to the document for taking delivery, the seller shall deliver to the buyer documents and materials related to the subject matter in accordance with the contract or in accordance with the relevant usage.
Article 137 Sales Involving Intellectual Property
In a sale of any subject matter which contains intellectual property such as computer software, etc., the intellectual property in the subject matter does not vest in the buyer, except otherwise provided by law or agreed by the parties.
Article 138 Time of Delivery
The seller shall deliver the subject matter at the prescribed time. Where the contract prescribes a period during which delivery is to take place, the seller may deliver at any time during the delivery period.
Article 139 Absence of Provision for Time of Delivery
Where the time for delivery of the subject matter was not prescribed or clearly prescribed, Article 61 and Item 4 of Article 62 apply.
Article 140 Time of Delivery of Subject Matter Already in Buyer‘s Possession
Where the subject matter was in buyer‘s possession prior to conclusion of the contract, the time when the contract becomes effective is the time of delivery.
Article 141 Absence of Provision for Place of Delivery
The seller shall deliver the subject matter at the prescribed place.
Where the place of delivery was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the following provisions apply:
(i) If the subject matter needs carriage, the seller shall deliver the subject matter to the first carrier for transmission to the buyer;
(ii) Where the subject matter does not need carriage, if at the time of conclusion of the contract, the buyer and the seller knew the subject matter was at a particular place, the seller shall deliver the subject matter at such place; and if they did not know the location of the subject matter, delivery shall take place at the seller‘s place of business at the time of conclusion of the contract.
Article 142 Passing of Risk
The risk of damage to or loss of the subject matter is borne by the seller prior to delivery, and by the buyer after delivery, except otherwise provided by law or agreed by the parties.
Article 143 Risk Allocation in Case of Delayed Delivery
Where the subject matter was not delivered at the prescribed time due to any reason attributable to the buyer, the buyer shall bear the risk of damage to or loss of the subject matter as from the date of breach.
Article 144 Risk Allocation for Subject Matter in Transit
Where the seller sells the subject matter which has been delivered to a carrier for transportation and is in transit, unless otherwise agreed by the parties, the risk of damage or loss is borne by the buyer as from the time of formation of the contract.
Article 145 Passing of Risk in Case of Seller Arranged Carriage
Where the place of delivery was not prescribed or clearly prescribed, if the subject matter needs carriage as provided in Item (i) of Paragraph 2 of Article 141, the risk of damage to or loss of the subject matter is borne by the buyer as from the time the seller delivers the subject matter to the first carrier.
Article 146 Risk Allocation in Case of Delay in Taking Delivery
Where the seller placed the subject matter at the place of delivery in accordance with the contract or in accordance with Item (ii) of Paragraph 2 of Article 141 hereof and the buyer fails to take delivery in breach of the contract, the risk of damage to or loss of the subject matter is borne by the buyer as from the date of breach.

CONTRACT LAW OF P. R. CHINA 4

 

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