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Contract Law of the People's Republic of China

Updated: 2015-07-28

Chapter 2 Conclusion of Contracts

Article 9 In concluding a contract, the parties shall have appropriate civil capacity of right and civil capacity of conduct.

The parties may conclude a contract through an agent in accordance with the law.

Article 10 The parties may conclude a contract in written, oral or other forms.

Where the laws or administrative regulations require a contract to be concluded in written form, the contract shall be in written form. If the parties agree to do so, the contract shall be concluded in written form.

Article 11 The written forms mean the forms which can show the described contents visibly, such as a written contractual agreement, letters, and data-telex (including telegram, telex, fax, EDI and e-mails).

Article 12 The contents of a contract shall be agreed upon by the parties, and shall contain the following clauses in general:

    (1) title or name and domicile of the parties;

    (2) contract object;

    (3) quantity;

    (4) quality;

    (5) price or remuneration;

    (6) time limit, place and method of performance;

    (7) liability for breach of contract; and

    (8) methods to settle disputes.

The parties may conclude a contract by reference to the model text of each kind of contract.

Article 13 The parties shall conclude a contract in the form of an offer and acceptance.

Article 14 An offer is a proposal hoping to enter into a contract with other parties. The proposal shall comply with the following stipulations:

    (1) Its contents shall be detailed and definite;

    (2) It indicates the proposal of the offeror to be bound in case of acceptance.

Article 15 An invitation for offer is a proposal for requesting other parties to make offers to the principal. Price forms mailed, public notices of auction and tender, prospectuses and commercial advertisements, etc. Are invitations for offer.

Where the contents of a commercial advertisement comply with the terms of the offer, it may be regarded as an offer.

Article 16 An offer becomes effective when it reaches the offeree.

If a contract is concluded by means of data-telex, and recipient appoints a specific system to receive the data-telex, the time when the data-telex enters the system shall be the time of arrival; if no specific system is appointed, the time when the data-telex first enters any of the recipient's systems shall be regarded as the time of arrival.

Article 17 An offer may be withdrawn, if the withdrawal notice reaches the offeree before or at the same time when the offer arrives.

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

Article 19 An offer may not be revoked, if

    (1) the offeror indicates a fixed time for acceptance or otherwise explicitly states that the offer is irrevocable; or

    (2) the offeree has reasons to rely on the offer as being irrevocable and has made preparation for performing the contract.

Article 20 An offer shall be null and void under any of the following circumstances:

    (1) The notice of rejection reaches the offeror;

    (2) The offeror revokes its offer in accordance with the law;

    (3) The offeree fails to make an acceptance at the time when the time limit for acceptance expires;

    (4) The offeree substantially alters the contents of the offer.

Article 21 An acceptance is a statement made by the offeree indicating assent to an offer.

Article 22 Except that it is based on transaction practices or that the offer indicates an acceptance may be made by performing an act, the acceptance shall be made by means of notice.

Article 23 An acceptance shall reach the offeror within the time limit fixed in the offer.

Where no time is fixed in the offer, the acceptance shall arrive in accordance with the following provisions:

    (1) If the offer is made in dialogues, the acceptance shall be made immediately except as otherwise agreed upon by the parties;

    (2) If the offer is made in forms other than a dialogue, the acceptance shall arrive within a reasonable period of time.

Article 24 Where the offer is made in a letter or a telegram, the time limit for acceptance commences from the date shown in the letter or from the moment the telegram is handed in for dispatch. If no such date is shown in the letter, it commences from the date shown on the envelope. Where an offer is made by means of instantaneous communication, such as telephone or facsimile, the time limit for acceptance commences from the moment that the offer reaches the offeree.

Article 25 A contract is established when the acceptance becomes effective.

Article 26 An acceptance becomes effective when its notice reaches the offeror. If an acceptance needn't be notified, it becomes effective when an act of acceptance is performed in accordance with transaction practices or as required in the offer.

Where a contract is concluded in the form of data-telex, the time when an acceptance arrives shall apply the provisions of Paragraph 2, Article 16 of this law.

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

Article 28 Where an offeree makes an acceptance beyond the time limit for acceptance, the acceptance shall be a new offer except that the offeror informs the offeree of the effectiveness of the said acceptance promptly.

Article 29 If the offeree dispatches the acceptance within the time limit for acceptance which can reach the offeror in due time under normal circumstances, but the acceptance reaches the offeror beyond the time limit because of other reasons, the acceptance shall be effective, except that, the offeror informs the offeree promptly that it does not accept the acceptance because it exceeds the time limit for acceptance.

Article 30 The contents of an acceptance shall comply with those of the offer. If the offeree substantially modifies the contents of the offer, it shall constitute a new offer. The modification relating to the contract object, quality, quantity, price or remuneration, time or place or method of performance, liabilities for breach of contract and the settlement of disputes, etc., shall constitute the substantial modification of an offer.

Article 31 If the acceptance does not substantially modifies the contents of the offer, it shall be effective, and the contents of the contract shall be subject to those of the acceptance, except as rejected promptly by the offeror or indicted in the offer that an acceptance may not modify the offer at all.

Article 32 Where the parties conclude a contract in written form, the contract is established when both parties sign or affix a seal on it.

Article 33 Where the parties conclude the contract in the form of a letter or data-telex, etc., one party may request to sign a letter of confirmation before the conclusion of the contract. The contract shall be established at the time when the letter of confirmation is signed.

Article 34 The place of effectiveness of an acceptance shall be the place of the establishment of the contract.

If the contract is concluded in the form of data-telex, the main business place of the recipient shall be the place of establishment. If no main business place, its habitual residence shall be considered to be the place of establishment. Where the parties agree otherwise, the place of establishment shall be subject to that agreement.

Article 35 Where the parties conclude a contract in written form, the place where both parties sign or affix a seal shall be the place where the contract is established.

Article 36 A contract, which shall be concluded in written form as provided for by the laws and administrative regulations or as agreed upon by the parties, shall be established, as the parties do not use the written form, but one party has performed the principal obligation and the other party has received it.

Article 37 A contract, which is concluded in written form, shall be established, if one party has performed its principal obligation and the other party has received it before signiture or affixing with a seal.

Article 38 In case the State issues a mandatory plan or a State purchasing order task based on necessity, the relevant legal persons or other organizations shall conclude contracts between them in accordance with the rights and obligations as stipulated by the relevant laws and administrative regulations.

Article 39 Where standard terms are adopted in concluding a contract, the party which supplies the standard terms shall define the rights and obligations between the parties abiding by the principle of faimess, request the other party to note the exclusion or restriction of its liabilities in reasonable ways, and explain the standard terms according to the requirement of the other party.

Standard terms are clauses which are prepared in advance for general and repeated use by one party and which are not negotiated with the other party in concluding a contract.

Article 40 When standard terms are under the circumstances stipulated in Article 52 and Article 53 of this Law, or the party which supplies the standard terms exempts itself from its liabilities, weights the liabilities of the other party, and excludes the rights of the other party, the terms shall be null and void.

Article 41 If a dispute over the understanding of the standard terms occurs, it shall be interpreted according to general understanding. Where there are two or more kinds of interpretation, an interpretation unfavourable to the party supplying the standard terms shall be preferred. Where the standard terms are inconsistent with non-standard terms, the latter shall be adopted.

Article 42 The party shall be liable for damages if it is under one of the following circumstances in concluding a contract and thus causing losses to the other party:

    (1) disguising and pretending to conclude a contract, and negotiating in bad faith;

    (2) concealing deliberately the important facts relating to the conclusion of the contract or providing deliberately false information;

    (3) performing other acts which violate the principle of good faith.

Article 43 A business secret the parties learn in concluding a contract shall not be disclosed or unfairly used, not matter the contract is established or not. The party who causes the other party to suffer from losses due to disclosing or unfairly using the business secret shall be liable for damages.

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