Contract Law of the People's Republic of China

(Adopted and Promulgated by the Second Session of the Ninth National People's Congress on March 15, 1999.)

 

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 purpose of this law ,a contract is an agreement between natural persons,legal persons or other orgnizations with equal standing ,for the purpose of establishing,altering or discharging a relationship of civil rights and obligations.

 

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 revelant laws and administrative regulations,as well as observe social ethics,and may not disrupt social and ecomomic 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 tis 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)liablities 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 bound thereby.

 

Article 15 Invitation to Offer

An invitaion 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 effecive when it reaches the offeree.When a contract is concluded by the exchange of electroni messages,if the recipient of an electronic message has designated a specific system to receive it,the time when the electronic message has 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 recipent'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 his acceptance at the end of the period for acceptance.

(iv)The offeree makes material change to the terms of the offer.