(Adopted by the Second Session of the Ninth National People's Congress on March 15, 1999, promulgated by Order No.15 of the President of the People's Republic of China on March 15, 1999, and effective from October 1, 1999)
Contents
General Provisions
Chapter I Common Provisions
Chapter II Formation of the Contract
Chapter III Validity of the Contract
Chapter IV Performance of the Contract
Chapter V Modification and Transfer of the Contract
Chapter VI Termination of Rights and Obligations under the Contract
Chapter VII Liability for Breach of Contract
Chapter VIII Miscellaneous Provisions
Specific Provisions
Chapter IX Contracts of Sale
Chapter X Contracts for the Supply and Consumption of Electricity, Water, Gas or Heat
Chapter XI Contracts of Gift
Chapter XII Loan Contracts
Chapter XIII Contracts for Lease
Chapter XIV Contracts for Financial Lease
Chapter XV Work Contracts
Chapter XVI Construction Project Contracts
Chapter XVII Carriage Contracts
Chapter XVIII Technology Contracts
Chapter XIX Contracts of Deposit
Chapter XX Warehousing Contracts
Chapter XXI Contracts of Mandate
Chapter XXII Contracts of Commission Agency
Chapter XXIII Brokerage Contracts
Supplementary Provisions
General Provisions
Chapter I Common Provisions
Article 1
For the purposes of protecting the legitimate rights and interests of the parties to contracts, maintaining the socioeconomic order and promoting the construction of socialist modernization, this Law is enacted.
Article 2
For the purposes of this Law, a contract is an agreement on the establishment, alteration or termination of civil right-obligation relations between natural persons, legal persons and other organizations of subjects with equal status.
Agreements on such relations of paternity as marriage, adoption and guardianship shall be governed by the provisions of other laws.
Article 3
The parties to the contract have equal legal status, and a party may not impose its will on the other party.
Article 4
The parties shall, according to law, have the right to enter into a contract on their own free will, and no unit or person may unlawfully interfere.
Article 5
The parties shall observe the equitable principle in defining each other's rights and obligations.
Article 6
The parties shall abide by the doctrines of good faith in exercising their rights and performing their obligations.
Article 7
The parties shall, in concluding and performing the contract, abide by laws and administrative regulations, respect social morals, and may not disrupt the socioeconomic order or impair the social and public interests.
Article 8
A contract legally entered into has the legal binding force on the parties. The parties shall perform their obligations as contracted, and may not unilaterally modify or terminate the contract.
A contract legally entered into is protected by laws.
Chapter II Formation of the Contract
Article 9
The parties shall, when concluding a contract, have corresponding capacity for civil rights and for civil conduct.
The parties may, according to law, entrust an agent to conclude a contract.
Article 10
The parties may, when concluding a contract, resort to the written form, verbal form or any other form.
If the written form is required by laws or administrative regulations, it shall adopt the written form. If the parties agree to adopt the written form, it shall adopt the written form.
Article 11
The written form means any mode that the information contained therein is capable of being reproduced in tangible form such as memorandum in writing, letter or text in electronic data (including telegram, telex, facsimile, electronic data interchange and e-mail).
Article 12
The contents of a contract are determined by the parties and generally, contain the following clauses:
1. designation or names and addresses of the parties;
2. the subject matter;
3. quantity;
4. quality;
5. price or remuneration;
6. time, place and mode of performance;
7. liability for breach of contract, and
8. dispute settlement.
The parties may conclude contracts with reference to various model contract forms.
Article 13
The parties shall, in concluding a contract, adopt the forms of offer and acceptance.
Article 14
An offer is an indication of intent desiring to conclude a contract with others, such an indication shall conform to the following provisions:
1. being concrete and definite in contents; and
2. indicating the intention of the offeror to be bound in case of acceptance of the offeree.
Article 15
An invitation for offer is the indication of intent desiring others to make offers. Mailed and delivered price catalogs, auction announcements, invitations for bid, prospectus and commercial advertisements are invitations for offer.
A commercial advertisement shall, if its contents conform to the provisions on an offer, be deemed as an offer.
Article 16
An offer becomes effective when it reaches the offeree.
If a contract is concluded in the form of text in electronic data and the receiver has appointed a special receiving system to receive the said data text, the time when the text in electronic data enters into this special system shall be the time of arrival; If no special receiving system is appointed, the time when the text in electronic data first enters into any of the receiver's systems shall be the time of arrival.
Article 17
An offer may be withdrawn. The withdrawal of an offer shall reach the offeree before or at the same time as the offer.
Article 18
An offer may be revoked. The revocation shall reach the offeree before it has dispatched an acceptance.
Article 19
An offer cannot be revoked
1. if the offeror indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or
2. if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has made preparations for the performance of the contract.
Article 20
An offer ceases to be effective
1. if a rejection reaches the offeror;
2. if the offeror has revoked it according to law;
3. if the fixed time for acceptance expires and the offeree fails to accept it; or
4. if the offeree makes a substantial change to it.
Article 21
An acceptance is the indication of assent of the offeree to an offer.
Article 22
An acceptance shall be made by notice unless, as a result of trade practices or by virtue of the offer, the offeree may indicate the assent by performing an act.
Article 23
An acceptance shall reach the offeror within the time fixed by the offer.
If no time is fixed by the offer, the acceptance shall reach the offeror in accordance with the following provisions:
1. If an offer is made orally, the acceptance shall be made immediately unless the parties stipulate otherwise; and
2. If an offer is not made orally, the acceptance shall reach the offeror within a reasonable period.
Article 24
If an offer is made through a letter or a telegram, the period of time for acceptance begins to run from the date shown on the letter or from the date the telegram is handed in for dispatch or, if no such date is shown on the letter, from the date shown by the postmark of the letter. If an offer is made by means of instantaneous communications such as telephone or facsimile, the period of time for acceptance begins to run from the moment that the offer reaches the offeree.
Article 25
A contract is concluded at the same time as the acceptance becomes effective.
Article 26
The acceptance becomes effective when it reaches the offeror. If an acceptance does not need to be made by notice, it becomes effective when an act of acceptance is performed as a result of trade practices or by virtue of the offer.
Where a contract is concluded in the form of text in electronic data, the provisions of Paragraph 2 of Article 16 of this Law shall be applicable to the time of arrival of the acceptance.
Article 27
An acceptance may be withdrawn. The withdrawal of the acceptance shall reach the offeror before or at the same time as the acceptance reaches the offeror.
Article 28
If the offeree makes an acceptance in excess of the period of time for acceptance, it shall be a new offer unless, without undue delay, the offeror informs the offeree that the acceptance is effective.
Article 29
If an offeree makes an acceptance within the period of time for acceptance and the acceptance shall be able to reach the offeror under the normal situation but the acceptance reaches the offeror in excess of the period of time due to other reasons, the acceptance is effective unless, without undue delay, the offeror informs the offeree that the acceptance is not entertained due to its delayed arrival.
Article 30
The contents of an acceptance shall be consistent with the contents of the offer. If the offeree makes a substantial change to the contents of the offer, it is a new offer. Changes to the subject matter, quality, quantity, price or remuneration, period of performance, place and mode of performance, liability for breach of contract and method of dispute settlement in a contract are substantial changes to the contents of an offer.
Article 31
If an acceptance makes a non-substantial change to the contents of the offer, the acceptance is effective unless, without undue delay, the offeror indicates its rejection or the offer indicates that the acceptance may not make any change to the contents of the offer, and the contents of the contract shall be based on the contents of the acceptance.
Article 32
If the parties conclude a contract in the form of memorandum in writing, the contract is established at the same time as both parties put their signatures or affix their seals on it.
Article 33
If the parties conclude a contract in the form of letter or text in electronic data or any other forms, a written confirmation may be demanded prior to the establishment of the contract. The contract is established at the same time as the written confirmation is signed.
Article 34
The place where the acceptance becomes effective shall be the place where the contract is established.
Where a contract is concluded in the form of text in electronic data, the receiver's major place of business is the place of establishment of the contract; in absence of a major place of business, its habitual residence is the place of establishment of the contract. Where the parties stipulate otherwise, such stipulations shall govern.
Article 35
If the parties adopt the form of memorandum in writing to conclude a contract, the place where both parties sign or stamp the contract is the place of establishment of the contract.
Article 36
If, as provided by laws or administrative regulations or as agreed by the parties, the form of memorandum in writing is required in concluding a contract and the parties fail to do so but a party has already performed the major obligations and the other party accepts, the contract is established.
Article 37
If, in concluding a contract in the form of memorandum in writing, a party has already performed the major obligations prior to the signature or seal and the other party accepts, the contract is established.
Article 38
If the State, according to the needs, gives mandatory orders or State purchase orders, the legal persons and other organizations concerned shall conclude contracts in accordance with the rights and obligations provided for by the relevant laws and administrative regulations.
Article 39
If standard clauses are used in concluding a contract, the party that provides the standard clauses shall determine the rights and obligations between the parties in accordance with the principle of fairness, take appropriate methods to remind the other party of exempt and restriction clauses on its responsibility, and give explanations on the clauses at the request of other party.
Standard clauses mean the clauses that are formulated in beforehand by a party for the purpose of repeated usage and that party does not negotiate with the other party when concluding the contract.
Article 40
A standard clause becomes invalid if it has the circumstances laid down in Articles 52 and 53 of this Law or the party that provides the standard clause waives its liability or gives strict liability to the other party or refuses the main rights of the other party.
Article 41
If a dispute arises over the understanding of a standard clause, an interpretation shall be made in accordance with common understanding. If a standard clause has more than one interpretation, it shall make an interpretation unfavorable to the party providing the clause. If a standard clause is inconsistent with the non-standard clause, the non-standard clause shall be used.
Article 42
If, in the course of concluding a contract, a party has any of the following circumstances and thus causes a loss to the other party, that party shall be liable therefor:
1. maliciously engaging in negotiations under the excuse of concluding a contract; or
2. intentionally hiding the key facts related to the conclusion of the contract or providing false situations; or
3. any other act in contrary to the principle of good faith.
Article 43
A party, no matter the contract is established or not, may not disclose or inappropriately exploit the business secrets obtained in the course of concluding the contract. If disclosure or inappropriate exploitation of the said business secrets causes a loss to the other party, the party at fault shall be liable therefor.
Chapter III Validity of the Contract
Article 44
A contract legally entered into is valid when it is concluded.
Where a contract shall be subject to the formalities of approval and registration according to the provisions of laws and administrative regulations before it becomes valid, the provisions shall govern.
Article 45
The parties may agree to attach the conditions to the validity of the contract. A contract attached with valid conditions becomes valid when the conditions are accomplished. A contract attached with the conditions on its dissolution becomes invalid when the conditions arise.
If the parties, for their own interests, unjustifiably prevent the conditions from being accomplished, the conditions shall be deemed as having been accomplished; if the parties unjustifiably motivate the conditions to arise, the conditions shall be deemed as not having arisen.
Article 46
The parties may agree to subject the validity of the contract to the time limit. A contract attached with the time limit becomes valid when the time limit expires. A contract attached with a time limit for its termination becomes invalid when the time limit expires.
Article 47
A contract concluded by a person with limited civil capacity becomes valid after being ratified by his legal agent, however, a contract of mere profits or a contract made compatible to his age, intelligence and mental health conditions is not subject to ratification by his legal agent.
The opposite party may urge his legal agent to ratify it within one month. If his legal agent fails to give an indication, it shall be a refusal to ratification. Prior to ratification, the bona fide opposite party has the right to withdraw. A withdrawal shall be made by notice.
Article 48
A contract concluded by a doer without the right of representation, in excess of his right of representation or after the ceasing of his right of representation in the name of the principal, without ratification by the principal, shall have no force on the principal, and the doer shall bear all responsibilities arising.
The opposite party may urge the principal to subsequently ratify the contract within one month. If the principal fails to make an indication, it shall be deemed as a refusal to ratification. Prior to a subsequent ratification, the bona fide opposite party has the right to withdraw. The withdrawal shall be made by notice.
Article 49
Where a doer, without the right of representation, in excess of the right of representation or after the ceasing of the right of representation, still concludes a contract in the name of the principal, and the opposite party has justifiable reasons to believe the doer has the right of representation, the act of agency is effective.
Article 50
If a legal person or the legal representative of any other organizations exceeds his limits of power in concluding a contract, the said act of representation is effective, unless the opposite party knows or should know that he has exceeded the limit of power.
Article 51
Where a person without the right of disposing disposes of other's property, upon ratification by the obligee or if the person without the right of disposing obtains the right of disposing after concluding the contract, the said contract is valid.
Article 52
A contract is invalid under any of the following circumstances:
1. if a party makes the contract by means of deceit or coercion to impair the State's interests;
2. maliciously conspiring to damage interests of the State, the collective or the third party;
3. seeking to conceal the illegal goals under the disguise of legitimate forms;
4. doing harm to social and public interests; or
5. violating the mandatory provisions of laws and administrative regulations.
Article 53
The following clauses on liability exemption contained in a contract are invalid:
1. causing physical injury to the other party; or
2. causing heavy loss to property to the other party with intention or because of gross negligence.
Article 54
A party has the right to request a people's court or an arbitration organization to alter or rescind the following contracts:
1. being concluded out of substantial misunderstandings; or
2. being obviously unfair when the contract was concluded.
If one party makes the other party to conclude the contract against his true will by means of deceit, coercion or by taking advantages of the other's difficulties, the party suffering a loss has the right to request a people's court or an arbitration organization to alter or rescind the contract.
If the parties applies for an alteration to the contract, the people's court or arbitration organization may not rescind the contract.
Article 55
The right to rescind ceases to exist
1. if the party with the right to rescind has not exercised it within a year from the date on which he knows or should know the reasons for rescission; or
2. if the party with the right to rescind disclaims it by explicit expression or his own act after he knows the reasons for rescission.
Article 56
An invalid or rescinded contract does not have the legal binding force from the beginning. If part of a contract is invalid and this part does not affect the validity of other parts, other parts continue to be valid.
Article 57
If a contract is invalid, rescinded or terminated, it does not affect the validity of those clauses independently existing pertaining to the settlement of disputes.
Article 58
After a contract becomes invalid or is rescinded, any property obtained under the contract shall be returned; if it is impossible or unnecessary to return the property, compensation shall be made by converting the property into cash. The party at fault shall compensate the other party for losses arising therefrom, if both parties have negligence, they shall bear their own responsibilities accordingly.
Article 59
If the parties maliciously conspire to impair and damage the interests of the State, collectives or any third parties, any property they have obtained therefrom shall be returned to the State, the collective or the third party.
Chapter IV Performance of the Contract
Article 60
The parties shall perform their respective obligations as contracted.
The parties shall observe the principle of good faith and perform the obligations of notification, assistance and confidentiality in accordance with the nature and aims of the contract and the trade practices.
Article 61
If, after a contract becomes valid, the parties fail to stipulate or have ambiguous stipulations on the contents of the contract such as quality, price or remuneration or the place of performance, the parties may negotiate supplements thereon; if they are unable to reach supplementary agreements, they shall be determined according to the related clauses of the contract or trade practices.
Article 62
If the parties have ambiguous stipulations on related contents of the contract and the contents still can not be determined according to the provisions of Article 61 of this Law, the following provisions shall be applicable:
1. if the quality requirements are unclear, to perform according to State standards and trade standards or, according to common standards or special standards conforming to the aim of the contract in absence of such State standards or trade standards;
2. if the price or remuneration is unclear, to perform according to the market price in the place of contract performance when the contract was concluded or, according to government-set prices or government guiding prices if it is so required by law;
3. if the place of performance is unclear and payment in cash is involved, to perform in the place of cash recipient; if delivery of real estate is involved, to perform in the place where the real estate is located; if other subject matters are involved, to perform in the place of the party who performs the obligations;
4. if the period of performance is unclear, the debtor may perform his obligations at any time, and the creditor may also request for the performance of obligations at any time, and in this case, shall give the debtor necessary time to make preparations;
5. if the mode of performance is unclear, to perform in the mode conducive to the realization of the aim of the contract; and
6. if burdens for the performance are not clearly stipulated, it shall be borne by the party performing the obligations.
Article 63
If, for a contract whereby the government-set price or government guiding price is applicable, the government price is adjusted during the delivery period stipulated by the contract, the price at the time of delivery shall be applied. Where overdue delivery occurs and the price goes up during the period, the original price shall be applied; if the price drops during this period, the new price shall be applied. Where overdue delivery-taking or overdue payment is involved, the new price shall be applied if the price goes up; and the original price shall be applied if the price goes down.
Article 64
If the parties agree to let the debtor perform obligations to a third party and the debtor fails to do so or fails to perform obligations as contracted, the debtor shall bear the liability for breach of contract to the creditor.
Article 65
If the parties agree to let a third party to perform obligations to the creditor and the third party fails to do so or fails to perform the obligations as contracted, the debtor shall bear the liability for breach of contract to the creditor.
Article 66
If the parties are obligated to each other and there is no time order for the performance, they shall perform their respective obligations concurrently. A party has the right to reject the other party's request for performance before the latter performs its own obligations. A party has the right to reject the other party's request for performance if the latter's performance fails to meet the agreement.
Article 67
If the parties are obligated to each other and there is a time order for performance, the party which is the second to perform has the right to reject the request for performance of the party which is the first to perform prior to the latter's performance, and the party which is the second to perform has the right to reject the request for performance of the party which is the first to perform if the latter's performance fails to meet the agreement.
Article 68
The party which ought to perform first may stop its performance if it has evidences to prove that the other party has any of the following circumstances:
1. acutely deteriorating business operation;
2. transferring properties or withdrawing capital to dodge debts;
3. having grimly lost business reputation; or
4. having other circumstances of inability or possibility of inability to perform obligations.
A party who stops its performance without concrete evidences shall bear the liability for breach of contract.
Article 69
If a party stops its performance according to the provisions of Article 68 of this Law, it shall inform the other party in a timely manner. The party shall resume its performance when the other party provides a guarantee. The party that stops its performance may terminate the contract if the other party has not regained its capability of performance nor provided a guarantee within a reasonable period.
Article 70
If a creditor splits, merges or changes domicile without informing the debtor and thus makes it difficult for the performance of obligations, the debtor may stop its performance or submit the subject matter to competent authorities.
Article 71
The creditor may refuse the debtor to perform its obligations ahead of schedule, however, except for the case that the performance does not infringe upon the creditor's interests.
If the performance of obligations ahead of schedule by a debtor increases expenses of the creditor, the debtor shall bear the additional expenses.
Article 72
The creditor may refuse the debtor to partly perform its obligations, however, except for the case that the partial performance does not infringe upon the creditor's interests.
If the partial performance of obligations by a debtor increases expenses of the creditor, the debtor shall bear the additional expenses.
Article 73
If a debtor is reluctant to exercise its creditor's rights matured and thus causes a loss to the creditor, the creditor may apply to a people's court to subrogate the debtor's creditor's rights in its name, however, except for the case that the creditor's rights exclusively belong to the debtor.
The scope for executing the right of subrogation is limited to the creditor's rights. The debtor shall bear all necessary expenses for the subrogation of rights by the creditor.
Article 74
If a debtor disclaims its creditor's right or transfers its property free of charge and thus causes a loss to the creditor, the creditor may apply to a people's court for revocation of the debtor's action. The creditor may also apply to a people's court for revocation of the debtor's action if the debtor transfers its property at an unreasonably low price, subsequently causing a loss to the creditor, and the transferee knows such a circumstance.
The scope for executing the right of revocation is limited to the creditor's rights. A debtor shall bear the expenses inflicted to the creditor in exercising the right of revocation.
Article 75
The right of revocation shall be exercised within one year from the day on which the creditor knows or should know the reasons for revocation. If a creditor does not exercise its right of revocation within five years from the day on which the action of the debtor occurs, such right of revocation shall cease to exist.
Article 76
After a contract becomes valid, the parties may not refuse to perform their obligations under the contract at the excuse of change of name or designation or change of legal representative, person in charge or sponsor.
Chapter V Modification and Transfer of the Contract
Article 77
The parties may modify the contract upon consensus through consultations. Where, in accordance with the provisions of laws and administrative regulations, any modification to the contract shall be subject to the formalities of approval and registration, such provisions shall govern.
Article 78
A contract shall be deemed as not having been modified if the parties do not have clear agreements on the contents of modification of the contract.
Article 79
A creditor may transfer all or part of its rights under the contract to a third party, however, except for any of the following circumstances:
1. to be not transferable according to the nature of the contract;
2. to may not be transferred according to agreement between the parties; or
3. to may not be transferred according to the provisions of laws.
Article 80
Where a creditor is to transfer its rights, the creditor shall inform the debtor. Without notice, the transfer shall not be binding to the debtor.
A creditor may not revoke the notice of transfer of rights, however, excluding the case with approval from the transferee.
Article 81
Where a creditor transfers its rights, the transferee shall also obtain secondary rights related to the creditor's rights, however, except for the case where the said secondary rights exclusively belong to the creditor.
Article 82
When a debtor receives a notice on the transfer of creditor's rights, the debtor may advocate the transferor's plea to the transferee.
Article 83
If, when a debtor receives a notice on the transfer of creditor's rights, the debtor has creditor's rights over the transferee and the creditor's rights of the debtor is matured before or at the same time as the transferred creditor's rights, the debtor may advocate to the transferee to offset them.
Article 84
If a debtor intends to transfer all or part of the obligations under the contract to a third party, the debtor shall get approval of the creditor.
Article 85
If a debtor transfers its obligations, the new debtor may advocate the original debtor's plea to the creditor.
Article 86
If a debtor transfers its obligations, the new debtor shall bear all accessory debts related to the principal debts, however, except for the case where the accessory debts belong to the original debtor exclusively.
Article 87
Where, in accordance with the provisions of laws and administrative regulations, the transfer of rights or obligations shall be subject to the formalities of approval and registration, such provisions shall govern.
Article 88
A party may, with approval of the other party, transfer its rights together with its obligations under the contract to a third party.
Article 89
When rights are transferred together with obligations, the provisions of Article 79, Articles 81 to 83, and Articles 85 to 87 of this Law are applicable.
Article 90
When a party merges after the conclusion of the contract, the legal person or other organizations arising from the merger shall exercise the rights under the contract and perform the obligations under the contract. When a party splits after the conclusion of the contract, unless the creditor and the debtor stipulate otherwise, the legal persons or other organizations arising from the split shall have joint and several rights under the contract and bear joint and several liabilities under the contract.
Chapter VI Termination of Rights and Obligations under the Contract
Article 91
The rights and obligations under the contract shall be terminated
1. if obligations have been performed according to the contract;
2. if the contract is dissolved;
3. if liabilities are offset with each other;
4. if the debtor has submitted the subject matter to competent authorities according to law;
5. if the creditor exempts the debtor from obligations;
6. if creditor's rights and liabilities belong to the same person; or
7. if laws provide or the parties stipulate ant other circumstance to be terminated.
Article 92
After the termination of rights and obligations under the contract, the parties shall perform the duties of notification, assistance and confidentiality under the doctrine of good faith and in accordance with trade practices.
Article 93
The parties may dissolve the contract upon consensus through consultations.
The parties may stipulate the conditions for termination of the contract by one party. When the conditions for termination of the contract become mature, the party with the right to terminate may terminate the contract.
Article 94
The parties may dissolve the contract
1. if the aim of the contract cannot be fulfilled because of force majeure;
2. if, before the period of performance expires, a party clearly indicates by word or act that it will not perform the principal obligations;
3. if a party delays the performance of the principal obligations and still fails to perform the obligations within a reasonable period after being urged;
4. if a party delays the performance of obligations or has other illegal activities and thus causes the impossibility for the realization of the aim of the contract; or
5. if laws provide any other circumstance.
Article 95
Where the time limit for the performance of dissolution is provided for by laws or by agreement of the parties, and if it is not exercised at the expiration of the time limit, such right shall cease to exist.
Where no time limit is provided for by laws or by agreement of the parties, and if it is still not exercised within a reasonable period after being urged by the other party, such right shall cease to exist.
Article 96
When a party advocates to dissolve the contract according to the provisions of Paragraph 2 of Article 93 and Article 94 of this Law, the party shall inform the other party. The contract shall be dissolved when the notice reaches the other party. The other party, if having objection, may apply to a people's court or an arbitration organization to determine the validity of dissolution of the contract.
Where, in accordance with the provisions of laws and administrative regulations, the dissolution of a contract shall be subject to the formalities of approval and registration, such provisions shall govern.
Article 97
After the dissolution of a contract, those not yet performed shall cease to be performed; As for those already performed, the parties may ask to restore them to the original status, take other remedial measures and has the right to claim compensation in accordance with the performance conditions and the nature of the contract.
Article 98
The termination of a contract shall not affect the validity of its clauses on settlement and liquidation.
Article 99
If the parties are obligated to each other, and if the varieties and quality of subject matters of the obligations are the same, any party may offset its debts against the debts of the other party, however, except for they cannot be offset according to the provisions of laws or according to the nature of the contract.
If a party advocates to offset, the party shall inform the other party. The notice becomes effective when it reaches the other party. The notice to offset debts may not be attached with any conditions or term.
Article 100
If the parties are obligated to each other and if the subject matters are of different varieties and quality, they may also be offset against each other upon consensus through consultations by the parties.
Article 101
Under any of the following circumstances, a debtor may submit the subject matter to competent authorities if the party is unable to perform its obligations:
1. The creditor refuses to take delivery without justified reasons;
2. The whereabouts of the creditor is unknown;
3. The creditor has died but not declared an heir yet or has lost capacity of civil conduct but has not decided on his guardian; or
4. Other circumstances provided for by laws.
If the subject matter is unsuitable or too costly to be submitted to competent authorities, the debtor may auction or sell it and submit the proceeds to competent authorities.
Article 102
After the submission of the subject matter to competent authorities, the debtor shall immediately inform the creditor or his heir or guardian, except for the case that the whereabouts of the creditor is unknown.
Article 103
The risk of damage and loss of the subject matter after submission to competent authorities shall be borne by the creditor. Fruits from the subject matter during the period of submission shall belong to the creditor. The expenses for submitting the subject matter to competent authorities shall be borne by the creditor.
Article 104
The creditor may collect the subject matter submitted at any time, however, if the creditor is obligated to the debtor, competent authorities that keep the subject matter shall, at the debtor's request, refuse the creditor to collect the subject matter before performing its own obligations matured or providing a guarantee.
A creditor's right to collect the subject matter, if being not exercised within five years from the date of submission, shall cease to exist, and the subject matter submitted belongs to the State after having deducted the submission expenses.
Article 105
If a creditor exempts part or all obligations of the debtor, part of or all rights and obligations under the contract shall be terminated.
Article 106
If the creditor's rights and obligations belong to the same party, the rights and obligations under the contract terminate, however, except for that the interests of a third party are involved.
Chapter VII Liability for Breach of Contract
Article 107
If a party fails to perform its obligations under the contract or does not perform its obligations as contracted, the party shall bear the liability for breach of contract as performing the obligations, taking remedial measures or compensating for damages and losses.
Article 108
If a party explicitly indicates by words or by act not to perform its obligations under the contract, the other party may request that party to bear the liability for breach of contract prior to the expiration of the period of performance.
Article 109
If a party fails to pay the prices or remuneration, the other party may request that party to make payment.
Article 110
If a party fails to perform non-pecuniary obligations or does not perform non-pecuniary obligations as contracted, the other party may request for a performance, however, except for any of the following circumstances:
1. It is impossible to perform by laws or by facts;
2. The subject matter of the obligations is unsuitable for a compulsory performance or too costly for a performance; or
3. The creditor fails to apply for a performance within a reasonable period.
Article 111
If the quality fails to meet the agreed requirements, liability for breach of contract shall be borne according to the agreements of the parties. If the liability for breach of contract is not stipulated or is not clearly stipulated, and if it still cannot be determined according to the provisions of Article 61 of this Law, the party suffering the loss may, according to the nature of the subject matter and the amount of loss, choose to request the other party to bear the liability for breach of contract such as repair, replacement, redoing, refund of the subject matter or discount in payment or remuneration.
Article 112
If a party fails to perform its obligations under the contract or does not perform its obligations as contracted, and if the other party still suffers other losses after the performance of obligations or remedial measures, that party shall be liable therefor.
Article 113
If a party fails to perform its obligations under the contract or does not perform its obligations as contracted and thus causes a loss to the other party, the amount of compensation for the loss shall be equivalent to the loss actually caused by breach of contract, including profits that could been obtained after performance of the contract but not exceeding the sum of the loss that the delinquent party have anticipated or should anticipate when concluding the contract.
If a business operator has cheating and fraudulent behavior in providing commodities or services to consumers, the operator shall assume the responsibility for making compensation for losses and damages in accordance with the provisions of the Law of the People's Republic of China on the Protection of Consumers' Rights and Interests.
Article 114
The parties may stipulate that any party, if breaching the contract, shall pay the other party a certain amount of penalty for breach of contract according to the seriousness of the breach, and may also stipulate on the method for calculating the sum of compensation for losses due to the breach of contract.
If the agreed penalty for breach of contract is lower than the loss, the parties may apply to a people's court or an arbitration organization for an increase; If the agreed penalty for breach of contract is excessively higher than the loss arising from breach of contract, the parties may apply to a people's court or an arbitration organization for an appropriate reduction.
If the parties agree upon a delayed performance of penalty fine for breach of contract, the party breaching the contract shall, after paying the penalty fine for breach of contract, also perform its obligations.
Article 115
The parties may, in accordance with the Guarantee Law of the People's Republic of China, agree upon that one party shall pay a deposit to the other party as a guarantee of the creditor's rights. After the debtor has performed its obligations, the deposit shall be calculated as part of the prices or be refunded. If the party paying the deposit fails to perform its obligations as contracted, it shall not be entitled to seek a refund of the deposit; If the party receiving the deposit fails to perform the obligations as contracted, it shall refund a double amount of the deposit.
Article 116
When the parties agree upon both a penalty for breach of contract and a deposit and if one party breaches the contract, the other party may choose to apply the clause on penalty for breach of contract or the clause on deposit.
Article 117
If a contract cannot be performed because of force majeure, part or all of the obligations may be exempted, depending on the impact of force majeure, unless laws provide otherwise. If a force majeure occurs after one party delays its performance, its obligations may not be exempted.
Force majeure as the term is used in this Law means the objective situation that could not be foreseen, avoided and overcome.
Article 118
A party shall, if being unable to perform the contract due to a force majeure, inform the other party immediately so as to reduce possible losses to the other party, and shall provide relative evidences within a reasonable period.
Article 119
When a party breaches the contract, the other party shall take appropriate measures to prevent the spread of losses; and may not claim compensation for the expanded losses if it has not taken appropriate preventive measures to mitigate losses from expanding.
The delinquent party shall bear a reasonable amount of expenses inflicted by the other party in preventing losses from expanding.
Article 120
If both parties breach the contract, they shall bear their own liabilities accordingly.
Article 121
A party shall, if breaching the contract because of the fault of a third party, bear the liability for breach of contract to the other party. Any disputes between the party and the third party shall be settled by laws or by agreement.
Article 122
If the breach of contract by a party impairs the physical or property rights and interests of the other party, the victim party has the right to make a choice, either requesting the other party to bear the liability for breach of contract according to this Law or requesting the other party to bear the liability for infringement of rights according to other laws.
Chapter VIII Miscellaneous Provisions
Article 123
Where other laws contain otherwise provisions on contracts, such provisions shall govern.
Article 124
For contracts not explicitly prescribed in the Specific Provisions of this Law or other laws, the General Provisions of this Law shall apply, and the most similar provisions in the Specific Provisions of this Law or other laws may also be used as reference.
Article 125
When the parties have disputes over the understanding of the clauses of the contract, the true meaning of the said clauses shall be figured out and determined according to the words and sentences used in the contract, related clauses of the contract, aim of the contract, trade practices and the principle of good faith.
If the texts of a contract is made in two languages and are of equal binding force as contracted, the words and sentences used in the texts of all languages shall be assumed to be of identical denotation. If the words and sentences used in the texts of the languages are inconsistent, they shall be interpreted according to the aim of the contract.
Article 126
The parties to a contract involving foreign interests may choose the laws applicable to the settlement of contract disputes, unless laws provide otherwise. If the parties to a contract involving foreign interests did not make a choice, laws of the State most closely related to the contract shall apply.
The laws of the People's Republic of China shall be applicable to contracts on Chinese-foreign equity joint ventures, on Chinese-foreign contractual operation enterprises and on Chinese-foreign co-operation in exploring and developing natural resources, which are to be performed in the territory of the People's Republic of China.
Article 127
The administrative departments for industry and commerce and other competent administrative departments concerned shall, within the scope of their respective duties and powers and in accordance with the provisions of laws and administrative regulations, be responsible for the supervision of and dealing with the activities harming the State's interests and the social and public interests by making use of contracts; if a crime is constituted, criminal responsibility shall be demanded for according to law.
Article 128
The parties may settle disputes over the contract through consultations or mediation.
If the parties are unwilling to resort to consultations or mediation, or the consultation or mediation fails, the parties may apply to an arbitration organization for arbitration according to the arbitration agreement. The parties to a contract involving foreign interests may, according to the arbitration agreement, apply to a Chinese arbitration organization or any other arbitration organization for arbitration. If the parties did not conclude an arbitration agreement or the arbitration agreement is invalid, they may initiate an action to a people's court. With regard to judgment, arbitral award and letter of mediation already becoming legally effective, the parties shall execute them; if a refusal for performance occurs, the other party may apply for a compulsory enforcement to a people's court.
Article 129
The limitation of actions or arbitration for contracts of international sale of goods and contracts on technology import and export shall be four years, computing from the day on which the party knows or should know its rights are infringed upon. The limitation of actions or arbitration for other contracts shall be governed by the provisions of relevant laws.
Specific Provisions
Chapter IX Contracts of Sale
Article 130
A contract of sale is a contract whereby the seller transfers its ownership over the subject matter to the buyer and the buyer pays the price for it.
Article 131
In addition to those laid down in Article 12 of this Law, a contract of sale may also contain such clauses as method of packaging, inspection standards and method, mode of settlement, language used in the contract and its validity.
Article 132
The subject matter for sale shall belong to the seller or over which the seller has the right of disposal.
Where subject matters are forbidden or restricted for sale by laws and administrative regulations, such provisions shall govern.
Article 133
The ownership over a subject matter is transferred upon the delivery of the subject matter, however, except for the case where laws provide otherwise or the parties stipulate otherwise.
Article 134
The parties may stipulate in the contract of sale that the seller retains the ownership over the subject matter if the buyer fails to pay the price or to perform other obligations.
Article 135
The seller shall perform its obligations of delivering the subject matter or providing documents for taking delivery of the subject matter and transferring the ownership over the subject matter to the buyer.
Article 136
The seller shall provide the buyer related certificates and data in addition to documents for taking delivery of the subject matter as contracted or according to trade practices.
Article 137
Where subject matters as computer software involving intellectual property rights are to be sold, unless the laws provide otherwise or the parties stipulate otherwise, the intellectual property rights of these subject matters shall not belong to the buyer.
Article 138
The seller shall deliver the subject matter within the specified time limit. The seller may deliver the subject matter at any time within the time limit if the time limit is specified.
Article 139
If the parties fail to stipulate the time limit or have ambiguous stipulations on the time limit for delivery, the provisions of Article 61 and Paragraph 4 of Article 62 of this Law shall apply.
Article 140
If the buyer already possesses the subject matter before the contract is entered into, the time the contract becomes valid is the time of delivery.
Article 141
The seller shall deliver the subject matter to the agreed place of delivery.
If the parties fail to have the stipulations or have ambiguous stipulations on the place of delivery, and if it still cannot be determined according to the provisions of Article 61 of this Law, the following provisions shall apply:
1. If the subject matter needs to be transported, the seller shall give the subject matter to the first carrier for delivery to the buyer; and
2. If the subject matter does not need to be transported, and if the seller and the buyer know the location of the subject matter when entering into the contract, the seller shall deliver the subject matter at the said location of the subject matter; if the location of the subject matter is unknown, the seller shall deliver the subject matter at the seller's place of business at the time when the contract is concluded.
Article 142
The risks of damage and loss of the subject matter shall be borne by the seller prior to the delivery and by the buyer after the delivery, unless the laws provide otherwise or the parties stipulate otherwise.
Article 143
If the subject matter is unable to be delivered within the agreed time limit because of the buyer, the buyer shall bear the risks of damage and loss of the subject matter from the date of breaching the agreement.
Article 144
When the seller sells subject matters still en route of transport, unless the parties stipulate otherwise, the risks of damage and loss of the subject matters shall be borne by the buyer from the time when the contract is concluded.
Article 145
If the parties fail to have the stipulations or have ambiguous stipulations on the place of delivery, and if the subject matter needs to be transported according to Item 1 of Paragraph 2 of Article 141 of this Law, the buyer shall bear the risks of damage and loss of the subject matter when the seller consigns the subject matter to the first carrier for transport.
Article 146
If the seller puts the subject matter at the place of delivery as contracted or according to the provisions of Item 2 of Paragraph 2 of Article 141 of this Law and the buyer, in violation of the stipulations, does not take delivery of the subject matter, the buyer shall bear the risks of damage and loss from the day the buyer violates the stipulations.
Article 147
Where the seller fails, as contracted, to provide documents and data in relation to the subject matter, this shall not affect the transfer of risks of damage to and loss of the subject matter.
Article 148
If the quality of a subject matter fails to meet the quality requirements and thus causes the inability for the realization of the contract aim, the buyer may refuse to take delivery of the subject matter or dissolve the contract. If the buyer refuses to take delivery of the subject matter or dissolves the contract, the risks of damage and loss of the subject matter shall be borne by the seller.
Article 149
When the risks of damage and loss of a subject matter are to be borne by the buyer, this shall not affect the buyer's right to request the seller to bear liability for breach of contract if the seller's performance of obligations does not comply with stipulations.
Article 150
The seller has the obligation to guarantee that no third party will claim rights against the buyer over the subject matter delivered unless laws provide otherwise.
Article 151
If the buyer knows or should know that a third party has rights over the subject matter at the time when the contract is concluded, the seller shall not bear the obligations specified in Article 150 of this Law.
Article 152
If the buyer has hard evidence to prove that a third party probably claims rights over the subject matter, that buyer may suspend the payment of the price accordingly, however, except for that the seller provides an appropriate guarantee.
Article 153
The seller shall deliver the subject matter according to the quality standards as contracted. When the seller provides quality descriptions on related subject matters, the subject matter delivered shall conform to the quality standards specified.
Article 154
If the parties fail to have the stipulations or have ambiguous stipulations on the quality of the subject matter and if it still cannot be determined according to the provisions of Article 61 of this Law, the provisions of Article 62 of this Law shall apply.
Article 155
If the subject matter delivered by the seller fails to meet the quality requirements, the buyer may request that seller to bear the liability for breach of contract according to the provisions of Article 111 of this Law.
Article 156
The seller shall deliver the subject matter packed in the packaging method as contracted. If there is no stipulations or ambiguous stipulations on the packaging method and it still cannot be determined according to the provisions of Article 61 of this Law, the subject matter shall be packed in the general method, and in absence of such general methods, shall be packed in a way sufficient to protect the subject matter.
Article 157
The buyer shall inspect the subject matter within the agreed period for inspection after receiving it. If no period for inspection is agreed upon, the buyer shall immediately inspect the subject matter.
Article 158
If the parties stipulate the period for inspection, the buyer shall, within the period for inspection, inform the seller the unconformity of the subject matter with the agreed quantity or quality. If the buyer fails to inform, the subject matter shall be deemed in conformity with the agreed quantity or quality.
If the parties do not have the period for inspection, the buyer shall inform the seller the unconformity of the subject matter with the agreed quantity or quality within a reasonable period after it knows or should know the unconformity. If the seller fails to inform the seller with a reasonable period or within two years from the date of taking delivery of the subject matter, the subject matter shall be deemed in conformity with the agreed quantity or quality, however, if there is a quality guarantee period for the subject matter, the quality guarantee period shall apply and the provisions on the two-year limit shall not apply.
If the seller knows or should know that the subject matter provided fails to meet the stipulations, the buyer shall not be limited by the period for notification provided for in the two preceding paragraphs.
Article 159
The buyer shall pay the price according to the amount as contracted. If there are no stipulations or ambiguous stipulations on the price, the provisions of Article 61 and Paragraph 2 of Article 62 of this Law shall apply.
Article 160
The buyer shall pay the price at the agreed place. If the place of payment is not stipulated or not clearly stipulated and it still cannot be determined according to the provisions of Article 61 of this Law, the buyer shall pay the price at the place of business of the seller or, if the payment is agreed upon as the precondition for delivering the subject matter or acquiring the documents of the subject matter, the payment shall be made at the place where the subject matter is delivered or the documents of the subject matter are provided.
Article 161
The buyer shall pay the price at the agreed time. If the time for making payment is not stipulated or not clearly stipulated and it still cannot be determined according to the provisions of Article 61 of this Law, the buyer shall make payment at the same time as it takes delivery of the subject matter or receives documents of the subject matter.
Article 162
If the seller provides an extra amount of the subject matter, the buyer may accept or refuse to accept the extra amount. If the buyer accepts the extra amount, it shall pay for the extra amount at the price of the original contract; If the buyer refuses to accept the extra amount, the buyer shall immediately inform the seller
Article 163
Fruits generated by the subject matter belong to the seller before delivery and to the buyer after the delivery.
Article 164
If a contract is dissolved because of unconformity of the principal subject matter with the requirements, the dissolution of the contract shall be effective to accessory subject matters. The dissolution of a contract is not effective to the principal subject matter if the contract is dissolved because of the unconformity of the accessory subject matters with requirements.
Article 165
If the subject matter is composed of several objects and one of them fails to meet requirements, the buyer may dissolve part of the contract concerning the said object; if a separation of this object from other objects obviously ruins the value of the subject matter, the party may dissolve the contract concerning the several objects.
Article 166
If the seller delivers the subject matter by batches and if the seller fails to deliver one batch of the subject matter or its delivery fails to meet the agreement, leading to the inability for the realization of the contract aim, the buyer may dissolve the contract concerning the said batch of the subject matter.
If the seller fails to deliver one batch of the subject matter or its delivery fails to meet the requirements, resulting in the fact the delivery of following batches of the subject matter is unable to realize the aim of the contract, the buyer may dissolve the contract concerning the said batch and all following batches of the subject matter.
If the buyer has dissolved the contract concerning one of the batches of the subject matter and if the said batch of the subject matter is inter-dependent with all batches not yet delivered, the buyer may dissolve the contract concerning the batches already delivered and not yet delivered.
Article 167
If the buyer to a contract of installment payment fails to pay the price matured which amounts to one-fifth of the total payment, the seller may request the buyer to pay full prices or dissolve the contract.
If the seller dissolves the contract, the seller may request the buyer to pay an utilization fee for the said subject matter.
Article 168
The parties to a sale by sample shall seal up the samples and may make descriptions on samples' quality. The subject matter delivered by the seller shall be of the same quality as the sample or identical to the quality described.
Article 169
If the buyer to a sale by sample does not know that the samples have hidden faults and defects, even if the subject matter delivered is identical to the samples, the quality of the subject matter delivered by the seller shall also conform to the common standards for the same category of objects.
Article 170
The parties to a sale for trial use may stipulate a period for trial use of the subject matter. If the period for trial use is not stipulated or not clearly stipulated and it still cannot be determined according the provisions of Article 61 of this Law, it shall be determined by the seller.
Article 171
The buyer to a sale by trial use may purchase or refuse to purchase the subject matter within the period for trial use. If the period for trial use ends and the buyer fails to indicate whether to purchase or not, it shall be deemed as a purchase.
Article 172
The rights and obligations of the parties to the sale by bid and tender as well as the procedures for bid and tender shall be governed by the provisions of relevant laws and administrative regulations.
Article 173
The rights and obligations of the parties to an auction as well as the auction procedures shall be governed by the provisions of relevant laws and administrative regulations.
Article 174
If laws have the provisions on other onerous contracts, such provisions shall govern; in absence of such provisions, the relevant provisions on contracts of sale shall serve as reference.
Article 175
Where the parties agree to a barter trade and to a transfer of the ownership over the subject matter, the relevant provisions on contracts of sale shall serve reference.
Chapter X Contracts for the Supply and Consumption of Electricity, Water, Gas or Heat
Article 176
A contract for the supply and consumption of electricity is a contract whereby the supplier provides electricity to the consumer and the latter pays the price for it.
Article 177
A contract for the supply and consumption of electricity shall contain such clauses as the mode of supply, quality, time, capacity, place, nature, measuring method, price, the settlement method of electricity charges, and the responsibility on the maintenance of electricity supply and consumption facilities.
Article 178
The place of performance of the contract for the supply and consumption of electricity is stipulated by the parties; if the parties fail to make stipulations or fail to stipulate clearly, the place of demarcation of title of electricity supply facilities is the place of performance.
Article 179
The supplier shall safely supply electricity according to the standards for the supply of electricity set by the State and according to the contract. If the supplier fails to do so and thus causes a loss to the consumer, the supplier shall be liable therefor.
Article 180
If the supplier needs to cut the supply of electricity for reasons as planned or temporary inspection and repairs of electricity supplying equipment, legal limitation of electricity consumption or violation of the consumer of electricity consumption, the supplier shall, according to the relevant regulations of the State, inform the consumer in advance. If the supplier fails to do so and thus causes a loss to the consumer, it shall be liable therefor.
Article 181
The supplier shall make immediate repairs if electricity supply is cut off due to such reasons as natural disasters. If the supplier fails to do so and thus causes a loss to the consumer, it shall be liable therefor.
Article 182
The consumer shall pay, as scheduled, the electricity fee according to the relevant regulations of the State and the contract. A consumer failing to do so shall pay a penalty fine for breach of contract according to the contract. If, after being urged, the consumer still fails to pay the fee and the fine for breach of contract within a reasonable period, the supplier may stop the supply of electricity in accordance with the procedures specified by the State.
Article 183
The consumer shall safely consume the electricity according to the relevant regulations of the State or as stipulated by the parties. If the consumer fails to do so and thus causes a loss to the supplier, it shall be liable therefor.
Article 184
Contracts for the supply and consumption of water, gas or heat shall be governed by reference to the provisions of the contract for the supply and consumption of electricity.
Chapter XI Contracts of Gift
Article 185
A contract of gift is a contract whereby the donor gratisly gives its own property to a donee, and the latter indicates to accept the gift.
Article 186
The donor may cancel the gift prior to the transfer of the rights of the gifted property.
The provisions of the preceding paragraph shall not apply to the contracts of gift of the nature of public welfare or moral obligation such as disaster-relief and poverty-relief and the contracts of gift notarized.
Article 187
If the gifted property needs to be subject to such formalities as registration, the relevant formalities shall be accomplished.
Article 188
If the donor under the contract of gift of the nature of public welfare or moral obligation and such as disaster-relief and poverty-relief and the contracts of gift notarized fails to deliver the property to be gifted, the donee may ask for delivery.
Article 189
If a damage or loss of the property gifted is caused by intention or major fault of the donor, the donor shall be liable therefor.
Article 190
A gift may be subject to collateral.
If a gift is subject to collateral obligations, the donee shall perform his obligations as contracted.
Article 191
If the gifted property has defects, the donor shall not bear any responsibility. If, in the case of a gift subject to collateral obligations, the gifted property has defects, the donor shall, within the limit of the collateral obligations, bear the same guaranty liabilities as the seller.
If the donor intentionally does not inform the donee about the defects or has guaranteed it free from defects and thus causes a loss to the donee, the donor shall be liable therefor.
Article 192
The donor may rescind the gift if the donee is under one of the following circumstances:
1. severely infringing upon the donor or his close relatives;
2. having the obligation to support the donor but failing to perform it; or
3. failing to perform obligations as contracted.
The right of rescission of the donor shall be exercised within one year from the date on which he knows or should know the reasons therefor.
Article 193
If the donee's illegal act leads to the death or loss of capacity for civil conduct of the donor, the heir or legal agent of the donor may rescind the gift.
The right of rescission of the donor's heir or legal agent shall be exercised within six months from the date on which he knows or should know the reasons therefor.
Article 194
If a gift is rescinded, the person having the right of rescission may request the donee to return the gifted property.
Article 195
The donor may, if its financial conditions deteriorates distinctively and its production, business or family life is severely affected, cease to perform the obligation of gift.
Chapter XII Loan Contracts
Article 196
A loan contract is a contract whereby the borrower borrows a loan from the lender and repays the loan with the interest when the loan becomes due.
Article 197
A loan contract shall be concluded in the written form, however, except for borrowing between natural persons that has otherwise agreement.
A loan contract contains such clauses as the category of the loan, kind of currency, purpose of use, amount, interest rate, term and method of repayment.
Article 198
In concluding a loan contract, the lender may ask the borrower to provide a guaranty. The guaranty shall be governed by the provisions of the Guaranty Law of the People's Republic of China.
Article 199
In concluding a loan contract, the borrower shall, at the lender's demand, provide the lender with authentic information about its business activities and financial positions related to the borrowing.
Article 200
Interest of a loan may not be deducted from the principal in advance. If being deducted from the principal in advance, the loan shall be repaid and the interest shall be calculated according to the actual amount of the loan provided.
Article 201
The lender shall, if failing to provide the loan at the time and amount as contracted and thus causes a loss to the borrower, be liable therefor.
The borrower shall, if failing to take the loan at the time and amount as contracted, pay interest at the agreed time and amount.
Article 202
The lender may, as contracted, inspect and supervise the use of the loan. The borrower shall, as contracted, provide information as financial and accounting statements to the lender regularly.
Article 203
If the borrower fails to use the loan in accordance with the purpose of use as contracted, the lender may stop providing the loan, recall the loan ahead of time or dissolve the contract.
Article 204
The interest rates of financial institutions offering loan services shall be fixed within the ceiling and floor of loan interest rates set by the People's Bank of China.
Article 205
The borrower shall pay the interest within the agreed time limit. If there is no stipulation or ambiguous stipulation on the time limit for paying interest and it still cannot be determined according to the provisions of Article 61 of this Law, the borrower shall pay the interest together with the repayment of loan if the loan term is less than one year; shall pay the interest when it is up to every one year if the loan term exceeds one year, and shall pay interest when repaying the loan if the rest of the term is less than one year.
Article 206
The borrower shall repay the loan within the agreed time limit. If there is no stipulation or ambiguous stipulation on the time limit and it still cannot be determined according to the provisions of Article 61 of this Law, the borrower may repay the loan at any time; and the lender may urge the borrower to repay the loan within a reasonable period.
Article 207
The borrower shall, if failing to repay the loan within the time limit as contracted, pay the overdue interest as contracted or according to the relevant regulations of the State.
Article 208
If the borrower repays the loan ahead of schedule, unless the parties stipulate otherwise, the interest shall be calculated according to the actual period of the loan.
Article 209
The borrower may request the lender for an extension before the loan becomes due. An extension may be granted if the lender approves.
Article 210
A loan contract between natural persons becomes valid from the time when the lender provides the loan.
Article 211
If a loan contract between natural persons fails to contain stipulations or has unclear stipulations on the payment of interest, it shall be deemed as non-payment of interest.
If a loan contract between natural persons stipulates the payment of interest, the interest rate may not violate the regulations of the State on restrictions of loan interest rates.
Chapter XIII Contracts for Lease
Article 212
A contract for lease is a contract whereby the lessor delivers the leased article to the lessee for use or proceeds, and the lessee pays the rent.
Article 213
A contract for lease shall contain such clauses as the name of the leased article, quantity, purpose of use, term, rent, time limit and method of payment, and the maintenance of the leased article.
Article 214
The lease term may not exceed 20 years. If exceeding 20 years, the part in excess shall be invalid.
When the lease term expires, the parties may extend the contract for lease, however, the agreed lease term may not exceed 20 years from the date of renewal of the contract.
Article 215
A contract for lease which term exceeds six months shall be made in the written form. Where the parties fail to adopt the written form, it shall be deemed as a lease of unfixed term.
Article 216
The lessor shall deliver the leased article to the lessee as contracted, and maintain the leased article, during the lease term, in compliance with the purpose of use as contracted.
Article 217
The lessee shall use the leased article in an exploitation method as contracted. If the exploitation method is not stipulated or not clearly stipulated and it still cannot be determined according to the provisions of Article 61 of this Law, the leased article shall be used in accordance with its nature.
Article 218
The lessee using the leased article in the method as contracted or according to its nature shall not, if causing a loss to the leased article, be liable therefor.
Article 219
If the lessee fails to use the leased article in the method as contracted or according to its nature and thus causes a loss to the leased article, the lessor may dissolve the contract and claim compensation therefor.
Article 220
The lessor shall perform the duty of maintaining the leased article, unless the parties stipulate otherwise.
Article 221
When a leased article needs to be maintained and repaired, the lessee may ask the lessor to do so within a reasonable period. If the lessor fails to perform the maintenance duty, the lessee may maintain and repair the leased article on its own and the maintenance expenses arising therefrom shall be borne by the lessor. If the maintenance and repair of the leased article affects the use of the leased article by the lessee, the rent shall be reduced or the lease term shall be extended accordingly.
Article 222
The lessee shall properly keep the leased article. If the lessee fails to do so and thus causes a damage or loss of the leased article, it shall be liable therefor.
Article 223
The lessee may, with assent of the lessor, improve the leased article or supplement other articles to it.
If the lessee improves the leased article or supplement other articles to it without assent of the lessor, the lessor may ask the lessee to restore the leased article to its original state or to compensate the loss.
Article 224
The lessee may, with assent of the lessor, sublease the leased article to a third party. In this case, the lease contract between the lessee and the lessor shall continue to be valid, and if the third party causes a damage or loss of the leased article, the lessee shall be liable therefor.
If the lessee subleases without the assent of the lessor, the lessor may dissolve the contract.
Article 225
Proceeds obtained from possessing and using the leased article during the lease term shall belong to the lessee, unless the parties stipulate otherwise.
Article 226
The lessee shall pay the rent within the time limit as contracted. If there is no stipulations or ambiguous stipulations on the time limit and it still cannot be determined according to the provisions of Article 61 of this Law, the rent shall be paid at the expiration of the lease term in the case where the lease term is not up to one year; or shall be paid at the end of each year in the case where the lease term exceeds one year, and shall be paid at the expiration of the lease term if the rest of the lease term is less than one year.
Article 227
If the lessee fails to pay or delays the payment of rent without justified reasons, the lessor may demand the lessee to pay the rent within a reasonable period. The lessor may dissolve the contract if the lessee fails to pay the rent at the expiration of the term.
Article 228
If the lessee is unable to use or to gain proceeds from the leased article because of claims by a third party, the lessee may request to reduce the rent or not to pay the rent.
If a third party claims rights, the lessee shall immediately inform the lessor.
Article 229
Any change with respect to ownership over a leased article during the lease term shall not affect the validity of the contract for lease.
Article 230
The lessor intending to sell a leased house shall inform the lessee within a reasonable period prior to the sale, and the lessee has right of preemption to purchase the house under equal conditions.
Article 231
If, for reasons not accountable to the lessee, part of or all the leased article is damaged or lost, the lessee may request to reduce the rent or not to pay the rent; if, due to partial or complete damage to or loss of the leased article, the aim of the contract is unable to be realized, the lessee may dissolve the contract.
Article 232
If the parties fail to stipulate or to clearly stipulate the lease term of a leased article and it still cannot be determined according to the provisions of Article 61 of this Law, it shall be deemed as a lease of unfixed term. The parties may dissolve the contract at any time, however, the lessor dissolving the contract shal
