Contract Law
TABLE OF CONTENTS
Chapter I Basic Principles
Chapter II Conclusion
Chapter III Validity
Chapter IV Performance
Chapter V Modification & Transfer
Chapter VI Termination of Rights & Duties
Chapter VII Liability for Breach of Contracts
Chapter VIII Other Provisions
Specific Provisions
Chapter IX Sales Contracts
Chapter X Contracts for the Supply & Use of Electricity, Water, Gas & Heat
Chapter XI Contracts for Gifts
Chapter XII Contracts for Loan
Chapter XIII Contracts for Lease
Chapter XIV Contracts for Financial Leasing
Chapter XV Contracts for Work
Chapter XVI Contracts for Construction Projects
Chapter XVII Contracts for Carriage
Chapter XVIII Contracts for Technology
Chapter XIX Contracts for Deposit
Chapter XX Contracts for Warehouse
Chapter XXI Contracts for Mandate
Chapter XXII Contracts for Commission
Chapter XXIII Contracts for Brokerage
Chapter XXIV Supplementary Provisions
GENERAL PROVISIONS
CHAPTER I BASIC PRINCIPLES
Article 1
This Law is enacted with a view to protecting the lawful rights and interests of the contractual
parties, maintaining social economic order and promoting the socialist construction of modernization.
Article 2
A contract in this law is an agreement by which civil rights and duties relationship is established, modified or terminated between natural persons, legal persons or other associations that are subjects of equal status.
As to agreements concerning personal identity relationship such as marriage, adoption, guardianship etc., provisions in other laws shall apply.
Article 3
The contractual parties are of equal status. Neither party may impose its will on the other party.
Article 4
The contractual parties are free to enter into a contract according to law. No organization or individual may illegally interfere this right.
Article 5
The contractual parties shall ascertain their rights and duties in accordance with the principle of fairness.
Article 6
The contractual parties shall exercise their rights and perform their duties in accordance with the principle of good faith.
Article 7
The parties shall in conclusion and performance of a contract, abide by law and administrative regulations and respect social morality. They shall not disrupt the social economic order or harm the public interest.
Article 8
A contract legally formed is binding upon the parties. Each party shall perform its duties according to the terms of the contract. Neither party may unilaterally modify or discharge the contract.
CHAPTER II CONCLUSION
Article 9
The parties concluding a contract shall have correspondent civil right capacity and civil conduct capacity.
Each party may authorize an agent to conclude a contract.
Article 10
A contract may be concluded in written, oral or other forms.
Where a contract is required to adopt written form by law or administrative regulations, the written form shall apply. Where the parties have agreed that the contract shall be in written form, that form shall apply.
Article 11
The written form refers to written contracts, letters, data message (including telegram, telex, telecopy, electronic data interchange, and electronic mail)etc. whose contents can be manifested in visible form.
Article 12
The contents of the contract shall be agreed upon between the parties. A contract shall contain clauses on the following terms:
(1) name and address of the parties
(2) the object of the contract
(3) quantity
(4) quality
(5) price or remuneration
(6) time limit, place and manner of performance
(7) liabilities for breach of contract
(8) method of disputes settlement
The parties may enter into a contract with reference to any type of model contracts.
Article 13
The parties shall conclude a contract by offer and acceptance.
Article 14
An offer is a manifestation of willingness to enter into a contract with another person. The manifestation of willingness shall be subject to the following conditions:
(1) Its contents are ascertained;
(2) In case of acceptance by the offeree, it will have binding force on the offeror.
Article 15
An invitation for offer is a manifestation of willingness to be sent an offer by another person. The post of price list, an announcement for auction or bid, a prospectus and a commercial advertisement shall be deemed as an invitation for offer.
Article 16
An offer becomes effective at the time it reaches the offeree.
Where the contract is concluded in data message, the time of arrival for a data message is the time when the data message enters the designated system in case the addressee has designated an system for the purpose of receiving data messages; where the addressee has not designated an system, the time for arrival is the time when the data message enters any of the systems of the addressee for the first time.
Article 17
An offer may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.
Article 18
An offer may be revoked if the revocation reaches the offeree before the latter has dispatched an acceptance.
Article 19
An offer cannot be revoked in case of the following conditions:
(1) if it indicates, whether by stating a fixed time limit for acceptance or otherwise, that it is irrevocable
(2) if it is reasonable for the offeree to rely on the offer as being irrevocable and the offeree has made some preparations for the performance of the contract
Article 20
An offer is avoid in case of the following conditions:
(1) a rejection reaches the offeror
(2) the offeror rescinds its offer in accordance with law
(3) at the expiration of the time limit, the offeree does not make any acceptance
(4) the offeree makes substantial modification to the content of the offer
Article 21
An acceptance is a manifestation of assent to an offer made by the offeree.
Article 22
Except for subject to trade usage or the offer indicates that the acceptance may be made by performing an act, an acceptance shall be made through giving notice.
Article 23
An acceptance must reach the offeror within the time limit fixed by the offer or, if no time limit is fixed, it shall reach the offeror according to the following conditions:
(1) An oral offer must be accepted immediately unless that the parties have agreed otherwise
(2) In case of a non-oral form offer, the acceptance shall reach the offeror within a reasonable time limit
Article 24
A time limit for acceptance fixed in a letter or telegram begins to run from the date shown in the letter or the date on which the telegram is handed in for dispatch. If no such date is shown in the letter, from the date indicated by the postmark on its envelope. Where an offer is made through telephone, telefax or other modes of fast communication, the time limit for acceptance begins to run from the date on which the offer reaches the offeree.
Article 25
A contract is formed when the acceptance takes effect.
Article 26
The acceptance becomes effective when it reaches the offeror. If a notice is not required for an acceptance, the acceptance becomes effective when an act indicating the acceptance is performed according to trade usage or the requirement of the offer.
In case the contract Suded in data message, Paragraph 2 of Article 16 of this Law shall apply to the calculation of the time for the arrival of an acceptance.
Article 27
An acceptance may be withdrawn. The notice of withdrawal shall reach the offeror before or at the same time when the notice of acceptance reaches the offeror.
Article 28
A late acceptance sent by the offeree shall be taken as a new offer unless without undue delay the offeror informs the offeree that the late acceptance is effective.
Article 29
Where an acceptance sent by the offeree within time limit for acceptance and should have reached the offeror had it been in normal circumstances, reaches the offeror exceeding the time limit due to some other reasons, it shall be effective unless without undue delay, the offeror informs the offeree that it can not assent to the acceptance as the time limit acceptance has lapsed.
Article 30
The contents of the acceptance shall be in accordance with those of the offer. A substantial modification to the contents of the offer made by the offeree constitutes a new offer. Modifications on contract object, quantity, price or remuneration, time limit, place and method of performance ,liabilities for breach of contract and methods of disputes settlement shall be deemed as substantial modifications to the contents of the offer.
Article 31
Unless the offeror, without undue delay, objects to the discrepancy or the offer has indicated that no modification to the contents of the offer is allowed in an acceptance, an acceptance which does not substantially alter the contents of the offer is effective. And in this case, the contents of the acceptance shall be taken as the contents of the contract.
Article 32
A contract concluded by the parties in written contract shall be formed as soon as it is signed or sealed by the parties.
Article 33
Where the parties conclude a contract in letters or data message, they may request a confirmation letter to be signed before the contract is formed. In this case the contract shall be formed at the time the confirmation letter is signed.
Article 34
The place where the acceptance takes effect shall be deemed as the place where the contract is formed.
Where a contract is concluded in data message, unless otherwise agreed upon by the parties, the principle place of business of the addressee is the place where the contract is formed. If the addressee does not have a place of business, its habitual residence shall be the place where the contract is formed.
Article 35
Where the contract is concluded through written contract, the place where the parties sign or seal the contract shall be regarded as the place where the contract is established.
Article 36
Where the parties fail to conclude a contract in written form as required by law, administrative regulations or any agreement between the parties, the contract shall be formed so long as one party has performed its major duty and its performance has been accepted by the other party.
Article 37
Where a contract concluded in written form has yet to be signed or sealed, it shall be deemed as formed so long as one party has performed his major duties and his performance has been accepted by the other party.
Article 38
In case the State issues a mandatory assignment or an assignment for government procurement according to its needs, related legal person and other associations shall conclude contracts between them in accordance with rights and duties as stipulated by laws and administrative regulations.
Article 39
Where a contract is to be concluded by standard clauses, the party providing the standard clauses shall ascertain the rights and duties of the parties pursuant to the principle of fairness .It shall also bring the attention of the other party to the clauses, which exempt or restrict its obligations. If required ,an explanation on the said clauses shall be duly made.
Standard clauses are clauses which are prepared in advance for repeated use by one party and which are used in the conclusion of a contract without negotiation with the other party.
Article 40
Where the Standard clauses satisfy any conditions prescribed in Article 52 or 53 of this Law, or the party who provides them exempts his major duties, increases the responsibilities of the other party or excludes the latter's main rights, the said standard clauses are void.
Article 41
Where the Standard clauses satisfy any conditions prescribed in accordance with usual understanding. In case there are above two interpretations to the Standard clauses, they shall be interpreted unfavorable to the party who provides them. In case of a discrepancy appears between a standard clause and a non-standard clause, the latter prevails.
Article 42
A party with the follows conducts in concluding a contract shall be liable for the losses caused to the other party:
(1) under the guise of concluding a contract, to negotiates in bad faith
(2) active concealment of important fact related to concluding the contract or supply false fact
(3) other conducts in violation of the principle of good faith
Article 43
Where business secrets obtained by one party in the course of concluding a contract, whether the contract is formed or not, the other party shall not disclose that information or use it improperly. And he shall be liable for compensation where the disclosure or improper use of business secrets causes losses to the former party.
Article 44
A contract shall take effect at the moment it is formed according to law.
Where laws or regulations require a procedure of approval, registration etc., those provisions shall be followed.
Article 45
The validity of a contract may be subject to conditions by agreement between the parties. A contract subject to conditions for validity becomes effective when the conditions are satisfied. A contract subject to conditions for avoidance becomes void in case those conditions are satisfied.
The conditions shall be deemed as having been satisfied when one party improperly prevent them from being satisfied; and they shall be deemed as unsatisfied when one party improperly impel them to be satisfied.
Article 46
The validity of contract may be subject to time limit agreed upon between the parties. A contract subject to time limit for validity becomes effective when the time limit is mature. A contract subject to time limit for avoidance becomes void when the time limit is mature.
Article 47
A contract concluded by a person with limited civil conduct capacity shall takes effect after it is ratified by his legal representative. A gratuitous contract or a contract concluded in conformity with his age, intelligence or mental health condition however does not need to be ratified by the legal representative.
The counterpart may urge the legal representative to conduct ratification within one month. A silence of the legal representative shall be deemed as a refusal. The counterpart in good faith has the right to revoke the contract before it is ratified .The revocation shall be made through a notification.
Article 48
Where a contract is concluded in the name of the principle by a doer without agent rights or exceeding his authority or after the termination of the agency, the contract shall be invalid to the principle in the absence of his ratification and the doer shall be liable.
The counterpart may urge the principle to conduct ratification within one month. A silence of the principle shall be deemed as a refusal. The counterpart in good faith has the right to revoke the contract before it is ratified. The revocation shall be made through a notification.
Article 49
Where a contract is concluded in the name of the principle by a doer without agent rights or exceeding his authority or after the termination of the agency, this agency is effective so long as it is reasonable for the counterpart to believe that the doer has the agent right.
Article 50
If a contract is concluded by a legal representative or director of a legal person or other associations exceeding his power, the presentation shall be deemed as valid unless the counterpart knows or should have known that the legal representative or director has exceeded his power.
Article 51
A contract concluded by a person who is not entitled to dispose of the property of another person is effective after it is ratified by the entitled person or the person lack of right obtains the right of disposition after the conclusion of the contract.
Article 52
A contract which is in any of the following circumstances is void:
(1) one which is concluded through fraudulence or duress of one party to harm the interests of the State
(2) one which involves maliciously conspiring to injure the interests of the State, of a collective, or of a third party
(3) one which uses a lawful form to conceal an illegal purpose
(4) one which impairs the social public interests
(5) one which violates the compulsory provisions of laws or administrative regulations
Article 53
The following exemption clauses in a contract is void:
(1) one in connection with physical injury caused to the other party
(2) one in connection with property losses caused to the other party due to a deliberation or gross negligence
Article 54
The party may request the People's Court or an arbitrary organ to modify or rescind a contract as follows:
(1) one which is concluded under gross misconception
(2) one which is obviously unfair when the contract is being concluded
Where a contract is concluded under circumstances where one party, by using deceit or duress, or by taking advantage of the other party's distress, causes the other party to act contrary to his real intention, the injured party has the right to request the People's Court or an arbitrary organ to modify or rescind the contract.
If the party request modification of the contract, the People's Court or the arbitrary organ shall not revoke it.
Article 55
The right for withdraw shall extinguish in case of the following conditions:
(1) where a party who is entitled to revoke the contract fails to exercise his right of revocation within one year from the date on which he knows or should have known the reason for the revocation
(2) where a party who is entitled to revoke the contract expressly or through an act indicate that he gives up the right of revocation
Article 56
An avoided contract or a rescinded contract has no legal restraint from the time when it is concluded. Where the invalidity of a part of a contract does not affect the validity of the other parts. the other parts remain valid
Article 57
The avoidance, revocation and termination of a contact shall not affect the validity of the independent clauses in the contract in connection with dispute settlement.
Article 58
After a contract is avoided or is rescinded, the property acquired under the contract shall be returned. Property that can not be returned or is not necessary to be retuned shall be reimbursed in money. The party who was at fault must compensate the other party for the loss caused thereby, where both parties were at fault, each must bear an appropriate amount of liability.
Article 59
Where the parties maliciously conspire to injure the interests of the State, of a collective, or of a third party, the property obtained thereby shall be recovered by the State or returned to the collective or the third party the property obtained thereby shall be recovered by the State or returned to the collective or the third party.
Article 60
The parties shall fully perform the obligation according to the contract.
The parties shall perform such duties as notification, assistance, confidentiality etc., observing the principle of good faith and in accordance with nature and purpose of the contract and trade usage.
Article 61
After a contract takes effect, the parties may negotiate through supplementary agreement as to such terms as quality, price or remuneration, place for performance etc. which are not agreed or of which the agreement is ambiguous. In case that no supplementary agreement can be reached, it shall be ascertained according to relevant contract provisions or trade usage.
Article 62
If the parties fail to agree on relevant contract items or the agreement is ambiguous and it cannot be determined in accordance with Article 61 of this Law, rules as followed shall apply:
(1) If there is no explicit quality requirement, State standards and branch standards shall apply; in absence of State standards and branch standards, normal standards or special standards appropriate to the purpose of the contract shall apply
(2) If there is no explicit price or remuneration provision, the market price of the place for performance at the time of contract formation shall apply. if the government, according to law, is to fix the price, or guide to fix the price, this price shall apply
(3) If the place for performance is not explicit, payment shall be done at the receiver's place; delivery of real estate shall be made at the location of the real estate; other object shall be performed at the place of performing party
(4) If the period for performance is not explicit, the debtor may perform at any time and the creditor may require performance at any time, but necessary time for preparation shall be allowed for the other party
(5) If the way for performance is not explicit, the way favoring the realization of contract purpose shall apply;
(6) If there is no explicit provision as to the bearing of the cost for performance, cost for performance shall be borne by the debtor
Article 63
Where the government price or the guidance price of the government applies, is case that the government adjusts the price within the period for delivery, the price at the time of delivery shall prevail. In case of a delayed delivery, the original price shall apply when the price rises, while the new price shall apply when the price drops. In case of a delay acceptance of subject matter or delayed payment, the new price shall apply when the price rises, while the original price shall apply when the price drops.
Article 64
The parties may agree that the debtor performs the obligation to a third party. The additional cost caused by the performance to the third party shall be bone by the creditor.
The third party may request performance from the debtor The debtor shall be responsible to the creditor for the breach of contract if no performance has been made to the third party or the performance fails to conform to the agreement.
Article 65
The parties may agree that a third party may perform the obligation to the creditor The debtor shall be responsible to the creditor for the breach of contract, if no performance has been made by the third party or the performance fails to conform to the agreement.
Article 66
The parties shall perform simultaneously if they owe obligation to each other and no time sequence for performance is required One party is entitled to withhold performance before the other party tenders its performance or refuse relevant request for performance if the other party's performance fails to conform to the agreement.
Article 67
When the parties owe obligation to each other and are required to perform consecutively, the party to perform later is entitled to withhold its performance before the first party has performed and is entitled to withhold its relevant performance if the performance of the first party fails to conform to the agreement.
Article 68
The party who shall perform first may stop performance when there is evidence proving that the other party is under the following circumstances:
(1) serious deterioration of management
(2) transfer of property and capital to evade obligation
(3) loss of commercial reputation
(4) other circumstance where loss or possible loss of capacity for performance occurs
The parties who have no evidence to stop performance shall take liabilities for breach of contract.
Article 69
The party who stops performance according to Article 68 of this Law shall notify the other party in time and resume performance when the other party provides appropriate guarantee. After the stop of performance. if the other party neither recovers capacity for performance nor provides appropriate guarantee within a reasonable time. the party who stops performance may discharge the contract.
Article 70
The debtor may stop performance or deposit the subject matter when the creditor separates. combines or changes domicile without notice to the debtor and thereby causes difficulty in performance of obligation.
Article 71
The creditor may refuse the debtor's performance of obligation before due time, except that the performance before due time does no harm to the creditor's interests.
Additional cost incurred to the creditor by the debtor's performance before due time shall be borne by the debtor.
Article 72
The creditor may refuse the debtor's performance of obligation in part, except that the performance in part does no harm to the creditor's interests.
Additional cost incurred to the creditor by the debtor's performance in part shall be borne by the debtor.
Article 73
If the debtor's reluctance in exercising his obligatory right causes harm to the creditor, the creditor may apply to the people's court for the exercise of the debtor's court for the exercise of the debtor's obligatory right in his own name, except for the exclusive obligatory right for the debtor himself.
The right of subrogation shall be exercised within the scope of creditor’s obligatory right. Necessary cost for exercising right of subrogation by the creditor shall be borne by the debtor.
Article 74
Is the debtor's waiver of matured obligatory right or free transfer of property causes harm to the creditor, the creditor may apply to the people's court for the rescission of the debtor's act. If the debtor's transfer of property in an obviously unreasonably low price causes harm to the creditor of which the transferee has the knowledge, the creditor may also apply to the people's court for rescission of debtor's act.
The right of rescission shall be exercised within the scope of the creditor's obligatory right. Necessary cost for exercising the right of rescission by the creditor shall be borne by the debtor.
Article 75
The right of rescission shall be exercised within one year after the creditor knows or shall know the cause for rescission. The right of rescission distinguishes if the creditor fails to exercise the right within five years after the occurrence of the debtor's act.
Article 76
After a contract takes effect, the parties are not excused to non-performance due to the modification of names or change of legal representatives, persons in charge or undertakers.
CHAPTER V MODIFICATION & TRANSFER
Article 77
The parties may modify the contract upon agreement. If the procedure of approval or registration is required for the modification of contract by the laws or administrative regulations, provisions of the laws or administrative regulations shall apply.
Article 78
If the modification made by the parties is ambiguous, it will be deemed as no modification is made.
Article 79
The creditor may transfer whole or partial contractual rights to a third party, except for the following cases:
(1) transfer is not permitted by the nature of contract
(2) transfer is not permitted according to the parties' agreement
(3) transfer is not permitted according to legal provisions.
Article 80
The creditor shall notify the debtor in case of transfer of rights, otherwise, the transfer will not bind on the debtor.
Notice on the transfer of rights by the creditor shall not be rescinded, unless the transferee's consent is acquired.
Article 81
If the creditor transfers the rights, the transferee acquires rights accessory to the creditor's right, unless the accessory rights are exclusive for the creditor himself.
Article 82
Upon receiving the notice of transfer of creditor's right, the debtor's defense against the transferor may be claimed against the transferee.
Article 83
Upon receiving the notice of transfer of creditor's right, the debtor may, according to Article 99 of this Law, claim for off-set if he has due obligatory right against the transferor.
Article 84
The creditor's consent is required if the debtor transfers the contractual duty in whole or in part to a third party.
Article 85
If the debtor transfers the duty, the new debtor may claim the defense of the original debtor against the creditor.
Article 86
If the debtor transfers the duty, the new debtor shall bear the accessory debt relevant to the main debt unless the accessory debt is exclusive for the original debtor himself.
Article 87
If the procedure of approval or registration is required for the transfer of the obligatory right by the creditor or the transfer of the debt by the debtor according to laws or administrative regulations, provisions of laws and administrative regulations shall apply.
Article 88
Upon the other party's consent, one party may transfer both contractual right and duty in general to a third party.
Article 89
Where the rights and duties are transferred in general, provisions of Article 79,81to83,85to 87 shall apply.
Article 90
If the party combines after the formation of a contract, the legal person or other organization after combination shall exercise contractual right and fulfill contractual duty. If the party separates after the formation of contract, except for otherwise agreed by the creditor and the debtor, the legal person or other organization after separation shall enjoy joint and several creditors' rights and bear joint and several debts.
CHAPTER VI TERMINATION
Article 91
A rights and duties of contract terminate under the following circumstance:
(1) the debt is fulfilled according to the agreement
(2) the contract is discharged
(3) debt is set off
(4) the debtor deposits the subject matter according to law
(5) the creditor relieves the debt
(6) the obligatory right and debt are mixed to one party
(7) other circumstance of termination provided by law or agreed by parties
Article 92
After the rights and duties of a contract terminate, the parties shall perform duties of notice, assistance, confidentiality etc. conforming to the principle of good faith and in accordance with trade usage.
Article 93
The parties may discharge contract upon negotiation.
The parties may agree on terms for discharge by one party. When the terms are fulfilled, the party may discharge the contract.
Article 94
The parties may discharge the contract in case of the following conditions:
(1) if the contract purpose can not be realized due to force majeure
(2) before the expiration of the period for the performance, if one party explicitly expresses or demonstrates through act that the performance of the main debt is not intended
(3) if one party delays the performance of main duty and fails to fulfill the performance within reasonable period after summon exhortation
(4) if due to the delay in performance of obligation or other breach of contract by one party, the purpose of the contract can not be realized
(5) other conditions provided by law
Article 95
If there is a time limit for exercising right of discharge provided by law or agreed by the parties and the party fails to exercise the right before the expiration of contract, the right extinguishes.
The right of discharge extinguishes if the party fails to exercise the right within reasonable period after the other party's summon exhortation, though no time limit is provided by law or agreed by the parties.
Article 96
The party shall notify the other party if it suggests the discharge of the contract according to clause 2 of Article 93 and Article 94 of this law. The contract is discharged at the time the other party receives the notice. The other party may apply to the people's court or an arbitration body for affirming the effect of the contract in case of objection.
If the procedures of approval or registration is required by the laws or administrative regulations, the provisions of the laws of administrative regulations shall apply.
Article 97
After discharge of the contract, the part not yet performed shall stop performance as to the part already performed, the party may, according to the performance and the nature of the contract, claim for restitution, take other remedial measures and is entitled to compensation of losses.
Article 98
The termination of the rights and duties of a contract does not affect the effect of provisions of settlement and liquidation.
Article 99
If the parties owe obligation due to each other and the type and nature of the subject matter of the obligation is the same, any party may set off his own duty against that of the other party unless the off-set is not permitted according to the nature of the contract or legal provisions.
The party suggesting off-set should notify the other party. The notice comes into effect at the time the other party receives. No condition or time limit shall be attached to the notice of off-set.
Article 100
If the parties owe obligation due to each other, though the type and nature of the subject matter is not the same, obligation may be set off upon the parties' agreement.
Article 101
The debtor may deposit the subject matter if the obligation is difficult to fulfill under following circumstances:
(1) the creditor refuses the acceptance without reasonable ground
(2) the creditor's whereabouts is unknown
(3) the debtor dies and the heir is not yet determined or loses capacity for conduct and the successor or guardian is not yet determined
(4) other circumstances provided by law
If the subject matter is not suitable for the deposit or the cost for the deposit is excessively high, the debtor may sell through auction or sell off the subject matter and deposit the price acquired
Article 102
After the deposit of the subject matter, the debtor shall notify in time the creditor or the successor or the guardian of the creditor unless the creditor's whereabouts is unknown.
Article 103
After the deposit of the subject matter, risk of damage and loss of the subject matter is borne by the creditor. The accruements of the subject matter during the deposit period belong to the creditor Cost for the deposit is borne by the creditor.
Article 104
The creditor may take out deposited subject matter every time. But if creditor has matured debt to toe debtor, before the creditor hasn't performed debt or supplied security, the competent authorities for submitted subject matter of an obligation shall forbid him to take out deposited subject matter according to the request of debtor.
The right for taking out deposited subject matter of creditor will extinguish. if he fails to exercise this right within 5 years from the date of debtor's submission of the subject matter of an obligation to competent authorities .Deposited subject matter after subtraction of cost for debtor's submission of the subject matter of an obligation to competent authorities shall belong to State.
Article 105
If the creditor relieves the debtor from the debt in whole or in part. the rights and duties of the contract terminate respectively in whole or in part.
Article 106
If the obligatory right and debt are mixed to one party, the rights and duties of the contract terminate unless the interest of a third person is involved.
CHAPTER VII LIABILITY FOR BREACH OF CONTRACT
Article 107
The party who fails to fulfill its contractual duty or whose performance of contractual duty fails to conform to the contract shall be liable for the breach of contract such as specific performance, adopting remedial measures, or compensation for losses etc.
Article 108
One party who explicitly expresses or demonstrates through his own act that the performance of the contractual duty is not intended. the other party may claim him to be liable for breach of contract before the expiration of the period for performance.
Article 109
If one party fails to pay the price or remuneration, the other party may claim the payment of the price or remuneration.
Article 110
If one party fails to perform the non-monetary obligation or the performance of the non-monetary obligation fails to conform to the agreement the other party may claim for performance except for the following cases
(1) the obligation cannot be perform in law or in fact
(2) the object of the obligation is not suitable for enforcement or the cost for enforcement is excessively high
(3) the creditor fails to claim for performance within reasonable period
Article 111
If the quality fails to conform to the agreement the liability for breach of contract shall be borne according to the agreement.
If terms of the liability for breach of contract is not agreed on or the term is ambiguous and cannot be determined according to Article 61of this Law, the harmed party may choose reasonably repair exchange reproduction reduction of price return of goods remuneration and other liabilities for breach of contract from the other party according to the nature of the subject matter and extent of the losses.
Article 112
If the party fails to perform contractual duties or the performance of the duties fails to conform to the Agreement it shall after performing the duties or adopting remedial measures compensate for the losses to the other party in case the other party still suffers from other losses.
Article 113
Where one party fails to perform contractual duties or the performance fails to conform to the agreement and Thereby causes losses to the other party the amount for losses compensated shall be equal to the losses caused by the breach of contract including possible profit realized if contract duly performed but shall not Exceed the possible loss caused by breach of contract which can be foreseen by the breaching party at the time of contract formation.
Where the business operator has fraudulent conduct in supplying gooks and service for consumer it shall take liability for compensation according to the provisions in "law of the people's Republic of China on Protection of the Rights and interests of Consumers".
Article 114
The parties may agree that one party pays liquidated damages to the other in case of breach of contract according to the circumstance of the breach they may also agree on the calculating manner of damages caused by the breach.
If the agreed liquidated damage is excessively higher than the actual loss the party may apply to the People's court or an arbitration body for suitable mitigation if the agreed liquidated damage is excessively lower than the actual loss the party may apply to the people's court or an arbitration body for a suitable extension.
Article 115
The parties may agree that one party pays deposit to the other as warranty for the creditor鈥檚 right according to 鈥渓aw of Guarantee of the People鈥檚 Republic of China鈥?After the debtor performs the duties the deposit shall be balanced against the price or recovered The party who pays the deposit fails to perform the agreed duties it has no right to recover the deposit , if the party who accepts deposit fails to perform the agreed duties, it shall return the deposit twice as much.
Article 116
Where the parties have agreed upon both liquidated damages and deposit, one party may choose either clause to apply when the other breaches the contract
Article 117
If the non-performance is caused by force majeure, the liability shall be relieved in whole or in part in accordance with the effect of force majeure unless otherwise provided by law if force majeure exists after the delay of performance, liability can not be relieved.
The force majeure in this law refers to the objective circumstances that can not be predicted, avoided or overcome.
Article 118
If the party fails in performance due to force majeure, he shall notify the other party in time to mitigate possible loss caused to the other party and shall provide verification within reasonable time.
Article 119
After one party's breach of contract, the other party shall take appropriate measure to avoid the extension of loss extended.
Reasonable cost paid by the party to avoid the extension of loss shall be borne by the breaching party.
Article 120
The parties shall take liability respectively if both are in breach.
Article 121
One party shall take the liability of breach of contract to the other party if the breach is caused by a third party. The dispute between the party and the third person shall be handled according to legal provisions or agreements.
Article 122
Where one party breach of contract infringe upon the other party personal or property interests, the aggrieved party is entitled to choose the liability for breach of contract according to this Law or the liability for tort according to other laws.
CHAPTER VIII OTHER PROVISIONS
Article 123
Where there are provisions concerning contract in other laws, the said provisions shall apply accordingly.
Article 124
Where contracts are not explicitly provided by specific provisions of this Law or by other laws, the general provisions shall apply and the most similar provisions in the specific provisions of this Law or in other laws may be referred to.
Article 125
When disputes arise as to the understanding of a contract provision, the true meaning of the provision shall be ascertained according to the wording of the provision in the contract, relevant contract provisions and the purpose of the contract, and in conformity with trade usage and principle of good faith.
Where the text of contract is concluded in over 2 languages and parties have agreed that they have equal effect, the wording in different texts shall be assumed to have the same meaning. Where the different texts use inconsistent wording, it shall be construed according to the purpose of the contract.
Article 126
The parties to a foreign-related contract may choose the law applied to contract dispute, unless the law provides otherwise. Where the parties to a foreign-related contract have not made a choice, the law of the country having the closest connection with the contract shall apply.
Laws of the People Republic China shall be applied to contracts concluded by Chinese-foreign equity joint venture, Chinese-foreign contractual joint venture and Chinese-foreign cooperative exploration and development of natural resource, which is performed in the territory of the People's Republic of China.
Article 127
The administration of industry and commerce and other competent administrative department concerne~ shall, within their functions~ and powers, supervise and deal with the illegal activities which take advantage 0 the contract to harm the State and social public interests according to the provisions provided by law an~ administrative regulations. If the activity constitutes a crime, it shall be prosecuted for the crimina responsibility according to law.
Article 128
The parties may settle contract disputes through compromise or conciliation.
If the parties are unwilling to settle their dispute through compromise or conciliation, or if the compromise 0 conciliation proves unsuccessful, they may submit the dispute to an arbitration. body for arbitration accordin( to their arbitration agreement. The parties of foreign-related contracts may submit disputes for arbitration to Chinese arbitration body or other arbitration body according to their arbitration agreement.
If no arbitration agreement is reached or the arbitration agreement is void, the parties may bring Suit in people's court. The parties shall perform judgements, arbitral awards and conciliation which have take effect In case of refusal by one party. the other party may claim to the People's court for enforcement.
Article 129
The time limit of bringing suit or applying for arbitration in a dispute over an international contract of sales C goods and contract of technology export and import shall be four years, counting from the day when th party is aware or ought to be aware of its rights' being infringed upon.
As to the time limit of bringing suit or applying for arbitration in other contract disputes, relevant legal provisions shall apply accordingly.
SPECIFIC PROVISIONS
CHAPTER IX CONTRACTS FOR SALES
Article 130
A sales contract is a contract under which the seller transfers its ownership of the subject matter to the buyer, while the buyer pays for the price.
Article 131
Subject to Article 12 of this Law, the contents of a sales contract may contain clauses on manner of package, criteria and method for inspection, means of settlement of account, language used in the contract and validity etc.
Article 132
The subject matter sold shall be a matter owned by the seller or is subject to his disposition.
In case a subject matter is prohibited or restricted from being transferred by laws or administrative regulations, those laws and regulations shall be observed.
Article 133
Unless otherwise provided in law or agreed between the parties, the ownership of the subject matter transferred at the time the subject matter is delivered.
Article 134
The parties may in a sales contract agree upon a clause that the ownership of the subject matter shall belong to the seller in case the buyer fails to perform his duty of paying for price or other duties.
Article 135
The seller shall perform his duties of delivering the subject matter or any documents for taking delivery of subject matter, and transferring the ownership of the subject matter to the buyer.
Article 136
The seller shall, according to the agreement between the parties or trade usage, hand over to the buyer other relevant documents and materials in addition to the documents for taking delivery of the subject matter.
Article 137
Unless otherwise agreed upon between the parties or provided by law, if the subject matter to be sold is computer software or drawings etc. which possess intellectual property rights, the intellectual property rights of the subject matter does not belong to the buyer.
Article 138
The seller must deliver the subject matter within the time limit agreed upon; if a period of time for delivery is fixed at any time within that period.
Article 139
Where the time limit for delivery is not provided in the contract or the provision is ambiguous Article 61 and ltem 4 of Article 62 of this Law shall apply.
Article 140
Where the subject matter has been in the buyer's possession before the conclusion of the contract, the time when the contract takes effect shall be deemed as the time of delivery.
Article 141
the seller shall deliver the subject matter at the place agreed upon.
Where the place of delivery is not provided in the contract or the provision is ambiguous and it still can not ascertained in accordance with Article 61 of this Law, the following provisions shall apply:
(1) If the subject matter needs to be transferred, the seller shall hand in the subject mater over to the first r for transmission to the buyer
(2) where the subject matter doesn't need to be transferred, and at the time of conclusion of the contract. the seller and the buyer knew where the subject matter were, the seller shall deliver the subject mater at that place. If the particular place of the subject matter was not known to the parties. the subject matter hall be delivered at the place where the seller had his place of business at the time the contract was concluded
Article 142
The risk of damage or loss in respect of the subject matter shall be borne by the seller before delivery of the matter while by the buyer after delivery of the subject matter unless otherwise agreed upon between the parties or provided by law.
Article 143
where the subject matter is unable to be delivered within the time limit agreed upon due to the fault of the buyer bear the risk of damage or loss in respect of the subject matter from the date fixed for delivery.
Article 144
Unless otherwise agreed by the panties, when a subject matter which has been dispatched for transmission by the carrier is sold by the seller, the risk of damage or loss in respect passes to the buyer at the moment the contract takes effect.
Article 145
Where there is no place of delivery is provided in the contract or the provision is ambiguous and the subject matter need to be carried according to Item 1 of Paragraph 2 of Article 141 of this Law, the risk of damage or loss in respect of the subject matter shall pass to the buyer from the time the subject matter was handed carrier by the seller.
Article 146
In case the subject matter is placed at the place of delivery as agreed upon or according to Item 2 of Article 141 of this Law, while the buyer commits a breach of contract by failing to take of damage or loss in respect of the subject matter shall pass to the buyer from the date it breaches the contract.
Article 147
The fact that the seller has not delivered the documents and materials in respect of the subject matter as the passage of the risk of damage or loss to the subject matter.
Article 148
A(here the purpose of the contract fails to be achieved due to the unconformity of the quality of the subject flatter, the buyer may refuse to accept the subject mater or revoke the contract In case the buyer has refused to take delivery or revoked the contract, the risk of damage or loss to the subject matter shall be born by the seller.
Article 149
The fact that the risk of damage or loss to the subject matter is borne by the buyer does not impair its right to request the seller to bear the liability for breach of contract if the seller's performance of its obligation is not in accordance with the agreement between the parties.
Article 150
Unless otherwise provided by law, the seller shall guarantee the buyer being free from any claim of a third party.
Article 151
Where the buyer knows or should have known that a third party has a right in the subject matter at the time the contract is concluded, the seller shall not bear the liability as provided in Article 150 of this Law.
Article 152
Where the buyer has specific evidence to prove that the third party may claim a right in the subject matter, he is entitled to suspend payment of relevant price unless the seller has offered proper guaranty.
Article 153
The seller shall delivery a subject matter according to the quality requirement agreed upon. If the seller has supplied an explanation on the quality of the subject matter, the subject matter delivered shall be in conformity with the quality requirement noted in the explanation.
Article 154
If the quality requirement of the subject matter is not provided in the contract or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, Item 1 of Article 62 of this Law shall apply.
Article 155
Where the subject matter delivered by the seller does not meet the quality requirement, the buyer is entitled to request the seller to bear. liability for breach of the contract according to Article 111 of this Law.
Article 156
The seller shall deliver the subject matter according to the manner of package agreed upon. If the manner of package is not provided in the contract or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, the subject matter shall be packed in a usual manner; or where there is no such a usual manner, in a manner appropriate for the protection of the subject matter.
Article 156
Where the seller is not able to perform its duty of transferring part of the right that is owned by another person in the subject matter, the buyer may request to reduce the price or discharge the contract.
Article 157
The buyer after it takes delivery shall inspect the subject matter within the time limit for inspection as agreed upon. If no time limit is agreed upon, in due time.
Article 158
Where the parties has agreed upon time limit for inspection, the buyer shall notify the seller of the unconformity of the quantity or quality of the subject matter within the time limit for inspection. In case the buyer is reluctant to do so, the subject matter shall be deemed as in conformity.
Where no time limit for inspection is agreed upon, the buyer shall notify the seller within reasonable time after he has found or ought to have found the unconformity of the quantity or quality of the subject matter. In case the buyer fails to notify the seller within reasonable time or 2 years from the date of taking delivery, the quantity or quality of the subject matter shall be deemed as in conformity. However, where a period of quality guaranty for the subject matter has been set, the period of quality guaranty instead of the period of 2 years shall apply.
Where the seller knows or ought to have known the unconformity in the subject matter, the proceeding two Items on the restriction of time limit for notification shall not be binding on the buyer.
Article 159
The buyer shall pay for the price as agreed upon. If the price is not provided in the contract or the provision is ambiguous, Article 61 and Item 2 of Article 62 of this Law shall apply.
Article 160
The buyer shall pay for the price at a place agreed upon. If the place for payment is not provided in the contract or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, the buyer shall pay at the seller's place of business. However, if the parties have agreed that the payment shall be made only after the subject matter or the documents for taking delivery of the subject matter is delivered, the price shall be paid at the place where the subject matter or the documents for taking delivery is delivered.
Article 161
The buyer shall pay for the price at the time agreed upon. If the time for payment is not provided in the contract or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, the buyer shall pay for the price at the same time it accepts the subject matter or the documents for taking delivery of the subject matter.
Article 162
If the seller delivers a quantity of subject matter greater than that provided for in the contract, the buyer may take delivery or refuse to take delivery of the excess quantity. In case of taking delivery of the excess quantity, the buyer shall pay for its price according to the price fixed in the original contract. In case the buyer refuses to take delivery of the excess quantity, shall inform the seller in due time.
Article 163
Profit accrued from the subject matter before the delivery shall belong to the seller, and that after delivery shall belong to the buyer.
Article 164
Where a contract is discharged as the main article of the subject matter lacks conformity with the agreement, the validity of discharge of the contract extends to the subordinated article of the subject matter. Where a contract is to be discharged as the subordinated article of the subject matter lacks conformity, the validity of discharge does not extend to the main article.
Article 165
Where the subject matter is composed of several articles and one of them lacks conformity with the agreement, the buyer may discharge that article. However, if the value of the subject matter is obviously impaired in case that article is separated from the other articles, the buyer may discharge the contract with respect to all the articles.
Article 166
Where the seller delivers the subject matter in batches, and one batch of them is undelivered or the delivery lacks conformity with the agreement and thus this batch does not meet the purpose of the contract, the buyer may discharge this batch of subject matter.
Where one batch of the subject matter fails to be delivered by the seller or the delivery lacks conformity with the agreement, and thus the other batches of the subject undelivered do not meet the purpose of the contract, the buyer therefore may discharge this batch and the batches undelivered.
Where one batch of the subject matter is discharged by the buyer and this batch is interdependent with the other batches, the buyer may discharge the batches of subject matter both delivered or undelivered.
Article 167
Where the nonpayment overdue for the buyer to a payment by installments has amounted to one fifth of the total price, the seller may request the buyer to pay the total price or discharge the contract.
Where the seller discharges the con tract, he may request the buyer to pay for its use of the subject matter.
Article 168
The parties to a sale by sample shall seal up the sample and they may also make an explanation on the sample. The subject matter delivered by the seller shall be of the same quality to the sample.
Article 169
Where the buyer to a sale by sample does not know there. is a concealed defect in the sample, even the subject matter delivered is identical to the sample, it shall be in conformity with the normal standard of the same kind of matters.
Article 170
The parties to a sale on approval may agree upon a period for approval of the subject matter. If the period for approval is not provided in the contract or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, the period shall be determined by the seller.
Article 171
The buyer to a sale on approval may purchase or refuse to purchase the subject matter within the period of approval. Its silence as to whether to purchase it or not at the expiration of the period is deemed as an indication to purchase.
Article 172
The rights and duties of the parties to a sale by bid invitation and biding and the procedures for bid invitation and biding shall be subject to related laws and administrative regulations.
Article 173
The rights and duties of the parties to an auction and the procedure of auction shall be subject to related laws and administrative regulations.
Article 174
Where other non-gratuitous contracts are provided in law, those provisions shall apply. Otherwise, the provisions on sales contracts shall be followed.
Article 175
The provisions relating to sales contracts shall be followed as to a barter trade agreed upon between the parties in which the ownership of the subject matters is transferred.
CHAPTER X CONTRACTS FOR SUPPLY & USE OF WATER, ELECTRICITY, GAS & HEAT
Article 176
A contract for the supply and use of electricity is a contract through which the electricity supplier supplies electricity to the electricity user and the electricity user pays for the price.
Article 177
Contents of the contract for supply and use of electricity shall contain clauses on the manner, quality and time of the electricity supplied, the capacity, place, character, and method for calculation of the electricity used, the way of settling the electricity price and fee, the responsibilities for maintaining the electricity supply and use equipment etc.
Article 178
The place of performance of the contract for supply and use of electricity shall be agreed upon between the parties. Where there is no agreement or the agreement is ambiguous, the place of performance shall be the boundary of the property rights of the electricity supply equipment.
Article 179
The electricity supplier must supply electricity in a safe manner in accordance with the quality standard for the electricity supplied stipulated by the State and the agreement between the parties. Where the electricity supplier fails to supply electricity in a safe manner in accordance with the electricity supply standards stipulated by the State and the agreement between the parties, it shall compensate the electricity user for the losses caused thereby.
Article 180
Where due to planned or temporary inspection or repair of electricity supply equipment, a lawful restriction on the supply of electricity, or illegal use of electricity by the electricity user etc. the electricity supplier needs to suspend the supply of electricity, it shall notify the electricity user in advance according to the relevant State stipulations. In case the electricity supplier suspends the electricity supply without notifying the electricity user in advance, the electricity supplier shall compensate the electricity user for the losses caused thereby.
Article 181
In case the electricity supplied is cut off due to a natural disaster etc., the electricity supplier shall do rush repair according to relative stipulations of the State. If the repair is not done in due time and thus causes loss to the electricity user, the electricity supplier shall bear the liability of compensation.
Article 182
The electricity user shall pay the electricity fee according to relative stipulations of the State and the agreement between the parties. Where the electricity user fails to pay the overdue electricity fee, it shall pay the liquidated damages as agreed upon. In case the electricity user fails to pay the electricity fee of the liquidated damages after summon exhortation, the electricity supplier may suspend the supply of electricity according to procedures stipulated by the State.
Article 183
The user must use the electricity safely in accordance with the relative stipulations of the State and the agreement between the parties. In case it fails to do so and thus causes loss to the electricity supplier it shall be liable for compensation.
Article 184
Contracts for the supply and use of water, gas and heat shall be handled with reference to the provisions on the contract for the supply and use of electricity.
CHAPTER XI CONTRACTS FOR GIFTS
Article 185
A contract of gift is a contract under which the donor gratuitously assigns his property to the donee and the donee expresses his willingness to accept the gift.
Article 186
The donor may revoke the gift before his right on the property is transferred.
The Proceeding Paragraph shall not apply to contracts of gift with a character of social public benefit of moral duty such as disaster or poverty relief etc., and the contracts of gift which have gone through public notary.
Article 187
Where the property given needs to go through procedures such as registration etc., those procedures shall be conducted.
Article 188
Where the donor to the contracts of gift with a character of social public benefit or moral duty such as disaster or poverty relief etc. or the contracts of gift which have gone through public notary fails to deliver the property given, the donee may request delivery.
Article 189
Where the property given is damaged or lost due to the deliberation or gross negligence of the donor. the donor shall be liable for compensation.
Article 190
The gift may be made subject to duties.
Where the gift is made subject to duties, the donee shall perform the duties as agreed upon.
Article 191
The donor is not liable for the defects in the property given. In respect of a gift subject to duties, the donor shall, as to the defect in the property given, bear a seller's guaranty liability within the extent of the subject duties.
Where the donor deliberately fails to inform the donee of the defect in the property or guarantees that there is no defect in the property, he shall be liable for compensation if losses were caused to the donee thereof.
Article 192
The donor may revoke the gift in case the donee is subject to any of the following conditions:
(1) having seriously injured the donor or the close relatives of the donor
(2) in case he is under a duty to support the donor, having failed to perform such a duty
(3) having failed to perform the duties agreed upon in the contract of gift
The donor's right of revocation shall be exercised within one year from the date on which he knows or ought to have known the ground for revocation.
Article 193
Where an illegal act of the donee causes death or loss of civil conduct capacity to the donor, the heir or guardian of the donor is entitled to revoke the gift.
The heir or guardian's right of revocation shall be exercised within six months from the date on which he knows the ground for revocation.
Article 194
In case a gift is revoked by the person who is entitled to the revocation, he may request the donee to return the property given.
Article 195
Where the donor's business operation or family life is seriously affected due to a major deterioration of his financial status. he may refuse to perform the duty of making a gift.
CHAPTER XII CONTRACTS FOR LOAN
Article 196
A contract of loan is a contract by which the borrower borrows money from the lender under an obligation to repay the money with interest when the term of loan expires.
Article 197
A contract of loan shall be concluded in written form' except for otherwise agreed upon between natural persons.
A contract of loan shall contain clauses on the type, currency, purpose, amount, interest rate, term and manner of repayment etc. of the loan.
Article 198
The lender, in the conclusion of a contract of loan, may require the borrower to provide guaranty. The guaranty shall be handled according to the provisions of the Guaranty Law of the People's Republic of China.
Article 199
In the conclusion of a contract, the borrower shall, according to the requirement of the lender, provide true information on its business activity and financial status in connection with the loan.
Article 200
The interest of the loan shall not be deducted and retained from the capital of the loan in advance. In case it is deducted, the loan shall be repaid and the interest shall be calculated according to the actual amount of loan.
Article 201
Where the lender fails to provide the loan according to the date and amount agreed upon, and thus causes loss to the borrower, it shall be liable for compensation
Where the borrower fails to accept the loan according to the date and amount as agreed upon, it shall pay the interest according to the date and amount as agreed upon.
Article 202
The lender may inspect or supervise the use of the loan according to the agreement between the parties. The borrower as agreed upon shall regularly provide the lender with materials such as financial accounting reports etc.
Article 203
Where the borrower fails to use the loan according to the purpose of the loan agreed upon, the lender may suspend the distribution of the loan, recover the loan before its term expires or discharge the contract.82
Article 204
The interest of a loan provided by a financial institution that handles loan business according to the limits of loan interest stipulated by the People's Bank of China.
Article 205
The borrower shall pay for the interest of the loan within the time limit as agreed. If the time limit for payment of interest is not provided in the contract or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, the borrower shall pay the interest at the same time he repays the loan in case the term of the loan is less than one year. Where the term of the loan exceeds one year, the borrower shall pay the interest at the expiration of each one year period with the balance for the left period less than one year paid at the at the same time he repays the loan.
Article 206
The borrower shall repay the loan in accordance with the time limit as agreed upon. If the time limit for repayment is not provided in the contract or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, the borrower may repay the loan at any time and the lender may urge the borrower to repay it within appropriate time limit.
Article 207
Where the borrower fails to repay the loan in accordance with the time limit as agreed upon, he shall pay overdue interest according to agreement or the relative stipulations of the State.
Article 208
Where the borrower repays the loan before the expiration of the time limit, the loan interest shall be calculated according to the actual term of the loan except for otherwise agreed upon between the parties.
Article 209
The borrower may apply for an extension of the term of the loan before the date for repayment expires. The term of the loan may be extended with consent of the lender.
Article 210
A contract of loan between natural persons shall take effect at the time the lender offers the loan.
Article 211
Where the payment of interest is not agreed upon or the agreement is ambiguous in a contract of loan between natural persons, the loan shall be deemed as without interest.
Where the payment of interest is agreed upon in a contract of loan between natural persons, the interest shall not violate restrictions on loan interest stipulated by the State.
CHAPTER XIII CONTRACTS FOR LEASE
Article 212
A contract of lease is a contract under which the lessor gives to the lessee the rights of use and profit of the leased thing during the term of the lease, while the lessee pays for the rent agreed upon.
Article 213
A contract of lease shall contain provisions on the name, quantity and use of the leased thing, the term of the lease, the rent and its manner and time limit for payment, and the responsibility for maintenance of the leased thing etc.
Article 214
The term of the lease agreed between the parties shall not exceed 20 years. Otherwise, the exceeded period is void.
When the term of the lease expires, the parties may renew the contract of lease, however, the term agreed upon shall not exceed 20 years from the date on which the contract is renewed.
Article 215
A contract of lease shall be concluded in written form in case the term of the lease is above six months.
Where the parties fail to adopt a' written contract and afterwards disputes arise on the term of lease, the lease shall be deemed as a non- fixed term lease.
Article 216
The lessor shall deliver the thing leased to the lessee according to the contract and during the term of the lease keep it in conformity with its use agreed upon.
Article 217
The lessee shall use the thing leased according to the method agreed upon. If the method of use is not provided in the contract or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, the leased thing shall be used in conformity with its nature.
Article 218
Where the lessee uses the leased thing in a method agreed upon or in conformity with its nature and causes loss to the leased thing thereof, he shall not be liable for compensation.
Article 219
Where the lessee fails to use the leased thing in a method agreed upon or in conformity with its nature an caused loss to the leased thing thereof, the lessor may discharge the contract and request compensation
Article 220
The lessor shall perform his duty of maintenance of the thing leased except for otherwise agreed upon between the parties.
Article 221
Where the lessee needs a repair of the thing leased, he may request the lessor to do so in reasonable time.
In case the lessor fails to perform such a duty, the lessee may repair it himself with the cost borne by the lessor. If the lessee's use of the thing leased is affected due to the repair, the rent of lease shall be reduced accordingly or the term of the lease prolonged.
Article 222
The lessee shall take proper care of the thing leased. Where the lessee fails to take proper care and thus causes damage or loss to the thing leased thereof, he shall be liable for compensation.
Article 223
The lessee may make an improvement or add additional facilities to the thing leased with permission of the lessor.
Where the lessee makes an improvement or adds additional facilities to the thing leased without permission of the lessor, the lessor may request the lessee to restore the thing leased or pay compensation.
Article 224
The lessee may sublease the thing leased to a third party with permission of the lessor. In that case, the contract of lease between the lessor and the lessee keeps effective. And the lessee shall be liable for compensation in case loss is caused to the thing leased due to the fault of the third party.
In case the lessee subleases the thing leased without permission of the Lessor, the lessor may discharge the contract.
Article 225
Unless otherwise agreed upon between the parties, profit accrued from the lessee's possession and use of the thing leased during the term of lease shall belong to the lessee.
Article 226
The lessee shall pay the rent according to the time limit agreed upon. If the time limit is not provided in the contract or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, the lessee shall pay the rent at the expiration of the term of lease. However, if the term of lease exceeds one year, the rent shall be paid at the expiration of each year period with the balance for the left period less than one year paid at the expiration of the term of the lease.
Article 227
Where the lessee fails to pay or delays in paying the rent without appropriate reasons, the lessor may require the lessee to pay in a reasonable time. If the lessee fails to pay within that time, the lessor may discharge the contract.
Article 228
Where the claim of right by a third party affects the lessee in his using and making profit out of the thing leased, the lessee may request a reduction or exemption of the rent.
In case a third party claims right in the thing leased, the lessee shall give notice to the lessor in due time.
Article 229
An alteration in the ownership of the thing leased during the term of the lease shall not affect the validity of the contract of lease.
Article 230
Where the lessor proposes to sell a house leased, he shall notify the lessee within reasonable time before the sale. The lessee has priority in purchasing the house with the same terms of purchase
Article 231
Where an incident that is not attributed to the lessee causes partial or entire destruction or loss to the thing leased, the lessee may request a reduction or exemption of the rent. In case the partial or entire destruction or loss to the thing leased causes failure in the realization of the purpose of the contract. the lessee may discharge the contract.
Article 232
Where the term of lease is not provided in the contract or the provision is ambiguous and it still an not be ascertained according to Article 61 of this Law, the lease is deemed as a non-fixed term lease The parties may at any time discharge the contract. The lessor however, shall notify the lessee before a reasonable time if he proposes to discharge the contract.
Article 233
Where the thing leased endangers the safety or health of the lessee, the lessee may a any me discharge the contract notwithstanding that he knows the thing leased is not qualified during the conclusion of the contract.
Article 234
If the lessee dies during the term of a house lease, persons who live with him before his death may lease the house according to the original contract of lease.
Article 235
The lessee shall return the thing leased at the expiration of the term of lease. The thing returned shall be in conformity with the condition of the thing leased as if it were used in a method agreed upon or in conformity with its nature.
Article 236
Where the lessee continues to use the thing leased after the expiration of the lease and the lessor does not object to that effect, the original contract of lease shall keeps valid, however, the term of lease shall become a non4xed term.
CHAPTER XIV CONTRACTS FOR FINANCIAL LEASING
Article 237
A financial leasing contract is a contract under which the lessor according to the lessee's option on the seller and the thing leased buys the thing leased from the seller for the lessee's use, while the lessee pays the rent.
Article 238
A financial leasing contract shall contain clauses concerning the name, quantity, specification, technical function, method of inspection and lease term of the thing leased, the composition of rent and its term and manner of payment, types of currency for payment, and the attribution of the thing leased at the expiration of the lease term etc.
A financial leasing contract shall be in written form.
Article 239
Where the lessor according to the option of the lessee on the seller and the thing leased has concluded a sales contract, the seller shall deliver the subject matter to the lessee according to the agreement, while the lessee has rights as a buyer with respect to the acceptance of the subject matter.
Article 240
The lessor, the seller and the lessee may agree upon that the right of claim shall be exercised by the lessee if the seller fails to perform his duties in the sales contract. In this case the lessor shall give assistance.
Article 241
Where the lessor has concluded a sales contract according to the options of the lessee on the seller and the thing leased. without permission of the lessee, the lessor shall not modify any content of the contract with respect to the lessee.
Article 242
The lessor has ownership of the thing leased. In case the lessee goes bankrupt, the thing leased does not become bankruptcy property.
Article 243
Unless otherwise agreed upon between the parities, the rent of the financial leasing contract shall be ascertained according to the major part or the full cost for the purchase of the thing leased and the reasonable profit that may be accrued to the lessor.
Article 244
In case the thing leased is not in conformity with the agreement or the use of the thing itself, the lessor shall not be liable unless that the lessee has relied on the skill of the lessor in designating the thing leased or the lessor has intervened in the selection of the thing leased.
Article 245
The lessor shall guarantee the right of the lessee to the possession and use of the thing leased.
Article 246
If the thing leased causes property damage or physical injury to a third party during the period it is possessed by the lessee, the lessor is not liable.
Article 247
The lessee shall take proper care and use of the thing leased.
The lessee shall perform his duty of keeping the thing leased in good repair during the period it is in his possession.
Article 248
The lessee shall pay the rent as agreed upon. Where after summon exhortation the lessee fails to pay in due time, the lessor may request full payment of rent or discharge the contract and recover the thing leased.
Article 249
Where the lessor and the lessee have made an agreement upon that the thing leased shall belong to the lessee at the expiration of the lease, and the lessee has already paid most of the rent, but is unable to afford the residual rent, in this case if the lessor discharges the contract and recovers the thing leased, the lessee may request partial reimbursement so long as the returned thing is of higher value than the rent unpaid and other cost.
Article 250
The lessor and the lessee may agree upon the attribution of the thing leased at the expiration of the lease. If the attribution is not provided in the contract or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, the thing leased shall belong to lessor.
CHAPTER XV CONTRACTS FOR WORK
Article 251
A contract for work is a contract under which the contractor undertakes work and transfers its achievement of work to the customer according to the latter's requirement, and the customer is bound to pay remuneration thereof.
The work contracted includes processing, production on order, repair, reproduction, test, examination and etc.
Article 252
A contract of work shall contain clauses on the object, quantity, quality, remuneration, manner of work, supply of materials, time limit for performance, inspection standard and method of the work etc.
Article 253
Unless otherwise agreed upon between the parties, the contractor shall use its own equipment, technology and labor force to complete the main part of the work.
In case the contractor assigns the main part of his contracted work to a third party, he shall be responsible to the customer with respect to that part of work completed by the third party; if the assignment is made without agreement of the customer, the customer may discharge the contract.
Article 254
The contractor may assign the auxiliary part of the work contracted to a third party. Where the contractor has assigned the auxiliary part of the work to a third party, he shall be responsible to the customer on that part of work.
Article 255
Where the materials are to be supplied by the contractor, he shall select materials as agreed upon and subject to the inspection of the customer.
Article 256
Where the materials are to be supplied by the customer, the customer shall supply as agreed upon, the contractor shall inspect the materials supplied by the customer in due time and if he discovers that they are not in conformity with the agreement, he shall notify the customer in due time to make a replacement or supplement.
The contractor may not, without permission, replace any materials supplied by the customer or change any spare parts that do not need to be repaired.
Article 257
Where the contractor discovers that the drawings or technical requirements are not appropriate, he shall notify the customer in due time. If the contractor was caused loss due to the customer's reluctance to make a reply etc., the customer shall be liable for compensation.
Article 258
Where the customer modifies his requirement to the contracted work during the course of construction and thus causes loss to the contractor, the customer shall compensate for the loss of the contractor.
Article 259
Where the contracted work needs assistance from the customer, the customer shall perform his duty of assistance.
In case the contracted work is unable to be completed due to the customer not performing his duty of assistance, the contractor may urge the Customer to perform his duty within reasonable time; the contractor in this case may postpone his performance as well. Where the customer does not perform his duty overdue, the contractor may discharge the contract.
Article 260
The contractor shall during the course of construction, accept necessary inspection and supervision by the customer. The customer shall not obstruct the contractor's normal work by his inspection and supervision.
Article 261
On completion of the contracted work, the contractor shall deliver the achievement of work and the necessary technical materials and relevant quality certificates to the customer. The latter shall inspect and accept the achievement of work.
Article 262
Where the achievement of work delivered by the contractor does not meet the quality standard, the customer may request the contractor to bear the liability of repair, replacement, reduction of the remuneration or compensation for loss etc.
Article 263
The Customer shall pay the remuneration according to the time limit agreed upon. If the time limit for payment is not provided or the provision is ambiguous, and it still can not be ascertained according to Article 61 of this Law, the customer shall pay at the time of the delivery of the achievement of work. If the achievement of work is to be delivered by parts, the customer shall pay the remuneration for each part accordingly.
Article 264
Unless otherwise agreed upon between the parties, in case the customer does not pay the remuneration or the price of materials etc., the contractor has a lien on the achievement of the work.
Article 265
The contractor shall take proper care of the materials supplied by the customer and the achievement of work. In case the materials or the achievement of work was caused damage or loss due to the lack of proper care the contractor shall be liable for compensation.
Article 266
The contractor shall keep confidential in accordance with the requirement of the customer He shall not. without permission of the customer keep duplications and technical materials in respect of the contracted work.
Article 267
Unless otherwise agreed upon between the parties, the joint contractors shall bear joint and several liability to the customer.
Article 268
The customer may at any time discharge a contract for work, however he shall be liable for compensation if loss is caused to the contractor thereof.
CHAPTER XVI CONTRACTS FOR CONSTRUCTION PROJECTS
Article 269
A contract for construction projects is a contract under which the contractor undertakes project construction and the employer pays for the price.
Contracts for construction projects include survey design and building contracts.
Article 270
A contract for construction projects shall be concluded in written form.
Article 271
The bid invitation and bidding activities in construction projects shall be carried out openly, fairly and justly according to the provisions of relevant laws.
Article 272
The employer may conclude a contract for construction projects with a general contractor or respectively sign a survey, design and building contract with the surveyor, designer and builder.
The employer may not divide a contract which shall be completed by one contractor into parts and then issue them to several contractors.
With permission of the employer, the general contractor or the contractor for survey, design or building may assign the part of work he contracted to a third party. The third party shall bear joint and several liabilities to the employer with the general contractor or the contractor for survey, design or building with respect to that part of work completed by himself. The contractor shall not assign the entire construction project he has contracted to a third party or divide it into parts and then assign them to a third in the name of subcontract.
The contractor is prohibited from subcontracting the construction projects to any institutions without equivalent qualifications. The subcontractor is prohibited from re-subcontracting. The construction for the main part of the project must be completed by the contractor himself.
Article 273
Contracts for major construction projects of the State shall be concluded in accordance with procedures prescribed by the Sate and the investment plans and feasibility research report approved by the State.
Article 274
Survey and design contacts shall contain clauses on time limit for delivery of related basic materials and documents (including an estimated budget), quality requirements, cost and other terms for cooperation etc.
Article 275
A construction contract shall contain provisions on the scope of the projects, the construction period, the start and completion time for the interim construction projects, the quality of the project, the cost of the project, the time for delivery of technical data, the responsibilities for supply of materials and equipment. the allocation of funds and settlement of accounts, the inspection and acceptance of projects, the scope of quality guarantee, the period of quality warranty. the cooperation between the parties etc..
Article 276
Where the construction projects are supervised, the employer shall conclude a written mandate contract for supervision with the supervisor. The rights, duties and legal liabilities of the employer and the supervisor shall be in accordance with the provisions on contracts in this Law and those of other relevant laws and regulations.
Article 277
Under a situation not to obstruct the normal work of the contractor, the employer at any time may inspect the progress and quality of the construction work.
Article 278
Before a concealed project is to be concealed, the contractor shall inform the employer to inspect toe project. In case the employer fails to conduct an inspection in due time. the contractor may postpone the dead line for construction and request compensation for stop and delay of work as well.
Article 279
The employer shall inspect the construction projects upon completion according to the construction drawings and written instructions and projects inspection regulations and quality examination standards issued by the State.
Construction projects may be delivered for use only after it has been inspected upon completion. Projects without inspection or found unqualified in inspection may not be delivered for use.
Article 280
Where the quality of survey or design is not in conformity with the agreement or the survey or design documents are not submitted in due time, the construction period is thus prolonged and losses are thereby caused to the employer, the surveyor or designer shall continue to improve the survey or design, reduces or forfeits his survey or design fee and make compensation for the losses.
Article 281
Where due to the fault of the constructor, the quality of the project is not in conformity with the agreement, the employer is entitled to demand that the project be repaired, remedied or reconstructed within reasonable time by the constructor without extra payment. And if such repair, remedy or reconstruction causes overdue delivery of the project, the constructor shall be liable for breach of contract.
Article 282
Where due to the fault of the contractor, the construction projects causes physical and property loss in the reasonable term of use, the contractor shall be liable for compensation.
Article 283
Where the employer fails to supply the raw materials, equipment, site, funds, technical materials etc. according to the time and requirements agreed upon, the contractor may request to postpone the dead line for completion of the project. He may also request compensation for stop and delay of work as well.
Article 284
Where due to the fault of the employer, the project is stopped or postponed in the course of the construction, the employer shall adopt measures to offset or reduce the losses and at the same time compensate the contractor for losses and actual expenses incurred thereof due to stop or delay of work, changes in the transportation, transfers for machinery and equipment, overstocking of materials and spare parts etc.
Article 285
Where the plans are modified, the data supplied are not accurate or the conditions for survey and design work are not provided in due time and, as a result thereof, the survey and design work has to be redone or suspended, or the design revised, the employer shall pay additional expenses for the amount of work actually undertaken by the contractor.
Article 286
Where the employer fails to pay the construction price, the contractor may urge the employer to pay within reasonable time. If the employer fails to pay with the time limit, except for those not suitable to be converted into money or auctioned in accordance with their character, the contractor may convert the project into money after negotiation with the employer. He may also apply to the People's Court for auction the project in accordance with governing law. The construction price shall be reimbursed out of funds from the conversion or auction of the project with priority.
Article 287
Relevant provisions on contract of work shall apply in absence of provisions in this Chapter.
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