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1、LeRoy H. GrawEdD, DBA, C.P.M., CPCM, CPP, CPPM, CISCMChinas Contract LawKnowledge/Skill/AbilityBeable to write acontractpreparedunderChinasContractLawwhenrequired.IntroductionContractLawofthe Peoples Republic of China (PRC) waspromulgatedonNationalDay, October1st,1999Itreplaceda hostofexistinglaws,i

2、ncluding:EconomicContractLawofthe PRC(ECL)Lawofthe PRConEconomicContractsinvolving ForeignInterests (FECL)Lawofthe PRConTechnology ContractsContains23Chapter and428ArticlesBackgroundThenew PRCContractLawmirrorsprovisions of theU.N. Conventiononthe InternationalSaleofGoods(CISG), someideasofthe Unifo

3、rmCommercialCode,andsomemoderntrends in Westernlaw.Italso removespunitiveprovisionsofpriorlaw, provides forremediesforbreach,contemplatesspecificperformance, andfrownsonpenaltyclauses notrelated to actuallosses.Definition of aContractArticle 2ofthe newContractLawprovidesthatacontractinthis Lawrefers

4、toanagreement establishing,modifying andterminatingthecivilrights andobligationsbetween subjects of equal footing.A contract is an agreementbetween thesubjects,nomatter theyare naturalpersons,legalpersonsorotherorganizations.A contract is an agreementofcivilrelationshipbeingconcluded andsignedbyand

5、betweenspecificcivilsubjects, thatis, by andbetween twoormore naturalpersons,byand betweennaturalperson(s)and legal person(s)orotherorganization(s), by andbetween legal persons, by andbetween legal person(s)andotherorganization(s).ScopeoftheNew LawExcluded:Contractsinvolving personal statusrelations

6、hip, suchasonmatrimony,adoption,guardianship,etc.,undertheprovisionsofotherlaws.Contractsfor guaranteeorforinsurance.Othercontractsnot coveredinthe “SpecificProvisions”.Allcontracts mustfollow the“GeneralProvisions”ofthenew contract law,eventhoughthereare separate lawscoveringthesecontracttypes.Scop

7、eoftheNew LawIncluded:Otherthan those excluded,domesticcontractsand foreigncontracts which involveforeigninterests.15specifically-listed kinds of contractsfoundintheSpecificProvisions.Theseinclude:contractsfor salescontractsfor supplyanduse of electricity,water,gas or heatingcontractsfor donationcon

8、tractsfor loanscontractsfor leasecontractsfor financialleasecontractsfor workcontractsfor constructionprojectscontractsfor transportationcontractsfor technologycontractsfor storagecontractsfor warehousingcontractsfor commissioncontractsfor brokeragecontractsfor intermediation.What is Included?Articl

9、e 12Thecontentofa contract is determinedbythe partiesand generallyincludesthefollowing clauses:(1)designations or names andaddressesofthe parties;(2)the targeted matter;(3)quantity(4)quality;(5)priceorremuneration;(6)time,placeand modeoffulfillment;(7)liability forbreachofcontract; and(8)disputesett

10、lement.SpecificPointsOral contractsallowed.Binding contractsmaybewrittenororal,unlesslimitedbyagreementorlaw.Similar to theCISG.Unlikethe UCC,whichlimits oralcontracts to $5,000.SpecificPointsRecognitionofmoderntransactionmodes.Electronicallytransmittedcommunications(telegram, telex,facsimile, elect

11、ronicdatainterchangeande-mail)constitute writings forpurposesofcontractlaw.SpecificPointsGood faith in negotiating andperforming.A party who,inthe negotiating process, deliberatelyconcealsimportantfactsorpretendstoconcludeacontractmaybeliable forcausing losstothe other party.Good faith is required i

12、n theperformanceofcontractualrightsand duties.SpecificPointsGrounds forrevocation/modification.Whereserious misunderstandingliesatthebaseofthecontract, or where thecontractismanifestly unfairatthetimeitwasmade,apartymayseekmodificationorrevocation.SpecificPointsBusinesssecrets protected.A party whol

13、earnsabusinesssecretofthe other in thecontractingprocess risks damagesfor disclosingorunfairlyusingthe information.SpecificPointsAdhesionandStandardFormContracts.Akin to consumer protectionmeasuresinU.S.law, thenewlaw invalidates clausesthatpurport to immunize apartyfrom,interalia,causingpersonalinj

14、uryorpropertydamage to theother.SpecificPointsRulesofInterpretation.Incase of disputes,standardizedcontracts willbeinterpretedaccording to generalunderstanding,and ambiguities shall be resolved in favor of thenon-draftingparty.Whereinternational contractsspecify,forexample,thatboth theChinese andEng

15、lish versions willhaveequalvalidity,disparate meanings shall be interpreted accordingtothepurposeofthecontract.SpecificPointsOfferandAcceptance.Incontrasttopriorlaw, fairlydetailedrulesnowgovern offer andacceptance,formationand revocationofoffers.Forexample,anacceptanceisgenerallyeffective whennotic

16、e reachesthe offeror.SpecificPointsAcceptance thatvaries thetermsoftheoffer.Anofferee whosubstantially altersthecontentsofthe offer willnot be permittedtobind theofferee.Additional ProvisionsThenew law:encourages contracting partiestohaverecoursetoinformaldispute resolution.favorsarbitrationbut alsoaffirmsaccesstocourts.Summary/ConclusionsThenew Contract LawofChinaisappropriateforthe “NewWorldEconomy”and ChinasentranceintotheWTO.Thenew Contract Lawisgen

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