(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 shall inform the lessee before a reasonable period.
Article 233
If a leased article poses a threat to the lessee's safety and health, even if the lessee clearly knows that the quality of the said leased article is not up to the standards when concluding the contract, the lessee may still dissolve the contract at any time.
Article 234
If the lessee dies within the lease term of a house, the persons who live together with the deceased may lease the house according to the original contract for lease.
Article 235
The lessee shall return the leased article at the expiration of the lease term. The leased article returned shall be maintained in its utilization functions as contracted or according to its nature.
Article 236
If the lessee continues to use the leased article after the expiration of the lease term and the lessor does not raise any objection, the original contract for lease shall continue to be valid, but its lease term becomes unfixed.
Chapter XIV Contracts for Financial Lease
Article 237
A contract for financial lease is a contract whereby the lessor, according to the choice of the seller and leased article, purchases the leased article from the seller and provides it for use by the lessee, and the lessee pays the rent.
Article 238
A contract for financial lease contains such clauses as the name of the leased article, quantity, specifications, technical performance, inspection method, lease term, composition of rent, time limit and method of payment, kind of currency and ownership over the leased article at the expiration of the lease term.
Contracts for financial lease shall be made in the written form.
Article 239
Under a contract of sale concluded by the lessor according to the choice of the seller and the leased article, the seller shall deliver the subject matter to the lessee as contracted, and the lessee has the rights as the buyer over the subject matter received.
Article 240
The lessor, the seller and the lessee may stipulate that, if the seller fails to perform the obligations under the contract of sale, the lessee shall exercise the right of claim. If the seller exercises the right of claim, the lessor shall assist therefor.
Article 241
If the lessor concludes a contract of sale according to the lessee's choice of the seller and the leased article, the lessor may not, without assent of the lessee, modify the contents of the contract related to the lessee.
Article 242
The lessor enjoys the ownership over the leased article. If the lessee goes bankrupt, the leased article shall not fall to the category of bankrupt property.
Article 243
The rent under a contract for financial lease shall be determined according to the majority or whole of the cost for the purchase of the leased article plus reasonable profits for the lessor unless the parties stipulate otherwise.
Article 244
If the leased article fails to meet the agreed requirements or fails to qualify the purpose of use, the lessor shall not bear any liability, however, except for the case that the lessee depends on the lessor's expertise to decide on the leased article or the lessor intervenes with the selection of the leased article.
Article 245
The lessor shall guarantee the possession and utilization of the leased article by the lessee.
Article 246
If, within the period of possession over the leased article by the lessee, the leased article causes personal injury or property loss to a third party, the lessor does not bear any liability therefor.
Article 247
The lessee shall properly maintain and use the leased article.
The lessee shall perform the obligations of maintenance within the period of possession over the leased article.
Article 248
The lessee shall pay the rent as contracted. If the lessee still fails to pay the rent within a reasonable period after being urged, the lessor may demand for a full payment of the rent; and may also dissolve the contract and take back the leased article.
Article 249
If the parties stipulate that the lessee shall have the ownership over the leased article after the expiration of the lease term, the lessee has paid most of the rent but is unable to pay the remaining, and the lessor therefore dissolves the contract and takes back the leased article, and if the value of the leased article taken back exceeds the rent in arrears and other expenses, the lessee may request for a partial refund.
Article 250
The lessor and the lessee may stipulate the ownership over the leased article at the expiration of the lease term. If there is no stipulations or unclear stipulations over the ownership of the leased article and it still cannot be determined according to the provisions of Article 61 of this Law, the ownership over the leased article shall belong to the lessor.
Chapter XV Work Contracts
Article 251
A work contract is a contract whereby the undertaker completes the work and delivers the results therefrom according to the requirements of the client, and the client pays remuneration therefor.
Contracted work includes such work as processing, manufacturing on order, repair, reproduction, testing and inspection.
Article 252
A work contract contains such clauses as the subject matter, quantity, quality, remuneration, mode, supply of materials, period of performance, and standards and method for acceptance inspection.
Article 253
The undertaker shall complete the principal part of the work with its own equipment, technology and labor, unless the parties stipulate otherwise.
If the undertaker transfers the major work it has contracted to a third party to do, it shall be accountable to the client over the work results of the said third party. Without assent of the client, the client may dissolve the contract.
Article 254
The undertaker may assign the auxiliary work it has contracted to a third party to complete. The undertaker doing so shall be accountable to the client over the work results of the said third party.
Article 255
If the undertaker is to provide materials, the undertaker shall choose and use materials as contracted and accept inspection of the client.
Article 256
If the client is to provide materials, the client shall provide materials as contracted. The undertaker shall in time inspect materials provided by the client and, if it believes any unconformity with the agreement,
shall inform the client in time to replace, make up the shortage or take other remedial measures.
The undertaker may not, without approval, change materials provided by the client nor change accessories and parts unnecessary to be repaired.
Article 257
The undertaker shall immediately inform the client if it believes that the drawings or technical requirements provided by the client are unreasonable. The client shall be liable for losses caused to the undertaker due to its failure to reply.
Article 258
The client shall be liable for the loss caused to the undertaker if the client changes requirements for the contracted work in the course of the work.
Article 259
If a contracted work requires assistance from the client, the client shall have the obligation to offer assistance.
If the non-performance of the obligations to offer assistance by a client results in the impossibility for the completion of the contracted work, the undertaker may request the client to perform its obligations of assistance within a reasonable period, and may postpone the period of performance; if the client fails to do so, the undertaker may dissolve the contract.
Article 260
The undertaker shall accept necessary supervision and inspection of the client in the course of performing the work. The client may not obstruct the normal work of the undertaker by supervision and inspection.
Article 261
The undertaker shall, when finishing the work, deliver to the client the work results and provide necessary technical materials and related quality certificates. The client shall check and accept the work results.
Article 262
If the work results delivered by the undertaker fail to meet the quality requirements, the client may demand the undertaker to assume such liabilities for breach of contract as repair, reworking, remuneration reduction or compensation for losses.
Article 263
The client shall pay remuneration within the time limit as contracted. If there is no stipulations or ambiguous stipulations on the time limit for paying remuneration and it still cannot be determined according to the provisions of Article 61 this law, the client shall make payment at the time of delivery of the work results; and if part of the work result is delivered, shall pay remuneration accordingly.
Article 264
If the client fails to pay remuneration or prices for materials, the undertaker has the right of lien over the work results, unless the parties stipulate otherwise.
Article 265
The undertaker shall appropriately keep materials provided by the client and the work results finished. The client shall be liable for the damage or loss arising from the poor keeping.
Article 266
The undertaker shall keep confidentiality according to the client's requirements and, without the client's approval, may not preserve copies or technical data.
Article 267
Co-undertakers shall bear joint and several liabilities to their client, unless the parties stipulate otherwise.
Article 268
The client may dissolve the work contract at any time and, in this case, shall be liable for a loss of the undertaker, if any.
Chapter XVI Construction Project Contracts
Article 269
A construction project contract is a contract whereby the contractor carries out the construction of the project and the contract-offering party pays the price for it.
Construction project contracts include contracts for project prospecting, design and engineering.
Article 270
A construction project contract shall be made in the written form.
Article 271
Bidding for construction projects shall be carried out in an open, fair and impartial manner in accordance with the provisions of relevant laws.
Article 272
The contract-offering party may conclude a construction project contract with the contractor, and may also conclude separate prospecting, design and engineering contracts separately with the prospecting, designing and engineering parties. The contract-offering party may not break up one construction project that should been completed by one contractor into several parts and give out to several contractors.
The contractor or the prospecting, designing or engineering party may, with approval of the contract-offering party, assign part of its contracted work to a third party to complete. The third party shall assume joint and several liabilities together with the contractor or the prospecting, designing or engineering party to the contract-offering party over the work results of the third party. The contractor may not assign the entire construction project it has contracted to a third party or break up the entire construction project it has contracted into several parts and sub-contract them separately to third parties in the name of subcontract.
The contractor is forbidden to subcontract projects to units without corresponding qualifications. Subcontracting units are forbidden to subcontract again the project they have contracted. The main structure of the construction project must be completed by the contractor itself.
Article 273
Contracts for State key construction projects shall be concluded in accordance with the procedures set forth by the State and such documents as investment plans and feasibility study reports approved by the State.
Article 274
A prospecting or designing contract contains such clauses as the time limit for delivery of relevant basic materials and documents (including budgetary estimates), quality requirements, expenses and other co-operation conditions.
Article 275
An engineering contract contains such clauses as the project scope, period for construction, commencement and completion time of projects to be delivered prior to the completion of the entire projects, project quality, costs, delivery time of technical materials, responsibility for the supply of materials and equipment, funds allocation and settlement, acceptance inspection upon delivery, range of quality guarantee, quality warranty period, and co-operation among the parties.
Article 276
For projects in which the superintendency system is to be applied, the contract-offering party shall conclude a commission contract of superintendency in a written form with the entrusted supervisor. The rights and obligations as well as legal responsibilities of the contract-offering party and the supervisor shall be defined according to the contract of mandate of this Law as well as the relevant provisions of other laws and administrative regulations.
Article 277
The contract-offering party may, under the preconditions of not obstructing the normal work of the contractor, inspect the progress and quality of the work at any time.
Article 278
Prior to the completion of a concealed project, the contractor shall inform the contract-offering party to make inspection. If the contract-offering party fails to inspect the project in time, the contractor may postpone the period for the completion of the project, and may request for compensation for losses arising from stoppage of its work and down time of its work.
Article 279
When a construction project is completed, the contract-offering party shall carry out a timely inspection for acceptance according to construction drawings and descriptions, criteria for acceptance inspection of construction projects and quality standards issued by the State. If the project passes the acceptance inspection, the contract-offering party shall pay the contractual prices and take delivery of the said construction project.
A construction project may be put into use only after it has passed the acceptance inspection upon completion. Without such inspection or if failing to pass the inspection, no construction project may be put into use.
Article 280
If a loss is caused to a contract-offering party because the prospecting or designing fails to conform to the quality requirements or the failure to submit the prospecting or designing documents as scheduled postpones the period for construction, the prospecting or designing party shall continue to improve the prospecting or designing, reduce or waive the prospecting or designing fees and make compensation for the loss.
Article 281
If the quality of a construction project fails to meet the contractual requirements because of the engineering party's reasons, the contract-offering party has the right to demand the engineering party to repair or rework or reconstruct free of charge within a reasonable period. If the delivery is delayed because of the repair or rework and reconstruction, the engineering party shall bear the liability for breach of contract.
Article 282
If, a construction project, due to reasons accountable to the contractor, causes damages to and losses of the person and property within its reasonable period of utilization, the contractor shall be liable therefor.
Article 283
If the contract-offering party fails to provide raw materials, equipment, site, funds or technical materials at the time and requirements as contracted, the contractor may postpone the period of construction and has the right to make demand for compensation for cessation of work and down time of workers.
Article 284
If a construction project is stopped or suspended because of reasons accountable to the contract-offering party, the contract-offering party shall take measures to remedy or reduce losses, and compensate the contractor for losses and actual expenses due to cessation of work, down time of workers, transportation back to the original place, dispatchment and relocation of mechanic equipment and stockpiles of materials and structural components.
Article 285
If, due to the contract-offering party's alteration to its plan, inaccuracy in materials provided or failure to provide necessary working conditions for prospecting and designing, the reworking, cessation of work or alteration to the design is caused to the prospecting or designing party, the contract-offering party shall increase its payment of fees according to the actual workload of the prospecting or designing party.
Article 286
If the contract-offering party fails to pay the price as contracted, the contractor may urge the contract-offering party to make the payment within a reasonable period. If the contract-offering party fails to make the payment at the expiration of the period, unless the construction project is unsuitable for discounted sale or auction according to its nature, the contractor may negotiate with the contract-offering party to sell the said project at a discounted price, and may also apply to a people's court to auction off the said project according to law. Payment for the construction of the project shall be made, in priority, out of the proceeds from the discounted sale or auction of the said project.
Article 287
The relevant provisions on work contracts are applicable to cases where this Chapter remains silent.
Chapter XVII Carriage Contracts
Section I Common Provisions
Article 288
A carriage contract is a contract whereby the carrier transports the passenger or goods to the designated place from the place of dispatch, and the passenger, consignor or consignee pays the ticket price or carriage charges.
Article 289
The carrier engaging in public transport may not reject ordinary and reasonable transport requests of passengers and consignors.
Article 290
The carrier shall safely transport passengers and goods to the designated place within a time limit as contracted or within a reasonable period.
Article 291
The carrier shall transport passengers and goods to the designated place via the contracted or usual transport route.
Article 292
The passenger, consignor or consignee shall pay the ticket price or carriage charges. If the carrier fails to transport via the route as contracted or the reasonable transport route and thus increases the ticket price or carriage charges, the passenger, consignor or consignee may refuse to pay the extra part of the ticket price or the carriage charges.
Section II Passenger Transport Contracts
Article 293
A passenger transport contract is established at the time when the carrier delivers the ticket to the passenger, unless the parties have the otherwise agreement or otherwise trade practices.
Article 294
The passenger shall commute with a valid ticket. If a passenger commutes without a ticket, beyond the distance, in a class higher than indicated by the ticket or with an invalid ticket, the said passenger shall make up to pay the ticket price and the carrier may collect extra fees as stipulated. If the said passenger fails to pay the ticket price, the carrier may refuse to transport.
Article 295
If a passenger is unable to commute at the time indicated by the ticket because of his own reason, the passenger shall, within the prescribed period of time, go through the procedures for a refund or change of the ticket. If a passenger fails to go through the refund or change procedures within the prescribed period, the carrier will not refund the ticket, and will not bear the transport obligation.
Article 296
The passenger shall carry baggage within the prescribed limit of quantity in the course of transport. Passengers who carry baggage in excess of the limit shall have their baggage checked.
Article 297
Passengers may not carry or secretly carry in their baggage any inflammable, explosive, toxic, corrosive and radioactive articles, nor dangerous articles that might threaten the safety of persons and property aboard the means of transport nor other prohibited articles.
If a passenger violates the provisions of the preceding paragraph, the carrier may unload and destroy the prohibited articles or submit them to related departments. If the passenger insists on carrying the prohibited articles or hiding them in baggage, the carrier shall refuse to transport.
Article 298
Carriers shall inform passengers about important matters for abnormal transport and matters of attention for safe transportation.
Article 299
Carriers shall transport passengers at the time and number of runs indicated by the ticket. If a carrier delays the transportation, the carrier shall, at passengers' requests, arrange other number of runs or alter the transport routes to transport the passenger to their destinations or refund their tickets.
Article 300
If the unilateral change of the means of transport by a carrier downgrades the service standards, the carrier shall, at passengers' requests, refund their tickets or reduce the ticket price; if the service standards are raised by the change, no additional charge shall be collected.
Article 301
In the course of transportation, carriers shall do their best to rescue and help passengers who suffer acute diseases, have childbirth or are in dangers.
Article 302
Carriers shall bear the responsibility of making compensation for injury or death of passengers occurred in the course of transportation, however, except for the cases that the carriers can prove the injury or death was caused by passengers' intention, grave negligence or their own health reasons of the passengers.
The provisions of the preceding paragraph are also applicable to passengers who are exempted of tickets, hold complimentary tickets and who are allowed by the carrier to commute without tickets.
Article 303
If the carry-on baggage of passengers are damaged or lost in the course of transportation and the carrier has fault, the carrier shall bear the responsibility of making compensation for damage and loss.
If the checked luggage of passengers are damaged or lost, the relevant provisions on the freight transport are applicable to.
Section III Freight Transport Contracts
Article 304
Consignors shall, when consigning goods for transport, clearly declare to the carriers information necessary for freight transportation such as the designations or names of the consignees or the consignees to order, as well as the name, nature, weight quantity and place of delivery of the goods.
If a loss is caused to the carrier due to untrue declaration or omission of substantial information by the consignor, the said consignor shall be liable therefor.
Article 305
If the freight transport needs to be subject to completing approval and inspection formalities, the consignor shall submit the documents on the completion of relevant formalities to the carrier.
Article 306
Consignors shall package the goods in the packaging methods as contracted. If packaging method is not stipulated or unclearly stipulated, the provisions of Article 156 of this Law shall apply.
If a consignor violates the provisions of the preceding paragraph, the carrier may refuse to transport.
Article 307
If a consignor consigns for transport such dangerous goods as the inflammable, explosive, toxic, corrosive or radioactive, the consignor shall, in accordance with the regulations of the State on the transport of dangerous goods, properly package the dangerous goods, make warning marks and labels of dangerous goods, and submit to the carrier written documents about the names, nature and preventive measures of the dangerous goods.
If a consignor violates the provisions of the preceding paragraph, the carrier may refuse to transport, or may also take appropriate measures to prevent losses, and expenses arising therefrom shall be borne by the consignor.
Article 308
Before the carrier delivers the goods to the consignee, the consignor may ask the carrier to stop the transportation, return the goods, change the place of destination, or deliver the goods to other consignees, however, it shall be liable for the loss thus caused to the carrier.
Article 309
When the goods are transported to the place of destination and the carrier knows the consignee, the carrier shall immediately inform the consignee, and the consignee shall take delivery of the goods in time. If the consignee delays to take delivery of the goods, the consignee shall pay fees as storage and maintenance fees to the carrier.
Article 310
At the time of taking delivery of the goods, the consignee shall inspect the goods within the period of time as contracted. If the period of time for inspection of the goods is not stipulated or not clearly stipulated and it still cannot be determined according to the provisions of Article 61 of this Law, the consignee shall inspect the goods within a reasonable period. If the consignee fails to raise objection on the quantity, damages or losses of the goods within the period stipulated or a reasonable period, it shall be deemed as a preliminary evidence that the carrier has delivered goods in accordance with the transport documents.
Article 311
Carriers shall be liable for damages and losses of the goods occurred in the course of transportation, however, if the carrier proves that a damage or loss of the goods is caused by force majeure, the natural property of the goods or reasonable wear and tear, or are caused by negligence of the consignor or the consignee, the carrier shall not be liable therefor.
Article 312
If the parties have agreed on the amount of compensation for damages and losses of the goods, their agreement shall apply; if the amount of compensation is not stipulated or not clearly stipulated and it still cannot be determined according to the provisions of Article 61 of this Law, the amount shall be calculated at the market price of the place of delivery when the goods are delivered or should been delivered. If laws and administrative regulations contain otherwise provisions on the calculation method of the compensation amount and the limits of compensation, such provisions shall govern.
Article 313
If two or more carriers engage in connected transport of the same mode, the carrier which signs the contract with the consignor shall be responsible for the entire process of transportation. If a loss occurs at one transportation section, the carrier which signs the contract with the consignor and the carrier of the said section shall bear joint and several liabilities.
Article 314
If, in the case where the goods are lost in the course of transportation due to force majeure, the freight fares are not yet collected, the carrier may not ask for payment of freight fares; if freight fares have already been collected, the consignor may ask for a refund.
Article 315
If the consignor or consignee fails to pay freight fares, storage fees and other fees of transportation, the carrier has the right of lien over the goods transported, however, unless the parties stipulate otherwise.
Article 316
If the consignee is unknown or the consignee refuses to take delivery of the goods without justified reasons, the carrier may submit the goods to competent authorities according to the provisions of Article 101 of this Law.
Section IV Multi-modal Transport Contracts
Article 317
Operators of multi-modal transport are responsible for performing or organizing to perform multi-modal transport contracts, enjoy the rights of carriers in the entire transport process and shall assume the obligations of carriers.
Article 318
Operators of multi-modal transport may stipulate corresponding liabilities for participant carriers over the sections of multi-modal transport under the multi-modal transport contract, however, such stipulations shall not affect the obligations of the operators for the entire transport process.
Article 319
The operator of multi-modal transport shall, when receiving the goods consigned for transport by the consignor, issue the multi-modal transport documents. At the request of the consignor, the multi-modal transport documents may be transferable or non-transferable documents.
Article 320
If a loss is caused to the operator of multi-modal transport due to consignors' fault at the time of consigning the goods for transport, even if the consignor has transferred its multi-modal transport documents, the consignor shall still be liable therefor.
Article 321
If a damage or loss of goods occurs in one section of multi-modal transport, the provisions of related laws regulating the transport modes of the section shall apply to the responsibilities for compensation and liability limits of the operators of multi-modal transport. If it is unable to determine in which section of transport a damages or loss of the goods occurs, responsibilities for making compensation therefor shall be governed by the provisions of this Chapter.
Chapter XVIII Technology Contracts
Section I Common Provisions
Article 322
A technology contract is a contract concluded by the parties to define their rights and obligations for technology development, transfer, consultancy or service.
Article 323
The conclusion of technology contracts shall be conducive to the development and advance of science and technology, and shall help accelerate the commercialization, application and dissemination of scientific and technological results.
Article 324
The contents of a technology contract shall be determined by the parties, and generally, shall contain the following clauses:
1. name of the project;
2. content, scope and requirement of the subject matter;
3. program, schedule, period, place, area and mode of performance;
4. confidentiality of technical information and materials;
5. sharing of risk liabilities;
6. ownership over technological results and proceeds distribution method;
7. criterion and method of acceptance inspection;
8. price, remuneration or royalty and their modes of payment;
9. calculation method of penalty for breach of contract or compensation for losses;
10. method for dispute settlement; and
11. definition and interpretation of names and technical terms.
Materials of technical background, feasibility studies and technical evaluation reports, project task paper and plans, technical standards, technical norms, original design and technique documents, as well as other technical documents, which are related to the performance of the contract, may serve as components of the contract as agreed upon by the parties.
If a technology contract involves a patent, it shall clearly have the name of invention or creation, the applicant and the patentee, the date of application, application number, patent number and duration of patent right.
Article 325
The modes of payment for prices, remuneration and royalty of technology contracts shall be stipulated by the parties, and they may adopt the methods of overall computation and lump payment or overall computation and installment payment, and may also adopt the methods of royalty payment or royalty payment plus advances of initial down payment.
When royalty payment is agreed upon, royalty may be calculated at a certain percentage of the price of the product, newly-added output value and profits for the exploitation of patents and application of non-patented technology contracts, or the sales revenue of the product, and may also be computed according to other methods agreed upon. The percentage of royalty payment may be a fixed percentage, a year-on-year increase percentage or year-on-year reduction percentage.
When royalty payment is agreed upon, the parties shall specify in the contract the method for checking and consulting related accounting books.
Article 326
If the rights of exploitation and transfer of service-related technological results belong to the legal persons or other organizations, the legal persons or other organizations may conclude technology contracts on the said service-related technological results. The legal persons and other organizations shall deduct a certain percentage of the proceeds from utilizing and transferring the said service-related technological results to offer rewards or remuneration to the person(s) who completed the said service-related technological results. When the legal persons or other organizations conclude technology contracts to transfer the service-related technological results, the persons completing the service-related technological results have the priority to acquire the results.
A service-related technological result refers to the technological result that is achieved in the course of performing tasks of the legal person or any other organization or is made by primarily making use of the materials and technical conditions of the legal person or any other organization.
Article 327
The rights of exploitation and transfer of non-service technological results belong to persons who have made the results, and the persons making the non-service technological results may conclude technology contracts on the non-service technological results.
Article 328
Persons making technological results have the right to indicate on related documents of the technological results that they are the persons making the technological results and the right to win certificates of honor and rewards.
Article 329
Technology contracts of illegal monopoly over technologies, inhibiting technology progress or infringing upon technological results of others are invalid and void.
Section II Technological Development Contracts
Article 330
A technological development contract is a contract concluded by the parties on the research and development of new technology, new product, new technique or new material as well as its system.
Technological development contracts include the commissioned development contracts and co-operative development contracts.
Technological development contracts shall adopt the written form.
Contracts concluded by the parties on the commercialization of technological results of an industrial application value shall be made with reference to the technological development contracts.
Article 331
The client of a commissioned development contract shall pay funds for research and development and remuneration as contracted; provide technical materials and original data; complete all co-operative work; and take delivery of fruits of research and development.
Article 332
The researcher and developer of a commissioned development contract shall work out and implement research and development plans according to the contract; rationally use the research and development funds; complete the research and development work as scheduled, deliver the results of research and development, provide related technical materials and necessary technical instructions, and help the client master the research and development results.
Article 333
If the research and development work is stopped or delayed or fails due to breach of contract by the client, the client shall bear the liability for breach of contract.
Article 334
If the research and development work is stopped or delayed or fails due to breach of contract by the researcher and developer, the researcher and developer shall bear the liability for breach of contract.
Article 335
The parties to a co-operative development contract shall make investments as contracted, including investment in the form of technology; participate in the research and development work according to the division of work; and co-operate and assist the research and development work.
Article 336
If the breach of contract by a party to a co-operative development contract results in the suspension, delay or failure of the research and development work, the party shall bear the liability for breach of contract.
Article 337
If the revelation to the public by others a technology which is the subject matter of a technology development contract results in the performance of the said technology development contract meaningless, the parties may dissolve the contract.
Article 338
If unsurmountable technical difficulties arising in the course of performing a technology development contract lead to the total failure or partly failure of the research and development, the said risk responsibilities shall be stipulated by the parties. If it is not stipulated or not clearly stipulated and it still cannot be determined according to the provisions of Article 61 of this Law, the parties shall reasonably share the risk responsibilities.
If a party finds a circumstance specified in the preceding paragraph that probably causes the total failure or partly failure of the research and development, the said party shall immediately inform the other party and take appropriate measures to minimize the loss. If the party fails to do so and causes the expansion of the loss, the said party shall be liable for the expansion of the loss.
Article 339
For inventions and creations accomplished from commissioned development, the right to apply for patents belongs to the researcher and developer, unless the parties stipulate otherwise. If the researcher and developer acquire patent rights, the clients may exploit the said patents free of charge.
If a researcher or developer transfers its right to apply for a patent, the client enjoys the preemptive right over the transfer of the right to apply for patent.
Article 340
For inventions and creations accomplished from co-operative development, the right to apply for patents belongs to all parties to the cooperative development, unless the parties stipulate otherwise. If one of the parties transfers its joint right to apply for patent on the invention or creation, other parties enjoy the preemptive right over the transfer of the joint rights to apply for patent.
If a party to a co-operative development declares to disclaim its joint right to apply for patent on the invention or creation, one or all of other parties to the co-operative development may make individual or joint application. If the applicant obtains the patent right, the party that has disclaimed its right of application may exploit the said patent free of charge.
If a party to a co-operative development does not agree to apply for a patent, one or all of other parties to the co-operative development may not apply for patent.
Article 341
The rights of utilization, rights of transfer and the proceeds distribution method on the know-how results achieved from commissioned development or co-operative development shall be stipulated by the parties. If there is no stipulations or unclear stipulations and it still cannot be determined according to the provisions of Article 61 of this Law, all the parties involved have the rights of utilization and transfer, but the researcher and developer of a commissioned development may not, prior to delivery of the research and development results to the client, transfer the research and development results to a third party.
Section III Technological Transfer Contracts
Article 342
Technological transfer contracts include contracts for the transfer of patent rights, transfer of the right to apply for patent, transfer of technological know-how and license for exploitation of patents.
Technological transfer contracts shall adopt the written form.
Article 343
A technological transfer contract may stipulate the scope for the transferor and transferee to exploit the patent or to use the technological know-how, but may not restrict technological competition and technology development.
Article 344
A contract for licensing the implementation of a patent shall be valid only within the period of continued existence of the patent. If the valid duration of the patent right expires or the patent right is declared invalid, the patentee may not conclude with others the contract for licensing the implementation of the patent.
Article 345
The licenser of a contract for licensing the implementation of a patent shall, as contracted, permit the licensee to implement the patent, deliver technical materials related to patent implementation, and provide necessary technical instructions.
Article 346
The licensee of a contract for licensing the implementation of a patent shall, as contracted, implement the patent, may not allow a third party beyond the contract to implement the patent; and shall pay royalty as contracted.
Article 347
The transferor of a contract for transferring technical know-how shall, as contracted, provide technical materials, give technical instructions, guarantee the practical applicability and reliability of the technology, and bear the obligation of keeping confidential.
Article 348
The transferee of a contract for transferring technical know-how shall, as contracted, utilize the technology, pay royalty, and bear the obligation of keeping confidential.
Article 349
The transferor of a technological transfer contract shall guarantee its legitimate ownership over the technology provided and guarantee the technology provided to be complete, errorless and effective and to be able to realize the goals as contracted.
Article 350
The transferee of a technological transfer contract shall, according to the scope and period of time as contracted, bear the obligation of keeping confidential the secret part of the technology transferred that is not yet open to public.
Article 351
The transferor shall, if failing to transfer the technology as contracted, refund partly or total amount of royalty and also bear the liability for breach of contract; if a party exploits a patent or utilizes a technical know-how beyond the scope as contracted, or allow a third party without authorization, in violation of the agreement, to exploit the said patent or to utilize the said technical know-how, the party shall stop its illegal acts and bear the liability for breach of contract; if a party violates the contractual obligation for keeping confidential, the party shall bear the liability for breach of contract.
Article 352
The transferee shall, if failing to pay royalty as contracted, make up its payment of royalty and pay a penalty fine for breach of contract as contracted; if failing to do so, shall stop its exploitation of the patent or utilization of the technical know-how, return the technical materials and bear the liability for breach of contract; if exploiting the patent or utilizing the technical know-how in excess of the specified scope or allowing a third party, without assent of the transferor, to exploit the patent or to utilize the said technical know-how, shall stop its illegal acts and bear the liability for breach of contract; and if violating its contractual obligation of keeping confidential, shall bear the liability for breach of contract.
Article 353
If the exploitation of the patent or utilization of the technical know-how by the transferee as contracted infringes upon the legitimate rights and interests of others, the transferor shall assume the responsibility, unless the parties stipulate otherwise.
Article 354
In the technological transfer contract, the parties may, in accordance with the principle of mutual benefits, stipulate the method for sharing any improved technological result from the patent exploitation or utilization of the technical know-how. If it is not stipulated or not clearly stipulated and it still cannot be determined according to the provisions of Article 61 of this Law, any of the other parties is not be entitled to share the improved technological result of a party.
Article 355
Where laws and administrative regulations contain otherwise provisions on contracts for technology import and export or for patents and patent applications, such provisions shall govern.
Section IV Technical Consultancy Contracts and Technical Service Contracts
Article 356
Technical consultation contracts include contracts for providing feasibility study, technical projection, special technological investigations, and analysis and evaluation reports on specific technological projects.
A technical service contract refers to a contract whereby one party uses its technical knowledge to solve specific technical problems for the other party, and does not include the construction project contract and the work contract.
Article 357
The client of a technical consultancy contract shall, as contracted, state the issues for consultancy, provide background technical information and related technical materials and data; and accept the fruits of work from the mandatory and pay remuneration.
Article 358
The mandatory of a technical consultancy contract shall complete the consultancy report or solve the problems within the time limit as contracted; and the consultancy report submitted shall meet the stipulated requirements.
Article 359
If the client to a technical consultancy contract fails to provide necessary materials and data as contracted and thus affects the progress and quality of the work or the client fails to accept or delays to accept the fruits of work, remuneration already paid may not be retrieved and any amount of remuneration not yet paid shall be paid.
If the mandatory to a technical consultancy contract fails to submit the consultancy report as scheduled or the report submitted fails to meet the requirements, the mandatory shall bear the liabilities for breach of contract as reducing or waiving the remuneration.
A loss caused by the decision of the client of a technical consultancy contract according to the up-to-requirement consultancy report and advice provided by the mandatory shall be borne by the client, unless the parties stipulate otherwise.
Article 360
The client to a technical service contract shall, as contracted, provide working conditions and perform co-operative work; accept fruits of work and pay remuneration.
Article 361
The mandatory to a technical service contract shall, as contracted, complete the service items, solve technical problems, guarantee the quality of the work, and inseminate knowledge for solving technical problems.
Article 362
If the client to a technical service contract fails to perform its contractual obligations or the performance of its contractual obligations fails to the requirements, thus affecting the progress and quality of the work, or fails to accept or delays its acceptance of the fruits of work, remuneration already paid may not be retrieved and any remuneration not yet paid shall be paid.
If the mandatory to a technical service contract fails to complete the service work as contracted, the said mandated party shall bear the liabilities for breach of contract such as waiving the remuneration.
Article 363
In the course of performance of a technical consultancy contract or a technical service contract, new technological achievements made by the mandatory with technical materials and working conditions provided by the client shall belong to the mandatory. New technological achievement made by the client with the fruits of work of the mandatory shall belong to the client. If the parties have otherwise agreements, their agreements shall govern.
Article 364
Where laws and administrative regulations contain otherwise provisions on technology brokerage contracts and technical training contracts, such provisions shall govern.
Chapter XIX Contracts of Deposit
Article 365
A contract of deposit is a contract whereby the depository safekeeps the articles delivered by the depositor and returns the said articles.
Article 366
The depositor shall pay to the depository the storage fee as contracted.
If the parties fail to have stipulations or have ambiguous stipulations on the storage fee and it still cannot be determined according to the provisions of Article 61 of this Law, the storage shall be deemed as free of charge.
Article 367
A contract of deposit shall be established at the time of delivery of the articles unless the parties stipulate otherwise.
Article 368
If the depositor delivers the articles to the depository, the latter shall issue a storage certificate, unless there are otherwise trade practices.
Article 369
The depository shall properly safekeep the articles.
The parties may stipulate the place and method for safekeeping. Except for emergency or for the interests of the depositor, the place and method for safekeeping may not be changed unilaterally.
Article 370
If the articles delivered for safekeeping by a depositor have faults and defects or are subject to special safekeeping measures according to the nature of the articles, the depositor shall inform the depository about relevant information. If the failure to do so by the depositor results in the loss or damage to the articles, the depository shall not be liable therefor; if the depository suffers a loss therefrom, the depositor shall be liable for the loss unless the depository knows or should know about it but fails to take remedial measures.
Article 371
The depository may not transfer the articles to a third party for safekeeping, unless the parties stipulate otherwise.
If a depository, in violation of the provisions of the preceding paragraph, transfers the articles to a third party for safekeeping, and thus causes a damage or loss to the articles, the depository shall be liable therefor.
Article 372
The depository may not use or permit a third party to use the articles, unless the parties stipulate otherwise.
Article 373
If a third party claims rights over the articles, provided for a preservation or execution of the articles according to law, the depository shall perform the obligation of returning the articles to the depositor.
If a third party initiates an action against the depository or applies for distraint of the articles, the depository shall immediately inform the depositor.
Article 374
If, within the period of safekeeping, a damage to or loss of the articles is caused due to improper safekeeping by the depository, the depository shall be liable therefor, however, if the safekeeping storage is gratuitous and the depository can prove itself free from any substantial negligence, the depository shall not be liable therefor.
Article 375
The depositor shall declare to the depository if delivering currencies, negotiable securities or other valuable objects for safekeeping, and the depository shall check them before acceptance or seal them up. If the depositor fails to declare and the said deposit is damaged or lost, the depository may make compensation for them as general articles.
Article 376
The depositor may collect its articles at any time.
If the parties fail to have the stipulations or have ambiguous stipulations on the period of safekeeping, the depository may, at any time, ask the depositor to collect the articles; if the period of safekeeping is stipulated, the depository, without special reasons, may not ask the depositor to collect the articles ahead of time.
Article 377
When the period of safekeeping expires or the depositor collects the articles ahead of schedule, the depository shall return the articles and fruits accruing to the depositor.
Article 378
If a depository safekeeps currencies, the depository may return currencies of the same kind and of the same amount. If safekeeping other replaceable articles, the depository may return articles of the same kind, the same quality and the same quantity as contracted.
Article 379
Under a contract of deposit with remuneration, the depositor shall pay the storage fee to the depository according to the agreed period of safekeeping.
If the parties fail to have the stipulations or have ambiguous stipulations on the time limit for payment and it still cannot be determined according to the provisions of Article 61 of this Law, the payment shall be made at the time of collecting the articles.
Article 380
If the depositor fails to pay the storage fee and other charges, the depository has the right of lien over the articles unless the parties stipulate otherwise.
Chapter XX Warehousing Contracts
Article 381
A warehousing contract is a contract whereby the depository stores the goods delivered by the depositor and the depositor pays the warehousing fee.
Article 382
A warehousing contract becomes valid when it is concluded.
Article 383
If delivering dangerous goods such as the inflammable, explosive, toxic, corrosive and radioactive or perishable articles for warehousing, the depositor shall state the nature of the said goods or articles and provide relevant information and materials.
If the depositor violates the provisions of the preceding paragraph, the depository may refuse to accept the goods and articles to be stored and may also take appropriate measures to avoid the occurrence of losses, and expenses therefrom shall be borne by the depositor.
The depository shall, if intending to store dangerous goods or articles such as the inflammable, explosive, toxic, corrosive and radioactive, have the storage conditions therefor.
Article 384
The depository shall check the goods to be stored as contracted before accepting them. If the depository believes, at the time of checking before accepting for storage, any inconsistency between the goods to be stored and that having agreed upon, the depository shall immediately inform the depositor. If, after the acceptance by the depository, any inconsistency of the goods or articles warehoused in terms of the kinds, quantity or quality with the agreement is arisen, the depository shall be liable for the damage or loss.
Article 385
If the depositor delivers goods for storage, the depository shall issue a warehousing certificate thereto.
Article 386
The depository shall sign or stamp on the warehousing certificate. A warehousing certificate shall contain the following particulars:
1. designation or name and address of the depositor;
2. kind, quantity, quality, package, number of pieces and marks of the goods stored;
3. standards on damage and spoilage of the goods stored;
4. warehousing site;
5. warehousing period;
6. warehousing fee;
7. the insured amount, duration of insurance and designation of the insurance company if the goods to be stored have been insured; and
8. name of the issuer and the place and date of issuance.
Article 387
A warehousing certificate is the proof to collect the goods stored. The depositor or holder of the warehousing certificate may, upon endorsement on the warehousing certificate and upon signature or seal by the depository, transfer the right to collect the goods stored.
Article 388
The depository shall, at request of the depositor or the holder of the warehousing certificate, allow the said depositor or holder to examine the goods or articles stored and to collect samples.
Article 389
The depository shall, if believing any quality deterioration or damage of the warehoused goods or articles, immediately inform the depositor or the holder of the warehousing certificate.
Article 390
The depository shall, if believing that the goods or articles have any quality deterioration or other damages which pose threat to the safety and normal warehousing of other in-warehouse goods or articles, urge the depositor or the holder of the warehousing certificate to make necessary disposal. Under emergent situations, the depository may make necessary arrangement and treatment, however, shall inform the depositor or the holder of the warehousing certificate about the situation afterwards.
Article 391
If the parties fail to have stipulations or have ambiguous stipulations on the warehousing period, the depositor or holder of the warehousing certificate may collect, at any time, the goods or articles stored, and the depository may also request, at any time, the depositor to collect the goods stored, but shall give a reasonable period for making preparations.
Article 392
If the warehousing period expires, the depository or holder of the warehousing certificate shall collect the goods or articles by presenting the warehousing certificate. If the depository or holder of the warehousing certificate postpones to collect the goods stored, extra warehousing fees shall be charged; if the goods are collected prior to the expiration, the warehousing fees shall not be reduced.
Article 393
If, at expiration of the warehousing period, the depository or holder of the warehousing certificate fails to collect the stored goods, the depository may urge the depository or holder of the warehousing certificate to collect the goods within a reasonable period, if it still fails to collect the goods at expiration of the given period, the depository may submit the goods or articles to competent authorities.
Article 394
If a damage or loss is caused to the stored goods or articles due to improper warehousing by the depository within the warehousing period, the depository shall be liable therefor.
If the quality deterioration or damage is caused to the goods or articles due to the nature of the goods stored, failure to meet the packaging requirements or overrun of their valid storage period, the depository shall not be liable therefor.
Article 395
In absence of the provisions in this Chapter, the relevant provisions on the contracts of deposit shall apply.
Chapter XXI Contracts of Mandate
Article 396
A contract of mandate is a contract whereby the mandator and the mandatory agree that the mandatory handles the affairs of the mandator.
Article 397
The mandator may specifically authorize the mandatory to handle one or several affairs, and may also generally authorize the mandatory to handle all affairs.
Article 398
The mandator shall pay in advance expenses for handling the mandated affairs. If the mandatory pays expenses necessary for handling the mandated affairs in advance, the mandator shall repay the said expenses and interests accrued.
Article 399
The mandatory shall handle the mandated affairs in accordance with the instructions of the mandator. If it is necessary to modify the instructions of the mandator, it shall be subject to approval of the mandator; if, under emergent situations, it is impossible to gain contact with the mandator, the mandatory shall properly handle the mandated affairs, but shall immediately inform the mandator of the said situations afterwards.
Article 400
The mandatory shall personally handle the mandated affairs. With assent of the mandator, the mandatory may transfer the mandate. If a transfer of mandate is approved, the mandator may directly instruct the third party to the transfer of mandate about the mandated affairs, and the mandatory shall bear responsibility only for the choice of the third party and its instructions to the third party. If a transfer of mandate is not approved, the mandatory shall be liable for any acts of the third party to the transfer of mandate, however, except that under emergent situations, the mandatory has to transfer the mandate for the purpose of protecting the interests of the mandator.
Article 401
The mandatory shall, at the request of the mandator, report the handling of the mandated affairs. When a contract of mandate ceases, the mandatory shall report the results of the handling of the mandated affairs.
Article 402
If the mandatory, in its own name and within the scope power mandated by the mandator, negotiates a contract with a third party, and if the third party knows or should know the agency relationship between the mandatory and the mandator, the said contract will directly be binding on the mandator and the third party, however, except that hard evidences prove the said contract is binding only on the mandatory and the third party.
Article 403
When the mandatory negotiates, in its own name, a contract with a third party and the third party does not know the agency relationship between the mandatory and the mandator, the mandatory does not perform its contractual obligations to the mandator due to reasons of the third party, the mandatory shall disclose the third party to the mandator, and the mandator therefore may exercise the rights of the mandatory over the third party, however, except for the case that the third party would not have entered into the contract if it had known the said mandator at the time when negotiating the contract with the mandatory.
If the mandatory fails to perform its contractual obligations to the third party due to reasons of the mandator, the mandatory shall disclose the mandator to the third party, the third party therefore may choose the mandatory or the mandator, as the opposite party, to advocate its rights, however, the third party may not change the opposite party once it is chosen.
If the mandator exercises the rights of the mandatory over a third party, the third party may advocate its challenge over the mandatory to the mandator. When the third party chooses the mandator as the opposite party, the mandator may advocate its challenge over the mandatory to the third party, and its challenge over the third party to the mandatory.
Article 404
The mandatory shall give back to the mandator any property obtained in handling the mandated affairs.
Article 405
When the mandatory fulfills the mandated affairs, the mandator shall pay remuneration to the mandatory. If a contract of mandate is dissolved or the mandated affairs could not be fulfilled due to reasons for which the mandatory are not accountable, the mandator shall pay corresponding remuneration to the mandatory. If the parties have otherwise stipulations, such stipulations shall govern.
Article 406
With respect to a contract of mandate involving remuneration, if any negligence of the mandatory causes a loss to the mandator, the mandator may demand compensation therefor. With regard to a contract of mandate without remuneration, if any intention or substantial negligence of the mandatory causes a loss to the mandator, the mandator may demand compensation therefor.
The mandatory shall, if going beyond the limit of power and thus causing a loss to the mandator, make compensation therefor.
Article 407
If the mandatory, in handling the mandated affairs, suffers a loss due to reasons for which it is not accountable, the mandatory may demand compensation therefor from the mandator.
Article 408
The mandator may, with assent of the mandatory, authorize a third party, in addition to the mandatory, to handle the mandated affairs. If a loss is thus caused to the mandatory, the mandatory may demand compensation therefor from the mandator.
Article 409
If two or more mandatories jointly handle the mandated affairs, they shall bear joint and several liabilities.
Article 410
The mandator or the mandatory may terminate the contract of mandate at any time. If a party terminates the contract and thus causes a loss to the other party, the party shall compensate the loss, except for reasons for which the said party is not accountable.
Article 411
A contract of mandate shall terminate when either the mandator or the mandatory dies, loses capacity of civil conduct or goes bankrupt, however, except that the parties stipulate otherwise or it is unsuitable to terminate the contract according to the nature of the mandated affairs.
Article 412
If the death, loss of capacity or bankruptcy of the mandator leads to the termination of the contract of mandate, which will infringe upon the interests of the mandator, the mandatory shall continue to handle the mandated affairs before the heir, legal agent or liquidation organization takes over the mandated affairs.
Article 413
If the death, loss of capacity of civil conduct or bankruptcy of the mandatory leads to the termination of the contract of mandate, the heir, legal agent or liquidation organization of the mandatory shall immediately inform the mandator. If the termination of the contract of mandate will infringe upon the interests of the mandator, the heir, legal agent or liquidation organization shall take necessary measures prior to making proper arrangement and treatment by the mandator.
Chapter XXII Contracts of Commission Agency
Article 414
A contract of commission agency is a contract whereby the commission agent, in its own name, engages in trade activities for the mandator and the mandator pays remuneration.
Article 415
Expenses inflicted by the commission agent in handling the mandated affairs shall be borne by the commission agent, except that the parties stipulate otherwise.
Article 416
If the commission agent possesses the commissioned articles, the commission agent shall properly safekeep them.
Article 417
If the commissioned articles have defects or are vulnerable to degeneration or deterioration at the time when they are delivered to the commission agent, the commission agent may, with assent of the mandator, dispose of them; if it is unable to gain immediate contact with the mandator, the commission agent may dispose of the articles in a proper manner.
Article 418
If a commission agent sells at a price lower than the price set by the mandator or buys at a price higher than the price set by the mandator, the commission agent shall get assent of the mandator. If a deal is made without assent of the mandator, the commission agent shall make up the price difference and the said deal shall be binding on the mandator.
If a commission agent sells at a price higher than the price set by the mandator or buys at a price lower than the price set by the mandator, the remuneration may be increased as contracted. If it is not stipulated or not explicitly stipulated and it still cannot be determined according to the provisions of Article 61 of this Law, the said benefits shall belong to the mandator.
If the mandator has special instructions on the price, the commission agent may not sell or buy in violation of the said instructions.
Article 419
If the commission agent buys or sells commodities at a market price, unless the mandator indicates otherwise, the commission agent itself may serve as the buyer or the seller.
If the commission agent has the circumstance specified in the preceding paragraph, the commission agent may still ask the mandator to pay remuneration.
Article 420
If the commission agent buys the commissioned articles according to the contract, the mandator shall collect it in time. If, after being urged by the commission agent, the mandator refuses to collect the articles without justified reasons, the commission agent may submit the commissioned articles to competent authorities according to the provisions of Article 101 of this Law.
If the commission articles could not be sold or the mandator withdraws the commissioned sale, and the mandator fails to retrieve or dispose of the said articles after being urged by the commission agent, the commission agent may submit the commissioned articles to competent authorities according to the provisions of Article 101 of this Law.
Article 421
The commission agent having a contract with the third party shall directly enjoy the rights and bear the responsibilities under the contract.
If the non-performance of obligations by a third party causes a loss to the mandator, the commission agent shall be liable therefor, except that the commission agent and the mandator stipulate otherwise.
Article 422
If the commission agent fulfills or partly fulfills the commissioned affairs, the mandator shall pay remuneration accordingly. If the mandator fails to pay remuneration at the expiration of the specified time limit, the commission agent enjoys the lien over the commissioned articles, unless the parties stipulate otherwise.
Article 423
Where this Chapter remains silent, the relevant provisions on contracts of mandate shall apply.
Chapter XXIII Brokerage Contracts
Article 424
A brokerage contract is a contract whereby the broker reports to the mandator the time to conclude the contract or provides media services for the conclusion of the contract, and the mandator pays remuneration therefor.
Article 425
The broker shall truthfully report to the mandator the matters related to the conclusion of the contract.
If the broker intentionally conceals important facts in relation to the conclusion of the contract or provides untrue information and thus harms the interests of the mandator, the broker may not ask for payment of remuneration and shall be liable therefor.
Article 426
If the broker succeeds in promoting the conclusion of a contract, the mandator shall pay remuneration as contracted. If the remuneration for the broker is not stipulated or not explicitly stipulated and it still cannot be determined according to the provisions of Article 61 of this Law, the remuneration shall be reasonably determined according to the broker's labor services. If the media services provided by the broker prompted the conclusion of a contract, the parties to the said contract shall proportionally share the burden to pay the remuneration to the broker.
If the broker promotes the conclusion of a contract, the expenses arising in the course of brokerage activities shall be borne by the broker.
Article 427
If the broker fails to prompt the conclusion of a contract, the broker may not ask for payment of remuneration, but may ask the mandator to pay expenses necessary for engaging in the brokerage activities.
Supplementary Provisions
Article 428
This Law shall enter into force on October 1, 1999. The Economic Contract Law of the People's Republic of China, the Economic Contract Law Involving Foreign Interests of the People's Republic of China and the Technology Contract Law of the People's Republic of China shall be annulled simultaneously.
