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1、AMERICAN CERTIFICATION INSTITUTE,2004 1LeRoy H.GrawEdD,DBA,C.P.M.,CPCM,CPP,CPPM,CISCMChinas Contract LawAMERICAN CERTIFICATION INSTITUTE,2004 2Knowledge/Skill/AbilityBe able to write a contract prepared under Chinas Contract Law when required.AMERICAN CERTIFICATION INSTITUTE,2004 3IntroductionContra
2、ct Law of the Peoples Republic of China(PRC)was promulgated on National Day,October 1st,1999 It replaced a host of existing laws,including:1.Economic Contract Law of the PRC(ECL)2.Law of the PRC on Economic Contracts involving Foreign Interests(FECL)3.Law of the PRC on Technology ContractsContains 2
3、3 Chapter and 428 ArticlesAMERICAN CERTIFICATION INSTITUTE,2004 4BackgroundThe new PRC Contract Law mirrors provisions of the U.N.Convention on the International Sale of Goods(CISG),some ideas of the Uniform Commercial Code,and some modern trends in Western law.It also removes punitive provisions of
4、 prior law,provides for remedies for breach,contemplates specific performance,and frowns on penalty clauses not related to actual losses.AMERICAN CERTIFICATION INSTITUTE,2004 5Definition of a ContractArticle 2 of the new Contract Law provides that a contract in this Law refers to an agreement establ
5、ishing,modifying and terminating the civil rights and obligations between subjects of equal footing.A contract is an agreement between the subjects,no matter they are natural persons,legal persons or other organizations.A contract is an agreement of civil relationship being concluded and signed by a
6、nd between specific civil subjects,that is,by and between two or more natural persons,by and between natural person(s)and legal person(s)or other organization(s),by and between legal persons,by and between legal person(s)and other organization(s).AMERICAN CERTIFICATION INSTITUTE,2004 6AMERICAN CERTI
7、FICATION INSTITUTE,2004 7Scope of the New LawExcluded:1.Contracts involving personal status relationship,such as on matrimony,adoption,guardianship,etc.,under the provisions of other laws.2.Contracts for guarantee or for insurance.3.Other contracts not covered in the“Specific Provisions”.4.All contr
8、acts must follow the“General Provisions”of the new contract law,even though there are separate laws covering these contract types.AMERICAN CERTIFICATION INSTITUTE,2004 8Scope of the New LawIncluded:Other than those excluded,domestic contracts and foreign contracts which involve foreign interests.15
9、specifically-listed kinds of contracts found in the Specific Provisions.These include:contracts for salescontracts for supply and use of electricity,water,gas or heatingcontracts for donationcontracts for loanscontracts for leasecontracts for financial leasecontracts for workcontracts for constructi
10、on projectscontracts for transportationcontracts for technologycontracts for storagecontracts for warehousingcontracts for commissioncontracts for brokeragecontracts for intermediation.AMERICAN CERTIFICATION INSTITUTE,2004 9What is Included?Article 12 The content of a contract is determined by the p
11、arties and generally includes the following clauses:(1)designations or names and addresses of the parties;(2)the targeted matter;(3)quantity(4)quality;(5)price or remuneration;(6)time,place and mode of fulfillment;(7)liability for breach of contract;and(8)dispute settlement.AMERICAN CERTIFICATION IN
12、STITUTE,2004 10Specific PointsOral contracts allowed.Binding contracts may be written or oral,unless limited by agreement or law.Similar to the CISG.Unlike the UCC,which limits oral contracts to$5,000.AMERICAN CERTIFICATION INSTITUTE,2004 11Specific PointsRecognition of modern transaction modes.Elec
13、tronically transmitted communications(telegram,telex,facsimile,electronic data interchange and e-mail)constitute writings for purposes of contract law.AMERICAN CERTIFICATION INSTITUTE,2004 12Specific PointsGood faith in negotiating and performing.A party who,in the negotiating process,deliberately c
14、onceals important facts or pretends to conclude a contract may be liable for causing loss to the other party.Good faith is required in the performance of contractual rights and duties.AMERICAN CERTIFICATION INSTITUTE,2004 13Specific PointsGrounds for revocation/modification.Where serious misundersta
15、nding lies at the base of the contract,or where the contract is manifestly unfair at the time it was made,a party may seek modification or revocation.AMERICAN CERTIFICATION INSTITUTE,2004 14Specific PointsBusiness secrets protected.A party who learns a business secret of the other in the contracting
16、 process risks damages for disclosing or unfairly using the information.AMERICAN CERTIFICATION INSTITUTE,2004 15Specific PointsAdhesion and Standard Form Contracts.Akin to consumer protection measures in U.S.law,the new law invalidates clauses that purport to immunize a party from,inter alia,causing
17、 personal injury or property damage to the other.AMERICAN CERTIFICATION INSTITUTE,2004 16Specific PointsRules of Interpretation.In case of disputes,standardized contracts will be interpreted according to general understanding,and ambiguities shall be resolved in favor of the non-drafting party.Where
18、 international contracts specify,for example,that both the Chinese and English versions will have equal validity,disparate meanings shall be interpreted according to the purpose of the contract.AMERICAN CERTIFICATION INSTITUTE,2004 17Specific PointsOffer and Acceptance.In contrast to prior law,fairl
19、y detailed rules now govern offer and acceptance,formation and revocation of offers.For example,an acceptance is generally effective when notice reaches the offeror.AMERICAN CERTIFICATION INSTITUTE,2004 18Specific PointsAcceptance that varies the terms of the offer.An offeree who substantially alter
20、s the contents of the offer will not be permitted to bind the offeree.AMERICAN CERTIFICATION INSTITUTE,2004 19Additional ProvisionsThe new law:encourages contracting parties to have recourse to informal dispute resolution.favors arbitration but also affirms access to courts.AMERICAN CERTIFICATION IN
21、STITUTE,2004 20Summary/ConclusionsThe new Contract Law of China is appropriate for the“New World Economy”and Chinas entrance into the WTO.The new Contract Law is generally consistent with the UCC and CISG and may even be preferred by foreign firms doing business in China.The new Contract Law is relatively straightforward and uncomplicated.It is a definite improvement over the old patchwork of 3 separate laws which governed contracts previously.AMERICAN CERTIFICATION INSTITUTE,2004 21
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