(Adopted at the 2nd Plenary Session of the 9th People's Congress on March 15,1999)

TABLE OF CONTENTS
Chapter I Basic Principles
Chapter II Conclusion
Chapter III Validity
Chapter IV Performance
Chapter V Modification & Transfer
Chapter VI Termination of Rights & Duties
Chapter VII Liability for Breach of Contracts
Chapter VIII Other Provisions

Specific Provisions

Chapter IX Sales Contracts
Chapter X Contracts for the Supply & Use of Electricity, Water, Gas & Heat
Chapter XI Contracts for Gifts
Chapter XII Contracts for Loan
Chapter XIII Contracts for Lease
Chapter XIV Contracts for Financial Leasing
Chapter XV Contracts for Work
Chapter XVI Contracts for Construction Projects
Chapter XVII Contracts for Carriage
Chapter XVIII Contracts for Technology
Chapter XIX Contracts for Deposit
Chapter XX Contracts for Warehouse
Chapter XXI Contracts for Mandate
Chapter XXII Contracts for Commission
Chapter XXIII Contracts for Brokerage
Chapter XXIV Supplementary Provisions


GENERAL PROVISIONS


CHAPTERI
BASIC PRINCIPLES

Article 1
This Law is enacted with a view to protecting the lawful rights and interests of the contractual
parties, maintaining social economic order and promoting the socialist construction of modernization.

Article 2
A contract in this law is an agreement by which civil rights and duties relationship is established, modified or terminated between natural persons, legal persons or other associations that are subjects of equal status.

As to agreements concerning personal identity relationship such as marriage, adoption, guardianship etc., provisions in other laws shall apply.

Article 3
The contractual parties are of equal status. Neither party may impose its will on the other party.

Article 4
The contractual parties are free to enter into a contract according to law. No organization or individual may illegally interfere this right.

Article 5
The contractual parties shall ascertain their rights and duties in accordance with the principle of fairness.

Article 6
The contractual parties shall exercise their rights and perform their duties in accordance with the principle of good faith.

Article 7
The parties shall in conclusion and performance of a contract, abide by law and administrative regulations and respect social morality. They shall not disrupt the social economic order or harm the public interest.

Article 8
A contract legally formed is binding upon the parties. Each party shall perform its duties according to the terms of the contract. Neither party may unilaterally modify or discharge the contract.


CHAPTER II
CONCLUSION

Article 9
The parties concluding a contract shall have correspondent civil right capacity and civil conduct capacity.

Each party may authorize an agent to conclude a contract.

Article 10
A contract may be concluded in written, oral or other forms.

Where a contract is required to adopt written form by law or administrative regulations, the written form shall apply. Where the parties have agreed that the contract shall be in written form, that form shall apply.

Article 11
The written form refers to written contracts, letters, data message (including telegram, telex, telecopy, electronic data interchange, and electronic mail)etc. whose contents can be manifested in visible form.

Article 12
The contents of the contract shall be agreed upon between the parties. A contract shall contain clauses on the following terms:

(1) name and address of the parties
(2) the object of the contract
(3) quantity
(4) quality
(5) price or remuneration
(6) time limit, place and manner of performance
(7) liabilities for breach of contract
(8) method of disputes settlement

The parties may enter into a contract with reference to any type of model contracts.

Article 13
The parties shall conclude a contract by offer and acceptance.

Article 14
An offer is a manifestation of willingness to enter into a contract with another person. The manifestation of willingness shall be subject to the following conditions:

(1) Its contents are ascertained;
(2) In case of acceptance by the offeree, it will have binding force on the offeror.

Article 15
An invitation for offer is a manifestation of willingness to be sent an offer by another person. The post of price list, an announcement for auction or bid, a prospectus and a commercial advertisement shall be deemed as an invitation for offer.

Article 16
An offer becomes effective at the time it reaches the offeree.

Where the contract is concluded in data message, the time of arrival for a data message is the time when the data message enters the designated system in case the addressee has designated an system for the purpose of receiving data messages; where the addressee has not designated an system, the time for arrival is the time when the data message enters any of the systems of the addressee for the first time.

Article 17
An offer may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.

Article 18
An offer may be revoked if the revocation reaches the offeree before the latter has dispatched an acceptance.

Article 19
An offer cannot be revoked in case of the following conditions:

(1) if it indicates, whether by stating a fixed time limit for acceptance or otherwise, that it is irrevocable
(2) if it is reasonable for the offeree to rely on the offer as being irrevocable and the offeree has made some preparations for the performance of the contract

Article 20
An offer is avoid in case of the following conditions:

(1) a rejection reaches the offeror
(2) the offeror rescinds its offer in accordance with law
(3) at the expiration of the time limit, the offeree does not make any acceptance
(4) the offeree makes substantial modification to the content of the offer

Article 21
An acceptance is a manifestation of assent to an offer made by the offeree.

Article 22
Except for subject to trade usage or the offer indicates that the acceptance may be made by performing an act, an acceptance shall be made through giving notice.

Article 23
An acceptance must reach the offeror within the time limit fixed by the offer or, if no time limit is fixed, it shall reach the offeror according to the following conditions:

(1) An oral offer must be accepted immediately unless that the parties have agreed otherwise
(2) In case of a non-oral form offer, the acceptance shall reach the offeror within a reasonable time limit

Article 24
A time limit for acceptance fixed in a letter or telegram begins to run from the date shown in the letter or the date on which the telegram is handed in for dispatch. If no such date is shown in the letter, from the date indicated by the postmark on its envelope. Where an offer is made through telephone, telefax or other modes of fast communication, the time limit for acceptance begins to run from the date on which the offer reaches the offeree.

Article 25
A contract is formed when the acceptance takes effect.

Article 26
The acceptance becomes effective when it reaches the offeror. If a notice is not required for an acceptance, the acceptance becomes effective when an act indicating the acceptance is performed according to trade usage or the requirement of the offer.

In case the contract Suded in data message, Paragraph 2 of Article 16 of this Law shall apply to the calculation of the time for the arrival of an acceptance.

Article 27
An acceptance may be withdrawn. The notice of withdrawal shall reach the offeror before or at the same time when the notice of acceptance reaches the offeror.

Article 28
A late acceptance sent by the offeree shall be taken as a new offer unless without undue delay the offeror informs the offeree that the late acceptance is effective.

Article 29
Where an acceptance sent by the offeree within time limit for acceptance and should have reached the offeror had it been in normal circumstances, reaches the offeror exceeding the time limit due to some other reasons, it shall be effective unless without undue delay, the offeror informs the offeree that it can not assent to the acceptance as the time limit acceptance has lapsed.

Article 30
The contents of the acceptance shall be in accordance with those of the offer. A substantial modification to the contents of the offer made by the offeree constitutes a new offer. Modifications on contract object, quantity, price or remuneration, time limit, place and method of performance ,liabilities for breach of contract and methods of disputes settlement shall be deemed as substantial modifications to the contents of the offer.

Article 31
Unless the offeror, without undue delay, objects to the discrepancy or the offer has indicated that no modification to the contents of the offer is allowed in an acceptance, an acceptance which does not substantially alter the contents of the offer is effective. And in this case, the contents of the acceptance shall be taken as the contents of the contract.

Article 32
A contract concluded by the parties in written contract shall be formed as soon as it is signed or sealed by the parties.

Article 33
Where the parties conclude a contract in letters or data message, they may request a confirmation letter to be signed before the contract is formed. In this case the contract shall be formed at the time the confirmation letter is signed.

Article 34
The place where the acceptance takes effect shall be deemed as the place where the contract is formed.

Where a contract is concluded in data message, unless otherwise agreed upon by the parties, the principle place of business of the addressee is the place where the contract is formed. If the addressee does not have a place of business, its habitual residence shall be the place where the contract is formed.

Article 35
Where the contract is concluded through written contract, the place where the parties sign or seal the contract shall be regarded as the place where the contract is established.

Article 36
Where the parties fail to conclude a contract in written form as required by law, administrative regulations or any agreement between the parties, the contract shall be formed so long as one party has performed its major duty and its performance has been accepted by the other party.

Article 37
Where a contract concluded in written form has yet to be signed or sealed, it shall be deemed as formed so long as one party has performed his major duties and his performance has been accepted by the other party.

Article 38
In case the State issues a mandatory assignment or an assignment for government procurement according to its needs, related legal person and other associations shall conclude contracts between them in accordance with rights and duties as stipulated by laws and administrative regulations.

Article 39
Where a contract is to be concluded by standard clauses, the party providing the standard clauses shall ascertain the rights and duties of the parties pursuant to the principle of fairness .It shall also bring the attention of the other party to the clauses, which exempt or restrict its obligations. If required ,an explanation on the said clauses shall be duly made.

Standard clauses are clauses which are prepared in advance for repeated use by one party and which are used in the conclusion of a contract without negotiation with the other party.

Article 40
Where the Standard clauses satisfy any conditions prescribed in Article 52 or 53 of this Law, or the party who provides them exempts his major duties, increases the responsibilities of the other party or excludes the latter's main rights, the said standard clauses are void.

Article 41
Where the Standard clauses satisfy any conditions prescribed in accordance with usual understanding. In case there are above two interpretations to the Standard clauses, they shall be interpreted unfavorable to the party who provides them. In case of a discrepancy appears between a standard clause and a non-standard clause, the latter prevails.

Article 42
A party with the follows conducts in concluding a contract shall be liable for the losses caused to the other party:

(1) under the guise of concluding a contract, to negotiates in bad faith
(2) active concealment of important fact related to concluding the contract or supply false fact
(3) other conducts in violation of the principle of good faith

Article 43
Where business secrets obtained by one party in the course of concluding a contract, whether the contract is formed or not, the other party shall not disclose that information or use it improperly. And he shall be liable for compensation where the disclosure or improper use of business secrets causes losses to the former party.


CHAPTER III
VALIDITY

Article 44
A contract shall take effect at the moment it is formed according to law.

Where laws or regulations require a procedure of approval, registration etc., those provisions shall be followed.

Article 45
The validity of a contract may be subject to conditions by agreement between the parties. A contract subject to conditions for validity becomes effective when the conditions are satisfied. A contract subject to conditions for avoidance becomes void in case those conditions are satisfied.

The conditions shall be deemed as having been satisfied when one party improperly prevent them from being satisfied; and they shall be deemed as unsatisfied when one party improperly impel them to be satisfied.

Article 46
The validity of contract may be subject to time limit agreed upon between the parties. A contract subject to time limit for validity becomes effective when the time limit is mature. A contract subject to time limit for avoidance becomes void when the time limit is mature.

Article 47
A contract concluded by a person with limited civil conduct capacity shall takes effect after it is ratified by his legal representative. A gratuitous contract or a contract concluded in conformity with his age, intelligence or mental health condition however does not need to be ratified by the legal representative.

The counterpart may urge the legal representative to conduct ratification within one month. A silence of the legal representative shall be deemed as a refusal. The counterpart in good faith has the right to revoke the contract before it is ratified .The revocation shall be made through a notification.

Article 48
Where a contract is concluded in the name of the principle by a doer without agent rights or exceeding his authority or after the termination of the agency, the contract shall be invalid to the principle in the absence of his ratification and the doer shall be liable.

The counterpart may urge the principle to conduct ratification within one month. A silence of the principle shall be deemed as a refusal. The counterpart in good faith has the right to revoke the contract before it is ratified. The revocation shall be made through a notification.

Article 49
Where a contract is concluded in the name of the principle by a doer without agent rights or exceeding his authority or after the termination of the agency, this agency is effective so long as it is reasonable for the counterpart to believe that the doer has the agent right.

Article 50
If a contract is concluded by a legal representative or director of a legal person or other associations exceeding his power, the presentation shall be deemed as valid unless the counterpart knows or should have known that the legal representative or director has exceeded his power.

Article 51
A contract concluded by a person who is not entitled to dispose of the property of another person is effective after it is ratified by the entitled person or the person lack of right obtains the right of disposition after the conclusion of the contract.

Article 52
A contract which is in any of the following circumstances is void:

(1) one which is concluded through fraudulence or duress of one party to harm the interests of the State
(2) one which involves maliciously conspiring to injure the interests of the State, of a collective, or of a third party
(3) one which uses a lawful form to conceal an illegal purpose
(4) one which impairs the social public interests
(5) one which violates the compulsory provisions of laws or administrative regulations

Article 53
The following exemption clauses in a contract is void:

(1) one in connection with physical injury caused to the other party
(2) one in connection with property losses caused to the other party due to a deliberation or gross negligence

Article 54
The party may request the People's Court or an arbitrary organ to modify or rescind a contract as follows:

(1) one which is concluded under gross misconception
(2) one which is obviously unfair when the contract is being concluded

Where a contract is concluded under circumstances where one party, by using deceit or duress, or by taking advantage of the other party's distress, causes the other party to act contrary to his real intention, the injured party has the right to request the People's Court or an arbitrary organ to modify or rescind the contract.

If the party request modification of the contract, the People's Court or the arbitrary organ shall not revoke it.

Article 55
The right for withdraw shall extinguish in case of the following conditions:

(1) where a party who is entitled to revoke the contract fails to exercise his right of revocation within one year from the date on which he knows or should have known the reason for the revocation
(2) where a party who is entitled to revoke the contract expressly or through an act indicate that he gives up the right of revocation

Article 56
An avoided contract or a rescinded contract has no legal restraint from the time when it is concluded. Where the invalidity of a part of a contract does not affect the validity of the other parts. the other parts remain valid

Article 57
The avoidance, revocation and termination of a contact shall not affect the validity of the independent clauses in the contract in connection with dispute settlement.

Article 58
After a contract is avoided or is rescinded, the property acquired under the contract shall be returned. Property that can not be returned or is not necessary to be retuned shall be reimbursed in money. The party who was at fault must compensate the other party for the loss caused thereby, where both parties were at fault, each must bear an appropriate amount of liability.

Article 59
Where the parties maliciously conspire to injure the interests of the State, of a collective, or of a third party, the property obtained thereby shall be recovered by the State or returned to the collective or the third party the property obtained thereby shall be recovered by the State or returned to the collective or the third party.


CHAPTER IV
PERFORMANCE

Article 60
The parties shall fully perform the obligation according to the contract.

The parties shall perform such duties as notification, assistance, confidentiality etc., observing the principle of good faith and in accordance with nature and purpose of the contract and trade usage.

Article 61
After a contract takes effect, the parties may negotiate through supplementary agreement as to such terms as quality, price or remuneration, place for performance etc. which are not agreed or of which the agreement is ambiguous. In case that no supplementary agreement can be reached, it shall be ascertained according to relevant contract provisions or trade usage.

Article 62
If the parties fail to agree on relevant contract items or the agreement is ambiguous and it cannot be determined in accordance with Article 61 of this Law, rules as followed shall apply:

(1) If there is no explicit quality requirement, State standards and branch standards shall apply; in absence of State standards and branch standards, normal standards or special standards appropriate to the purpose of the contract shall apply
(2) If there is no explicit price or remuneration provision, the market price of the place for performance at the time of contract formation shall apply. if the government, according to law, is to fix the price, or guide to fix the price, this price shall apply
(3) If the place for performance is not explicit, payment shall be done at the receiver's place; delivery of real estate shall be made at the location of the real estate; other object shall be performed at the place of performing party
(4) If the period for performance is not explicit, the debtor may perform at any time and the creditor may require performance at any time, but necessary time for preparation shall be allowed for the other party
(5) If the way for performance is not explicit, the way favoring the realization of contract purpose shall apply;
(6) If there is no explicit provision as to the bearing of the cost for performance, cost for performance shall be borne by the debtor

Article 63
Where the government price or the guidance price of the government applies, is case that the government adjusts the price within the period for delivery, the price at the time of delivery shall prevail. In case of a delayed delivery, the original price shall apply when the price rises, while the new price shall apply when the price drops. In case of a delay acceptance of subject matter or delayed payment, the new price shall apply when the price rises, while the original price shall apply when the price drops.

Article 64
The parties may agree that the debtor performs the obligation to a third party. The additional cost caused by the performance to the third party shall be bone by the creditor.

The third party may request performance from the debtor The debtor shall be responsible to the creditor for the breach of contract if no performance has been made to the third party or the performance fails to conform to the agreement.

Article 65
The parties may agree that a third party may perform the obligation to the creditor The debtor shall be responsible to the creditor for the breach of contract, if no performance has been made by the third party or the performance fails to conform to the agreement.

Article 66
The parties shall perform simultaneously if they owe obligation to each other and no time sequence for performance is required One party is entitled to withhold performance before the other party tenders its performance or refuse relevant request for performance if the other party's performance fails to conform to the agreement.

Article 67
When the parties owe obligation to each other and are required to perform consecutively, the party to perform later is entitled to withhold its performance before the first party has performed and is entitled to withhold its relevant performance if the performance of the first party fails to conform to the agreement.

Article 68
The party who shall perform first may stop performance when there is evidence proving that the other party is under the following circumstances:

(1) serious deterioration of management
(2) transfer of property and capital to evade obligation
(3) loss of commercial reputation
(4) other circumstance where loss or possible loss of capacity for performance occurs

The parties who have no evidence to stop performance shall take liabilities for breach of contract.

Article 69
The party who stops performance according to Article 68 of this Law shall notify the other party in time and resume performance when the other party provides appropriate guarantee. After the stop of performance. if the other party neither recovers capacity for performance nor provides appropriate guarantee within a reasonable time. the party who stops performance may discharge the contract.

Article 70
The debtor may stop performance or deposit the subject matter when the creditor separates. combines or changes domicile without notice to the debtor and thereby causes difficulty in performance of obligation.

Article 71
The creditor may refuse the debtor's performance of obligation before due time, except that the performance before due time does no harm to the creditor's interests.

Additional cost incurred to the creditor by the debtor's performance before due time shall be borne by the debtor.

Article 72
The creditor may refuse the debtor's performance of obligation in part, except that the performance in part does no harm to the creditor's interests.

Additional cost incurred to the creditor by the debtor's performance in part shall be borne by the debtor.

Article 73
If the debtor's reluctance in exercising his obligatory right causes harm to the creditor, the creditor may apply to the people's court for the exercise of the debtor's court for the exercise of the debtor's obligatory right in his own name, except for the exclusive obligatory right for the debtor himself.

The right of subrogation shall be exercised within the scope of creditor?¡¥s obligatory right. Necessary cost for exercising right of subrogation by the creditor shall be borne by the debtor.

Article 74
Is the debtor's waiver of matured obligatory right or free transfer of property causes harm to the creditor, the creditor may apply to the people's court for the rescission of the debtor's act. If the debtor's transfer of property in an obviously unreasonably low price causes harm to the creditor of which the transferee has the knowledge, the creditor may also apply to the people's court for rescission of debtor's act.

The right of rescission shall be exercised within the scope of the creditor's obligatory right. Necessary cost for exercising the right of rescission by the creditor shall be borne by the debtor.

Article 75
The right of rescission shall be exercised within one year after the creditor knows or shall know the cause for rescission. The right of rescission distinguishes if the creditor fails to exercise the right within five years after the occurrence of the debtor's act.

Article 76
After a contract takes effect, the parties are not excused to non-performance due to the modification of names or change of legal representatives, persons in charge or undertakers.


CHAPTER V
MODIFICATION & TRANSFER

Article 77
The parties may modify the contract upon agreement. If the procedure of approval or registration is required for the modification of contract by the laws or administrative regulations, provisions of the laws or administrative regulations shall apply.

Article 78
If the modification made by the parties is ambiguous, it will be deemed as no modification is made.

Article 79
The creditor may transfer whole or partial contractual rights to a third party, except for the following cases:

(1) transfer is not permitted by the nature of contract
(2) transfer is not permitted according to the parties' agreement
(3) transfer is not permitted according to legal provisions.

Article 80
The creditor shall notify the debtor in case of transfer of rights, otherwise, the transfer will not bind on the debtor.

Notice on the transfer of rights by the creditor shall not be rescinded, unless the transferee's consent is acquired.

Article 81
If the creditor transfers the rights, the transferee acquires rights accessory to the creditor's right, unless the accessory rights are exclusive for the creditor himself.

Article 82
Upon receiving the notice of transfer of creditor's right, the debtor's defense against the transferor may be claimed against the transferee.

Article 83
Upon receiving the notice of transfer of creditor's right, the debtor may, according to Article 99 of this Law, claim for off-set if he has due obligatory right against the transferor.

Article 84
The creditor's consent is required if the debtor transfers the contractual duty in whole or in part to a third party.

Article 85
If the debtor transfers the duty, the new debtor may claim the defense of the original debtor against the creditor.

Article 86
If the debtor transfers the duty, the new debtor shall bear the accessory debt relevant to the main debt unless the accessory debt is exclusive for the original debtor himself.

Article 87
If the procedure of approval or registration is required for the transfer of the obligatory right by the creditor or the transfer of the debt by the debtor according to laws or administrative regulations, provisions of laws and administrative regulations shall apply.

Article 88
Upon the other party's consent, one party may transfer both contractual right and duty in general to a third party.

Article 89
Where the rights and duties are transferred in general, provisions of Article 79,81to83,85to 87 shall apply.

Article 90
If the party combines after the formation of a contract, the legal person or other organization after combination shall exercise contractual right and fulfill contractual duty. If the party separates after the formation of contract, except for otherwise agreed by the creditor and the debtor, the legal person or other organization after separation shall enjoy joint and several creditors' rights and bear joint and several debts.