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1、LeRoy H. GrawEdD, DBA, C.P.M., CPCM, CPP, CPPM, CISCMChinas Contract LawKnowledge/Skill/AbilityBe able to write a contract prepared under Chinas Contract Law when required.IntroductionContract Law of the Peoples Republic of China (PRC) was promulgated on National Day, October 1st, 1999 It replaced a
2、 host of existing laws, including:Economic Contract Law of the PRC (ECL)Law of the PRC on Economic Contracts involving Foreign Interests (FECL)Law of the PRC on Technology ContractsContains 23 Chapter and 428 ArticlesBackgroundThe new PRC Contract Law mirrors provisions of the U.N. Convention on the
3、 International Sale of Goods (CISG), some ideas of the Uniform Commercial Code, and some modern trends in Western law. It also removes punitive provisions of prior law, provides for remedies for breach, contemplates specific performance, and frowns on penalty clauses not related to actual losses. De
4、finition of a ContractArticle 2 of the new Contract Law provides that a contract in this Law refers to an agreement establishing, modifying and terminating the civil rights and obligations between subjects of equal footing.A contract is an agreement between the subjects, no matter they are natural p
5、ersons, legal persons or other organizations. A contract is an agreement of civil relationship being concluded and signed by and between specific civil subjects, that is, by and between two or more natural persons, by and between natural person(s) and legal person(s) or other organization(s), by and
6、 between legal persons, by and between legal person(s) and other organization(s).Scope of the New LawExcluded:Contracts involving personal status relationship, such as on matrimony, adoption, guardianship, etc., under the provisions of other laws.Contracts for guarantee or for insurance.Other contra
7、cts not covered in the “Specific Provisions.All contracts must follow the “General Provisions of the new contract law, even though there are separate laws covering these contract types.Scope of the New LawIncluded:Other than those excluded, domestic contracts and foreign contracts which involve fore
8、ign interests.15 specifically-listed kinds of contracts found in the Specific Provisions. These include:contracts for salescontracts for supply and use of electricity, water, gas or heatingcontracts for donationcontracts for loanscontracts for leasecontracts for financial leasecontracts for workcont
9、racts for construction projectscontracts for transportationcontracts for technologycontracts for storagecontracts for warehousingcontracts for commissioncontracts for brokeragecontracts for intermediation.What is Included?Article 12 The content of a contract is determined by the parties and generall
10、y includes the following clauses:(1) designations or names and addresses of the parties;(2) the targeted matter;(3) quantity(4) quality;(5) price or remuneration;(6) time, place and mode of fulfillment;(7) liability for breach of contract; and(8) dispute settlement.Specific PointsOral contracts allo
11、wed. Binding contracts may be written or oral, unless limited by agreement or law. Similar to the CISG.Unlike the UCC, which limits oral contracts to $5,000.Specific PointsRecognition of modern transaction modes. Electronically transmitted communications (telegram, telex, facsimile, electronic data
12、interchange and ) constitute writings for purposes of contract law. Specific PointsGood faith in negotiating and performing.A party who, in the negotiating process, deliberately conceals important facts or pretends to conclude a contract may be liable for causing loss to the other party. Good faith
13、is required in the performance of contractual rights and duties. Specific PointsGrounds for revocation/modification.Where serious misunderstanding lies at the base of the contract, or where the contract is manifestly unfair at the time it was made, a party may seek modification or revocation. Specif
14、ic PointsBusiness secrets protected.A party who learns a business secret of the other in the contracting process risks damages for disclosing or unfairly using the information. Specific PointsAdhesion and Standard Form Contracts.Akin to consumer protection measures in U.S. law, the new law invalidat
15、es clauses that purport to immunize a party from, inter alia, causing personal injury or property damage to the other.Specific PointsRules of Interpretation. In case of disputes, standardized contracts will be interpreted according to general understanding, and ambiguities shall be resolved in favor
16、 of the non-drafting party.Where international contracts specify, for example, that both the Chinese and English versions will have equal validity, disparate meanings shall be interpreted according to the purpose of the contract.Specific PointsOffer and Acceptance.In contrast to prior law, fairly de
17、tailed rules now govern offer and acceptance, formation and revocation of offers. For example, an acceptance is generally effective when notice reaches the offeror. Specific PointsAcceptance that varies the terms of the offer.An offeree who substantially alters the contents of the offer will not be
18、permitted to bind the offeree. Additional ProvisionsThe new law:encourages contracting parties to have recourse to informal dispute resolution.favors arbitration but also affirms access to courts. Summary/ConclusionsThe new Contract Law of China is appropriate for the “New World Economy and Chinas entrance into the WTO.The new Contract Law is g
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