19991001
The Standing Committee of the National People’s Congress Law of the People’s Republic of China on Foreign-related Economic Contracts Order No.22 [1985] of President March 21, 1985 (Adopted at the Tenth Session of the Standing Committee of the Sixth National People’s Congress, promulgated by Order No.22 of the Chapter I General Provisions Article 1 This Law is formulated with a view to protecting the lawful rights and interests of the parties to Chinese-foreign economic contracts Article 2 This Law shall apply to economic contracts concluded between enterprises or other economic organizations of the People’s Republic Article 3 Contracts shall be concluded according to the principle of equality and mutual benefit and the principle of achieving agreement through Article 4 In concluding a contract, the parties must abide by the law of the People’s Republic of China and shall not harm the public interest Article 5 The parties to a contract may choose the proper law applicable to the settlement of contract disputes. In the absence of such a choice The law of the People’s Republic of China shall apply to contracts that are to be performed within the territory of the People’s Republic For matters that are not covered in the law of the People’s Republic of China, international practice shall be followed. Article 6 Where an international treaty which is relevant to a contract, and to which the People’s Republic of China is a contracting party Chapter II Conclusion of Contracts Article 7 A contract shall be formed as soon as the parties to it have reached a written agreement on the terms and have signed the contract. Contracts which are subject to the approval of the state, as provided for by the laws or administrative regulations of the People’s Article 8 Appendices specified in a contract shall be integral parts of the contract. Article 9 Contracts that violate the law or the public interest of the People’s Republic of China shall be void. In case any terms in a contract violate the law or the public interest of the People’s Republic of China, the validity of the contract Article 10 Contracts that are concluded by means of fraud or duress shall be void. Article 11 A party which is responsible for the invalidity of a contract shall be liable for the losses suffered by the other party as a result Article 12 A contract shall, in general, contain the following terms: (1) the corporate or personal names of the contracting parties and their nationalities and principal places of business or domicile; (2) the date and place of the signing of the contract; (3) the type of contract and the kind and scope of the object of the contract; (4) The technical conditions, quality, standard, specifications and quantity of the object of the contract; (5) the time limit, place and method of performance; (6) the price, amount and method of payment, and various incidental charges; (7) whether the contract is assignable and, if it is, the conditions for its assignment; (8) liability to pay compensation and other liabilities for breach of contract; (9) the ways for settling contract disputes; and (10) the language(s) in which the contract is to be written and its validity. Article 13 So far as it may require, a contract shall provide for the limits of the risks to be borne by the parties in performing the object; Article 14 Where a contract needs to be performed continuously over a long period, the parties shall set a period of validity for the contract Article 15 In the contract the parties may agree to provide a guaranty. The guarantor shall be held liable within the agreed scope of guaranty. Chapter III Performance of Contracts and Liability for Breach of Contract Article 16 A contract shall be legally binding as soon as it is established in accordance with the law. The parties shall perform their obligations Article 17 A party may temporarily suspend its performance of the contract if it has conclusive evidence that the other party is unable to perform Article 18 If a party fails to perform the contract or its performance of the contractual obligations does not conform to the agreed terms, which Article 19 The liability of a party to pay compensation for the breach of a contract shall be equal to the loss suffered by the other party as Article 20 The parties may agree in a contract that, if one party breaches the contract, it shall pay a certain amount of breach of contract The breach of contract damages as stipulated in the contract shall be regarded as compensation for the losses resulting from breach Article 21 If both parties breach the contract, each shall be commensurately liable for the breach of contract that is its responsibility. Article 22 A party which suffers losses resulting from a breach of contract by the other party shall promptly take appropriate measures to prevent Article 23 If a party fails to pay on time any amount stipulated as payable in the contract or any other amount related to the contract that Article 24 If a party is prevented from performing all or part of its obligations owing to force majeure, it shall be relieved of all or part If a party cannot perform its obligations within the contractually agreed time limit owing to force majeure, it shall be relieved Force majeure means an event that the parties could not have foreseen at the time of conclusion of the contract, both parties being The scope of force majeure may be specified in the contract. Article 25 The party which fails to perform wholly or in part its contractual obligations owing to force majeure shall promptly inform the other Chapter IV Assignment of Contracts Article 26 When a party assigns, wholly or in part, its contractual rights and obligations to a third party, it must obtain the consent of the Article 27 In the case of a contract which, according to the laws or administrative regulations of the People’s Republic of China, is to be formed Chapter V Modification, Rescission and Termination of Contracts Article 28 A contract may be modified if both parties agree through consultation. Article 29 A party shall have the right to notify the other party that a contract is rescinded in any of the following situations: (1) if the other party has breached the contract, thus adversely affecting the economic benefits they expected to receive at the time (2) if the other party fails to perform the contract within the time limit agreed upon in the contract, and again fails to perform it (3) if all the obligations under the contract cannot be performed owing to force majeure; or (4) if the contractually agreed conditions for the rescission of the contract are present. Article 30 For a contract consisting of several independent parts, some may be rescinded according to the provisions of the preceding article Article 31 A contract shall be terminated in any one of the following situations: (1) if the contract has already been performed in accordance with the agreed terms; (2) if an arbitration body or a court has decided that the contract shall be terminated; or (3) if the parties agree through consultation to terminate the contract. Article 32 Notices or agreements on the modification or rescission of contracts shall be made in writing. Article 33 In the case of a contract which, according to the laws or administrative regulations of the People’s Republic of China, is to be established Article 34 The modification, rescission or termination of a contract shall not affect the rights of the parties to claim damages. Article 35 The contractually agreed terms for the settlement of disputes shall not become invalid because of the rescission or termination of Article 36 The contractually agreed terms for the settlement of accounts and liquidation of a contract shall not become invalid because of the Chapter VI Settlement of Disputes Article 37 If disputes over a contract develop, the parties shall, as far as possible, settle them through consultation, or through mediation If the parties are unwilling to settle their dispute through consultation or mediation, or if consultation or mediation proves unsuccessful, Article 38 If no arbitration clause is provided in the contract, and a written arbitration agreement is not reached afterwards, the parties may Chapter VII Supplementary Provisions Article 39 The time limit for filing suit or applying for arbitration in a dispute over a contract for the purchase and sale of goods shall be Article 40 If new legal provisions are formulated while contracts for Chinese-foreign equity joint ventures, Chinese-foreign contractual joint Article 41 This Law may apply to contracts concluded before it goes into effect if this is agreed to by the parties through consultation. Article 42 The State Council shall, in accordance with this Law, formulate the rules for the implementation. Article 43 This Law shall enter into force on July 1,1985. |
The Standing Committee of the National People’s Congress
1985-03-21