文件编号：98078
中华人民共和国合同法 Contract Law of the People's Republic of China
(Adopted at the Second Session of the Ninth National People's Congress on March 15, 1999'
Promulgated by the Order NO. 15 of the President of the People's Republic of China on March 15,
1999 and effective as of October 1, 1999)
颁布日期：19990315 实施日期：19991001 颁布单位：全国人民代表大会
Contents
General Provisions
Chapter 1 General Principles
Chapter 2 Conclusion of Contracts
Chapter 3 Validity of Contracts
Chapter 4 Performance of Contracts
Chapter 5 Modification and Assignment of Contracts
Chapter 6 Termination of Contractual Rights and Obligations
Chapter 7 Liabilities for Breach of Contracts
Chapter 8 Other Provisions
Specific Provisions
Chapter 9 Sales Contracts
Chapter 10 Contracts for Supply of Power, Water, Gas or Heat
Chapter 11 Gift Contracts
Chapter 12 Contracts for Loans of Money
Chapter 13 Leasing Contracts
Chapter 14 Financial Leasing Contracts
Chapter 15 Contracts for Works
Chapter 16 Contracts for Construction Projects
Chapter 17 Transportation Contracts
Chapter 18 Technology Contracts
Chapter 19 Storage Contracts
Chapter 20 Warehousing Contracts
Chapter 21 Commission Contracts
Chapter 22 Contracts of Commission Agency
Chapter 23 Intermediation conrtacts
Supplementary Provisions
General Provisions
Chapter 1 General Principles
Article 1 This Law is enacted in order to protect the lawful rights and interests of the
contracting parties, to maintain social and economic order, and to promote the process of socialist
modernization.
Article 2 A contract in this Law refers to an agreement among natural persons, legal persons
or other organizations as equal parties for the establishment, modification of a relationship
involving the civil rights and obligations of such entities.
Agreements concerning personal relationships such as marriage, adoption, guardianship, etc.
shall be governed by the provisions in other laws.
Article 3 Contracting parties shall have equal legal status, and no party may impose its will
on the other party.
Article 4 The parties have the right to lawfully enter into a contract of their own free will in
accordance with the law, and no unit or individual may illegally interfere therewith.
Article 5 The parties shall adhere to the principle of fairness in deciding their respective
rights and obligations.
Article 6 The parties shall observe the principle of honesty and good faith in exercising their
rights and performing their obligations.
Article 7 In concluding and performing a contract, the parties shall comply with the laws and
administrative regulations, respect social ethics, and shall not disrupt the social and economic
order or impair the public interests.
Article 8 A lawfully established contract shall be legally binding on the parties thereto, each
of whom shall perform its own obligations in accordance with the terms of the contract, and no
party shall unilaterally modify or terminate the contract.
The contract established according to law is protected by law.
Chapter 2 Conclusion of Contracts
Article 9 In entering into a contract, the parties shall have appropriate capacities for civil
rights and civil acts.
A party may appoint an agent to enter into a contract on its behalf in accordance with the
law.
Article 10 The parties may use written, oral or other forms in entering into a contract.
A contract shall be in written form if the laws or administrative regulations so provide. A
contract shall be concluded in written form if the parties so agree.
Article 11 "Written form" refers to a form such as a written contractual agreement, letter,
electronic data text(including a telegram, telex, fax, electronic data exchange and e-mail)that can
tangibly express the contents contained therein.
Article 12 The contents of a contract shall be agreed upon by the parties, and shall generally
contain the following clauses:
(1) titles or names and domiciles of the parties;
(2) subject matter;
(3) quantity;
(4) quality;
(5) price or remuneration;
(6) time limit, place and method of performance;
(7) liability for breach of contract; and
(8) method to settle disputes.
The parties may conclude a contract by reference to a model text of each kind of contract.
Article 13 The parties shall conclude a contract in the form of an offer and an acceptance.
Article 14 An offer is an expression of an intent to enter into a contract with another person.
Such expression of intent shall comply with the following:
(1) its contents shall be specific and definite;
(2) it indicates that the offeror will be bound by the expression of intent in case of
acceptance by the offeree.
Article 15 An invitation for offer is an expression of an intent to invite other parties to make
offers thereto. Mailed price lists, public notices of auction and tender, prospectuses and
commercial advertisements, etc. are invitations for offer.
Where the contents of a commercial advertisement meet the requirements for an offer, it
shall be regarded as an offer.
Article 16 An offer becomes effective when it reaches the offeree.
If a contract is concluded through data-telex, and a recipient designates a specific system to
receive the date-telex, the time when the data-telex enters such specific system shall be the time of
arrival; if no specific system is appointed, the time when the data-telex first enters any of the
recipient's systems shall be regarded as the time of arrival.
Article 17 An offer may be withdrawn. The withdrawal notice shall reach the offeree before
or at the same time when the offer arrives.
Article 18 An offer may be revoked. The revocation notice shall reach the offeree before it
has dispatched a notice of acceptance.
Article 19 An offer may not be revoked, if
(1) the offeror indicates a fixed time for acceptance or otherwise explicitly states that the
offer is irrevocable; or
(2) the offeree has reasons to rely on the offer as being irrevocable and has made preparation
for performing the contact.
Article 20 An offer shall lose efficacy under any of the following circumstances:
(1) the notice of rejection reaches the offeror;
(2) the offeror revokes the offer in accordance with the law;
(3) the offeree fails to dispatch an acceptance before the expiration of the time limit for
acceptance;
(4) the offeree makes substantial changes to the contents of the offer.
Article 21 An acceptance is the expression of an intention to by the offeree to assent to the
offer.
Article 22 The acceptance shall be made in the form of a notice, except where acceptance
may be made by an act on the basis of customary business practice or as expressed in the offer.
Article 23 An acceptance shall reach the offeror within the time limit prescribed in the offer.
Where no time limit is prescribed in the offer, the acceptance shall reach the offeror in
accordance with the following provisions:
(1) if the offer is made in dialogues, the acceptance shall be made immediately unless
otherwise agreed upon by the parties;
(2) If the offer is made in forms other than a dialogue, the acceptance shall reach the offeror
within a reasonable period of time.
Article 24 Where an offer is made by letter or telegram, the time limit for acceptance shall
accrue from the date shown in the letter or from the date on which the telegram is handed in for
dispatch. If no such date is shown in the letter, it shall accrue from the postmark date on the
envelope. Where an offer is made by means of instantaneous communication, such as telephone or
facsimile, etc. the time limit for acceptance shall accrue from the moment that the offer reaches
the offeree.
Article 25 A contract is established when the acceptance becomes effective.
Article 26 An acceptance becomes effective when its notice reaches the offeror. If notice of
acceptance is not required, the acceptance shall become effective when an act of acceptance is
performed in accordance with transaction practices or as required in the offer.
Where a contract is concluded in the form of date-telex, the time of arrival of an acceptance
shall be governed by the provisions of Paragraph 2, Article 16 of this Law.
Article 27 An acceptance may be withdrawn, but a notice of withdrawal shall reach the
offeror before or at the same time when the notice of acceptance reaches the offeror.
Article 28 Where an offeree makes an acceptance beyond the time limit for acceptance, the
acceptance shall be a new offer except that the offeror promptly informs the offeree of the
effectiveness of the said acceptance.
Article 29 If the offeree dispatched the acceptance within the time limit specified for
acceptance, and under normal circumstances the acceptance would have reached the offeror in due
time, but due to other reasons the acceptance reaches the offeror after the time limit for acceptance
has expired, such acceptance shall be effective, unless the offeror notifies the offeree in a timely
manner that it does not accept the acceptance due to the failure of the acceptance to arrive within
the time limit.
Article 30 The contents of an acceptance shall comply with those of the offer. If the offeree
substantially modifies the contents of the offer, it shall constitute a new offer. The modification
relating to the subject matter, quality, quantity, price or remuneration, time or place or method of
performance, liabilities for breach of contract and method of dispute resolution, etc. shall
constitute the substantial modification of an offer.
Article 31 If the acceptance does not substantially modifies the contents of the offer, it shall
be effective, and the contents of the contract shall be subject to those of the acceptance, except as
rejected promptly by the offeror or indicated in the offer that an acceptance may not modify the
offer at all.
Article 32 Where the parties conclude a contract in written form, the contract is established
when it is signed or sealed by the parties.
Article 33 Where the parties conclude the contract in the form of letters or data-telex, etc.,
one party may request to sign a letter of confirmation before the conclusion of the contract. The
contract shall be established at the time when the letter of confirmation is signed.
Article 34 The place of effectiveness of an acceptance shall be the place of the establishment
of the contract.
If the contract is concluded in the form of data-telex, the main business place of the recipient
shall be the place of establishment. If the recipient does not have a main business place, its
habitual residence shall be considered to be the place of establishment. Where the parties agree
otherwise, such agreement shall apply.
Article 35 Where the parties conclude a contract in written form, the place where both parties
sign or affix their seals on the contract shall be the place of establishment.
Article 36 Where a contract is to be concluded in written form as required by relevant laws
and administrative regulations or as agreed by the parties, and the parties failed to conclude the
contract in written form, but one party has performed the principal obligation and the other party
has accepted it, the contract is established.
Article 37 Where a contract is to be concluded in written form, if one party has performed its
principal obligation and the other party has accepted it before signing or sealing of the contract,
the contract is established.
Article 38 Where the State has issued a mandatory plan or a State purchasing order based on
necessity, the relevant legal persons and the other organizations shall conclude a contract between
them in accordance with the rights and obligations as stipulated by the relevant laws and
administrative regulations.
Article 39 Where standard terms are adopted in concluding a contract, the party supplying the
standard terms shall define the rights and obligations between the parties abiding by the principle
of fairness, and shall inform the other party to note the exclusion or restriction of its liabilities in a
reasonable way, and shall explain the standard terms upon request by the other party.
Standard terms are clauses that are prepared in advance for general and repeated use by one
party, and which are not negotiated with the other party when the contract in concluded.
Article 40 When standard terms are under the circumstances stipulated in Articles 52 and 53
of this Law, or the party which supplies the standard terms exempts itself from its liabilities,
increases the liabilities of the other party, and deprives the material rights of the other party, the
terms shall be invalid.
Article 41 If a dispute over the understanding of the standard terms occurs, it shall be
interpreted in accordance with common understanding. Where there are two or more kinds of
interpretation, an interpretation unfavorable to the party supplying the standard terms shall prevail.
Where the standard terms are inconsistent with non-standard terms, the latter shall prevail.
Article 42 The party shall be liable for damage if it is under one of the following
circumstances in concluding a contract and thus causing losses to the other party:
(1) pretending to conclude a contract, and negotiating in bad faith;
(2) deliberately concealing important facts relating to the conclusion of the contract or
providing false information;
(3) performing other acts which violate the principle of good faith.
Article 43 A trade secret the parties learn in concluding a contract shall not be disclosed or
improperly used, no matter the contract is established or not. If the party discloses or improperly
uses such trade secret and thus causing loss to the other party, it shall be liable for damages.
Chapter 3 Validity of Contracts
Article 44 The contract established according to law becomes effective upon its
establishment.
With regard to contracts that are subject to approval or registration as stipulated by relevant
laws or administrative regulations, the provisions thereof shall be followed.
Article 45 The parties may agree on that the effectiveness of a contract be subject to certain
conditions. A contract whose effectiveness is subject to certain conditions shall become effective
when such conditions are accomplished. The contract with dissolving conditions shall become
invalid when such conditions are satisfied.
If a party improperly prevent the satisfaction of a condition for its own interests, the
condition shall be regarded as having been accomplished. If a party improperly facilitates the
satisfaction of a condition, such condition shall be regarded as not to have been satisfied.
Article 46 The parties may agree on a conditional time period as to the effectiveness of the
contract. A contract subject to an effective time period shall come into force when the period
expires. A contract with termination time period shall become invalid when the period expires.
Article 47 A contract concluded by a person with limited civil capacity of conduct shall be
effective after being ratified afterwards by the person's statutory agent, but a pure profit-making
contract or a contract concluded which is appropriate to the person's age, intelligence or mental
health conditions need not be ratified by the person's statutory agent.
The counterpart may urge the statutory agent to ratify the contract within one month. It shall
be regarded as a refusal of ratification that the statutory agent does not make any expression. A
bona fide counterpart has the right to withdraw it before the contract is ratified. The withdrawal
shall be made by means of notice.
Article 48 A contract concluded by an actor who as no power of agency, who oversteps the
power of agency, or whose power of agency has expired and yet concludes it on behalf of the
principal, shall have no legally binding force on the principal without ratification by the principal,
and the actor shall be held liable.
The counterpart may urge the principal to ratify it within one month. It shall be regarded as a
refusal of ratification that the principal does not make any expression. A bona fide counterpart has
the right to withdraw it before the contract is ratified. The withdrawal shall be made by means of
notice.
Article 49 If an actor has no power of agency, oversteps the power of agency, or the power of
agency has expired and yet concludes a contract in the principal's name, and the counterpart has
reasons to trust that the actor has the power of agency, the act of agency shall be effective.
Article 50 Where a statutory representative or a responsible person of a legal person or other
organization oversteps his/her power and concludes a contract, the representative act shall be
effective except that the counterpart knows or ought to know that he/she is overstepping his/her
powers.
Article 51 Where a person having no right to disposal of property disposes of other persons'
properties, and the principal ratifies the act afterwards or the person without power of disposal has
obtained the power after concluding a contract, the contract shall be valid.
Article 52 A contract shall be null and void under any of the following circumstances:
(1) a contract is concluded through the use of fraud or coercion by one party to damage the
interests of the State;
(2) malicious collusion is conducted to damage the interests of the State, a collective or a
third party;
(3) an illegitimate purpose is concealed under the guise of legitimate acts;
(4) damaging the public interests;
(5) violating the compulsory provisions of laws and administrative regulations.
Article 53 The following exception clauses in a contract shall be null and void:
(1) those that cause personal injury to the other party;
(2) those that cause property damages to the other party as result of deliberate intent or gross
negligence.
Article 54 A party shall have the right to request the people's court or an arbitration
institution to modify or revoke the following contracts:
(1) those concluded as a result of significant misconception;
(2) those that are obviously unfair at the time when concluding the contract.
If a contract is concluded by one party against the other party's true intentions through the
use of fraud, coercion, or exploitation of the other party's unfavorable position, the injured party
shall have the right to request the people's court or an arbitration institution to modify or revoke it.
Where a party requests for modification, the people's court or the arbitration institution may
not revoke the contract.
Article 55 The right to revoke a contract shall extinguish under any of the following
circumstances:
(1) a party having the right to revoke the contract fails to exercise the right within one year
from the day that it knows or ought to know the revoking causes;
(2) a party having the right to revoke the contract explicitly expresses or conducts an act to
waive the right after it knows the revoking causes.
Article 56 A contract that is null and void or revoked shall have no legally binding force ever
from the very beginning. If part of a contract is null and void without affecting the validity of the
other parts, the other parts shall still be valid.
Article 57 If a contract is null and void, revoked or terminated, it shall not affect the validity
of the dispute settlement clause which is independently existing in the contract.
Article 58 The property acquired as a result of a contract shall be returned after the contract is
confirmed to be null and void or has been revoked; where the property can not be returned or the
return is unnecessary, it shall be reimbursed at its estimated price. The party at fault shall
compensate the other party for losses incurred as a result therefrom. If both parties are fault, each
party shall respectively be liable.
Article 59 If the parties have maliciously conducted collusion to damage the interests of the
State, a collective or a third party, the property thus acquired shall be turned over to the State or
returned to the collective or the third party.
Chapter 4 Performance of Contracts
Article 60 Each party shall fully perform its own obligations as agreed upon.
The parties shall abide by the principle of good faith, and perform obligations of notification,
assistance, and confidentiality, etc. in accordance with the nature and purpose of the contract and
the transaction practice.
Article 61 Where, after the contract becomes effective, there is no agreement in the contract
between the parties on such contents as quality, price or remuneration, or place of performance
etc., or such agreement is ambiguous, the parties may agree upon supplementary terms through
consultation; if a supplementary agreement cannot be reached, such terms shall be determined in
accordance with the relevant provisions of the contract or the transaction practices.
Article 62 Where certain contents agreed upon by the parties in the contract are ambiguous
and cannot be determined in accordance with the provisions in Article 61 of this Law, the
following provisions shall be applied:
(1)if quality requirement is not clear, performance shall be in accordance with the state
standard or industry standard; absent any state or industry standard, performance shall be in
accordance with the customary standard or any particular standard consistent with the purpose of
the contract;
(2)if price or remuneration is not clear, performance shall be in accordance with the
prevailing market price at the place of performance at the time the contract was concluded, and if
adoption of a price commissioned by the government or based on government issued pricing
guidelines is required by law, such requirement applies;
(3)where the place of performance is not clear, if the obligation is payment of money,
performance shall be at the place where the payee is located; if the obligation is delivery of
immovable property, performance shall be at the place where the immovable property is located;
for any other subject matter, performance shall be effected at the place of location of the party
fulfilling the obligations.
(4)if the time of performance is not clear, the obligor may perform, and the obligee may
require performance, at any time, provided that the other party shall be given the time required for
preparation;
(5)if the method of performance is not clear, performance shall be rendered in a manner
which is conducive to realizing the purpose of the contract;
(6)if the responsibility for the expenses of performance is not clear, the party fulfilling the
obligations shall bear the expenses.
Article 63 Where the government-fixed price or government-directed price is followed in a
contract, if the said price is readjusted within the time limit for delivery as stipulated in the
contract, the payment shall be calculated according to the price at the time of delivery. Where a
party delays in delivering the subject matter, the original price shall be adopted if the price rises;
and the new price shall be adopted if the price falls. Where a party delays in taking delivery of the
subject matter or making payment, the new price shall be adopted if the price rises, and the
original price shall be adopted if the price falls.
Article 64 Where the parties agree that the obligor shall perform the obligations to a third
party, and the obligor fails to perform its obligations to such third party or its performance of the
obligations is not in conformity with the agreement, the obligor shall be liable to the obligee for
breach of contract.
Article 65 Where the parties agree that a third party performs the obligations to the obligee,
and the third party fails to perform the obligations or the performance is not in conformity with the
agreement, the obligor shall be liable to the obligee for breach of contract.
Article 66 Where both parties have obligations toward one another and there is no order of
priority in respect of the performance of obligations, the parties shall perform the obligations
simultaneously. Each party has the right to reject any demand by the other party for performance
prior to the performance by the other party. If the performance of the obligations of the party who
is to perform first is not in conformity with the agreement, the party who is perform later has the
right to reject the other party's demand for corresponding performance.
Article 67 Where both parties have obligations toward each other and there is an order of
priority in respect of the performance, and the party who is to perform first fails to perform, the
party who is to perform later has the right to reject the other party's demand for performance. If
the performance of the obligations of the party who is to perform first is not in conformity with the
agreement, the party who is to perform later has the right to reject the other party's demand for
corresponding performance.
Article 68 The party required to perform first may suspend its performance if it has
conclusive evidence showing that the other party is under any of the following circumstances:
(1)its business has seriously deteriorated;
(2)it has engaged in transfer of assets or withdrawal of funds for the purpose of evading
debts;
(3)it has lost its business creditworthiness;
(4)it is in any other circumstance which will or may cause it to lose its ability to perform.
Where a party suspends performance without conclusive evidence, it shall be liable for
breach of contract.
Article 69 If a party suspends its performance in accordance with the provisions of Article 68
of this Law, it shall timely notify the other party. If the other party provides appropriate assurance
for its performance, the party shall resume performance. After performance was suspended, if the
other party fails to regain its ability to perform and fails to provide appropriate assurance within a
reasonable time, the suspending party may terminate the contract.
Article 70 Where the obligee fails to notify the obligor of its separation, merger, or change of
the domicile, thereby making it difficult for the obligor to perform its obligations, the obligor may
suspend its performance or escrow the subject matter.
Article 71 The obligee may reject the obligor's advance performance of its obligations, except
that the advance performance does not harm the obligee's interests.
Any additional expense incurred by the obligee due to the obligor's advance performance of
its obligations shall be borne by the obligor.
Article 72 An obligee may reject the obligor's partial performance, except that the partial
performance of its obligations does not harm the obligee's interests.
Any additional expense incurred by the obligee due to the obligor's partial performance of its
obligations shall be borne by the obligor.
Article 73 Where the obligor is remiss in exercising its due creditor's right, thereby harming
the obligee's interests, the obligee may petition the People's Court for subrogation in its own name,
except that the creditor's right exclusively belongs to the obligor.
The extent to which the subrogation rights can be exercised is limited to the obligee's rights.
The expenses necessary for the obligee to exercise such subrogation rights shall be borne by the
obligor.
Article 74 Where the obligor waives its creditor's right against a third party that is due or
assigns its property without reward, thereby harming the obligee's interests, the obligee may
petition the People's Court for cancellation of the obligor's act. Where the obligor assigns its
property at a low price which is manifestly unreasonable, thereby harming the obligee's interests,
and the assignee is aware of the situation, the obligee may also petition the People's Court for
cancellation of the obligor's act.
The extent to which the right to cancel can be exercised is limited to the rights of the obligee.
The expenses necessary for the obligee to exercise the right to cancel shall be borne by the
obligor.
Article 75 The right to cancel shall be exercised within one year form the date the obligee
knows or should have known of the matter for cancellation. Such right to cancel shall lapse if the
obligee fails to exercise such rights within five years from the date of the occurrence of such act.
Article 76 Once a contract becomes effective, a party may not refuse to perform its
obligations thereunder due to a change in its name, or its legal representative, the person in charge,
or the person handling the contract.
Chapter 5 Modification and Assignment of Contracts
Article 77 A contract may be modified if the parties reach a consensus through consultation.
If the laws or administrative regulations so provide, approval and registration procedures for
such modification shall be gone through in accordance with such provisions.
Article 78 Where an agreement by the parties on the contents of a modification is ambiguous,
the contract shall be presumed as not having been modified.
Article 79 The obligee may assign its rights under a contract, in whole or in part, to a third
party, except under the following circumstances:
(1)such rights may not be assigned in light of the nature of the contract;
(2)such rights may not be assigned according to the agreement between the parties;
(3)such rights may not be assigned according to the provisions of the laws.
Article 80 Where the obligee assigns its rights, it shall notify the obligor. Such assignment
will have no effect on the obligor without notice thereof.
A notice by the obligee to assign its rights shall not be revoked, unless such revocation is
consented to by the assignee.
Article 81 Where the obligee assigns its right, the assignee shall acquire the collateral rights
related to the principal rights, except that the collateral rights exclusively belong to the obligee.
Article 82 Upon receipt of the notice of assignment of rights, the obligor may assert against
the assignee any defenses it has against the assignor.
Article 83 Upon receipt by the obligor of the notice of assignment of rights, the obligor shall
have vested rights against the assignor, and if the rights of the obligor vest prior to or at the same
time as the assigned rights, the obligor may claim an offset against the assignee.
Article 84 Where the obligor delegates its obligations under a contract in whole or in part to a
third party, such delegation shall be subject to the consent of the obligee.
Article 85 Where the obligor delegates its obligation, the new obligor may exercise any
defense that the original obligor had against the obligee.
Article 86 Where the obligor delegates its obligation, the new obligor shall assume the
incidental obligations related to the main obligations, except that the obligations exclusively
belong to the original obligor.
Article 87 Where the laws or administrative regulations stipulate that the assignment of rights
or transfer of obligations shall undergo approval or registration procedures, such provisions shall
be followed.
Article 88 Upon the consent of the other party, one party may transfer its rights together with
its obligations under contract to a third party.
Article 89 Where the rights and obligations are transferred together, the provisions in Articles
79, Articles 81 to 83, and Articles 85 to 87 of this Law shall be applied.
Article 90 Where a party is merged after the contract has been concluded, the legal person or
other organization established after the merger shall exercise the rights and obligations thereunder.
Unless otherwise agreed upon by the obligor and obligee, the legal persons or other organizations
that exist after the division shall jointly enjoy the rights and jointly assume the obligations under
the contract.
Chapter 6 Termination of Contractual Rights and Obligations
Article 91 The rights and obligations under a contract shall be terminated under any of the
following circumstances:
(1) the obligations have been performed as agreed upon;
(2) the contract has been rescinded;
(3) the obligations have been offset against each other;
(4) the obligor has escrowed the subject matter accordance with the law;
(5) the obligee has released the obligor of its obligation;
(6) the rights and obligations have vested in one party;
(7)any other circumstances for termination as stipulated by the laws or agreed upon by the
parties.
Article 92 After the termination of the rights and obligations under the contract, the parties
shall observe the principal of honesty and good faith and perform the obligations of notification,
assistance and confidentiality, etc. in accordance with relevant transaction practices.
Article 93 The parties may terminate a contract if they reach a consensus through
consultation.
The parties may agree upon conditions under which either party may terminate the contract.
Upon satisfaction of the conditions, the party who has the right to terminate may terminate the
contract.
Article 94 The parties to a contract may terminate the contract under any of the following
circumstances:
(1) it is rendered impossible to achieve the purpose of contract due to an event of force
majeure;
(2) prior to the expiration of the period of performance, the other party expressly states, or
indicates through its conduct, that it will not perform its main obligation;
(3) the other party delayed performance of its main obligation after such performance has
been demand, and fails to perform within a reasonable period;
(4) the other party delays performance of its obligations, or breaches the contract in some
other manner, rendering it impossible to achieve the purpose of the contract;
(5) other circumstance as provided by law.
Article 95 Where the laws stipulates or the parties agreed upon the time limit to exercise the
right to terminate the contract, and no party exercises it when the time limit expires, the said right
shall be extinguished.
Where neither the law stipulates nor the parties make an agreement upon the time limit to
exercise the right to terminate the contract, and no party exercise it within a reasonable time period
after being urged, the said right shall be extinguished.
Article 96 A party demanding termination of a contract in accordance with the provisions of
Paragraph 2 of Article 93 and Article 94 of this Law shall notify the other party. The contract shall
be terminated upon the receipt of the notice by the other party. If the other party objects to such
termination, it may petition the People's Court or an arbitration institution to adjudicate the
validity of the termination of the contract.
Where the laws and administrative regulations so provide, the approval and registration
procedures for the termination of the contract shall be gone through in accordance with such laws
and regulations.
Article 97 After the termination of a contract, performance shall cease if the contract has not
been performed; if the contract has been performed, a party may, in accordance with the
circumstances of performance or the nature of the contract, demand the other party to restore such
party to its original state or adopt other remedial measures, and such party shall have the right to
demand compensation for damages.
Article 98 The termination of rights and obligations under a contact shall not affect the
validity of clauses that related to the final settlement of accounts and winding-up.
Article 99 Where the parties are liable to one another for obligations that are due, and if the
type and nature of the subject matter of such obligations are the same, any party may offset its
own obligation against the obligation of the other party, except unless such offset is not allowed
according to the laws and regulations or cannot be made given the nature of the contract.
The party who claims such offset shall notify the other party. The notice shall become
effective when it reaches the other party. The offset shall not be subject to any condition or time
limit.
Article 100 Where the parties have obligations towards one another, and the type and nature
of such obligations are different, the obligations may also be offset upon consensus between the
parties after consultation.
Article 101 The obligor may escrow the subject matter under any of the following
circumstances which render performance of the obligations difficult:,
(1) the obligee refuses to accept them without justified reasons;
(2) the whereabouts of the obligee are unknown;
(3) the obligee is deceased and the successor has not been determined, or the obligee has lost
civil capacity and a guardian has not been appointed;
(4) other circumstance as provided for in the laws.
Where the subject matter is not fit for escrow, or the cost of escrow is excessively high, the
obligor may auction or sell the subject matter according to law, and escrow the proceeds
therefrom.
Article 102 Unless the whereabouts of the obligee are unknown, the obligee shall notify the
obligee, or the successor or guardian of the obligor immediately after the subject matter has been
placed in escrow.
Article 103 Once the subject matter has been placed in escrow, the risk of damage to,
destruction or loss of the subject matter shall be borne by the obligee. The obligee shall be entitled
to any fruits of the subject matter during the escrow period. Escrow expenses shall be borne by the
obligee.
Article 104 The obligee may claim the subject matter in escrow at any time, except that if the
obligee has any due obligations toward the obligor, prior to the obligee's performance of its
obligations or the obligee's provision of security for its performance, the escrow institution shall,
at the request of the obligor, refuse the obligee's claim of the escrowed subject matter.
The right of the obligee to reclaim the subject matter in escrow shall lapse if it is not
exercised within five years form the date the subject matter is placed in escrow, and the escrowed
subject matter shall revert to the national treasury after the deduction of the escrow costs.
Article 105 Where an obligee releases the obligor of its own obligations, in whole or in part,
the rights and obligations under the contract shall terminate in whole or in part.
Article 106 If the rights and obligations under a contract vest in one party, such rights and
obligations thereunder shall terminate, unless they involve the interests of a third party.
Chapter 7 Liabilities for Breach of Contracts
Article 107 If a party fails to perform its obligations under a contract, or its performance fails
to satisfy the terms of the contract, it shall bear the liabilities for breach of contract such as to
continue to perform its obligations, to take remedial measures, or to compensate for losses.
Article 108 Where one party express explicitly or indicates by its conduct that it will not
perform its obligations under a contract, the other party may demand it to bear the liability for the
breach of contract before the expiry of the performance period.
Article 109 If a party fails to pay the price or remuneration, the other party may request it to
make the payment.
Article 110 Where a party fails to perform the non-monetary obligations or its performance
of non- monetary obligations fails to satisfy the terms of the contract, the other party may request
it to perform it except under any of the following circumstances:
(1) it is unable to be performed in law or in fact;
(2) the subject matter of the obligation is unfit for compulsory performance or the
performance expenses are excessively high;
(3) the obligee does not require performance within a reasonable time.
Article 111 Where the quality fails to satisfy the agreement, the breach of contract damages
shall be borne in the manner as agreed upon by the parties. Where there is no agreement in the
contract on the liability for breach of contract or such agreement is unclear, nor can it be
determined in accordance with the provisions of Article 61of this Law, the damaged party may, in
light of the nature of the subject matter and the degree of loss, reasonably choose to request the
other party to bear the liabilities for the breach of contract such as repairing, substituting,
reworking, returning the goods, or reducing the price or remuneration.
Article 112 Where a party fails to perform its obligations under the contract or its
performance fails to conform to the agreement, and the other party still suffers from other
damages after the performance of the obligations or adoption of remedial measures, such party
shall compensate the other party for such damages.
Article 113 Where a party fails to perform its obligations under the contract or its
performance fails to conform to the agreement and cause losses to the other party, the amount of
compensation for losses shall be equal to the losses caused by the breach of contract, including the
interests receivable after the performance of the contract, provided not exceeding the probable
losses caused by the breach of contract which has been foreseen or ought to be foreseen when the
party in breach concludes the contract.
The business operator who commits default activities in providing to the consumer any
goods or services shall be liable for paying compensation for damages in accordance with the Law
of the People's Republic of China on Protection of Consumer Rights and Interests.
Article 114 The parties may agree that if one party breaches the contract, it shall pay a certain
sum of liquidated damages to the other party in light of the circumstances of the breach, and may
also agree on a method for the calculation of the amount of compensation for the damages
incurred as a result of the breach.
Where the amount of liquidated damages agreed upon is lower than the damages incurred, a
party may petition the People's Court or an arbitration institution to make an increase; where the
amount of liquidated damages agreed upon are significantly higher than the damages incurred, a
party may petition the People's Court or an arbitration institution to make an appropriate
reduction.
Where the parties agree upon breach of contract damages in respect to the delay in
performance, the party in breach shall perform the obligations after paying the breach of contract
damages.
Article 115 The parties may agree that a party pay a deposit to the other party as a guaranty
for the obligation in accordance with the Security Law of the People's Republic of China. Upon
the obligor has performed its obligation, the deposit shall be offset against the price or refunded to
the obligor. If the party paying the deposit fails to perform its obligations under the contract, such
party has no right to demand for the return of the deposit; where the party accepting the deposit
fails to perform its obligations under the contract, such party shall refund twice the value of the
deposit.
Article 116 If the parties agree on both liquidated damages and a deposit, and one party is in
breach, the other party may choose to apply either the provisions for liquidated damages or that for
the deposit.
Article 117 A party who is unable to perform a contract due to force majeure is exempted
from liability in part or in whole in light of the impact of the event of force majeure, except
otherwise provided by law. Where an event of force majeure occurs after the party's delay in
performance, it is not exempted from such liability.
For purposes of this Law, force majeure means any objective circumstances which are
unforeseeable, unavoidable and insurmountable.
Article 118 If a party is unable to perform a contract due to an event of force majeure, it shall
timely notify the other party so as to mitigate the losses that may be caused to the other party, and
shall provide evidence of such event of force majeure within a reasonable period.
Article 119 Where a party breached the contract, the other party shall take the appropriate
measures to prevent the losses from increasing; where the other party's failure to take appropriate
measures results in additional losses, it cannot demand compensation for the additional losses.
Any reasonable expense incurred by the other party in preventing additional losses shall be
borne by the party in breach.
Article 120 If both parties breach a contract, each party shall bear its own respective
liabilities.
Article 121 Where a party's breach is attributable to a third party, it shall nevertheless be
liable to the other party for breach. Any dispute between the party and such third party shall be
resolved in accordance with the law or the agreement between the parties.
Article 122 Where the breach of contract by one party infringes upon the other party's
personal or property rights, the aggrieved party is entitled to choose to claim the assumption by the
violating and infringing party of liabilities for breach of contract according to this Law, or to claim
the assumption by the violating and infringing party of liabilities for infringement according to
other laws.
Chapter 8 Other Provisions
Article 123 Where other laws provide otherwise in respect of a contract, such provisions shall
prevail.
Article 124 Where there are no explicitly provisions in the Specific Provisions of this Law or
in any other law concerning a certain contract, the provisions in the General Provisions of this
Law shall be applied, and reference may be made to the provisions in the Specific Provisions of
this Law or in any other law that most closely relate to such contract.
Article 125 If any disputes arise between the parties over the understanding of any clause of
the contract, the true meaning thereof shall be determined according to the words and sentences
used in the contract, the relevant provisions in the contract, the purpose of the contract, the
transaction practices and the principle of good faith.
Where a contract is concluded in two or more languages and it is agreed that all versions are
equally authentic, the words and sentences in each version are construed to have the same
meaning. In case of any discrepancy in the words or sentences used in the different language
versions, they shall be interpreted in light of the purpose of the contract.
Article 126 Parties to a foreign-related contract may select the applicable law for resolution
of a contractual dispute, except as otherwise provided by law. Where parties to the foreign-related
contract fails to select the applicable law, the contract shall be governed by the law of the country
with the closest connection thereto.
For a Sino-foreign equity joint venture enterprise contract, Sino-foreign cooperative joint
venture contract, or a contract for Sino-foreign joint exploration and development of natural
resources which is performed within the territory of the People's Republic of China, the law of the
People's Republic of China shall be applied.
Article 127 Within the scope of their respective duties, the administrative department of
industry and commerce and other relevant departments shall, in accordance with the relevant laws
and administrative regulations, be responsible for monitoring and dealing with any illegal acts
which, by taking advantage of contracts, harm the interests of the State or the interests of the
public and society; where such an act constitutes a crime, criminal liability shall be investigated in
accordance with the law.
Article 128 The parties may resolve a contractual dispute through settlement or mediation.
Where the parties do not wish to, or are unable to, resolve such dispute through settlement or
mediation, the dispute may be submitted to the relevant arbitration institution for arbitration in
accordance with the arbitration agreement between the parties. Parties to a foreign-related contract
may apply to a Chinese arbitration institution or another arbitration institution for arbitration.
Where the parties did not conclude an arbitration agreement, or the arbitration agreement is invalid,
either party may bring a suit to the People's Court. The parties shall perform the judgments,
arbitration awards or mediation agreements which have taken legal effect; if a party refuses to
perform, the other party may request the People's Court for enforcement.
Article 129 For a dispute arising from a contract for the international sale of goods or a
technology import or export contract, the time limit for bringing a suit or applying for arbitration
is four years, calculating from the date on which the party knows or ought to know the
infringement on its rights. For a dispute arising from any other type of contract, the time limit for
bringing a suit or applying for arbitration shall be governed by the relevant law.
Specific Provisions
Chapter 9 Sales Contracts
Article 130 A sales contract is a contract whereby the seller transfers the ownership of a
subject matter to the buyer, and the buyer pays the price for it.
Article 131 In addition to the terms set forth in Article 12 of this Law, a sales contract may
also contain such clauses as package manner, inspection standards and method, method of
settlement and clearance, language adopted in the contract and its authenticity.
Article 132 The subject matter to be sold shall be owned by the seller or of that the seller
shall have the right to dispose.
Where the transfer of a subject matter is prohibited or restricted by laws or administrative
regulation, such provision shall be applied.
Article 133 The ownership of a subject matter shall be transferred upon the delivery of the
object, except as otherwise stipulated by law or agreed upon by the parties.
Article 134 The parties to a sales contract may agree that the ownership shall belong to the
seller if the buyer fails to pay the price or perform other obligations.
Article 135 The seller shall perform the obligations of delivering to the buyer the subject
matter or handing over the documents for the buyer to take possession of the subject matter and of
transferring the ownership thereto.
Article 136 In addition to the document for taking possession, the seller shall deliver to the
buyer the relevant documents and materials in accordance with the agreement or transaction
practices.
Article 137 In a sale of any subject matter which contains intellectual property such as
computer software, etc., the intellectual property in the subject matter does not belong to the buyer,
except as otherwise provided by law or agreed upon by the parties.
Article 138 The seller shall deliver the subject matter by the time limit agreed upon. Where a
time period for delivery is agreed upon, the seller may deliver at any time within the said time
period.
Article 139 Where the time limit for delivery of the subject matter is not agreed upon
between the parties or the agreement is not clear, the provisions of Article 61 and Item 4 of Article
62 shall be applied.
Article 140 Where a subject matter has been possessed by the buyer prior to the conclusion of
the contract, the delivery time shall be the time when the contract becomes effective.
Article 141 The seller shall deliver the subject matter at the agreed place.
Where there is no agreement between the parties as to the place to deliver the subject matter
or such agreement is not clear, nor can it be determined according to the provisions of Article 61
of this Law, the following provisions shall be applied:
(1) if the subject matter needs carriage, the seller shall deliver the subject matter to the first
carrier so as to hand it over to the buyer;
(2) if the subject matter does not need carriage, and the seller and buyer know the place of
the subject matter when concluding the contract, the seller shall deliver the subject matter at such
place; if the place is unknown, the subject matter shall be delivered at the business place of the
seller when concluding the contract.
Article 142 The risk of damage to or loss of a subject matter shall be borne by the seller prior
to the delivery of the subject matter and by the buyer after delivery, except as otherwise stipulated
by law or agreed upon by the parties.
Article 143 Where a subject matter cannot be delivered at the agreed time limit due to any
reasons attributable to the buyer, the buyer shall bear the risk of damage to or loss of the subject
matter as of the date it breaches the agreement.
Article 144 Where the seller sells a subject matter delivered to a carrier for carriage and is in
transit, unless otherwise agreed upon by the parties, the risk of damage to or missing of the subject
matter shall be borne by the buyer as of the time of establishment of the contract.
Article 145 Where there is no agreement between the parties as to the place of delivery or
such agreement is not clearly, and the subject matter needs carriage according to the provisions of
Item 1 of Paragraph 2 of Article 141 of this Law, the risk of damage to or missing of the subject
matter shall be borne by the buyer after the seller has delivered the subject matter to the first
carrier.
Article 146 Where the seller has placed the subject matter at the place of delivery in
accordance with the agreement or in accordance with the provisions of Item 2 of Paragraph 2 of
Article 141 of this Law, while the buyer fails to take delivery in breach of the agreement, the risk
of damage to or missing of the subject matter shall be borne by the buyer as of the date of breach
of the agreement.
Article 147 The failure of the seller to deliver the documents and materials relating to the
subject matter as agreed upon shall not affect the passing of the risk of damage to or missing of the
subject matter.
Article 148 Where the quality of the subject matter does not conform to the quality
requirements, making it impossible to achieve the purpose of the contract, the buyer may refuse to
accept the subject matter or may terminate the contract. If the buyer refuses to accept the subject
matter or terminate the contract, the risk of damage to or missing of the subject matter shall be
borne by the seller.
Article 149 Where the risk of damage to or missing of the subject matter is borne by the
buyer, the buyer's right to demand the seller to bear liability for breach of contract because the
seller's performance of its obligations is not in conformity with the agreement shall not be
affected.
Article 150 Unless otherwise provided by law, the seller shall have the obligation to warrant
that no third party shall exercise against the buyer any rights with respect to the delivered subject
matter.
Article 151 Where the buyer knows or ought to know, at the time of conclusion of the
contract, that a third party has rights on the subject matter to be sold, the seller does not assume
the obligation prescribed in Article 150 of this Law.
Article 152 Where the buyer has conclusive evidence to demonstrate that a third party may
claim rights on the subject matter, it may suspend to pay the corresponding price, except where the
seller provides a appropriate guaranty.
Article 153 The seller shall deliver the subject matter in compliance with the agreed quality
requirements. Where the seller gives the quality specifications for the subject matter, the subject
matter delivered shall comply with the quality requirements set forth therein.
Article 154 Where the quality requirements for the subject matter is not agreed between
parties or such agreement is not clear, nor can it be determined according to the provisions of
Article 61 of this Law, the provisions of Item 1 of Article 62 of this Law shall be applied.
Article 155 If the subject matter delivered by the seller fails to comply with the quality
requirements, the buyer may demand the seller to bear liability for breach of contract in
accordance with Article 111 of this Law.
Article 156 The seller shall deliver the subject matter packed in the agreed manner. Where
there is no agreement on package manner in the contract or the agreement is not clear, nor can it
be determined according to the provisions of Article 61 of this Law, the subject matter shall be
packed in a general manner, and if no general manner, a package manner enough to protect the
subject matter shall be adopted.
Article 157 Upon receipt of the subject matter, the buyer shall inspect it within the agreed
inspection period. Where no inspection period is agreed, the buyer shall timely inspect the subject
matter.
Article 158 Where the parties have agreed upon an inspection period, the buyer shall notify
the seller of any non-compliance in quantity or quality of the subject matter within such inspection
period. Where the buyer delayed in notifying the seller, the quantity or quality of the subject
matter is deemed to comply with the contract.
Where no inspection period is agreed, the buyer shall notify the seller within a reasonable
period, commencing on the date when the buyer discovered or should have discovered the quantity
or quality non-compliance. If the buyer fails to notify within a reasonable period or fails to notify
within 2 years, commencing on the date when it received the subject matter, the quantity or quality
of the subject matter is deemed to comply with the contract, except that if there is a warranty
period in respect of the subject matter, the warranty period applies and supersedes such two year
period.
Where the seller knows or ought to know the non-compliance of the subject matter, the
buyer is not subject to the time limits for notification prescribed in the preceding two paragraphs.
Article 159 The buyer shall pay the price in the agreed amount. Where the price is not agreed
or the agreement is not clear, the provisions of Article 61 and Item 2 of Article 62 shall be applied.
Article 160 The buyer shall pay the price at the agreed place. Where the place of payment is
not agreed or the agreement is not clear, nor can it be determined according to the provisions of
Article 61 of this Law, the buyer shall make payment at the seller's place of business, provided
that if the parties agreed that payment shall be conditional upon delivery of the subject matter or
the document for taking delivery thereof, payment shall be made at the place where the subject
matter, or the document for taking delivery thereof, is delivered.
Article 161 The buyer shall pay the price at the agreed time. Where the time for payment is
not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of
this Law, the buyer shall make payment at the same time it receives the subject matter or the
document for taking delivery thereof.
Article 162 Where the seller delivers the subject matter in a quantity greater than that agreed
in the contract, the buyer may accept or reject the excess quantity. Where the buyer accepts the
excess quantity, it shall pay the price based on the contract rate; where the buyer rejects the excess
quantity, it shall timely notify the seller.
Article 163 The fruits of the subject matter belong to the seller if accrued before delivery, and
to the buyer if accrued after delivery.
Article 164 Where a contract is terminated due to non-compliance of any main component of
the subject matter, the effect of termination extends to the ancillary components. Where the
contract is terminated due to non-compliance of any ancillary component of the subject matter, the
effect of termination does not extend to the main 165 Where the subject matter
comprises of a number of components, one of which does not comply with the contract, the buyer
may terminate the portion of the contract in respect of such component, provided that if severance
of such component with the other components will significantly diminish the value of the subject
matter, the party may terminate the contract in respect of such number of components.
Article 166 Where the seller is to deliver the subject matter in installments, if the seller fails
to deliver one installment of the subject matter or the delivery fails to satisfy the terms of the
contract so that the said installment cannot realize the contract purpose, the buyer may terminate
the portion of the contract in respect thereof.
If the seller fails to deliver one installment of the subject matter or the delivery fails to
satisfy the terms of the contract so that the delivery of the subsequent installments of subject
matter can not realize the contract purpose, the buyer may terminate the portion of the contract in
respect of such installment as well as any subsequent installment.
If the buyer is to terminate the portion of the contract in respect of a particular installment
which is interdependent with all other installments, it may terminate the contract in respect of all
delivered and undelivered installments.
Article 167 In a sale by installment payment, where the buyer fails to make payments as they
became due, if the delinquent amount has reached one fifth of the total price, the seller may
require payment of the full price from the buyer or terminate the contract. If the seller terminates
the contract, it may require the buyer to pay a fee for its use of the subject matter.
Article 168 In a sale by sample, the parties shall place the sample under seal, and may specify
the quality of the sample. The subject matter delivered by the seller shall comply with the sample
as well as the quality specifications.
Article 169 In a sale by sample, if the buyer is not aware of a latent defect in the sample, the
subject matter delivered by the seller shall nevertheless comply with the normal quality standard
for a like item, even though the subject matter delivered complies with the sample.
Article 170 In a sale by trial, the parties may agree the trial period. Where a trial period is not
agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this
Law, it shall be determined by the seller.
Article 171 In a sale by trial, the buyer may either purchase or reject the subject matter during
the trial period. At the end of the trial period, the buyer is deemed to have made the purchase if it
fails to demonstrate its intent to purchase or reject the subject matter.
Article 172 In a sale by tender, matters such as the rights and obligations of the parties and
the tendering procedure, etc. are governed by the relevant laws and administrative regulations.
Article 173 In a sale by auction, matters such as the rights and obligations of the parties and
the auctioning procedure, etc. are governed by the relevant laws and administrative regulations.
Article 174 If there are provisions in the law for other non-gratuitous contracts, such
provisions shall apply; in the absence of such provisions, reference shall be made to the relevant
provision on sales contract.
Article 175 Where the parties agree on a barter transaction involving transfer of title to the
subject matters, such transaction shall be governed by reference to the relevant provisions on sales
contracts.
Chapter 10 Contracts for Supply of Power, Water, Gas, Or Heat
Article 176 A power supply contract is a contract whereby the power supplier supplies power
to the power customer, and the power consumer pay an electricity fee.
Article 177 The contents of a power supply contract include terms such as the method,
quality, and time of power supply, and the capacity, location and nature of power use, and the
metering method, electricity rate, the method of settlement of electricity fees, and the
responsibility for maintenance of the power supply and use facilities, etc..
Article 178 The place of performance of a power supply contract shall be the place agreed
upon by the parties, and if there is no agreement or the agreement is not clear, the place of
performance shall be the boundary where ownership of the power supply facilities is divided.
Article 179 The power supplier shall supply power in a safe manner in accordance with the
standards for power supply stipulated by the State and with the terms of the contract. Where the
power supplier fails to supply power in a safe manner in accordance with the standards for power
supply stipulated by the State and with the terms of the contract, thereby causing losses to the
power customer, it shall be liable for damages.
Article 180 Where the power supplier needs to suspend the power supply due to reasons such
as planned maintenance or provisional inspection and repair of the power supply facilities, legally
restriction on power, or illegal use of power by the power customer, etc., it shall notify the power
customer in advance in accordance with the relevant provisions of the State. Where the power
supplier suspends power supply without notifying the power customer in advance, thereby causing
losses to the power customer, it shall be liable for damages.
Article 181 Where the power supply is suspended due to a natural disaster or other causes,
the power supplier shall make prompt repairs in accordance with the relevant provisions of the
State. Where the power supplier fails to make prompt repair, thereby causing loss to the power
customer, it shall be liable for damages.
Article 182 The power customer shall timely pay the electricity fees in accordance with the
relevant provisions of the State and with the terms of the contract. Where the power customer
delays in paying the electricity fees, it shall pay breach of contract damages in accordance with the
contract. Where the power customer fails to pay the electricity fees and breach of contract
damages within a reasonable time limit after receiving demand for payment, the power supplier
may shut off the power supply in accordance with the procedure prescribed by the state.
Article 183 The power customer shall use power in a safe manner in accordance with the
relevant provisions of the State and with the terms of the contract. Where the power customer fails
to use power in a safe manner in accordance with the relevant provisions of the State and with the
terms of the contract, thereby causing losses to the power supplier, it shall be liable for damages.
Article 184 A contract for the supply of water, gas or heat shall be governed by reference to
the relevant provisions on power supply contracts.
Chapter 11 Gift Contracts
Article 185 A gift contract is a contract whereby the donor conveys his property to the donee
gratuitously and the donee expresses his acceptance of the gift.
Article 186 Prior to the transfer of rights to the gift property, the donor may revoke the gift.
The provisions of the preceding paragraph does not apply to any gift contract the nature of
which serves the public interests or fulfills a moral obligation, such as disaster relief, poverty relief,
etc., or any gift contract which has been notarized.
Article 187 Where conveyance of the gifted property is subject to such procedures as
registration according to law, the relevant procedures shall be carried out.
Article 188 In the case of a gift contract the nature of which serves the public interests or
fulfills a moral obligation, such as disaster relief, poverty relief, etc., or a gift contract which has
been notarized, if the donor fails to deliver the gift property, the donee may require delivery.
Article 189 Where the gifted property is damaged or lost due to any intentional misconduct or
gross negligence of the donor, he shall be liable for damages.
Article 190 A gift may be conditioned on an obligation.
Where the gift is conditioned on an obligation, the donee shall perform his obligations in
accordance with the contract.
Article 191 The donor is not liable for any defect in the gifted property. Where the gift is
conditioned on an obligation, and the gifted property is defective, the donor has the same warranty
obligations as a seller to the extent of the prescribed obligations.
Where the donor intentionally omits to inform the donee of the defect or warranted the
absence of any defect, thereby causing losses to the donee, he shall be liable for damages.
Article 192 Where the donee is in any of the following circumstances, the donor may revoke
the gift:
(1)seriously harming the donor or any immediate family member thereof;
(2) failing to perform support obligations owed to the donor;
(3) failing to perform the obligations under the gift contract.
The donor shall exercise its revocation right within one year after he knows, or ought to
know, the cause for revocation.
Article 193 Where the donor is deceased or incapacitated due to the donee's illegal act, his
heir or legal agent may revoke the gift.
The heir or legal agent of the donor shall exercise the right of revocation within six months
after he knows, or ought to know, the cause for revocation.
Article 194 Upon revocation of the gift, the person with the revocation right may claim
restitution of the gifted property from the donee.
Article 195 If the donor's economic situation is deteriorated significantly, thereby seriously
impacting on his business operation or family life, he may no longer perform the gift obligations.
Chapter 12 Contracts for Loan of Money
Article 196 A contract for loan of money is a contract whereby the borrower borrows a sum
of money from the lender, and repays the borrowed money with interest thereon when it becomes
due.
Article 197 A contract for loan of money shall be in writing, except where the loan is
between natural persons who have agreed otherwise.
The contents of a contract for loan of money include the terms such as the loan's type,
currency, purpose, amount, interest rate, term and method of repayment, etc.
Article 198 In entering into a contract for loan of money, the lender may require the borrower
to provide a guaranty. The guaranty shall conform to the provisions of the Security Law of the
People's Republic of China.
Article 199 In entering into a contract for loan of money, the borrower shall provide true
information concerning its business operation and financial condition in connection with the loan
as required by the lender.
Article 200 No interest shall be deducted from the principal in advance. Where any interest
amount is deducted from the principal in advance, the repayment of principal and calculation of
interest shall be based on the actual amount borrowed.
Article 201 Where the lender fails to make the loan amount available on the agreed date and
in the agreed amount, thereby causing losses to the borrower, it shall pay damages.
Where the borrower fails to draw down on the agreed date and in the agreed amount, it shall
nevertheless pay the interest on the agreed date and in the agreed amount.
Article 202 The lender may examine and monitor the application of the proceeds in
accordance with the contract. The borrower shall periodically provide the lender with materials
such as related financial and accounting reports, etc. in accordance with the contract.
Article 203 Where the borrower fails to use the proceeds for the prescribed purpose, the
lender may withhold funding, call the loan, or terminate the contract.
Article 204 The interest rate on the loan provided by a financial institution engaged in
lending operation shall be determined between the minimum and maximum rates fixed by the
People's Bank of China.
Article 205 The borrower shall pay the interest at the agreed time. Where the time of interest
payment is not agreed or the agreement is not clear, nor can it be determined in accordance with
Article 61 of this Law, if the loan term is less than one year, the interest shall be paid together with
the principal at the time of repayment; if the loan term is one year or longer, the interest shall be
paid at the end of each annual period, and where the remaining period is less than one year, the
interest shall be paid together with the principal at the time of repayment.
Article 206 The borrower shall repay the principal at the agreed time. Where the time of
repayment is not agreed or the agreement is not clear, nor can it be determined in accordance with
Article 61 of this Law, the borrower may repay at any time; and the lender may demand
repayment from the borrower within a reasonable time limit.
Article 207 Where the borrower fails to repay the loan at the agreed time, it shall pay delayed
repayment interest in accordance with the contract or the relevant provisions of the State.
Article 208 Where the borrower prepays the loan, unless otherwise agreed by the parties, the
interest shall be calculated based on the actual period of loan.
Article 209 The borrower may apply to the lender for extension of the loan term before its
maturity. Upon consent by the lender, the loan term may be extended.
Article 210 A contract for loan of money between natural persons becomes effective at the
time the lender makes the loan amount available.
Article 211 Under a contract for loan of money between natural persons, if payment of
interest is not agreed or the agreement is not clear, the loan is deemed interest free.
Under a contract for loan of money between natural persons, the interest rate on the loan
may not contravene the relevant provisions of the State concerning limit on loan interest rate.
Chapter 13 Leasing Contracts
Article 212 A leasing contract is a contract whereby the lessor delivers to the lessee the lease
item for it to use or accrue benefit from, and the lessee pays the rent.
Article 213 The contents of a leasing contract include terms such as the name, quantity and
purpose of the lease item, lease term, amount of rent, time and method of rent payment, as well as
maintenance and repair of the lease item, etc.
Article 214 The lease term may not exceed twenty years. If the lease term exceeds twenty
years, the portion of the lease term beyond the initial twenty year period is invalid.
At the end of the lease term, the parties may renew the lease, provided that the renewed term
may not exceed twenty years commencing on the date of renewal.
Article 215 Where the lease term is six months or longer, the lease shall be in writing. If the
parties fail to adopt a writing form, the lease is deemed a non-term lease.
Article 216 The lessor shall deliver the lease item to the lessee in accordance with the
contract and shall, during the lease term, keep the lease item fit for the agreed purpose.
Article 217 The lessee shall use the lease item in the agreed manner. Where the manner of
use of the lease item is not agreed or the agreement is not clear, nor can it be determined in
accordance with Article 61of this Law, the lease item shall be used in a manner consistent with its
nature.
Article 218 Where the lessee uses the lease item in the agreed manner or in a manner
consistent with its nature, thereby causing wear and tear to the lease item, it is not liable for
damages.
Article 219 Where the lessee fails to use the lease item in the agreed manner or in a manner
consistent with its nature, thereby causing damage to it, the lessor may terminate the contract and
claim damages.
Article 220 The lessor shall perform the obligations of maintenance and repair of the lease
item, except otherwise agreed by the parties.
Article 221 Where the lease item needs maintenance or repair, the lessee may require the
lessor to perform maintenance or repair within a reasonable time limit.
If the lessor fails to fulfill its obligations of maintenance or repair, the lessee may maintain
or repair the lease item on its own at the lessor's expense. Where the lessee's use of the lease item
is impaired due to maintenance or repair thereof, the rent shall be reduced or the lease term shall
be extended accordingly.
Article 222 The lessee shall keep the lease item with due care and shall be liable for damages
if the lease item is damaged or lost due to improper care.
Article 223 Subject to consent of the lessor, the lessee may make improvement on or addition
to the lease item.
If the lessee makes improvement on or addition to the lease item without consent of the
lessor, the lessor may require the lessee to restore the lease item to its original condition or claim
compensation for the losses.
Article 224 Subject to consent of the lessor, the lessee may sublease the lease item to a third
party. Where the lessee subleases the lease item, the leasing contract between the lessee and the
lessor remains valid, and if the third party causes damage to the lease item, the lessee shall
compensate for the losses.
Where the lessee subleases the lease item without the consent of the lessor, the lessor may
terminate the contract.
Article 225 During the lease term, any benefit accrued from the possession or use of the lease
item belongs to the lessee, except otherwise agreed by the parties.
Article 226 The lessee shall pay the rent at the agreed time. Where the time of payment is not
agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this
Law, the rent shall be paid at the end of the lease term if it is less than one year; if the lease term is
one year or longer, the rent shall be paid at the end of each annual period, and where the remaining
period is less than one year, the rent shall be paid at the end of the lease term.
Article 227 Where the lessee fails to pay or delays in paying the rent without any reason, the
lessor may require the lessee to pay the rent within a reasonable time limit. If the lessee fails to
pay the rent at the end of such time limit, the lessor may terminate the contract.
Article 228 If due to any claim by a third party, the lessee is unable to use or accrue benefit
from the lease item, the lessee may require reduction in rent or refuse to pay rent.
In case of any claim by a third party, the lessee shall timely notify the lessor.
Article 229 Any change of ownership to the lease item does not affect the validity of the
leasing contract.
Article 230 Where the lessor is to sell a dwelling unit under a lease, it shall give the lessee a
notice within a reasonable time limit before the sale, and the lessee has the right of first refusal
under the same conditions.
Article 231 Where the lease item is damaged or lost in part or in whole due to any reason not
attributable to the lessee, the lessee may require reduction in rent or refuse to pay rent; where the
purpose of the contract can not be achieved due to damage to or loss of the lease item in part or in
whole, the lessee may terminate the contract.
Article 232 Where the term of a lease is not agreed or the agreement is not clear, nor can it be
determined in accordance with Article 61 of this Law, such lease is deemed a non-term lease.
Either party may terminate the contract at any time, provided that the lessor shall give the lessee a
reasonable advance notice before it terminates the contract.
Article 233 Where the lease item endangers the safety or health of the lessee, the lessee may
terminate the contract at any time even if the lessee knows the lease item does not meet the quality
requirements when concluding the contract.
Article 234 Where the lessee is deceased during the term of a dwelling unit lease, the person
jointly living in the unit with the lessee while the lessee is alive may continue leasing it on the
terms of the original leasing contract.
Article 235 The lessee shall return the lease item at the end of the lease term. The returned
lease item shall be in a condition resulting from its use in the agreed manner or in a manner
consistent with its nature.
Article 236 Upon expiration of the lease term, if the lessee continues to use the lease item
without objection by the lessor, the original leasing contract remains effective, provided that it
becomes a non-term lease.
Chapter 14 Financial Leasing Contracts
Article 237 A financial leasing contract is a contract whereby the lessor, upon purchase of the
lessee-selected lease item from a lessee-selected seller, provides the lease item to the lessee for its
use, and the lessee pays the rent.
Article 238 The contents of a financial leasing contract include terms such as the name,
quantity, specifications, technical performance, and method of inspection of the lease item, the
lease term, the rental components and the time, method and currency of payment, as well as the
ownership of the lease item at the end of the lease term, etc.
A financial leasing contract shall be concluded in writing.
Article 239 Under the sales contract concluded by the lessor according to the lessee's
selection of the seller and the lease item, the seller shall deliver the subject matter to the lessee in
accordance with the contract, and the lessee enjoys the rights of the buyer in respect of taking
delivery of the subject matter.
Article 240 The lessor, the seller and the lessee may agree that any claim arising from the
seller's failure in the performance of its obligations under the sales contract will be made by the
lessee. Where the lessee makes such a claim, the lessor shall provide assistance.
Article 241 Without the consent of the lessee, the lessor may not amend any lessee-related
term in the sales contract concluded by it according to the lessee's selection of the seller and the
lease item.
Article 242 The lessor shall be entitled to the ownership of the lease item. In case the lessee
goes bankruptcy, the lease item is not part of its bankruptcy assets.
Article 243 Unless otherwise agreed by the parties, the rent under a financial leasing contract
shall be determined based on the major portion of or full costs of purchasing the lease item and the
lessor's reasonable profit.
Article 244 Where the lease item does not comply with the contract or is not fit for the
intended purpose, the lessor is not liable, except where the lessee relies on the skills of the lessor
in selecting the lease item or the lessor interferes with the selection thereof.
Article 245 The lessor shall give warranty in respect of the lessee's possession and use of the
lease item.
Article 246 If in the possession of the lessee, the lease item causes personal injury or property
damage to a third party, the lessor is not liable.
Article 247 The lessee shall keep and use the lease item with due care. While in possession of
the lease item, the lessee shall perform the obligations of maintenance and repair thereof.
Article 248 The lessee shall pay the rent in accordance with the contract. Where the lessee
fails to pay the rent within a reasonable time limit after receiving the demand for payment from
the lessor, the lessor may require payment of the full rent; or it may terminate the contract and take
back the lease item.
Article 249 Where the parties agree that the lease item shall belong to the lessee at the expiry
of the lease term, the lessee has paid the majority of the rent but is unable to pay the remaining
rent, and the lessor terminates the contract for this reason and takes back the lease item, if the
value of the lease item taken back exceeds the rent and other expenses which the lessee owes to
the lessor, the lessee may request the lessor to return a certain part.
Article 250 The lessor and the lessee may agree on the ownership of the lease item at the
expiry of the lease term. Where ownership of the lease item is not agreed or the agreement is not
clear, nor can it be determined in accordance with Article 61 of this Law, the ownership of the
lease item shall belong to the lessor.
Chapter 15 Contracts for Work
Article 251 A contract for work is a contract whereby the contractor shall, in light of the
requirements of the ordering party, complete certain work and deliver the results therefrom, and
the ordering party pays the remuneration therefor.
Work includes processing, ordering, repairing, duplicating, testing, inspecting, etc..
Article 252 The contents of a contract for work shall contain such clauses as the subject
matter, quantity, quality, remuneration, method of the work, supply of materials, term of
performance, standards and method of inspection.
Article 253 The contractor shall use its own equipment, skills and labor to complete the main
part of the work, except as otherwise agreed upon by the parties.
Where the contractor assigns the contracted work to a third party for completion, the
contractor shall be responsible to the ordering party in respect of the work results completed by
the ordering party. Where the assignment is not approved by the ordering party, the ordering party
may terminate the contract.
Article 254 The contractor may assign some ancillary work contracted to a third party for
completion. Where the contractor assigns some ancillary work to a third party for completion, the
contractor hall be responsible to the ordering party for the work result completed by a third party.
Article 255 Where the contractor is to supply the materials, the contractor shall select the
materials in accordance with the contract and shall make such materials available for inspection by
the ordering party.
Article 256 Where the ordering party is to supply the materials, it shall supply the materials
in accordance with the contract. The contractor shall timely inspect the materials supplied by the
ordering party, and if it discovers that they do not conform to the agreement in the contract, it shall
timely notify the ordering party to replace them or supply what is lacking or take other remedial
measures.
The contractor may not replace the materials supplied by the ordering party without
authorization, and may not replace any components which do not need to be repaired.
Article 257 Where the contractor discovers that the drawings or technical requirements
provided by the ordering party are unreasonable, it shall timely notify the ordering party. Where
any losses are caused to the contractor due to the indolent reply of the ordering party and other
reasons, the ordering party shall be liable for making compensation.
Article 258 Where the ordering party changes its requirements for the contracted work while
the work is under way, thereby causing losses to the contractor, the ordering party shall be liable
for making compensation.
Article 259 Where the performance of the contracted work requires assistance of the ordering
party, the ordering party shall have the obligation to provide assistance. Where the contracted
work is unable to be completed due to the ordering party's failure in fulfilling its obligation of
assistance, the contractor may urge the ordering party to perform its obligation within a reasonable
time limit and may extend the term of its performance; where the ordering party fails to perform
such obligation within the time limit, the contractor may terminate the contract.
Article 260 In the period of working, the contractor shall accept the necessary supervision
over and inspection of the work by the ordering party. The ordering party may not obstruct the
normal work of the contractor with the supervision and inspection.
Article 261 Upon the completion of the contracted work, the contractor shall deliver the work
results to the ordering party and shall submit necessary technical materials and the relevant quality
certificate. The ordering party shall conduct acceptance inspection of the work results.
Article 262 Where the work results delivered by the contractor fail to meet the quality
requirements, the ordering party may request the contractor to bear the liabilities for the breach of
contract by way of repairing, remaking, reducing remuneration, or making compensation.
Article 263 The ordering party shall pay the remuneration at the agreed time limit. Where the
time limit of payment is not agreed or the agreement is not clear, nor can it be determined in
accordance with Article 61 of this Law, the ordering party shall pay it at the time when the
contractor delivers the work results; where the work results are partially delivered, the ordering
party shall make payment accordingly.
Article 264 Where the ordering party fails to pay the remuneration or cost for the materials,
etc. to the contractor, the contractor is entitled to lien upon the work results, except as otherwise
agreed upon by the parties.
Article 265 The contractor shall keep the materials supplied by the ordering party and the
completed work results with due care, and shall be liable for damages in case of any damage or
losses due to improper care.
Article 266 The contractor shall keep the relevant information confidential as required by the
ordering party, and may not retain any replica or technical material without permission of the
ordering party.
Article 267 Joint contractors are jointly and severally liable to the ordering party, except as
otherwise agreed upon by the parties.
Article 268 The ordering party may terminate the contract at any time, but it shall bear the
liability for making compensation for losses, if the contractor suffers losses therefrom.
Chapter 16 Contracts for Construction Projects
Article 269 A contract for construction project is a contract whereby the contractor performs
project construction, and the developer pays the price.
Contracts for construction projects include contracts for survey, design, and construction.
Article 270 A contract for construction project shall be in written form.
Article 271 Tendering for a construction project shall be conducted in an open, fair and
impartial manner in accordance with the relevant laws.
Article 272 The developer may enter into a contract for construction project with a prime
contractor, or enter into contracts for survey, design, and construction with the surveyor, designer,
and constructor respectively.
The developer may not divide a construction project which should be completed by one
contractor into several parts and contract them out to several contractors.
Subject to consent by the developer, the prime contractor or the contractor for survey, design,
or construction may delegate part of the contracted work to a third party. The third party and the
prime contractor or the contractor for survey, design, or construction shall be jointly and severally
liable to the developer in respect of the work product completed by such third party. The
contractor may not assign in whole to any third party the contracted construction project, or divide
the whole contracted construction project into several parts and separately assign each part to a
third party under the guise of sub-contracting.
The contractor is prohibited from sub-contracting any part of the project to an entity not
appropriately qualified. A sub-contractor is prohibited from further sub-contracting its contracted
work. The main structure of the construction project must be constructed by the contractor itself.
Article 273 A contract for a major state construction project shall be concluded in accordance
with the procedure prescribed by the state and in compliance with the state-approved documents
such as the investment plan and feasibility studies report, etc.
Article 274 A contract for survey or design includes terms such as the time limit for
submission of the relevant basic information and documents (including budget estimate), the
quality requirements, fees, and other conditions of cooperation, etc.
Article 275 A construction contract includes terms such as the scope of the project, the
construction period, the time for commencement and completion of any work to be commissioned
in the interim, the quality of the project, the cost of the project, the time for delivery of technical
materials, the responsibilities for the supply of materials and equipment, the appropriation of funds
and settlement of account, inspection upon completion of the project, the scope and period of
quality warranty, and cooperation between the parties, etc.
Article 276 Where the construction project is subject to supervision, the developer shall enter
into an agency appointment contract for project supervision with a project supervisor in writing.
The rights, obligations and associated legal liabilities of the developer and supervisor shall be
prescribed in accordance with the provisions hereof concerning agency appointment contracts and
the provisions of other relevant laws and administrative regulations.
Article 277 Provided that the developer does not interfere with the normal operation of the
contractor, it may inspect the progress and quality of the work at any time.
Article 278 In the case of concealed work, the contractor shall give the developer notice for
inspection prior to concealment. Where the developer fails to timely conduct inspection, the
contractor may extend the relevant project milestones, and is entitled to claim damages for work
stoppage or work slowdown, etc.
Article 279 Upon completion of the construction project, the developer shall conduct
acceptance inspection according to the construction drawings and specifications, and in
accordance with the rules of construction inspection and quality inspection standard prescribed by
the state. Once the construction project has passed the acceptance inspection, the developer shall
pay the prescribed price and accept the construction project.
The completed construction project may be put into use only after it has passed the
acceptance inspection; if the construction project has not been inspected or has failed the
inspection, it may not be put into use.
Article 280 Where the developer sustains any loss from construction delay due to
non-compliance of the survey or design or due to delayed delivery of the survey or design
documents, the surveyor or the designer shall continue to improve the survey or design, reduce or
forgo the survey fee or design fee, and pay damages.
Article 281 Where the construction project fails to meet the prescribed quality requirements
due to any reason attributable to the constructor, the developer is entitled to require the constructor
to repair, re-construct or make alteration free of charge within a reasonable time. Where delivery
of the project is delayed due to such repair, re-construction or alteration, the constructor shall be
liable for breach of contract.
Article 282 Where the construction project caused personal injury and property damage
during its reasonable usage period due to any reason attributable to the contractor, the contractor
shall be liable for damages.
Article 283 Where the developer fails to provide raw materials, equipment, site, funds, or
technical information at the prescribed time and in accordance with the contractual requirements,
the contractor may extend the relevant project milestones, and is entitled to claim damages for
work stoppage or slowdown, etc.
Article 284 If an ongoing project is stopped or delayed due to any reason attributable to the
developer, the developer shall take the appropriate measures to make up or mitigate the loss, and
shall indemnify the contractor for its loss and out-of-pocket expenses arising from resulting work
stoppage, slowdown, reshipment, re-dispatch of mechanical equipment, and excess inventory of
materials and assemblies, etc.
Article 285 Where in the course of survey or design, any repeating work, work stoppage or
change of design occurs due to the developer's change of plan, the incorrect information provided
by it, or its failure to provide the working conditions necessary for the survey or design at the
prescribed time, the developer shall increase the fees in light of the actual amount of work done by
the surveyor or designer.
Article 286 If the developer failed to pay the price in accordance with the contract, the
contractor may demand payment from the developer within a reasonable period. Where the
developer fails to pay the price at the end of such period, the contractor may enter into an
agreement with the developer to liquidate the project, and may also petition the People's Court to
auction the project in accordance with the law, unless such project is not fit for liquidation or
auction in light of its nature.
The construction project price shall be paid in priority out of proceeds from the liquidation
or auction of the project.
Article 287 A matter not provided for in this Chapter shall be governed by the relevant
provision governing contracts of hired works.
Chapter 17 Transportation Contracts
Section One General Provisions
Article 288 A transportation contract is a contract whereby the carrier carries passengers or
cargoes from the starting place of carriage to the agreed destination, and the passenger, consignor
or consignee pays for the ticket-fare or freight.
Article 289 A carrier engaged in public transportation may not refuse the normal and
reasonable carriage request of a passenger or consignor.
Article 290 The carrier shall safely carry the passengers or cargoes to the agreed destination
within the agreed time or within a reasonable time.
Article 291 The carrier shall carry the passengers or cargoes to the agreed destination via the
agreed route or the customary carriage route.
Article 292 A passenger, a consignor or a consignee shall pay the ticket-fare or freight.
Where the carrier fails to carry the passengers or the cargoes via the agreed or customary carriage
route, thereby increasing the ticket-fare or freight, the passenger, consignor or consignee may
refuse to pay any increased portion thereof.
Section Two Passenger Transportation contracts
Article 293 A passenger transportation contract is established upon the carrier's delivery of
the passenger ticket to the passenger, except as otherwise agreed upon by the parties or there are
other transaction practices.
Article 294 The passenger shall board the means of transportation with a valid passenger
ticket. If the passenger boards without a ticket, exceeds the distance paid for, takes a higher class
or higher berth than booked, or boards with an invalid ticket, he shall make up the payment for an
appropriate ticket, and the carrier may charge an additional payment in accordance with the
relevant provisions. Where the passenger fails to pay the ticket-fare, the carrier may refuse to
carry.
Article 295 Where the passenger is unable to board the means of transportation
