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Barrister & Solicitor, Nova Scotia
Of counsel to Kunlun Law Firm, Beijing, China
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Interpretations of the Supreme People's Court on Certain Issues
concerning the Application of Contract Law of the People's Republic of China
(Part Two)
Fa Shi [2009] No. 5
April 24, 2009
(Adopted at the 1462nd meeting of
the Judicial Committee of the Supreme People's Court on February 9, 2009)
Announcement of the Supreme
People's Court of the People's Republic of China
Interpretations of the Supreme
People's Court on Certain Issues concerning the Application of Contract Law of the
People's Republic of China (Part Two), which has been adopted at the 1462nd
meeting of the Judicial Committee of the Supreme People's Court on February 9,
2009, is now promulgated and shall be effective as of May 13, 2009.
With a
view to facilitating the proper adjudication of contractual disputes, in
accordance with the Contract Law of the People's Republic of China (hereinafter
referred to as the "Contract Law"), we hereby issue the following
interpretations on certain issues concerning the application of the Contract
Law by People's Courts:
Chapter I Conclusion
of a Contract
Article 1
Where the
parties have dispute over whether the contract has enter into effect or not, in
case the titles and names of the parties, subject matter and the number thereof
can be determined, the people's court shall generally rule that the contract
has entered into effect, unless it is otherwise provided for by law or agreed upon
by the parties.
In case the contract lack for contents other than that as
stipulated in the preceding Paragraph, and the parties thereto can not reach an
agreement, the people's court shall determine in accordance with relevant
provisions of Contract Law such as Article 61, 62, and 125, etc..
Article 2
Where the
parties have not concluded a contract in the form of writing or in the form of
oral agreement, but have the intent to do so as presumed from their civil acts,
the people's court may rule that a contract has been concluded in "other
forms" as stipulated in Paragraph 1, Article 10 of the Contract Law,
unless it is otherwise provided for by law.
Article 3
In case
the reward offeror make a public announcement to pay the person who finishes a
certain activity and the said person request such payment upon the completion
of such activity, the people's court shall uphold such request, unless the
reward has one of the circumstances as prescribed in Article 52 of the Contract
Law.
Article 4
In case
the contract is concluded in a written form, and the place of conclusion as
specified in the contract does not comply with the actual place of signature or
seal, the people's court shall rule that the specified place of conclusion is
the place of conclusion of the contract; in case the contract does not specify
the place of conclusion, and the places of signature or seal are not at the
same place, the people's court shall rule that the place of the last signature
or seal is the place of concluding the contract.
Article 5
Where the
parties conclude a contract in the form of a contract statement, they shall
sign or seal such statement. In case the parties press their fingers on the
statement, the people's court shall rule that it has the same legal force as
signature or seal.
Article 6
The party
providing the standard terms uses special markings, in respect of clauses
excluding or restricting its liabilities, such as words, punctuation, typeface,
etc., which are adequate to arouse the other party's attentions, and explain
the said standard terms upon the other party's request, the people's court shall
rule that it complies with "reasonable manner" as specified in
Article 39 of the Contract Law.
The party
providing the standard terms shall be responsible for proving that it has
reasonably performed its obligation of informing and explaining such clauses.
Article 7
In case
the following circumstances do not violate the mandatory provisions of laws and
administrative regulations, the people's court may rule them as "trading
customs" as mentioned in the Contract Law:
(1) Practices
which are commonly adopted at the local place of the trade, a certain field or
a certain industry and is known or should be known by the trading parties at
the time of concluding the contract;
(2) Usual
Practices which are frequently used by both parties.
With
respect of trading customs, the party claiming such customs shall bear the
burden of proof.
Article 8
After a
contract which shall come into effect upon approval or registration as
prescribed by laws and administrative regulations has been concluded, in case
the party responsible for applying for such approval or registration fails to
do so according to the provisions of laws and the contract, it is "other
conducts which violate the principle of good faith" as prescribed in Item
3 of Article 42 of Contract Law. The people's court may, according to the
specific conditions of the case and upon the request of the persons concerned,
rule that the persons concerned go through relevant formalities by themselves.
The other party shall be responsible for compensating the expenses arising
under such circumstance and the actual losses of the persons concerned.
Chapter II Validity
of the Contract
Article 9
Where the
party providing the standard terms violates the provisions of Paragraph 1,
Article 39 concerning the obligation of informing and explaining, which causes
the other party to fail to notice the term excluding or restricting the said
party's liabilities and apply for revocation of such standard terms, the
people's court shall uphold such application.
Article
10
Where the
party providing the standard terms violates the provisions of Paragraph 1,
Article 39 of the Contract Law, and has one of the circumstances as stipulated
in Article 40 of the Contract Law, the people's court shall rule that such
standard terms are invalid.
Article
11
According
to the provisions of Article 47 and 48 of the Contract Law, the intent to
ratify shall come into effect at the time it reaches the persons concerned, and
the contract shall come into effect upon its conclusion.
Article
12
In case
an agency with no power concludes a contract on behalf of the principal, the
principal's commencement of performance of the contract shall be deemed as
ratification of the contract.
Article
13
After the
principal has undertaken the liabilities arising from the valid act of agency
in accordance with the provisions of Article 49 of Contract Law, he/she may
recover from the agency with no power for losses arising from such act of
agency.
Article
14 The term "mandatory provisions" as stipulated in Item 5, Article
52 of Contract Law shall refer to mandatory provisions on validity.
Article
15
Where the
seller enters into several sales contracts in respect of one same subject
matter, which do not have the circumstances as stipulated in Article 52 of
Contract Law of being invalid, if the buyers can not obtain the ownership of
the subject matter according to the stipulation of the contract, and claim for
the seller's breach of contract, the people's court shall uphold.
Chapter III Performance
of a Contract
Article
16
The
people's court may, according to the specific conditions of cases, name the
third party stipulated in Article 64 and 65 of the Contract Law as a third party
without independent claim, but may not ex officio name him/her as the defendant
or a third party with independent claim of the contractual case.
Article
17
With
respect to a subrogation action which is brought by the creditor against a
party overseas, the people's court shall determine its jurisdiction in
accordance with the provisions of Article 241 of the Civil Procedure Law of the
People's Republic of China.
Article
18
Where the
debtor waive his creditor's right which is not due, waive guarantee on his
creditor's right, or extends his performance period for his due creditor's
right maliciously, which causes damages to the creditor who file an power of
revocation action therefore in accordance with the provisions of Article 74 of
the Contract Law, the people's court shall uphold.
Article
19
With
respect to "an obviously unreasonable low price" as stipulated in
Article 74 of the Contract Law, the people's court shall make comprehensive
consideration and determine based on the general operator's judgment at the
locality of the trade and by referring to the guiding price of the price
department or the market price at the time and place of the trading and in line
with other relevant factors.
In case
the trading price is lower than 70% of the guiding price or market price at the
time and place of the trading, it may generally be deemed as an obviously
unreasonable low price; in case the trading price is 30% higher than the
guiding price or market price of the place of trading, it may generally be deemed
as obviously unreasonable high price.
In case
the debtor purchases others' property at an obviously unreasonable high price,
the people's court may revoke such trading in accordance with the provisions of
Article 74 of Contract Law upon the creditor's request.
Article
20
In case
the debtor's payments are not adequate to discharge all of the several debts of
the same type of the same creditor, debts due shall be of priority to be
offset; where several debts are due, debts which lack guarantees for the creditor
or which are with the minimum amount of guarantees shall be of priority to be
offset; where they are of the same amount of guarantees, debts with large loans
shall be of priority to be offset; where the loans are the same, they shall be
offset pursuant to the order of their due date; and where the due dates are the
same, they shall be offset according to their proportion, unless it is
otherwise agreed upon by the creditor and the debtor in respect of the debt
discharging and the order thereof.
Article
21 In case the debtor shall pay interests and expenses in addition to principal
debt, if his/her payment is not adequate to discharge all the debts and the
parties do not have relevant agreement, the people's court shall offset debts
according to the following orders:
(1)
Relevant expenses for the realization of creditor's right;
(2)
Interests thereon;
(3)
Principal debts.
Chapter
IV Termination of Contractual Rights and Obligations
Article
22 Where one party violates the obligation as stipulated in Article 92 of the
Contract Law and causes losses to the other party, and the other party claim
for damages for actual losses, the people's court shall uphold.
Article
23 With respect to due creditor's rights which can be offset according to
Article 99 of the Contract Law, in case the parties agree that they may not be
offset, the people's court may rule that such agreement is valid.
Article
24 Where the parties have dissents in respect of rescission of contract or debt
offsetting as stipulated in Article 96 and 99 of the Contract Law, but put
forth such dissents and bring a suit with the people's court upon the
expiration of the specified dissent period, the people's court shall not
uphold; in case there is no dissent period as specified by the parties, and the
suit is filed with the people's court three months after receiving the notice
of rescission of contract or debt offsetting, the people's court shall not
uphold.
Article
25 In accordance with the provisions of Article 101 of Contract Law, when the
debtor lodge the object of the contract or the earnings from the auctioning or
selling of the object to the drawing department, the people's court shall rule
that the drawing is valid.
In case
the drawing is valid, it shall be deemed that the debtor has performed its
obligations to the extent of the drawing.
Article
26 Where material changes which are unforeseeable by the parties at the time of
concluding the contract and which are not caused by force majeure and are not commercial
risks happen to objective conditions after the contract has been concluded, and
specific performance of the contract will be obviously unfair for one party or
can not realize the contractual purposes, if the parties claim with the
people's court for alteration of rescission of the contract, the people's court
shall determine whether to alter or rescind the contract or not according to
the principle of fairness and in line with the actual conditions of the case.
Chapter V
Liabilities of Breach of Contract
Article
27
Where the
parties claim with the people's court for adjustment of the default fine
according to the provisions of Paragraph 2 of Article 114 of the Contract Law
via a counter claim or defense, the people's court shall uphold.
Article
28
Where the
parties claim with the people's court for an increase of the default fine in
accordance with the provisions of Paragraph 2 of Article 114 of Contract Law,
the amount of default fine upon the increase shall not exceed the amount of
actual losses. In case after the default fine has been increased, one party
claims for damages from the other party, the people's court shall not uphold.
Article
29
Where the
parties claim that the default fine agreed upon is too high and pray for
moderate decrease thereof, the people's court shall, according to the principle
of fairness and good faith, based on the actual losses and in light with
overall factors such as the performance of the contract, the extent of fault of
the parties and anticipated profits thereof, etc., weigh and make a judgment.
In case
the default fine agreed upon exceeds 30% of the losses caused, it may generally
be deemed as "excessively higher than the losses caused" as
stipulated in Paragraph 2 of Article 114 of Contract Law.
Chapter VI
Supplementary Provisions
Article
30
Cases of
disputes arising from contracts concluded after the implementation of the
Contract Law, which have not undergone the last instance upon the
implementation of this Interpretation, shall be governed by this Interpretation;
in case they have undergone the last instance prior to the implementation of
this Interpretation, if the parties apply for a second instance or it is
determined according to trial supervision procedure that they shall be subject
to a second instance, they shall no longer be governed by this Interpretation.
Avocat à la Cour d'Appel de Paris
Barrister & Solicitor, Nova Scotia
Of counsel to Kunlun Law Firm, Beijing, China
29 boulevard Raspail 75007 Paris
tel: (331) 45 04 62 52 - fax: (331) 45 44 64 45
nous répondrons à vos messages
