CONTRACTS Associate Pr. Dr. Dong HuiningLaw Department, North China University of Technology ， Beijing.

CONTRACTS

Associate Pr. Dr. Dong HuiningLaw Department, North China University of

Technology ， Beijing

AN INSTRUCTION TO CHINESE LAW

Ⅰ. China's Legislative System Ⅱ ． China's Legal System Ⅲ ． China's CourtsⅣ. China’s Judges

Ⅰ. China's Legislative System

China practices a unified, multilevel legislative system.

The National People’s Congress of PRC (NPC) and its Standing Committee exercise the state's power to make laws.

The State Council formulates administrative regulations in accordance with the Constitution and other laws and records them with the NPC.

In line with the specific conditions and actual needs of their administrative regions and on condition that they do not violate the Constitution or other state laws and administrative regulations, the people's congresses of provinces, autonomous regions and municipalities directly under the Central Government, as well as their standing committees, may enact local statutes and record them with the NPC Standing Committee and the State Council.

The people's congresses of national autonomous areas have the power to enact regulations concerning autonomy and local needs in light of the unique political, economic and cultural conditions of the indigenous ethnic groups.

In accordance with the law and the State Council's administrative regulations, decisions and decrees, ministries and commissions of the State Council, the People's Bank of China, the State Auditing Administration and other departments directly under the State Council that have administrative functions may enact regulations within the scope of their authority.

In China's multilevel legislative system, laws promulgated at different levels do not have the same effect.

The NPC has the power to alter or annul the inappropriate laws enacted by its Standing Committee.

Ⅱ ． China's Legal System

China's legal system is divided into seven types and three levels of laws.

The types are the Constitution and Constitution-related

laws, civil and business law, administrative law, economic law, social law, criminal law, the law on lawsuit and non-lawsuit

procedures.

The levels are state laws, administrative regulations and local statutes.

Ⅲ ． China's Courts

Mainly 4 different types of courts

The Supreme People’s Court The High People’s Court The Intermediate People’s Court The First Trial (Grassroots) People’s

Court

All these courts do not only decide civil law cases, but have to deal with all subject matters which are not within the range of the other specialized courts.

Ⅳ. China’s Judges

Four types 12 Levels

Qualification

a. A citizen of the People's Republic of China;

 b. At least 23 years of age;  c. Supports the Constitution of the People's

Republic of China;  d. In good political, professional and moral

standing;  e. In good health;

 f. A graduate of law from an institution of higher learning, or a non-law graduate from an institution of higher learning with in-depth knowledge of law, with 3 years of working experience;

or holders of a bachelor's degree in JD with 2 years of working experience;

or those holding a Master's or Ph.D. degree in JD with 1 full year of working experience.

g. Pass the National Justice Examination

Ⅰ. The PRC Contract LawⅡ. Meaning of “Contract”Ⅲ. Origin and relationship to tortⅣ. Privity, Consent and the

“Reasonable Man” Ⅴ. Offer-AcceptanceⅥ. Validity of ContractsⅦ. Breach and RemediesⅧ. Interpretation of Contracts

Ⅰ. The PRC Contract Law

1949 -1999

The Economic Contract Law of PRC The Foreign-related Economic Contract

Law of PRC The Technology Contract Law of PRC

October 1, 1999 - Now The PRC Contract Law was adopted and

promulgated by the Second Session of the Ninth National People's Congress March 15, 1999, and came into force on October 1, 1999.

It is consists of three parts. Part One is called “general principles” and

gives rules which are important to all kinds of contracts.

Part Two is called “specific provisions” , and gives rules of different types of contracts.

Part Three is called “supplementary provisions”, and gives the date of effectiveness and repealing certain Laws.

specific provisions

Sales Contracts Contracts for Supply of Power, Water, Gas ,

Or Heat Gift Contracts Contracts for Loan of Money Leasing Contracts Financial Leasing Contracts Contracts of Hired Works

Contracts for Construction Projects Carriage Contracts Technology Contracts Safekeeping Contracts Warehousing Contracts Agency Appointment Contracts Trading-Trust Contracts Brokerage Contracts

Ⅱ. MEANING OF "CONTRACT"

A contract is an agreement between natural persons, legal persons or other organizations with equal standing, for the purpose of establishing, altering, or discharging a relationship of civil rights and obligations.

Written v. oral contracts

Although the word "contract" often refers to a written document, a writing is not always necessary to create a contract.

An agreement may be binding on both parties even though it is oral. Some contracts, however, must be in writing.

Behavior is acceptable.

Is there a contracts?

A contract requires an agreement between the parties.

But not all agreements are contracts.

Non-business, religious, or charitable agreements are not always contracts.

The same has been said of family or household agreements.

Ⅲ. Origin and relationship to tort

Both contracts and torts give rise to obligations.

But tort obligations are imposed by the law; it is not normally a choice one makes.

Contracts, on the other hand, are a vehicle by which persons voluntarily create obligations upon themselves.

Ⅳ. Privity, Consent and the "Reasonable Man"

Privity ： One sure sign of the personal nature of contracts is that no one but one of the parties can go to court and enforce the contract even if the contract was to operate to a third party's benefit.

Consent: A contract involves a "meeting of the minds". For this, all parties must be capable of consent.

“Reasonable Man” : Another important feature of the law of contract is that where there is a dispute as to whether or not a contract exists, the courts will assess the situation not from the perspective of the parties, but from the perspective of a "reasonable man".

Ⅴ. Offer-Acceptance

Article 14 Definition of OfferAn offer is a party's manifestation of intention to enter into a contract with the other party.

Article 21 Definition of Acceptance

An acceptance is the offeree's manifestation of intention to assent to an offer.

Practice if there is a contract

1. A. Do you want to buy my car for $500?

B. Yes, I take it.

Contract.

2. A. Do ……? B. I must go back home to ask my wife.

Yes, I take it (after 5 minutes).

No contract because oral offer dies at the end of conversation.

3. A. Do…….? B. Says nothing. A. (to C ) Do you……? B. Yes, I take it.

No contract because by the time you ask C, your offer to B dies.

4. A. Do you……? B. No. Yes (a few minutes later).

No contract because B’s No is rejection and it kills the offer.

5. A. Do……? I’d like to keep my offer open until Dece,1.

B. Says No on Nov. 29, and then says Yes on Nov. 30.

No contract because a rejection kills an offer even if it has a fixed time of validity.

6. A. Do ……? B. No, but I give $400, (then says) yes I

take it for $500.

No contract because $400 is a counteroffer and it kills the original offer.

“yes, I take it at $500 ” is a new offer, the acceptance is on the original offer.

7. A. I give you an offer in writing to sell my car for $500.

B. I take it within two days.

Contract because your offer is in writing and I can accept it in a reasonable time. Two days might be considered as a reasonable time.

Ⅵ. Validity of Contracts

ValidValid upon ratificationVoidableVoid

Ⅶ. Breach and Remedies

Breach of contract comes in many forms. You could have a complete breach, where

one party completely refuses to deliver on any part of their under taking.

In other situation, one party of the contract may omit or refuse to do a small residual portion.

The Responsibility to Mitigate Losses Even if your contractual partner is not

keeping their end of the bargain, you should try to keep your losses at a minimum.

Remedies

There are several options available to the court in cases of breach of contract.

Performance Damages Advanced Damages Earnest Money

The preferred remedy is damages. Compensatory remedy is synonymous to

the claim for damages. The purpose is compensation not

punishment so only real, actual damages can be ordered by the court.

However, it seems that Chinese courts are no longer deaf to pleas for punitive damages in breach of contract cases.

In wrongful dismissal cases based on breach of an employment contract, punitive damages are not uncommon.

Specific performance is exceptional and ordered only when an award of damages would be "inadequate".

A court will not order a singer to perform against his or her will even if not doing so is a breach of contract. Nor will a court order specific performance for non-specific goods such as “grain” or “petroleum”, since they can be replaced, albeit perhaps at a higher price.

Ⅷ. Interpretation of Contracts

If both parties agree on a certain interpretation to be given to a term in a contract, a court has no reason or justification for pursuing the matter further and should accept this interpretation.

A court will always try to discover the intentions of the contracting parties using the plan, ordinary and popular meanings of the words used.

A court should not try to re-write a contract using interpretation rules but , rather, to use these rules to pinpoint the intentions of the parties at the moment of contract.