The Contract Law of the People's Republic of China (1999)

Chapter I General Principles

Article 1 This Law is enacted to protect the lawful rights and interests of the contracting parties, to maintain social and
economic order and to promote socialist modernization.
Article 2 A contract referred to in this Law is an agreement among natural persons, legal persons andor other
organizations as e!ual parties for the esta"lishment, modification or termination of a relationship in#ol#ing the ci#il
rights and o"ligations of such entities.
Agreements with respect to personal relationships such as marriage, adoption, guardianship, etc., shall "e go#erned
"$ the pro#isions in other laws.
Article % The parties to a contract shall ha#e e!ual legal status, and no part$ shall impose its own will upon the other
part$.
Article & The parties ha#e the right to lawfull$ enter into a contract of their own free will, and no entit$ or indi#idual
shall unlawfull$ interfere therewith.
Article ' In defining their respecti#e rights and o"ligations, the parties shall adhere to the principle of fairness.
Article ( In e)ercising their rights and performing their o"ligations, the parties shall o"ser#e the principles of honest$
and good faith.
Article * In forming and performing a contract, the parties shall compl$ with the laws and administrati#e regulations,
respect social morals, and shall not disrupt the social and economic order or impair the social and pu"lic interests.
Article + A contract formed under the law shall "e legall$ "inding on the parties thereto, each of whom shall perform
its own o"ligations as agreed, and no part$ shall unilaterall$ alter or rescind the contract.
A contract lawfull$ formed shall recei#e protection under the law.
Chapter II Contract ,ormation
Article - In forming a contract, the parties shall possess the appropriate capacities for ci#il rights and ci#il acts.
A part$ ma$ lawfull$ authorize an agent to enter into a contract on its "ehalf.
Article 1. In forming a contract, the parties ma$ use written, oral or other forms.
/here the laws and administrati#e regulations so pro#ide, a written form shall "e adopted. /here the parties so
agree, a written form shall "e adopted.
Article 11 0/ritten form0 means a form such as a written contractual instrument, letter, electronic data te)t 1including a
telegram, tele), facsimile, electronic data e)change and electronic mail2 that can tangi"l$ e)press the contents
contained therein.
Article 12 The contents of a contract are to "e agreed "$ the parties. 3uch contents generall$ include the following4
112 name and domicile of each part$5
122 su"6ect matter5
1%2 !uantit$5
1&2 !ualit$5
1'2 price or remuneration5
1(2 specified time, place and manner of performance5
1*2 lia"ilit$ for "reach of contract5 and
1+2 method of dispute resolution.
In forming a contract, the parties ma$ refer to te)ts of #arious model contracts.
Article 1% In forming a contract, the parties shall adopt the method of offer and acceptance.
Article 1& An offer is the e)pression of an intent to enter into a contract with another person. 3uch e)pression of intent
shall conform to the following4
112 the contents are specific and definite5 and
122 it is clearl$ e)pressed that once the offeree accepts, such e)pression of intent shall "e "inding upon the offeror.
Article 1' An in#itation to offer is an e)pression of intent "$ a person to ha#e another person tender an offer to him or
her. Price lists that are mailed or deli#ered, pu"lic announcements of auctions, pu"lic announcements of in#itations to
tender a "id, stoc7 offering prospectuses, commercial ad#ertisements, etc., are in#itations to offer.
/here the contents of a commercial ad#ertisement conform to the pro#isions concerning offers, such ad#ertisement
shall "e deemed to "e an offer.
Article 1( An offer shall "ecome effecti#e once it reaches the offeree.
If a contract is concluded in the form of electronic data te)t and the addressee designates a particular s$stem through
which to recei#e the electronic data te)t, the time it enters the particular s$stem shall "e deemed the arri#al time. If no
particular s$stem is designated, the time the electronic data te)t first enters an$ s$stem of the addressee shall "e
deemed the arri#al time.
Article 1* An offer ma$ "e withdrawn. The notification of withdrawal of the offer must reach the offeree prior to or at
the same time the offer reaches the offeree.
Article 1+ An offer ma$ "e re#o7ed. The notification of the re#ocation of the offer must reach the offeree prior to the
dispatch of the notification of acceptance "$ the offeree.
Article 1- An offer shall not "e re#o7ed under an$ of the following circumstances4
112 the offeror specifies a time limit for acceptance or clearl$ indicates in another manner that the offer is irre#oca"le5
or
122 the offeree has grounds to "elie#e that the offer is irre#oca"le and has alread$ carried out preparator$ wor7 for the
performance of the contract.
Article 2. An offer shall "ecome #oid if4
112 the notification of the re6ection of the offer reaches the offeror5
122 the offeror re#o7es the offer in accordance with the law5
1%2 the offeree fails to accept the offer "efore the e)piration of the time limit for acceptance5 or
1&2 the offeree ma7es a material alteration to the contents of the offer.
Article 21 An acceptance is the e)pression of an intent "$ the offeree to assent to the offer.
Article 22 An acceptance shall "e gi#en in the form of a notice, e)cept where acceptance ma$ "e gi#en "$ an act on
the "asis of customar$ "usiness practice or as e)pressed in the offer.
Article 2% The acceptance shall reach the offeror within the time specified in the offer.
/here the offer does not specif$ a time limit for acceptance, the arri#al of the acceptance shall "e determined in
accordance with the following pro#isions4
112 unless otherwise agreed "$ the parties, if the offer is made #er"all$, the acceptance shall "e made immediatel$5
122 if the offer is not made #er"all$, the acceptance shall arri#e within a reasona"le period.
Article 2& If an offer is made "$ letter or telegram, the time limit for acceptance shall accrue from the date indicated on
the letter or from the date the telegram is su"mitted for transmission. If the letter is not dated, the time limit for
acceptance shall accrue from the postmar7 date on the letter. /hen the offer is made using a rapid form of
communication such as the telephone or facsimile, the time limit for acceptance shall accrue from the time the offer
reaches the offeree.
Article 2' A contract is concluded when the acceptance "ecomes effecti#e.
Article 2( A notice of acceptance shall "ecome effecti#e once it reaches the offeror. /here notice of acceptance is not
re!uired, the acceptance shall "ecome effecti#e upon the act of acceptance "ased on customar$ "usiness practice or
the re!uirements in the offer.
If electronic data te)t is used to form the contract, the pro#isions in Article 1(, 3ection 2 of this Law shall appl$ as to
the time of arri#al of the acceptance.
Article 2* An acceptance ma$ "e withdrawn. The notice of withdrawal of acceptance shall reach the offeror prior to or
at the same time the notice of acceptance reaches the offeror.
Article 2+ If the offeree dispatches the acceptance after the time limit for acceptance has e)pired, such acceptance
shall constitute a new offer, unless the offeror notifies the offeree in a timel$ manner that the acceptance is #alid.
Article 2- If the offeree dispatches its acceptance within the time specified for acceptance, and under normal
circumstances the acceptance would ha#e reached the offeror in time, "ut due to other reasons the acceptance
reaches the offeror after the time limit for acceptance has e)pired, such acceptance shall "e #alid, unless the offeror
notifies the offeree in a timel$ manner that it does not accept the acceptance due to the failure of the acceptance to
arri#e within the time limit.
Article %. The contents of the acceptance shall "e identical to the contents of the offer. A material alteration made "$
the offeree to the contents of the offer shall constitute a new offer. Alterations such as those concerning the su"6ect
matter, !uantit$, !ualit$, price or remuneration, specified time of performance, place and manner of performance,
lia"ilit$ for "reach, dispute resolution, etc., under the contract are material alterations to the contents of an offer.
Article %1 8nless the offeror o"6ects to the alteration to the offer in a timel$ manner or the offer clearl$ indicates that
the acceptance shall not ma7e an$ alterations to the contents of the offer, an acceptance that contains a non9material
alteration to the contents of the offer shall "e #alid, and the contents of the contract shall "e "ased upon the contents
of the acceptance.
Article %2 /here the parties form a contract using a written contract, the contract is concluded at the time "oth parties
sign the contract or affi) their seals thereon.
Article %% In forming a contract using a letter or electronic data te)t, etc., the parties ma$, prior to the conclusion of the
contract, re!uire the signing of a written confirmation. The contract is concluded at the time of the signing of the
written confirmation.
Article %& The place of the conclusion of the contract is the place where the acceptance "ecomes effecti#e.
If the contract is formed using electronic data te)t, the place of the conclusion of the contract is the principal place of
"usiness of the addressee. In the a"sence of a principal place of "usiness, the place of the conclusion of the contract
is the addressee:s usual residence. If the parties agree otherwise, such agreement shall appl$.
Article %' If the parties form a contract using a contractual instrument, the place of the conclusion of the contract is
the place where the parties sign or affi) their seals on the contract.
Article %( /here the laws or administrati#e regulations pro#ide that the contract "e in written form or where the
parties agree to form a contract in written form, and the parties fail to use a written form, "ut one part$ has alread$
performed its principal o"ligations which ha#e "een accepted "$ the other part$, the contract is concluded.
Article %* If the contract is formed using a written contractual instrument, and prior to the signing of, or affi)ing of
seals to, the contract, one part$ has alread$ performed its principal o"ligations which ha#e "een accepted "$ the
other part$, such contract is concluded.
Article %+ If the 3tate, "ased on its needs, issues a mandator$ assignment or an assignment with respect to an order
for goods for the 3tate, the rele#ant legal persons andor the other organizations shall enter into a contract on the
"asis of the rights and o"ligations prescri"ed in the rele#ant laws and administrati#e regulations.
Article %- /here a contract is formed using standardized clauses, the part$ that pro#ides the standardized clauses
shall, adhering to the principle of fairness, define the rights and o"ligations of the parties and shall, in a reasona"le
manner, "ring to the attention of the other part$ an$ clause that releases or limits such part$:s lia"ilit$. 8pon re!uest
"$ the other part$, the part$ pro#iding the standardized clauses shall gi#e an e)planation of such clauses.
A standardized clause is a clause that is drafted in ad#ance "$ a part$ for repeated use and one that is not discussed
with the other part$ at the time of the formation of the contract.
Article &. A standardized clause is in#alid if its contents fall under the pro#isions in Article '2 and Article '% of this
Law, or the part$ pro#iding the standardized clause releases its own lia"ilities, increases the lia"ilities of the other
part$, or e)cludes a primar$ right of the other part$.
Article &1 If a dispute arises o#er the understanding of a standardized clause, the interpretation rendered shall "e
pursuant to the common understanding of such clause. If two or more different interpretations of a standardized
clause e)ist, the standardized clause shall "e construed against the part$ that pro#ides the standardized clause. If a
standardized clause and a non9standardized clause are inconsistent, the non9standardized clause shall "e used.
Article &2 If a part$ engages in an$ of the following during the course of the formation of a contract, there"$ causing
damages to the other part$, such part$ shall "e lia"le for damages4
112 "ad faith negotiations under the prete)t of forming a contract5
122 intentional concealment of important facts related to the formation of the contract or the pro#ision of false
information5 or
1%2 other acts that #iolate the principles of honest$ and good faith.
Article &% A trade secret that "ecomes 7nown to a part$ during the course of the formation of a contract shall not "e
disclosed or improperl$ used whether or not the contract is concluded. If such trade secret is disclosed or improperl$
used, causing damages to the other part$, the part$ that discloses or improperl$ uses the trade secret shall "e lia"le
for damages.
Chapter III Contract ;alidit$
Article && A contract that is lawfull$ concluded shall "ecome effecti#e at the time of its conclusion.
If the laws and administrati#e regulations pro#ide that appro#al and registration procedures shall "e carried out for a
contract to "ecome effecti#e, such laws and regulations shall go#ern.
Article &' The parties ma$ agree that the #alidit$ of a contract "e su"6ect to certain conditions. A contract whose
effecti#eness is su"6ect to certain conditions shall "ecome effecti#e upon the satisfaction of such conditions. A
contract whose rescission is su"6ect to certain conditions shall cease to "e effecti#e upon the satisfaction of such
conditions.
If a part$ improperl$ pre#ents the satisfaction of a condition for its own "enefit, the condition shall "e deemed to ha#e
"een satisfied. If a part$ improperl$ facilitates the satisfaction of a condition, the condition shall "e deemed not to
ha#e "een satisfied.
Article &( The parties ma$ agree on fi)ing a specific term for the #alidit$ of the contract. A contract that fi)es a specific
time for the contract to "ecome effecti#e shall "ecome effecti#e at such time. A contract that fi)es a specific time for
the termination of the contract shall cease to "e effecti#e at such time.
Article &* A contract entered into "$ a person with a limited capacit$ for ci#il acts shall "e #alid upon ratification "$ his
or her statutor$ representati#e. <owe#er, where the contract is purel$ for the procurement of "enefit, or is formed in
such a wa$ as to correspond to the age, intellectual capacit$ or mental health status of such person, such contract
need not "e ratified "$ the statutor$ representati#e.
The opposite part$ ma$ demand the statutor$ representati#e to ratif$ the contract within one month. The failure of the
statutor$ representati#e to respond shall "e deemed a refusal to ratif$. Prior to the ratification of the contract, the
opposite part$ in good faith shall ha#e the right to rescind the contract. 3uch rescission shall "e made "$ wa$ of
notice.
Article &+ If a person enters into a contract using the name of another, "ut the person performing such act lac7s the
authorit$ to act as agent, or e)ceeds the scope of such authorit$, or such authorit$ has terminated, such contract, in
the a"sence of ratification "$ the person whose name is used, has no effect as to such person, and the person
performing such act shall "ear lia"ilit$.
The opposite part$ ma$ demand the person whose name is used to ratif$ the contract within one month. The failure of
such person to respond shall "e deemed a refusal to ratif$. Prior to the ratification of the contract, the opposite part$
in good faith shall ha#e the right to rescind the contract. 3uch rescission shall "e made "$ wa$ of notice.
Article &- If a person enters into a contract using the name of another, "ut the person performing such act lac7s the
authorit$ to act as agent, or e)ceeds the scope of such authorit$, or the agenc$ has terminated, and the opposite
part$ has grounds to "elie#e that the agent has such agenc$ rights, the act of agenc$ shall "e #alid.
Article '. If a legal representati#e or person in charge of a legal person or other organizations enters into a contract
"e$ond the scope of his or her authorit$, the act of representation shall "e #alid unless the opposite part$ 7nows or
should ha#e 7nown that the scope of authorit$ has "een e)ceeded.
Article '1 A contract under which a person without the right of disposition disposes of the propert$ of another person
shall "e #alid upon ratification "$ the person with such right or upon the ac!uisition of such right "$ the person without
such right su"se!uent to the formation of the contract.
Article '2 A contract shall "e #oid if4
112 a part$ enters into a contract "$ fraudulent or coerci#e means, there"$ impairing the interests of the 3tate5
122 there is a malicious collusion to impair the interests of the 3tate, a collecti#e or a third part$5
1%2 it conceals an illegal purpose "$ using legal means5
1&2 it impairs social and pu"lic interests5 or
1'2 it #iolates a mandator$ pro#ision in the laws or administrati#e regulations.
Article '% The following e)culpator$ clauses in a contract shall "e in#alid4
112 one which results in "odil$ in6ur$ to the other part$5 and
122 one which intentionall$ or through gross negligence results in the loss of, or damage to, propert$ of the other part$.
Article '& A part$ shall ha#e the right to petition the People:s Court or an ar"itration institution to alter or nullif$ a
contract if4
112 it is formed as a result of a ma6or misunderstanding5 or
122 it is manifestl$ unfair at the time of the formation of the contract.
If a part$ "$ fraud or duress, or "$ ta7ing ad#antage of the other part$:s plight causes the other part$ to enter into a
contract under circumstances that are contrar$ to the true intent of such part$, the in6ured part$ has the right to
petition the People:s Court or an ar"itration institution to alter or nullif$ the contract.
If a part$ re!uests an alteration to the contract, the People:s Court or the ar"itration institution shall not nullif$ the
contract.
Article '' The right to nullif$ shall lapse under the following circumstances4
112 a part$ with the right to nullif$ fails to e)ercise such right within one $ear from the date the part$ 7nows or should
ha#e 7nown of the matter gi#ing rise to the right to nullif$5 or
122 a part$ with the right to nullif$ wai#es such right "$ clear e)pression or through its conduct, after 7nowing of the
reason for the nullification.
Article '( A contract that is in#alid or nullified shall ha#e no legall$ "inding effect a" initio. If a contract is partiall$
in#alid and such partial in#alidit$ does not affect the #alidit$ of the other parts of the contract, the other portions shall
remain #alid.
Article '* The in#alidit$, nullification, or termination of a contract shall not affect the #alidit$ of an$ independentl$
e)isting contractual pro#ision related to the manner of dispute resolution.
Article '+ If a contract is in#alid or is nullified, the propert$ that was ac!uired as a result of such contract shall "e
returned. If it is impossi"le or unnecessar$ to return such propert$, monetar$ compensation shall "e paid "ased on
the #alue of the propert$. The part$ at fault shall compensate the other part$ for the damages incurred. If "oth parties
are at fault, each part$ shall "ear its respecti#e lia"ilit$.
Article '- If propert$ is ac!uired "$ wa$ of a malicious collusion "$ the parties to impair the interests of the 3tate, a
collecti#e or a third part$, the propert$ so ac!uired shall "e reco#ered "$ the 3tate or returned to the collecti#e or third
part$.
Chapter I; Contract Performance
Article (. =ach part$ shall full$ perform its own o"ligations as agreed.
=ach part$ shall o"ser#e the principles of honest$ and good faith and perform the o"ligations of notification,
assistance, confidentialit$, etc. in accordance with the nature and purpose of the contract and customar$ "usiness
practice.
Article (1 After the contract "ecomes effecti#e, in the a"sence of an agreement on such contents as !ualit$, price or
remuneration, place of performance, etc., or if the agreement on such contents is am"iguous, the parties ma$
supplement such contents "$ agreement. In the e#ent that a supplemental agreement cannot "e reached, a
determination shall "e made according to the rele#ant pro#isions in the contract or the customar$ "usiness practice.
Article (2 If certain contents agreed "$ the parties in the contract are am"iguous and cannot "e determined pursuant
to the pro#isions in Article (1 of this Law, the following pro#isions shall appl$4
112 If the !ualit$ re!uirements are am"iguous, performance shall "e rendered in accordance with the national
standard or industr$ standard5 if neither a national standard nor an industr$ standard e)ists, performance shall "e
rendered in accordance with the customar$ standard or specific standard set in conformance with the purpose of the
contract5
122 If the price or remuneration is am"iguous, pa$ment shall "e made in accordance with the pre#ailing mar7et price
at the place of performance at the time the contract is formed5 if the price is fi)ed or guided "$ the go#ernment,
pa$ment shall "e made in accordance with the regulations thereof5
1%2 If the place of performance is am"iguous, the place of performance shall "e at the location of the recipient of the
currenc$ where currenc$ is to "e tendered5 at the location of the real propert$ where real propert$ is to "e deli#ered5
and for other su"6ect matter, at the location of the part$ who is to perform the o"ligation5
1&2 If the time limit for performance is am"iguous, the o"ligor ma$ perform at an$ time, and the o"ligee ma$ also
demand performance at an$ time, pro#ided that necessar$ preparator$ time is gi#en to the other part$5
1'2 If the manner of performance is am"iguous, performance shall "e rendered in a manner conduci#e to achie#ing
the purpose of the contract5 and
1(2 If the responsi"ilit$ for the cost of performance is am"iguous, such cost shall "e "orne "$ the part$ who performs
the o"ligation.
Article (% If a go#ernmentall$ fi)ed or guided price is used, and the official price is ad6usted during the specified term
for deli#er$ as pro#ided in the contract, the price shall "e the pre#ailing price at the time the goods are deli#ered. If
deli#er$ of the su"6ect matter is dela$ed and the price rises, the original price shall "e adopted5 if the price falls, the
new price shall "e adopted. If a part$ ta7es deli#er$ of the su"6ect matter after the specified time limit, or pa$ment is
made after the due date and the price rises, the new price shall "e adopted5 if the price falls, the original price shall "e
adopted.
Article (& If the parties agree that the o"ligor shall perform its o"ligations towards a third part$, and the o"ligor fails to
perform its o"ligations towards such third part$ or its performance of the o"ligations is not in conformance with the
agreement, the o"ligor shall "e lia"le to the o"ligee for "reach.
Article (' If the parties agree that a third part$ shall perform the o"ligations of the o"ligor towards the o"ligee, and the
third part$ fails to perform the o"ligations of the o"ligor, or its performance of the o"ligations of the o"ligor is not in
conformance with the agreement, the o"ligor shall "e lia"le to the o"ligee for "reach.
Article (( If the parties ha#e mutual o"ligations towards one another, and there is no order of priorit$ with respect to
the timing of the performance of such o"ligations, "oth parties shall perform such o"ligations concurrentl$. =ach part$
has the right to re6ect an$ demand "$ the other part$ for performance prior to the performance "$ the other part$. If
the performance of a part$:s o"ligations fails to conform to the agreement, the other part$ has the right to re6ect such
part$:s demand for corresponding performance.
Article (* If an order of priorit$ e)ists with respect to the timing of the performance of the mutual o"ligations "etween
the parties, and the part$ who is to perform first fails to perform, the part$ who is to perform later has the right to re6ect
the other part$:s demand for performance. If the performance of the o"ligations of the part$ who is to perform first is
not in conformance with the agreement, the part$ who is to perform later has the right to re6ect the other part$:s
demand for corresponding performance.
Article (+ The part$ who is to perform first ma$ suspend its performance if it has clear e#idence which shows that an$
of the following situations applies to the other part$4
112 a serious deterioration of the "usiness condition5
122 the transfer of its assets or withdrawal of its capital to e#ade its o"ligations5
1%2 a loss of its "usiness reputation5 or
1&2 other situations relating to the loss or possi"le loss of the o"ligor:s a"ilit$ to perform its o"ligations.
A part$ who suspends its performance without clear e#idence in support thereof shall "e lia"le for "reach.
Article (- A part$ who suspends performance pursuant to the pro#isions in Article (+ of this Law shall notif$ the other
part$ in a timel$ manner. Performance shall resume when the other part$ pro#ides an appropriate guarant$. After
performance is suspended, if the other part$ fails to restore its a"ilit$ to perform or pro#ide an appropriate guarant$
within a reasona"le period, the part$ who suspends performance ma$ rescind the contract.
Article *. If the o"ligee is di#ided, merged, or has its address changed without notif$ing the o"ligor, there"$ causing
the o"ligor hardship in the performance of its o"ligations, the o"ligor ma$ suspend its performance or escrow the
su"6ect matter.
Article *1 The o"ligee ma$ re6ect the earl$ performance of the o"ligor, unless such earl$ performance does not impair
the interests of the o"ligee.
The additional e)penses incurred "$ the o"ligee due to the o"ligor:s earl$ performance of its o"ligations shall "e
"orne "$ the o"ligor.
Article *2 The o"ligee ma$ re6ect the o"ligor:s partial performance of its o"ligations, unless such partial performance
does not impair the interests of the o"ligee.
The additional e)penses incurred "$ the o"ligee as a result of o"ligor:s partial performance of its o"ligations shall "e
"orne "$ the o"ligor.
Article *% If the o"ligor is remiss in e)ercising its #ested rights, there"$ causing damages to the o"ligee, the o"ligee
ma$ petition the People:s Court to grant the o"ligee the right to e)ercise, in its own name, the rights of the o"ligor "$
wa$ of su"rogation, unless such rights are the e)clusi#e rights of the o"ligor.
The e)tent to which the su"rogation rights can "e e)ercised is limited to the rights of the o"ligee. The e)penses
necessar$ for the o"ligee to e)ercise such su"rogation rights shall "e "orne "$ the o"ligor.
Article *& If the o"ligor wai#es its #ested rights or transfers assets gratuitousl$, there"$ causing damages to the
o"ligee, the o"ligee ma$ petition the People:s Court to nullif$ the acts of the o"ligor. If the o"ligor transfers an$ of its
assets at a manifestl$ unreasona"le low price, there"$ causing damages to the o"ligee, and the transferee is aware
of this situation, the o"ligee ma$ also petition the People:s Court to nullif$ the acts of the o"ligor.
The e)tent to which the right to nullif$ can "e e)ercised is limited to the rights of the o"ligee. The e)penses necessar$
for the o"ligee to e)ercise the right to nullif$ shall "e "orne "$ the o"ligor.
Article *' The right to nullif$ shall "e e)ercised within one $ear from the date the o"ligee 7nows or should ha#e 7nown
of the matter for nullification. 3uch right to nullif$ shall lapse if the o"ligee fails to e)ercise such right within fi#e $ears
from the date of the occurrence of such act.
Article *( >nce a contract "ecomes effecti#e, a part$ ma$ not refuse to perform its contractual o"ligations due to a
change in its name, or its legal representati#e, the person in charge or the person underta7ing the performance of the
contractual o"ligations.
Chapter ; Contract Amendments and Assignments
Article ** 8pon reaching a consensus through consultation, the parties ma$ amend the contract.
If the laws and administrati#e regulations so pro#ide, appro#al and registration procedures for such amendment shall
"e carried out in accordance with such laws and regulations.
Article *+ /here an agreement "$ the parties on the contents of an amendment is am"iguous, the contract shall "e
presumed as not ha#ing "een amended.
Article *- The o"ligee ma$ assign the rights under a contract, in whole or in part, to a third part$, e)cept under the
following circumstances4
112 such rights ma$ not "e assigned "ased on the nature of the contract5
122 such rights ma$ not "e assigned pursuant to the agreement of the parties5 or
1%2 such rights ma$ not "e assigned pursuant to the laws and regulations.
Article +. In assigning its rights, the o"ligee shall notif$ the o"ligor. /ithout notice thereof, such assignment will ha#e
no effect on the o"ligor.
A notice "$ the o"ligee to assign its rights shall not "e re#o7ed, unless such re#ocation is consented to "$ the
assignee.
Article +1 If the o"ligee assigns its rights, the assignee ac!uires the ancillar$ rights related to the rights of the o"ligee,
unless such ancillar$ rights are the e)clusi#e rights of the o"ligee.
Article +2 8pon receipt of the notice of assignment of rights, the o"ligor ma$ assert against the assignee an$
defenses it has against the assignor.
Article +% 8pon receipt "$ the o"ligor of the notice of assignment of rights, the o"ligor shall ha#e #ested rights against
the assignor, and if the rights of the o"ligor #est prior to or at the same time as the assigned rights, the o"ligor ma$
claim an offset against the assignee.
Article +& A delegation of the o"ligations under the contract, in whole or in part, "$ the o"ligor to a third part$ shall "e
su"6ect to the consent of the o"ligee.
Article +' If the o"ligor delegates its o"ligations, the new o"ligor ma$ e)ercise an$ defense that the original o"ligor
had against the o"ligee.
Article +( If the o"ligor delegates its o"ligations, the new o"ligor shall assume the ancillar$ o"ligations related to the
primar$ o"ligations of the o"ligor, unless such ancillar$ o"ligations are e)clusi#e to the original o"ligor.
Article +* If the laws and administrati#e regulations so pro#ide, appro#al and registration procedures shall "e carried
out for the assignment of rights of the o"ligee and the delegation of o"ligations of the o"ligor in accordance with such
laws and regulations.
Article ++ 8pon the consent of the other part$, a part$ ma$ transfer its rights together with its o"ligations under a
contract to a third part$.
Article +- /here the rights and o"ligations are transferred together, the pro#isions in Article *-, Articles +1 through
+%, and Articles +' through +* of this Law shall appl$.
Article -. /here a part$ is merged after the contract has "een formed, the legal person or other organization that
sur#i#es the merger shall e)ercise the rights and perform the o"ligations under the contract. 8nless otherwise agreed
"$ the o"ligor and o"ligee, where a part$ is di#ided after the contract has "een formed, the legal persons and other
organizations that e)ist after the di#ision shall 6ointl$ en6o$ the rights and 6ointl$ assume the o"ligations under the
contract.
Chapter ;I Termination of Contractual ?ights and >"ligations
Article -1 The rights and o"ligations under a contract shall terminate under an$ of the following circumstances4
112 the o"ligations ha#e "een full$ performed as agreed5
122 the contract has "een rescinded5
1%2 the o"ligations ha#e "een mutuall$ offset5
1&2 the o"ligor has escrowed the su"6ect matter in accordance with the law5
1'2 the o"ligee has released the o"ligor of its o"ligations5
1(2 the rights and o"ligations ha#e #ested in one part$5 or
1*2 other circumstances for termination as set forth in the law or as agreed "$ the parties.
Article -2 After the termination of the rights and o"ligations under the contract, the parties shall o"ser#e the principles
of honest$ and good faith and perform the o"ligations of notification, cooperation, confidentialit$, etc., in accordance
with customar$ "usiness practice.
Article -% 8pon reaching a consensus through consultation, the parties ma$ rescind the contract.
The parties ma$ agree upon condition1s2 under which either part$ ma$ rescind the contract. 8pon the satisfaction of
the condition1s2, the part$ who has the right to rescind ma$ rescind the contract.
Article -& A part$ ma$ rescind the contract under an$ of the following circumstances4
112 the purpose of the contract is rendered impossi"le to achie#e due to an e#ent of force ma6eure5
122 prior to the e)piration of the period of performance, the other part$ e)pressl$ states, or indicates through its
conduct, that it will not perform its principal o"ligation5
1%2 the other part$ dela$s performance of its principal o"ligation after such performance has "een demanded, and
fails to perform within a reasona"le period5
1&2 the other part$ dela$s performance of its o"ligations, or "reaches the contract in some other manner, rendering it
impossi"le to achie#e the purpose of the contract5 or
1'2 other circumstances as pro#ided "$ law.
Article -' If a part$ does not e)ercise the right to rescind prior to the end of the rescission period as prescri"ed "$ law
or as agreed "$ the parties, such right shall lapse.
If the period to e)ercise the right to rescind is not prescri"ed "$ law or agreed "$ the parties, and such right is not
e)ercised within a reasona"le period after a demand for the e)ercise of such right is made on the other part$, such
right shall lapse.
Article -( A part$ demanding rescission in accordance with Article -%, 3ection 2 and Article -& of this Law shall notif$
the other part$. The contract shall "e rescinded upon receipt of the notice "$ the other part$. If the other part$ o"6ects
to such rescission, it ma$ petition the People:s Court or an ar"itration institution to ad6udicate the #alidit$ of the
rescission of the contract.
If the laws and administrati#e regulations so pro#ide, the appro#al and registration procedures for the rescission of
the contract shall "e carried out in accordance with such laws and regulations.
Article -* After the rescission of the contract, performance shall cease if the contract has not "een performed5 if the
contract has "een performed, a part$ ma$, in accordance with the circumstances of performance or the nature of the
contract, demand the other part$ to restore such part$ to its original state or adopt other remedial measures, and
such part$ shall ha#e the right to demand compensation for damages.
Article -+ The termination of rights and o"ligations under a contract shall not affect the #alidit$ of clauses that relate to
the final settlement of accounts and winding9up.
Article -- If the parties are lia"le to one another for o"ligations that ha#e "ecame due, and if the t$pe and nature of
the su"6ect matter of such o"ligations are the same, an$ part$ ma$ offset its own o"ligations against the o"ligations of
the other part$, unless such offset is not allowed pursuant to the laws and regulations or cannot "e made gi#en the
nature of the contract.
The part$ who claims such offset shall notif$ the other part$. The notice shall "e effecti#e upon receipt "$ the other
part$. The offset shall not "e su"6ect to an$ condition or time limit.
Article 1.. If the parties ha#e o"ligations towards one another, and the t$pe and nature of such o"ligations are
different, the o"ligations ma$ also "e offset upon consensus "etween the parties after consultation.
Article 1.1 The o"ligor ma$ escrow the su"6ect matter under an$ of the following circumstances which render
performance of the o"ligations difficult4
112 the o"ligee refuses acceptance without a proper reason5
122 the wherea"outs of the o"ligee are un7nown5
1%2 the o"ligee is deceased and the successor has not "een determined, or the o"ligee has lost ci#il capacit$ and a
guardian has not "een appointed5 or
1&2 other circumstances as pro#ided for in the laws or regulations.
If the su"6ect matter is not suita"le for escrow or the cost of escrow is e)cessi#el$ high, the o"ligor ma$ auction or sell
the su"6ect matter in accordance with the law, and escrow the proceeds therefrom.
Article 1.2 8nless the wherea"outs of the o"ligee are un7nown, the o"ligor shall notif$ the o"ligee, or the successor
or guardian of the o"ligee immediatel$ after the su"6ect matter has "een placed in escrow.
Article 1.% After the su"6ect matter has "een placed in escrow, the ris7 of destruction, damage to, or loss of, the
su"6ect matter shall "e "orne "$ the o"ligee. The o"ligee shall "e entitled to an$ fruits of the su"6ect matter during the
escrow period. =scrow costs shall "e "orne "$ the o"ligee.
Article 1.& The o"ligee ma$ reclaim the escrowed su"6ect matter at an$ time, e)cept that if the o"ligee has an$
outstanding o"ligations towards the o"ligor, the escrow institution shall, at the re!uest of the o"ligor, refuse the
o"ligee:s claim of the escrowed su"6ect matter prior to the o"ligee:s performance of its o"ligations or the o"ligee:s
pro#ision of securit$ for its performance.
The right of the o"ligee to reclaim the escrowed su"6ect matter shall lapse if such right is not e)ercised within fi#e 1'2
$ears from the date the su"6ect matter is placed in escrow, and the escrowed su"6ect matter shall re#ert to the
national treasur$ after the deduction of the escrow costs.
Article 1.' If an o"ligee releases the o"ligor of its o"ligations, in whole or in part, the contractual rights and
o"ligations related thereto shall terminate in whole or in part.
Article 1.( If the rights and o"ligations #est in one person, such rights and o"ligations under the contract shall
terminate, unless the$ in#ol#e the interests of a third part$.
Chapter ;II Lia"ilit$ for @reach
Article 1.* If one part$ fails to perform its contractual o"ligations, or the performance of its contractual o"ligations
fails to conform to the agreement, such part$ shall continue its performance, ta7e remedial measures or compensate
the other part$ for damages, etc..
Article 1.+ If one part$ clearl$ e)presses, or "$ its conduct clearl$ indicates, that it will not perform its contractual
o"ligations, the other part$ ma$ demand that it "ear lia"ilit$ for "reach of contract prior to the time such performance
is due.
Article 1.- If one part$ fails to pa$ the price or remuneration, the other part$ ma$ demand that it pa$ such price or
remuneration.
Article 11. If one part$ fails to perform a non9monetar$ o"ligation, or the performance of a non9monetar$ o"ligation
fails to conform to the agreement, the other part$ ma$ demand performance, e)cept under the following
circumstances4
112 such performance cannot "e rendered, in law or in fact5
122 the o"6ect of the o"ligation is not suita"le for specific performance, or the e)penses for performance are
e)cessi#el$ high5 or
1%2 the o"ligee fails to demand performance within a reasona"le period.
Article 111 If the !ualit$ does not conform to the agreement, lia"ilit$ for "reach should "e "orne in the manner agreed
"$ the parties. In the a"sence of an agreement on lia"ilit$ for "reach, or if the agreement on lia"ilit$ for "reach is
am"iguous and cannot "e determined pursuant to the pro#isions in Article (1 of this Law, the in6ured part$ ma$
demand, "$ wa$ of ma7ing a reasona"le choice "ased on the nature of the o"6ect and the e)tent of the damages, the
other part$ to repair, replace, re9ma7e, return, or reduce the price or remuneration of the o"6ect, etc., as lia"ilit$ for
"reach of contract.
Article 112 If one part$ fails to perform its contractual o"ligations, or the performance of its contractual o"ligations fails
to conform to the agreement, and the other part$ still suffers from other damages after the performance of the
o"ligations or adoption of remedial measures, such part$ shall compensate the other part$ for such damages.
Article 11% If one part$ fails to performs its contractual o"ligations, or the performance of the contractual o"ligations
fails to conform to the agreement, causing damages to the other part$, the amount of compensation for damages
shall "e e!ual to the damages caused "$ the "reach, including the "enefit that could ha#e "een o"tained had the
contract "een performed5 howe#er, the amount of compensation shall not e)ceed the damages for "reach that were
foreseea"le or should ha#e "een foreseea"le to the part$ in "reach at the time the contract was formed.
If an operator of the "usiness engages in a fraudulent act while pro#iding goods or ser#ices to a consumer, the
operator of a "usiness shall "ear lia"ilit$ for damages to the consumer pursuant to the pro#isions of the Law of the
People:s ?epu"lic of China on the Protection of the ?ights and Interests of Consumers.
Article 11& The parties ma$ agree that when a part$ "reaches the agreement, it shall, "ased on the circumstances of
the "reach, pa$ the other part$ li!uidated damages in a fi)ed amount, and ma$ also agree on a method for
calculating the amount of compensation for the damages incurred as a result of the "reach.
If the amount of the agreed li!uidated damages is lower than the damages incurred, a part$ ma$ petition the People:s
Court or an ar"itration institution to ma7e an increase5 if the agreed upon li!uidated damages are significantl$ higher
than the damages incurred, a part$ ma$ petition the People:s Court or an ar"itration institution to ma7e an appropriate
reduction.
Article 11' The parties ma$, pursuant to the Guarant$ Law of the People:s ?epu"lic of China, agree that one part$
pa$ a deposit to the other part$ as a guarant$ for the o"ligation. After the o"ligor has performed its o"ligation, the
deposit shall "e offset against the price or returned to the other part$. If the part$ who pa$s the deposit fails to perform
the agreed o"ligations, such part$ has no right to demand the return of the deposit. If the part$ who accepts the
deposit fails to perform the agreed o"ligations, such part$ shall refund twice the #alue of the deposit.
Article 11( If the parties ha#e agreed upon li!uidated damages as well as a deposit, and one part$ is in "reach, the
other part$ ma$ elect to appl$ either the pro#ision for li!uidated damages or the pro#ision for the deposit.
Article 11* 8nless otherwise pro#ided "$ law, if the contract cannot "e performed due to an e#ent of force ma6eure,
the responsi"ilities with respect to performance ma$ "e wholl$ or partiall$ e)empted, depending on the effect of the
force ma6eure. If an e#ent of force ma6eure occurs after a part$ has dela$ed its performance, such responsi"ilities
cannot "e e)empted.
0,orce ma6eure0 as referred to in this Law means o"6ecti#e circumstances that cannot "e foreseen, a#oided or
o#ercome.
Article 11+ A part$ who cannot perform a contract due to an e#ent of force ma6eure shall notif$ the other part$ in a
timel$ manner in order to mitigate the damages that could "e caused to the other part$, and such part$ shall, within a
reasona"le period, pro#ide the other part$ with e#idence of such e#ent of force ma6eure.
Article 11- After one part$ "reaches a contract, the other part$ shall ta7e appropriate measures to pre#ent the
damages from increasing. If the other part$:s failure to ta7e appropriate measures results in additional damages, it
cannot demand compensation for the additional damages.
?easona"le costs paid "$ a part$ to pre#ent an increase in damages shall "e "orne "$ the part$ in "reach.
Article 12. If "oth parties "reach a contract, each part$ shall "ear its own respecti#e lia"ilit$.
Article 121 If a part$ "reaches a contract for reasons attri"uta"le to a third part$, such part$ shall "e lia"le to the other
part$ for the "reach. A dispute "etween a part$ and a third part$ shall "e resol#ed as pro#ided "$ law or in
accordance with the agreement.
Article 122 If an act of "reach "$ a part$ ph$sicall$ in6ures or impairs the propert$ interests of the other part$, the
in6ured part$ has the right to choose to demand the other part$ to "ear lia"ilit$ for the "reach in accordance with this
Law or to assume lia"ilit$ in tort in accordance with other laws.
Chapter ;III Aiscellaneous
Article 12% If other laws pro#ide otherwise with respect to a contract, the pro#isions therein shall go#ern.
Article 12& The General Principles of this Law shall appl$ to contracts that are not e)pressl$ pro#ided for in the
3pecific Pro#isions of this Law or in other laws5 in addition, reference ma$ "e made to the pro#isions in the 3pecific
Pro#isions or in other laws that most closel$ relate to such contracts.
Article 12' If a dispute arises "etween the parties o#er the interpretation of a pro#ision in the contract, the true
meaning of such pro#ision shall "e determined according to the terms and phrases used in the contract, the rele#ant
pro#isions in the contract, the purpose of the contract, customar$ "usiness practice and the principles of honest$ and
good faith.
If the contract is formed using two or more language #ersions, and it is agreed that such #ersions shall ha#e e!ual
#alidit$, the terms and phrases used in the different #ersions are presumed to ha#e the same meaning. If an
inconsistenc$ e)ists "etween the terms or phrases used in the different #ersions, an interpretation shall "e rendered
"ased upon the purpose of the contract.
Article 12( 8nless otherwise pro#ided for "$ law, the parties to a foreign9related contract ma$ select the applica"le
law for the resolution of disputes under the contract. /here the parties to a foreign9related contract do not ma7e such
a selection, the laws of the countr$ to which the contract has the closest contacts shall appl$.
3ino9foreign e!uit$ 6oint #enture contracts, 3ino9foreign cooperati#e 6oint #enture contracts and 3ino9foreign
cooperati#e contracts for the e)ploration of natural resources that are performed within the "oundaries of the People:s
?epu"lic of China shall "e go#erned "$ the laws of the People:s ?epu"lic of China.
Article 12* The industr$ and commerce administrati#e departments and other rele#ant administrati#e departments in
charge shall, within the scope of their respecti#e functions and powers and pursuant to the pro#isions of the laws and
administrati#e regulations, "e responsi"le for controlling and dealing with illegal acti#ities with respect to contracts
used to impair the interests of the 3tate or the interests of the pu"lic and societ$5 and if such acti#ities constitute a
crime, criminal lia"ilit$ shall "e pursued in accordance with the law.
Article 12+ The parties ma$ resol#e contractual disputes through reconciliation or mediation.
If the parties are unwilling to resol#e a dispute through reconciliation or mediation, or if the reconciliation or mediation
is unsuccessful, the parties ma$, on the "asis of the ar"itration agreement, appl$ to an ar"itration institution for
ar"itration. The parties to a foreign9related contract ma$, on the "asis of the ar"itration agreement, appl$ to a Chinese
ar"itration institution or other ar"itration institution for ar"itration. If the parties ha#e not entered into an agreement
with respect to ar"itration, or if the ar"itration agreement is in#alid, the parties ma$ institute legal proceedings in the
People:s Court. The parties shall compl$ with an$ legall$ #alid 6udgment, ar"itration award or mediation agreement5 if
a part$ refuses to compl$, the other part$ ma$ petition the People:s Court to enforce such 6udgment, ar"itration award
or mediation agreement.
Article 12- /ith respect to a dispute arising from a contract for the international sale of goods or a contract for the
import and e)port of technolog$, the statute of limitations for instituting an action or appl$ing for ar"itration is four
$ears from the date a part$ 7nows or should ha#e 7nown of the infringement on such part$:s rights. As to the statute
of limitations for instituting an action or appl$ing for ar"itration with respect to a dispute arising from other contracts,
the pro#isions of the rele#ant laws shall go#ern.
Chapter IB 3ales Contracts
Article 1%. A sales contract is a contract under which the seller transfers the su"6ect matter to the purchaser, and the
purchaser pa$s the price to the seller.
Article 1%1 The contents of a sales contract ma$ include, in addition to the pro#isions in Article 12 of this Law, the
manner of pac7aging, the standard and method of inspection, the method for the settlement of accounts as well as
the languages #ersions used and their #alidit$.
Article 1%2 The su"6ect matter for sale shall "e owned "$ the seller, or the seller shall ha#e the right to dispose of it.
If the transfer of the su"6ect matter is prohi"ited or restricted "$ law or administrati#e regulation, the pro#isions therein
shall go#ern.
Article 1%% 8nless otherwise prescri"ed "$ law or agreed "$ the parties, title of the su"6ect matter shall pass upon
deli#er$ of the su"6ect matter.
Article 1%& The parties ma$ agree in the sales contract that if the purchaser fails to ma7e pa$ment or to perform other
o"ligations, title of the su"6ect matter shall remain with the seller.
Article 1%' The seller shall perform the o"ligations of deli#ering the su"6ect matter or the documents for ta7ing
possession of the su"6ect matter to the purchaser and of transferring title thereto.
Article 1%( In addition to the documents for ta7ing possession of the su"6ect matter, the seller shall deli#er to the
purchaser the rele#ant documentation and materials in accordance with the agreement or customar$ "usiness
practice.
Article 1%* 8nless otherwise prescri"ed "$ law or agreed "$ the parties, where the su"6ect matter sold in#ol#es
intellectual propert$ rights such as computer software, etc., such intellectual propert$ rights related to the su"6ect
matter do not "elong to the purchaser.
Article 1%+ The seller shall deli#er the su"6ect matter "$ the agreed time limit. If the time for deli#er$ is agreed upon,
the seller ma$ deli#er the su"6ect matter at an$ time within the specified time period.
Article 1%- If the parties fail to agree upon the time for deli#er$ of the su"6ect matter or the agreement on the time of
deli#er$ is am"iguous, the pro#isions in Article (1 and Article (2, 3ection & of this Law shall appl$.
Article 1&. If the su"6ect matter is in the possession of the purchaser prior to the formation of the contract, the
contract "ecomes effecti#e at the time of deli#er$.
Article 1&1 The seller shall deli#er the su"6ect matter at the agreed place.
If the parties fail to agree upon a place of deli#er$ or the agreement on the place of deli#er$ is am"iguous and cannot
"e determined pursuant to the pro#isions in Article (1 of this Law, the following pro#isions shall appl$4
112 If the su"6ect matter needs to "e transported, the seller shall deli#er the su"6ect matter to the first carrier for
shipment to the purchaser5
122 If the su"6ect matter does not need to "e transported, and "oth the seller and the purchaser were aware of the
location of the su"6ect matter at the time the contract was formed, the seller shall deli#er the su"6ect matter to such
location5 if the seller and purchaser were not aware of the location, the su"6ect matter shall "e deli#ered to the seller:s
place of "usiness at the time the contract was formed.
Article 1&2 8nless otherwise prescri"ed "$ law or agreed "$ the parties, the ris7 of destruction, damage to, and loss
of, the su"6ect matter shall "e "orne "$ the seller prior to deli#er$ of the su"6ect matter, and "orne "$ the purchaser
after deli#er$ of the su"6ect matter.
Article 1&% If for reasons attri"uta"le to the purchaser, the su"6ect matter cannot "e deli#ered "$ the agreed time, the
purchaser shall "ear the ris7 of destruction, damage to, or loss of, the su"6ect matter from the date it "reaches the
agreement.
Article 1&& 8nless otherwise agreed "$ the parties, where the su"6ect matter is sold "$ the seller who is to tender it to
the carrier for transport, the ris7 of destruction, damage to, and loss of, the su"6ect matter while in transit shall "e
"orne "$ the purchaser from the time the contract is formed.
Article 1&' If the parties fail to agree upon a place of deli#er$ for the su"6ect matter, or the agreement on the place of
deli#er$ is am"iguous, and the su"6ect matter re!uires transportation pursuant to the pro#isions in Article 1&1, 3ection
2, 3u"section 1 of this Law, the ris7 of destruction, damage to, or loss of, the su"6ect matter after the seller deli#ers
the su"6ect matter to the first carrier shall "e "orne "$ the purchaser.
Article 1&( If the seller places the su"6ect matter at the place for deli#er$ pursuant to the agreement or the pro#isions
in Article 1&1, 3ection 2, 3u"section 2 of this Law, and the purchaser, in "reach of the agreement, fails to ta7e
deli#er$ of the su"6ect matter, the ris7 of destruction, damage to, or loss of, the su"6ect matter shall "e "orne "$ the
purchaser from the date the purchaser "reaches the agreement.
Article 1&* If the seller does not deli#er the documentation and materials related to the su"6ect matter as agreed, the
passing of the ris7 of destruction, damage to, and loss of, the su"6ect matter shall not "e affected.
Article 1&+ If the !ualit$ of the su"6ect matter fails to conform to the !ualit$ re!uirements, rendering it impossi"le to
achie#e the purpose of the contract, the purchaser ma$ refuse to accept the su"6ect matter or ma$ rescind the
contract. If the purchaser refuses to accept the su"6ect matter or rescinds the contract, the ris7 of destruction,
damage to, and loss of, the su"6ect matter shall "e "orne "$ the seller.
Article 1&- If the ris7 of destruction, damage to, and loss of, the su"6ect matter is "orne "$ the purchaser, the
purchaser:s right to demand the seller to "ear lia"ilit$ for "reach of contract due to the seller:s failure to perform its
o"ligations in conformance with the agreement shall not "e affected.
Article 1'. 8nless otherwise prescri"ed "$ law, the seller shall ha#e an o"ligation to warrant that no third part$ shall
e)ercise against the purchaser an$ rights with respect to the deli#ered su"6ect matter.
Article 1'1 If at the time of formation of the contract the purchaser 7nows or should ha#e 7nown that a third part$ has
rights to the su"6ect matter, the seller shall not assume the o"ligations prescri"ed under Article 1'. of this Law.
Article 1'2 If the purchaser has clear e#idence that a third part$ could assert a right to the su"6ect matter, the
purchaser ma$ suspend the corresponding pa$ment, unless the seller pro#ides a proper guarant$.
Article 1'% The seller shall deli#er the su"6ect matter in accordance with the agreed !ualit$ re!uirements. If the seller
pro#ides specifications regarding the !ualit$ of the su"6ect matter, the deli#ered su"6ect matter shall conform to the
!ualit$ re!uirements therein.
Article 1'& If the parties fail to agree upon the !ualit$ re!uirements, or the agreement on !ualit$ re!uirements is
am"iguous and cannot "e determined pursuant to the pro#isions in Article (1 of this Law, the pro#isions in Article (2,
3ection 1 of this Law shall appl$.
Article 1'' If the su"6ect matter deli#ered "$ the seller fails to conform to the !ualit$ re!uirements, the purchaser ma$
demand the seller to "ear lia"ilit$ for "reach of contract pursuant to the pro#isions in Article 111 of this Law.
Article 1'( The seller shall deli#er su"6ect matter in the manner of pac7aging as agreed. If a manner of pac7aging is
not agreed, or the agreement on the manner of pac7aging is am"iguous and cannot "e determined pursuant to the
pro#isions in Article (1 of this Law, the pac7aging shall "e done in the customar$ manner, or in the a"sence of a
customar$ manner, the manner of pac7aging adopted shall "e ade!uate to protect the su"6ect matter.
Article 1'* 8pon receipt of the su"6ect matter, the purchaser shall inspect the su"6ect matter during the agreed period
for inspection. If a period for inspection is not agreed upon, inspection shall "e conducted in a timel$ manner.
Article 1'+ If the parties ha#e agreed upon a time period for inspection, the purchaser shall, during the inspection
period, notif$ the seller of the circumstances under which the !uantit$ or !ualit$ of the su"6ect matter fails to conform
to the agreement. If the purchaser is remiss in ma7ing such notification, the !uantit$ or !ualit$ of the su"6ect matter
shall "e deemed to "e in conformance with the agreement.
If the parties ha#e not agreed upon a period for inspection, the purchaser shall notif$ the seller within a reasona"le
period after the purchaser disco#ers or should ha#e disco#ered that the !uantit$ or !ualit$ is not in conformance with
the agreement. If the purchaser fails to notif$ the seller within a reasona"le period, or fails to notif$ the seller within
two 122 $ears from the date of receipt of the su"6ect matter, the !uantit$ or !ualit$ of the su"6ect matter shall "e
deemed to "e in conformance with the agreement5 howe#er, if there is a !ualit$ warrant$ period for the su"6ect matter,
the !ualit$ warrant$ period shall appl$ and the pro#ision regarding the two9$ear period shall not "e applied.
If the seller 7nows or should ha#e 7nown that the su"6ect matter pro#ided does not conform to the agreement, the
purchaser shall not "e restricted "$ the notification period prescri"ed in the preceding two sections.
Article 1'- The purchaser shall pa$ the price in the agreed amount. If a price is not the agreed upon, or the
agreement on the price is am"iguous, the pro#isions in Article (1 and Article (2, 3ection 2 of this Law shall "e
applied.
Article 1(. The purchaser shall ma7e pa$ment1s2 at the agreed place. If the place of pa$ment is not agreed upon, or
the agreement on the place of pa$ment is am"iguous and cannot "e determined pursuant to the pro#isions in Article
(1 of this Law, the purchaser shall ma7e pa$ment1s2 at the seller:s place of "usiness5 howe#er, if it is agreed that
pa$ment1s2 of the price shall "e conditioned upon the deli#er$ of the su"6ect matter or the deli#er$ of documents for
ta7ing possession of the su"6ect matter, pa$ment1s2 shall "e made at the place where the su"6ect matter or the
documents for ta7ing possession of the su"6ect matter is to "e tendered.
Article 1(1 The purchaser shall ma7e pa$ment at the agreed time. If the time of pa$ment is not agreed upon, or the
agreement on the time of pa$ment is am"iguous and cannot "e determined pursuant to the pro#isions in Article (1 of
this Law, the purchaser shall ma7e pa$ment at the time it recei#es the su"6ect matter or the documents for ta7ing
possession of the su"6ect matter.
Article 1(2 If the seller deli#ers the su"6ect matter in e)cess !uantit$, the purchaser ma$ accept or re6ect the e)cess
portion. If the purchaser accepts the e)cess portion, the purchaser shall pa$ the price in accordance with the contract
price5 if the purchaser re6ects the e)cess portion, the purchaser shall so notif$ the seller in a timel$ manner.
Article 1(% An$ fruits deri#ed from the su"6ect matter prior to deli#er$ shall "elong to the seller, and fruits deri#ed after
deli#er$ shall "elong to the purchaser.
Article 1(& If the contract is rescinded "ecause the principal part of the su"6ect matter fails to conform to the
agreement, the effect of the rescission of the contract shall e)tend to all ancillar$ parts of the su"6ect matter. If the
contract is rescinded "ecause an ancillar$ part of the su"6ect matter fails to conform to the agreement, the effect of
such rescission shall not e)tend to the principal part of the su"6ect matter.
Article 1(' If the su"6ect matter consists of se#eral o"6ects and onl$ one of the o"6ects fails to conform to the
agreement, the purchaser ma$ rescind the contract with respect to such o"6ect5 howe#er, if the se#erance of such
o"6ect from the other o"6ects manifestl$ impairs the #alue of the su"6ect matter, either part$ ma$ rescind the contract
with respect to all o"6ects.
Article 1(( If the seller deli#ers the su"6ect matter in installments, and the seller fails to deli#er one installment of the
su"6ect matter or the deli#er$ fails to conform to the agreement, rendering it impossi"le for such installment of su"6ect
matter to achie#e the purpose of the contract, the purchaser ma$ rescind the contract with respect to such installment
of su"6ect matter.
/here the seller deli#ers the su"6ect matter in installments, if the seller fails to deli#er one installment of the su"6ect
matter or the deli#er$ fails to conform to the agreement, rendering it impossi"le for the su"se!uent deli#er$ of other
installments of the su"6ect matter to achie#e the purpose of the contract, the purchaser ma$ rescind the contract with
respect to such installment as well as other su"se!uent installments of the su"6ect matter.
If the purchaser rescinds the contract with respect to one installment of the su"6ect matter, and such installment and
other installments of su"6ect matter are interdependent, the purchaser ma$ rescind the contract with respect to each
of those installments of su"6ect matter that has or has not "een deli#ered.
Article 1(* If the purchaser who ma7es pa$ment "$ installment fails to ma7e pa$ment1s2 e!ual to or e)ceeding one9
fifth of the total price due, the seller ma$ demand the purchaser to pa$ the price in full, or ma$ rescind the contract.
If the seller rescinds the contact, the seller ma$ demand the purchaser to pa$ a usage fee for the use of such su"6ect
matter.
Article 1(+ The parties who use a sample for a sales transaction shall seal up the sample, and specifications
regarding the !ualit$ of the sample ma$ "e pro#ided. The su"6ect matter deli#ered "$ the seller shall ha#e the same
!ualit$ as that of the samples and that descri"ed in the !ualit$ specifications.
Article 1(- If the purchaser who uses a sample for a purchase is unaware of a hidden defect in the sample, and e#en
if the su"6ect matter deli#ered is identical to the sample, the !ualit$ of the su"6ect matter deli#ered "$ the seller shall
ne#ertheless conform to the usual standards for the same t$pe of o"6ect.
Article 1*. The parties to a sale that includes a period for trial use ma$ agree upon the period for trial use for the
su"6ect matter. If a period for trial period is not agreed upon, or the agreement on the period for trial use is am"iguous
and cannot "e determined pursuant to the pro#isions in Article (1 of this Law, the period for trial use shall "e
determined "$ the seller.
Article 1*1 The purchaser in a sale that includes a period for trial use ma$ purchase or refuse to purchase the su"6ect
matter during the period for trial use. If the purchaser fails to indicate whether or not it will purchase the su"6ect matter
prior to the e)piration of the period for trial use, a purchase shall "e deemed to ha#e "een effected.
Article 1*2 ,or a sale "$ "idding, the rights and o"ligations of the parties as well as the "idding procedures shall
conform to the pro#isions of the rele#ant laws and administrati#e regulations.
Article 1*% ,or a sale "$ auction, the rights and o"ligations of the parties as well as the auction procedures shall
conform to the pro#isions of the rele#ant laws and administrati#e regulations.
Article 1*& If there are pro#isions in the law for other non9gratuitous contracts, such pro#isions shall appl$5 in the
a"sence of such pro#isions, reference shall "e made to the rele#ant pro#isions in 3ales Contracts.
Article 1*' If the parties agree to a "arter transaction under which the title of the su"6ect matter is transferred,
reference shall "e made to the rele#ant pro#isions in 3ales Contracts.
Chapter B Contracts for the 3uppl$ of =lectricit$, /ater, Gas and <eat
Article 1*( An electricit$ suppl$ contract is a contract under which the electricit$ supplier pro#ides electricit$ to the
electricit$ user, and the electricit$ user pa$s an electricit$ fee.
Article 1** The contents of an electricit$ suppl$ contract shall include clauses relating to the manner, !ualit$ and time
of the suppl$ of electricit$, the capacit$, address and nature of electricit$ usage, method of measurement, methods of
settlement for pricing and electricit$ fees, and the duties with respect to the maintenance of the facilities for the suppl$
and use of electricit$.
Article 1*+ The place of performance for the electricit$ suppl$ contract shall conform to the agreement of the parties5
if the parties ha#e no such agreement, or the agreement is am"iguous, the place of performance shall "e the place
within which the propert$ rights of the electricit$ suppl$ facilities are demarcated.
Article 1*- The electricit$ supplier shall suppl$ electricit$ safel$ in accordance with !ualit$ standards for electricit$
suppl$ as prescri"ed "$ the 3tate and as agreed "$ the parties. If the electricit$ supplier fails to suppl$ electricit$
safel$ in accordance with !ualit$ standards for electricit$ suppl$ as prescri"ed "$ the 3tate and as agreed "$ the
parties, causing damages to the electricit$ user, the electricit$ supplier shall "e lia"le for damages.
Article 1+. If the electricit$ supplie
r needs to suspend electricit$ suppl$ due to reasons such as a scheduled or necessar$ e)amination or repair of the
electricit$ suppl$ facilities, rationing of electricit$ in accordance with the law, or the illegal use of electricit$ "$ the
electricit$ user, the electricit$ supplier shall notif$ the electricit$ user in ad#ance pursuant to rele#ant 3tate
regulations. If the electricit$ supplier fails to notif$ the electricit$ user in ad#ance of the suspension of electricit$,
resulting in losses or damages to the electricit$ user, the electricit$ supplier shall "e lia"le for damages.
Article 1+1 If the electricit$ suppl$ is suspended due to a natural disaster or other causes, the electricit$ supplier shall
carr$ out repairs in a timel$ manner in accordance with rele#ant 3tate pro#isions. If the failure to carr$ out emergenc$
repairs in a timel$ manner results in losses or damages to the electricit$ user, the electricit$ supplier shall "e lia"le for
damages.
Article 1+2 The electricit$ user shall pa$ the electricit$ fee in accordance with rele#ant 3tate regulations and the
agreement of the parties. If the electricit$ user fails to pa$ the electricit$ fee within the specified time period, the
electricit$ user shall pa$ the agreed late pa$ment penalt$. If the electricit$ user does not pa$ the electricit$ fee and
late pa$ment penalt$ within a reasona"le period after ha#ing "een demanded to do so, the electricit$ supplier ma$
suspend electricit$ suppl$ in accordance with the procedures prescri"ed $ the 3tate.
Article 1+% The electricit$ user shall use the electricit$ supplied safel$ in accordance with rele#ant 3tate regulations
and the agreement of the parties. If the electricit$ user fails to use the electricit$ safel$ in accordance with rele#ant
3tate regulations and the agreement of the parties, resulting in losses or damages to the electricit$ supplier, the
electricit$ user shall "e lia"le for damages.
Article 1+& ,or contracts for the suppl$ of water, gas and heat, reference shall "e made to the rele#ant pro#isions for
electricit$ suppl$ contracts.
Chapter BI Gift Contracts
Article 1+' A gift contract is a contract under which a donor gi#es its own propert$ to a donee gratuitousl$ and the
donee e)presses its acceptance.
Article 1+( The donor ma$ re#o7e the gift prior to the passing of title of the gifted propert$.
The preceding section shall not appl$ to a gift contract that ser#es the pu"lic interest or is in the nature of a moral
dut$, such as disaster relief and aid to the poor, or for a gift contract that has "een notarized.
Article 1+* /here procedures such as registration are re!uired for the propert$ to "e lawfull$ gifted, such procedures
shall "e underta7en.
Article 1++ /ith respect to a gift contract that ser#es the pu"lic interest or is in the nature of an moral dut$, such as
disaster relief and aid to the poor, or a gift contract that has "een notarized, if the donor fails to deli#er the gifted
propert$, the donee ma$ demand deli#er$ of such propert$.
Article 1+- If damage, destruction or loss is caused to the gifted propert$ due to the intentional act or gross
negligence of the donor, the donor shall "e lia"le for damages.
Article 1-. A gift ma$ "e conditioned on an o"ligation.
/here the gift is conditioned on an o"ligation, the donee shall perform the o"ligation as agreed.
Article 1-1 If the gifted propert$ has a defect, the donor shall not "ear an$ lia"ilit$ with respect thereto. If the gift is
conditioned on an o"ligation, and the gifted propert$ has a defect, the donor shall, to the e)tent of such o"ligation,
"ear the same lia"ilit$ as would a seller.
If the donor intentionall$ fails to inform the donee of the defect, or warrants that the propert$ has no defect, resulting
in damages to the donee, the donor shall "e lia"le for damages.
Article 1-2 The donor ma$ re#o7e a gift if one of the following applies to the donee4
112 the donee seriousl$ in6ures or infringes upon the interests of the donor or a close relati#e of the donor5
122 the donee has an o"ligation of support towards the donor and fails to perform such o"ligation5 or
1%2 the donee fails to perform its o"ligations as agreed in the gift contract.
The donor:s right to re#o7e a gift shall "e e)ercised within one $ear from the date the donor 7nows or should ha#e
7nown of the reason for the re#ocation.
Article 1-% If an illegal act of the donee results in the death or loss of ci#il capacit$ of the donor, the successor or legal
representati#e of the donor ma$ re#o7e the gift.
The right of re#ocation of the successor or legal representati#e of the donor shall "e e)ercised within si) 1(2 months
from the date the successor or legal representati#e of the donor 7nows or should ha#e 7nown of the reason for the
re#ocation.
Article 1-& The person who has the right to re#o7e a gift ma$ demand the donee to return the gifted propert$.
Article 1-' If the economic condition of the donor significantl$ deteriorates so as to se#erel$ affect the production and
operations, or famil$ life of the donor, the donor ma$ discontinue performance of the gift o"ligation.
Chapter BII Loan Contacts
Article 1-( A loan contract is a contract under which the "orrower "orrows mone$ from the lender and repa$s the
"orrowed mone$, together with interest, on the due date.
Article 1-* 8nless a loan is "etween natural persons and such natural persons agree otherwise, a loan contract shall
"e in writing.
The contents of a loan contract shall include clauses relating to the nature, currenc$, purpose, amount, rate of
interest, term and manner of repa$ment of the loan.
Article 1-+ In forming a loan contract, the lender ma$ demand the "orrower to pro#ide securit$. The securit$ shall
conform to the pro#isions of the Guarant$ Law of the People:s ?epu"lic of China.
Article 1-- In forming a loan contract, the "orrower shall, in accordance with the re!uirements of the lender, pro#ide
the true status of its "usiness acti#ities and financial condition related to the loan.
Article 2.. The loan interest shall not "e deducted from the principal in ad#ance. If the interest has "een deducted
from the principal in ad#ance, the loan shall "e repaid and the interest shall "e calculated in accordance with the
actual amount of the loan.
Article 2.1 If the lender fails to e)tend the loan on the date and in the amount as agreed, causing losses to the
"orrower, the lender shall compensate the "orrower for such losses.
If the "orrower fails to collect the loan on the date and in the amount as agreed, the "orrower shall pa$ interest on the
date and in the amount as agreed.
Article 2.2 The lender ma$ inspect and super#ise the use of the loan as agreed. The "orrower shall pro#ide to the
lender rele#ant materials such as financial and accounting statements on a regular "asis as agreed.
Article 2.% If the "orrower fails to use the loan for the agreed upon purpose, the lender ma$ cease dis"ursement of
the loan, accelerate repa$ment of the loan or rescind the contract.
Article 2.& The interest rate on a loan e)tended "$ a financial institution engaged in loan operations shall "e set
within the range for loan interest rates as prescri"ed "$ the People:s @an7 of China.
Article 2.' The "orrower shall pa$ interest within the agreed time period. If the term for the pa$ment of interest is not
agreed upon, or the agreement on the term for the pa$ment of interest is am"iguous and cannot "e determined
pursuant to the pro#isions in Article (1 of this Law, the interest shall "e paid upon repa$ment of the loan if the loan
term is less than one $ear5 if the loan term e)ceeds one $ear, the interest shall "e paid at the end of each one9$ear
period of the loan during the loan term5 and if there is a period remaining on loan term of less than one $ear, the
interest shall "e paid together with the repa$ment of the loan.
Article 2.( The "orrower shall repa$ the loan within the agreed time period. If the loan term is not agreed upon, or the
agreement on the repa$ment of the loan is am"iguous and cannot "e determined pursuant to the pro#isions in Article
(1 of this Law, the "orrower ma$ repa$ the loan at an$ time5 the lender ma$ demand that repa$ment "$ made within a
reasona"le period.
Article 2.* If the "orrower fails to repa$ the loan within the agreed time period, the "orrower shall pa$ the default
interest in accordance with the agreement or rele#ant 3tate regulations.
Article 2.+ 8nless otherwise agreed "$ the parties, if the "orrower repa$s the loan in ad#ance, the interest shall "e
calculated "ased on the actual period of the loan.
Article 2.- Prior to the e)piration of the term for repa$ment, the "orrower ma$ appl$ to the lender for an e)tension of
the term for repa$ment. If the lender consents, the term ma$ "e e)tended.
Article 21. A loan contract "etween natural persons shall "ecome effecti#e at the time the lender pro#ides the loan.
Article 211 If the pa$ment of interest in a loan contract "etween natural persons is not agreed upon, or the agreement
is am"iguous, the loan shall "e deemed interest free.
If the pa$ment of interest is agreed upon in the loan contract "etween natural persons, the interest rate for the loan
shall not #iolate the rele#ant 3tate regulations regarding the limitations on interest rates for loans.
Chapter BIII Lease Contracts
Article 212 A lease contract is a contract under which the lessor deli#ers a leased o"6ect to the lessee for the lessee
to use or to o"tain "enefit from, and the lessee pa$s rent therefor.
Article 21% The contents of a lease contract shall include clauses such as the name, !uantit$, purpose, lease term,
rent, time and method of pa$ment, and maintenance of the leased o"6ect, etc..
Article 21& The lease term shall not e)ceed twent$ 12.2 $ears. An$ part of the term e)ceeding twent$ 12.2 $ears shall
"e in#alid.
8pon e)piration of the lease term, the parties ma$ renew the lease contract, pro#ided that the agreed lease term
does not e)ceed twent$ 12.2 $ears from the date of renewal.
Article 21' If the lease term is more than si) 1(2 months, the lease contract shall "e in written form. If the parties fail to
adopt a written form, the lease shall "e deemed as a lease of a non9fi)ed term.
Article 21( The lessor shall deli#er the leased o"6ect to the lessee as agreed, and shall ensure that the use of the
leased o"6ect during the lease term conforms to the agreed purpose.
Article 21* The lessee shall use the leased o"6ect in the agreed manner. If the manner of use is not agreed upon, or
the agreement on the manner of use is am"iguous and cannot "e determined pursuant to the pro#isions in Article (1
of this Law, the leased o"6ect shall "e used in accordance with the nature of the leased o"6ect.
Article 21+ If the lessee uses the leased o"6ect in accordance with the agreed manner or consistent with the nature of
the leased o"6ect, and such use results in wear and tear on the leased o"6ect, the lessee shall not "e lia"le for
damages.
Article 21- If the lessee fails to use the leased o"6ect in accordance with the agreed manner or uses the leased o"6ect
in a manner inconsistent with the nature of the leased o"6ect, and such use results in damage to the leased o"6ect,
the lessor ma$ rescind the contract and demand compensation for damages.
Article 22. 8nless otherwise agreed "$ the parties, the lessor shall perform maintenance o"ligations on the leased
o"6ect.
Article 221 /hen the leased o"6ect re!uires maintenance, the lessee ma$ demand the lessor to carr$ out such
maintenance within a reasona"le period. If the lessor fails to perform its maintenance o"ligations, the lessee ma$
carr$ out such maintenance on its own, and the cost for such maintenance shall "e "orne "$ the lessor. If the
maintenance on the leased o"6ect affects the lessee:s use thereof, the rent shall "e reduced accordingl$ or the lease
term shall "e e)tended.
Article 222 The lessee shall properl$ care for the leased o"6ect. If damage, destruction or loss is caused to the leased
o"6ect due to improper safe7eeping, the lessee shall "e lia"le to compensate the lessor for damages.
Article 22% 3u"6ect to the consent of the lessor, the lessee ma$ ma7e impro#ements on, or additions to, the leased
o"6ect.
If the lessee ma7es an$ impro#ement on, or additions to, the leased o"6ect without the lessor:s consent, the lessor
ma$ demand the lessee to restore the leased o"6ect to its original condition or ma$ demand compensation for
damages.
Article 22& 3u"6ect to the consent of the lessor, the lessee ma$ su"let the leased o"6ect to a third part$. If the lessee
su"lets the leased o"6ect, the lease contract "etween the lessee and the lessor shall remain in effect. If the third part$
causes damage to the leased o"6ect, the lessee shall compensate the lessor for such damage.
If the lessee su"leases the leased o"6ect without the consent of the lessor, the lessor ma$ rescind the contract.
Article 22' 8nless otherwise agreed "$ the parties, the lessee shall "e entitled to the "enefits o"tained from the
possession or use of the leased o"6ect during the lease term.
Article 22( The lessee shall pa$ the rent during the agreed upon time period. If the time period of pa$ment is not
agreed upon, or the agreement on the time period of pa$ment of rent is am"iguous and cannot "e determined
pursuant to the pro#isions in Article (1 of this Law, pa$ment shall "e made at the e)piration of the term of the lease, if
the lease term is less than one $ear5 if the lease term e)ceeds one $ear, pa$ment shall "e made at the end of each
one9$ear period, and if there is a remaining period in the lease term of less than one $ear, pa$ment shall "e made
upon the e)piration of the lease term.
Article 22* If the lessee fails to pa$ or dela$s pa$ment of the rent without a proper reason, the lessor ma$ demand
the lessee to ma7e pa$ment within a reasona"le period. If the lessee fails to ma7e pa$ment within such reasona"le
period, the lessor ma$ rescind the contract.
Article 22+ If due to the assertion of a right "$ a third part$ the lessee is una"le to ma7e use of, or o"tain "enefit from,
the leased o"6ect, the lessee ma$ demand a reduction or wai#er of the rent.
In the e#ent of an assertion of a right "$ a third part$, the lessee shall promptl$ notif$ the lessor.
Article 22- If a change in ownership of the leased o"6ect occurs during the lease term, the #alidit$ of the lease
contract shall not "e affected.
Article 2%. In selling the leased premises, the lessor shall notif$ the lessee within a reasona"le period prior to the
sale, and the lessee shall ha#e the right of first refusal to purchase such premises under e!ual conditions.
Article 2%1 If the leased o"6ect is damaged, destro$ed, or lost, wholl$ or partiall$, due to causes not attri"uta"le to the
lessee, the lessee ma$ demand a reduction or wai#er of the rent5 if the leased o"6ect is damaged, destro$ed or lost,
wholl$ or partiall$, rendering it impossi"le to achie#e the purpose of the contract, the lessee ma$ rescind the contract.
Article 2%2 If the parties ha#e not agreed upon a lease term, or the agreement on the lease term is am"iguous and
cannot "e determined pursuant to the pro#isions in Article (1 of this Law, the lease shall "e deemed to "e a lease of a
non9fi)ed term. The parties ma$ rescind the contract at an$ time, pro#ided that the lessor shall notif$ the lessee within
a reasona"le period prior to the lessor:s rescission of the contract.
Article 2%% If a leased o"6ect endangers the safet$ or health of the lessee, the lessee ma$ rescind the contract at an$
time, e#en if the lessee was aware at the time of the formation of the contract that the !ualit$ of the leased o"6ect was
not up to standard.
Article 2%& If the lessee dies during the lease term, those persons who resided with lessee while the lessee was ali#e
ma$ lease the premises in accordance with the original lease contract.
Article 2%' The lessee shall return the leased o"6ect upon the e)piration of the lease term. The condition of the
returned leased o"6ect shall conform to the condition agreed upon or shall "e in a condition reflecting that the leased
o"6ect has "een used during the lease term in a manner consistent with the nature of the leased o"6ect.
Article 2%( 8pon the e)piration of the lease term, if the lessee continues to use the leased o"6ect and the lessor does
not o"6ect, the original lease contract shall remain in effect, "ut the lease term shall "ecome non9fi)ed.
Chapter BI; ,inance Lease Contracts
Article 2%* A finance lease contract is a contract under which the lessor purchases the leased o"6ect from the seller
pursuant to the lessee:s designation of the seller and the leased o"6ect, and pro#ides the leased o"6ect to the leasee
for its use thereof, and for which the lessee pa$s rent.
Article 2%+ The contents of a finance lease contract include the leased o"6ect:s name, !uantit$, specifications,
technical capa"ilit$, method of inspection, lease term, particulars of rent, pa$ment term and method of pa$ment,
currenc$ and the passage of title of the leased o"6ect upon e)piration of the lease term.
A finance lease contract shall "e in written form.
Article 2%- The seller shall deli#er the leased o"6ect to the lessee as agreed in the sales contract entered into "$ the
lessor pursuant to the lessee:s designation of the seller and the su"6ect matter, and the lessee shall ha#e the rights of
a purchaser with respect to the su"6ect matter.
Article 2&. The lessor, seller and lessee ma$ agree that if the seller does not perform its o"ligations in the sales
contract, the lessee ma$ e)ercise the right to claim damages. /here the lessee e)ercises the right to claim damages,
lessor shall pro#ide assistance therewith.
Article 2&1 A"sent the consent of the lessee, the lessor shall not alter an$ contents of the sales contract entered into
"$ the lessor pursuant to the lessee:s designation of the seller and su"6ect matter that relate to the lessee.
Article 2&2 The lessor shall ha#e ownership rights to the leased o"6ect. If the lessee "ecomes "an7rupt, the leased
o"6ect shall not "e included in the assets of the "an7rupt estate.
Article 2&% 8nless otherwise agreed "$ the parties, the rent in the finance lease contract shall "e determined on the
"asis of the ma6orit$ or entiret$ of the purchase cost of leased o"6ect and the reasona"le profit of the lessor.
Article 2&& /here the leased o"6ect does not meet the agreed standard or is not fit for its intended use, the lessor
shall not "ear an$ lia"ilit$, unless the leasee relies on the s7ills of the lessor to select the leased o"6ect or the lessor
interferes in the selection of the leased o"6ect.
Article 2&' The lessor shall ensure the lessee:s possession and use of the leased o"6ect.
Article 2&( The lessor shall not "e lia"le for "odil$ in6ur$ to, or propert$ damage of, an$ third part$ caused "$ the
leased o"6ect while the lessee is in possession of the leased o"6ect.
Article 2&* The lessee shall properl$ safe97eep and use the leased o"6ect.
The lessee shall perform the o"ligations of maintenance on the leased o"6ect during the period it has possession of
the leased o"6ect.
Article 2&+ The lessee shall pa$ rent as agreed. If the lessee fails to pa$ the rent within a reasona"le period after a
demand for pa$ment, the lessor ma$ demand pa$ment of all rent, or the lessor ma$ rescind the contract and
repossess the leased o"6ect.
Article 2&- /here the parties agree that title to the leased o"6ect shall #est in the lessee upon e)piration of the lease
term, and the lessee has paid most of the rent, "ut is incapa"le of pa$ing the "alance owed, resulting in the lessor:s
rescission of the contract and repossession of the leased o"6ect, the lessee ma$ demand a partial refund where the
#alue of the repossessed leased o"6ect e)ceeds the outstanding rent owed "$ the lessee and other e)penses.
Article 2'. The lessor and the lessee ma$ agree upon the ownership of the leased o"6ect upon the e)piration of the
lease term. If the ownership of the leased o"6ect is not agreed upon, or the agreement is am"iguous and cannot "e
determined pursuant to the pro#isions in Article (1 of this Law, title to the leased o"6ect shall #est in the lessor.
Chapter B; 3pecial 8nderta7ing Contracts
Article 2'1 A special underta7ing contract is a contract under which the contractor completes certain wor7 in
accordance with the re!uirements of the principal and deli#ers the wor7 achie#ements to the principal, and the
principal pa$s a remuneration to the contractor.
3pecial underta7ings include processing, wor7 made to order, repairs, reproductions, tests, inspections,
e)aminations, etc..
Article 2'2 The contents of a special underta7ing contract include pro#isions regarding the su"6ect matter, !uantit$,
!ualit$, remuneration, manner of the wor7 to "e underta7en, furnishing of materials, time period for performance, and
the standard and method of the acceptance inspection.
Article 2'% 8nless otherwise agreed "$ the parties, the contractor shall complete the principal wor7 with its own
e!uipment, technolog$ and la"or.
If the contractor su"contracts a third part$ to complete the main wor7, the contractor shall "e lia"le to the principal
with respect to the wor7 completed "$ the third part$5 if such wor7 is su"contracted without the consent of the
principal, the principal ma$ rescind the contract.
Article 2'& The contractor ma$ su"contract a third part$ to complete the ancillar$ wor7 of the special underta7ing. If
the contractor su"contracts a third part$ to do the ancillar$ wor7 of the special underta7ing, it shall "e lia"le to the
principal for the wor7 achie#ements completed "$ the third part$.
Article 2'' If the contractor is to pro#ide the materials, the contractor shall select the materials as agreed, and shall
ma7e a#aila"le the materials for inspection and e)amination "$ the principal.
Article 2'( If the principal is to pro#ide materials, it shall pro#ide the materials as agreed. The contractor shall inspect
the materials pro#ided "$ the principal in a timel$ manner, and upon disco#ering that an$ of the materials fail to
conform to the agreement, the contractor shall, in a timel$ manner, send notice to the principal to replace or ma7e up
the deficienc$ in the materials, or ta7e other remedial measures.
The contractor shall not replace an$ materials pro#ided "$ the principal without authorization, nor shall it replace an$
parts or components that do not re!uire repair.
Article 2'* If the contractor disco#ers that the drawings or technical re!uirements pro#ided "$ the principal are
unrealistic, the contractor shall notif$ the principal in a timel$ manner. If the contractor incurs damages due to the
principal:s dela$ in responding, the principal shall compensate the contractor for such damages.
Article 2'+ If the principal changes the wor7 re!uirements during the course of the wor7, there"$ causing damages to
the contractor, the principal shall compensate for such damages.
Article 2'- If the wor7 underta7en re!uires the assistance of the principal, the principal shall ha#e an o"ligation to
pro#ide such assistance.
If the wor7 cannot "e accomplished due to the failure of the principal to fulfill such o"ligation of assistance, the
contractor ma$ demand the principal to perform such o"ligation within a reasona"le period and ma$ e)tend the time
limit of performance. If the principal fails to perform such o"ligation within such period, the contractor ma$ rescind the
contract.
Article 2(. Curing the course of the wor7, the contractor shall su"mit to the necessar$ super#ision and inspection "$
the principal. The principal shall not hinder the normal operations of the contractor in its super#ision and inspection of
the wor7.
Article 2(1 8pon the completion of the wor7, the contractor shall deli#er the completed wor7 to the principal, along
with the necessar$ technical materials and rele#ant !ualit$ certificates. The principal shall carr$ out an acceptance
inspection on the wor7 achie#ements.
Article 2(2 If the wor7 achie#ements deli#ered "$ the contractor fail to conform to the !ualit$ re!uirements, the
principal ma$ demand that the contractor repair, re9do or re9ma7e, accept a reduced remuneration or compensate for
damages, etc., as lia"ilit$ for "reach of contract.
Article 2(% The principal shall pa$ remuneration to the contractor within the agreed time period. If the time of pa$ment
is not agreed upon, or the agreement is am"iguous and cannot "e determined according to the pro#isions of Article
(1 of this Law, the principal shall ma7e the pa$ment at the time of deli#er$ of the completed wor7 achie#ements5 if the
wor7 is partiall$ deli#ered, the principal shall ma7e the corresponding pa$ment.
Article 2(& 8nless otherwise agreed "$ the parties, if the principal fails to pa$ the contractor remuneration or the cost
of materials, etc., the contractor shall ha#e possessor$ lien rights to the completed wor7 achie#ements.
Article 2(' The contractor shall properl$ care for the materials pro#ided "$ the principal, as well as the completed
wor7 achie#ements5 if such materials are damaged, destro$ed or lost due to improper care, the contractor shall "ear
lia"ilit$ for damages.
Article 2(( The contractor shall maintain confidentialit$ pursuant to the re!uirements of the principal, and shall not
retain an$ reproduction of the contracted wor7 or technical materials without permission from the principal.
Article 2(* 8nless otherwise agreed "$ the parties, 6oint9contractors for a special underta7ing shall "e 6ointl$ and
se#erall$ lia"le to the principal.
Article 2(+ The principal ma$ rescind the special underta7ing contract at an$ time. If such rescission causes damages
to the contractor, the principal shall compensate the contractor for such damages.
Chapter B;I Construction Contracts
Article 2(- A construction contract is a contract under which the contractor underta7es certain construction wor7 and
the part$ awarding the contract pa$s the contract price.
A construction contract includes contracts for sur#e$ing, designing, and construction.
Article 2*. A construction contract shall "e in written form.
Article 2*1 Acti#ities related to the in#itation and tendering of "ids for a construction pro6ect shall "e conducted
pu"licl$, fairl$ and impartiall$ pursuant to the pro#isions of the rele#ant laws.
Article 2*2 The part$ awarding the contract ma$ enter into one construction contract with a general contractor, or it
ma$ enter into separate sur#e$ing, design, and construction contracts with sur#e$ors, designers, and constructors,
respecti#el$. The part$ awarding the contract shall not di#ide into parts a construction pro6ect that should "e
completed "$ one contractor and award the parts to #arious contractors.
8pon the consent of the part$ awarding the contract, the general contractor or the contractors for sur#e$ing,
designing and construction ma$ su"contract to a third part$ to complete a portion of the wor7 for which it has "een
contracted. The third part$, along with the general contractor or the contractors for sur#e$ing, designing and
construction, shall "e 6ointl$ and se#erall$ lia"le to the part$ awarding the contract with respect to the wor7
achie#ements completed "$ the third part$. The contractor shall not re9contract to a third part$ the entire construction
pro6ect for which it has "een contracted5 nor shall it di#ide into parts the entire construction pro6ect for which it has
"een contracted and then, in the name of su"contracting, transfer all of the parts to a third part$.
The contractor is prohi"ited from su"contracting a part of the construction pro6ect to an$ entit$ that does not possess
the re!uisite !ualifications. A su"contracted entit$ is prohi"ited from re9su"contracting the pro6ect that it has "een
contracted. The construction of the main structure of the construction pro6ect shall "e completed "$ the contractor
itself.
Article 2*% Construction contracts for ma6or 3tate construction pro6ects shall "e formed in accordance with the
procedures prescri"ed "$ the 3tate as well as the in#estment plans and feasi"ilit$ stud$ reports, etc., appro#ed "$ the
3tate.
Article 2*& The contents of contracts for sur#e$ing or design include pro#isions concerning the time limit for
su"mission of the rele#ant "asic materials and documentation 1including an estimated "udget2, !ualit$ re!uirements,
fees and other cooperati#e wor7 conditions.
Article 2*' The contents of a "uilding contract include pro#isions regarding the scope of construction, construction
period, schedule of the commencement and completion of the interim wor7 re!uired to "e finished during the course
of the pro6ect, !ualit$ of construction, costs for the construction of the pro6ect, time of deli#er$ of the technical
materials, responsi"ilit$ for the suppl$ of materials and e!uipment, appropriation of funds and settlement of accounts,
acceptance inspection of the completed construction, scope of the !ualit$ warrant$, warrant$ period, cooperation
"etween "oth parties, etc..
Article 2*( /here the construction pro6ect re!uires super#ision, the part$ awarding the contract shall enter into a
super#ision contract in writing with a super#isor. The rights and o"ligations and legal responsi"ilities of the part$
awarding the contract and the super#isor shall "e pursuant to the pro#isions in Agenc$ Contracts in this Law, as well
as those in other rele#ant laws and administrati#e regulations.
Article 2** The part$ awarding the contract ma$ inspect at an$ time the progress and !ualit$ of the construction,
pro#ided that such inspection does not hinder the normal operations of the contractor.
Article 2*+ The contractor shall notif$ the part$ awarding the contract to carr$ out an inspection prior to the sealing of
an$ construction wor7 to "e sealed. If the part$ awarding the contract fails to carr$ out the inspection in a timel$
manner, the contractor ma$ e)tend the contract term and shall ha#e right to demand compensation for damages for
an$ wor7 stoppages, wor7 holdups, etc..
Article 2*- After the construction wor7 is completed, the part$ awarding the contract shall promptl$ carr$ out the
acceptance inspection "ased on the construction drawings and specifications, as well as the regulations for
acceptance inspection and !ualit$ inspection standards promulgated "$ the 3tate. If the construction wor7 passes the
acceptance inspection, the part$ awarding the contract shall pa$ the agreed contract price and accept the
construction pro6ect.
>nce the completed construction pro6ect passes the acceptance inspection, it ma$ "e deli#ered for use5 a
construction pro6ect that is not inspected or one that fails to pass inspection shall not "e deli#ered for use.
Article 2+. If the part$ awarding the contract incurs an$ damages due to the failure of a sur#e$ or design to conform
to the !ualit$ re!uirements, or due to the failure of the sur#e$or or designer to su"mit the sur#e$ or design documents
within the time specified, the sur#e$or or designer shall continue impro#ing the sur#e$ or design, reduce or wai#e the
sur#e$ or design fee, and compensate the part$ awarding the contract for damages.
Article 2+1 If the !ualit$ of the construction pro6ect fails to conform to the agreement for reasons attri"uta"le to the
constructor, the part$ awarding the contract shall "e entitled to demand the constructor to repair, reconstruct or ma7e
changes to the construction pro6ect within a reasona"le period free of charge. /here the deli#er$ of the construction
pro6ect is dela$ed due to such repair, reconstruction or changes, the contractor shall "e lia"le for "reach of contract.
Article 2+2 If for reasons attri"uta"le to the contractor, the construction pro6ect causes "odil$ in6ur$ or propert$
damage during a reasona"le period of use, the contractor shall "e lia"le for damages.
Article 2+% If the part$ awarding the contract fails to pro#ide the contractor with raw materials, e!uipment, capital,
technical information or a site pursuant to the time and re!uirements pro#ided in the agreement, the contractor ma$
e)tend the construction period and demand damages for an$ stoppage or holdup of wor7.
Article 2+& If for reasons attri"uta"le to the part$ awarding the contract, a stoppage of, or suspension in, the
construction of the pro6ect occurs, the part$ awarding the contract shall adopt measures to remed$ or mitigate the
losses, and shall compensate the contractor for losses and actual costs resulting from the stoppage, hold9up,
returned shipment, reallocation or transfer of mechanical e!uipment, pile9up of materials and components, etc..
Article 2+' If the part$ awarding the contract alters the plan, pro#ides inaccurate data, or fails to pro#ide necessar$
wor7ing conditions for a sur#e$ or design within the time specified, there"$ causing the sur#e$ or design to "e re9
done, stopped or re#ised, the part$ awarding the contract shall pa$ an$ additional e)penses incurred in accordance
with the actual amount of wor7 completed "$ the sur#e$or or designer.
Article 2+( If the part$ awarding the contract fails to pa$ the price as agreed, the contractor ma$ demand that the
part$ awarding the contract pa$ the price within a reasona"le period. If the part$ awarding the contract fails to ma7e
the pa$ment within the time specified, the contractor ma$ negotiate with the part$ awarding the contract to "arter the
construction wor7 in lieu of pa$ment or ma$ petition the People:s Court to auction the construction wor7 in accordance
with the law, unless the construction is not suita"le for "arter or auction gi#en the nature of the construction. /ith
respect to the use of proceeds from the "arter or auction, priorit$ shall "e gi#en to pa$ment for the construction.
Article 2+* Aatters not pro#ided for in this Chapter shall "e go#erned "$ the rele#ant pro#isions in 3pecial
8nderta7ing Contracts.
Chapter B;II Transportation Contracts
Part 14 General Pro#isions
Article 2++ A transportation contract is a contract under which the carrier transports a passenger or goods from the
point of departure to an agreed location, and the passenger, consignor or consignee pa$s a fare or freight charge.
Article 2+- A carrier engaged in the "usiness of pu"lic transportation shall not re6ect an ordinar$ or reasona"le
re!uest for transport made "$ the passenger or consignor.
Article 2-. The carrier shall safel$ transport the passenger or goods to the agreed location within the agreed time
period or within a reasona"le period.
Article 2-1 The carrier shall transport the passenger or goods to the agreed location using the agreed or usual route.
Article 2-2 The passenger, consignor or consignee shall pa$ a fare or freight charge. If the carrier fails to use the
agreed or usual route resulting in an additional fare or freight charge, the passenger, consignor or consignee ma$
refuse to pa$ the additional fare or freight charge.
Part 24 Passenger Transport Contracts
Article 2-% 8nless otherwise agreed "$ the parties or some other customar$ "usiness practice e)ists, a passenger
transport contract shall "e formed upon the carrier:s deli#er$ of the passenger tic7et to the passenger.
Article 2-& The passenger shall "oard the carrier with a #alid passenger tic7et. If a passenger "oards without a tic7et,
tra#els "e$ond the destination or a"o#e the class, or holds an in#alid tic7et, such passenger shall pa$ the re!uired
fare. The carrier ma$ collect the additional fare in accordance with the rele#ant regulations. If the passenger fails to
pa$ the fare, the carrier ma$ refuse to transport such passenger.
Article 2-' If for his own reasons the passenger is una"le to "oard the carrier at the time specified on the passenger
tic7et, he shall within the agreed time limit go through procedures to return the tic7et or change the tic7et. /here the
passenger fails to go through such procedures within the time limit, the carrier ma$ refuse to refund the fare and shall
no longer ha#e an o"ligation to transport such passenger.
Article 2-( Curing the course of transport, the carr$9on luggage of the passenger shall not e)ceed the agreed !uantit$
limit. /here the carr$9on luggage e)ceeds the agreed !uantit$ limit, the passenger shall complete the chec79in
procedures for the piece1s2 of luggage that e)ceed the agreed !uantit$ limit.
Article 2-* The passenger shall not carr$ on his or her person or place in his or her luggage an$ hazardous goods
such as inflamma"le, e)plosi#e, to)ic, corrosi#e or radioacti#e goods5 goods that could threaten the safet$ of persons
or propert$ on "oard, or an$ other contra"and.
If the passenger #iolates the pro#isions of the preceding section, the carrier ma$ unload or destro$ the contra"and, or
turn it o#er to the rele#ant authorities. If the passenger insists on carr$ing the contra"and on "oard or placing it in his
or her luggage, the carrier shall refuse to transport the passenger.
Article 2-+ The carrier shall inform the passenger in a timel$ manner of important matters related to the ina"ilit$ to
carr$ out normal transport and of precautions related to transportation safet$.
Article 2-- The carrier shall pro#ide the passenger with transport ser#ice in accordance with the time and carrier
num"er specified on the passenger tic7et. /here the carrier dela$s transport ser#ice, the carrier shall, at the re!uest
of the passenger, ma7e arrangements for the passenger to tra#el on another scheduled departure or refund the tic7et
price.
Article %.. /here the carrier lowers the ser#ice standards "$ changing the mode of transport without authorization,
the carrier shall, at the re!uest of the passenger, refund the tic7et price or reduce the amount of the fare5 where the
carrier raises the ser#ice standard, the carrier shall not collect an additional fare.
Article %.1 Curing the course of transport, the carrier shall use its "est efforts to come to the aid of an$ passenger
who is suffering from an acute illness, who is in la"or or who is in danger.
Article %.2 Curing the course of transport, the carrier shall "e lia"le for damages for the death or "odil$ in6ur$ of a
passenger, unless such death or "odil$ in6ur$ is attri"uta"le to passenger:s own health condition or the carrier has
e#idence showing that such death or "odil$ in6ur$ is due to an intentional act or gross negligence of the passenger.
The pro#isions of the preceding section appl$ to passengers who, under the rele#ant regulations, are e)empt from
purchasing tic7ets, passengers who hold discount tic7ets and passengers who are permitted "$ the carrier to "oard
without tic7ets.
Article %.% /here the carr$9on articles of the passenger are damaged or destro$ed during the course of transport due
to the fault of the carrier, the carrier shall "e lia"le for damages.
/here the chec7ed9in luggage is destro$ed, damaged or lost, the rele#ant regulations on transportation of goods
shall go#ern.
Part %4 Contracts for the Transport of Goods
Article %.& /hen consigning goods for transport, the consignor shall accuratel$ declare to the carrier the name of the
consignee or the consignee on order, as well as other necessar$ information related to the transport of the goods,
such as the name, nature, weight, !uantit$ and destination of the goods.
/here the consignor:s declaration is inaccurate or important information is omitted, causing losses to the carrier, the
consignor shall "ear lia"ilit$ for damages.
Article %.' /here appro#al or inspection formalities are re!uired for the transport of the goods, the consignor shall
su"mit to the carrier the documentation for which the rele#ant procedures ha#e "een completed.
Article %.( The consignor shall pac7 the goods in the agreed manner. In the a"sence of an agreement on the manner
of pac7aging or if the agreement on the manner of pac7aging is am"iguous, the pro#isions of Article 1'( of this Law
shall appl$.
If the consignor #iolates the pro#isions of the preceding section, the carrier ma$ refuse to transport the goods.
Article %.* /hen consigning for transport hazardous goods such as com"usti"le, e)plosi#e, to)ic, erosi#e or
radioacti#e goods, the consignor shall, in accordance with 3tate regulations for the transport of hazardous goods,
properl$ pac7 the hazardous goods, mar7 and la"el the goods as hazardous, and pro#ide the carrier with the written
materials with respect to the name, nature and safet$ precautions for such hazardous goods.
If the consignor #iolates the pro#isions of the preceding section, the carrier ma$ refuse to transport such goods or
ma$ ta7e appropriate measures to pre#ent the occurrence of loss5 an$ e)penses incurred therefrom shall "e "orne "$
the consignee.
Article %.+ Prior to the carrier:s deli#er$ of the goods to the consignee, the consignor ma$ re!uest the carrier to
suspend transport, return the goods, change the destination or deli#er the goods to another consignee, pro#ided that
the consignor pa$s the carrier for an$ losses resulting therefrom.
Article %.- If the carrier 7nows who the consignee is, the carrier shall promptl$ notif$ the consignee once the goods
arri#e at the destination, and the consignee shall promptl$ ta7e deli#er$ of the goods. /here the consignee dela$s in
ta7ing deli#er$, it shall pa$ to the carrier a "ailment fee and other e)penses.
Article %1. The consignee shall inspect the goods within the agreed time period after ta7ing deli#er$ thereof. In the
a"sence of an agreement as to the time limit for the inspection of goods, or if the agreement is am"iguous and cannot
"e determined pursuant to the pro#isions of Article (1 of this Law, the consignee shall inspect the goods within a
reasona"le period. If the consignee does not raise an o"6ection with respect to the !uantit$ of, or damage to, the
goods within the agreed time limit or within a reasona"le period, it shall "e seen as prima facie e#idence that the
goods deli#ered "$ the carrier are in accordance with the terms on the transport documentation.
Article %11 The carrier shall "e lia"le for damages for an$ destruction, damage to, or loss of, the goods incurred
during the course of transport, unless the carrier pro#es that such destruction, damage to, or loss of, the goods was
due to an e#ent of force ma6eure, the nature of the goods, reasona"le wear and tear, or the fault of the consignor or
consignee.
Article %12 The amount of compensation for the damage to, or loss of, the goods shall "e as agreed "$ the parties, if
the parties ha#e such an agreement5 in the a"sence of an agreement or if the agreement on the amount of
compensation is am"iguous and cannot "e determined pursuant to the pro#isions of Article (1 of this Law, the
amount of the compensation shall "e calculated "ased upon the pre#ailing mar7et price of the goods at the
destination at the time the goods are deli#ered or should ha#e "een deli#ered. /here a law or administrati#e
regulation pro#ides otherwise with respect to the calculation method or limitation on the amount of compensation,
such pro#isions shall go#ern.
Article %1% If the goods are transported "$ more than one carrier in the same mode of transport, the carrier who
enters into contract with the consignor shall "e responsi"le throughout the entire course of transport. If damage to the
goods occurs at a particular segment of the transport, the carrier who enters into the contract with the consignor and
the carrier for such segment shall "ear 6oint and se#eral lia"ilit$.
Article %1& If the goods are destro$ed or lost due to an e#ent of force ma6eure occurring during the course of transport
and the freight charge has not "een collected, the carrier shall not demand pa$ment thereof. If the freight charge has
"een collected, the consignor ma$ claim a refund.
Article %1' 8nless otherwise agreed "$ the parties, if the consignor or consignee fails to pa$ the freight charge,
"ailment fee or other e)penses incurred in connection with the transport of the goods, the carrier shall "e entitled to a
possessor$ lien with respect to such goods.
Article %1( If the consignee is un7nown or the consignee refuses to ta7e deli#er$ of the goods without a proper
reason, the carrier ma$ escrow the goods pursuant to the pro#isions of Article 1.1 of this Law.
Part &4 Aultimodal Transport Contract
Article %1* The multimodal transport operator shall "e responsi"le for the performance or coordination of the
performance of a multimodal transport contract, and shall ha#e the rights and assume o"ligations of a carrier for the
entire course of transport.
Article %1+ The multimodal transport operator ma$ agree with the indi#idual carriers participating in each respecti#e
segment of the multimodal transport to share responsi"ilities within each respecti#e segment of the multimodal
transport. <owe#er, such agreement shall not affect the o"ligations of the multimodal transport operator for the entire
course of transport.
Article %1- 8pon receipt of goods deli#ered "$ the consignor, the multimodal transport operator shall issue a
multimodal "ill of lading. At the re!uest of the consignor, the multimodal transport "ill of lading ma$ "e transfera"le or
not9transfera"le.
Article %2. If due to the fault of the consignor, the multimodal transport operator incurs damages while the goods are
in transit, the consignor shall "e lia"le for damages, e#en where the consignor has transferred the multimodal "ill of
lading.
Article %21 If destruction, damage to, or loss of, the goods occurs on a certain segment of the multimodal transport,
lia"ilit$ for damages and the limits of lia"ilit$ of the multimodal transport operator shall "e go#erned "$ the rele#ant
laws regulating the mode of transportation in the segment under which the destruction, damage or loss occurred. If
the transport segment on which the damage, destruction or loss occurred cannot "e determined, lia"ilit$ for damages
shall "e "orne in accordance with the pro#isions in this Chapter.
Chapter B;III Technolog$ Contracts
Part 14 General Pro#isions
Article %22 A technolog$ contract is a contract formed "$ the parties which defines the rights and o"ligations "etween
one another with respect to technolog$ de#elopment, transfer, consultation or ser#ices.
Article %2% The formation of a technolog$ contract shall "e conduci#e to the impro#ement of science and technolog$,
and shall e)pedite the transformation, application and promotion of scientific and technological achie#ements.
Article %2& The contents of a technolog$ contract shall "e agreed "$ the parties. A technolog$ contract generall$
contains the following pro#isions4
112 name of the pro6ect5
122 contents, scope and re!uirements of the su"6ect matter5
1%2 plan, progress schedule, time limit, place, area and manner with respect to performance5
1&2 confidentialit$ of the technological information and material5
1'2 assumption of ris7 lia"ilit$5
1(2 ownership of the technolog$ achie#ements and the method of sharing the "enefits deri#ed therefrom5
1*2 standard and method for inspection and acceptance5
1+2 price, remuneration or license fee, and pa$ment method5
1-2 li!uidated damages or the method of calculating damages for "reach5
11.2 method of dispute resolution5 and
1112 definition of terms and terminolog$.
Pursuant to the agreement of the parties, technolog$ "ac7ground materials, feasi"ilit$ studies and technolog$
appraisal reports, documents regarding pro6ect tas7s and scheduling, technolog$ criterion, technological
specifications, original design and technical documents, as well as other technical files relating to the performance of
the contract ma$ comprise parts of the contract.
If the technolog$ contract in#ol#es a patent, it shall state the name of the in#ention, the applicant for the patent, the
patentee, application date, application num"er, patent num"er and the #alid term of the patent.
Article %2' The parties shall agree upon the manner of pa$ment of the price, remuneration or license fee, which ma$
"e made through a single lump9sum pa$ment "ased on lump9sum calculation5 installment pa$ments "ased on lump9
sum calculation5 or the parties ma$ adopt a method of percentage pa$ments, or percentage pa$ments with an up9
front fee.
If percentage pa$ments are agreed upon, the$ ma$ "e made "ased on a fi)ed percentage of the price5 the increased
the #alue of the product, resulting from the implementation of the patent usage or technological secrets5 profits or
sales re#enue of the product5 or it ma$ "e calculated through other methods agreed "$ the parties. The percentage
pa$ment ma$ "e fi)ed, or it ma$ "e graduall$ increased or decreased on an annual "asis.
If percentage pa$ments are agreed upon, the parties shall agree upon a method for inspecting the rele#ant
accounting "oo7s and records.
Article %2( If the right to use or transfer the technological achie#ements de#eloped during the course of emplo$ment
is owned "$ a legal person or other t$pe of organization, the legal person or other t$pe of organization ma$ enter into
a technolog$ contract with respect to the technological achie#ements de#eloped during the course of emplo$ment.
The legal person or other t$pe of organization shall grant as a reward or remuneration to the indi#idual1s2 who has
accomplished the de#elopment of such technological achie#ements during the course of emplo$ment a fi)ed
percentage of the "enefits o"tained from the use or transfer of such technolog$. /here the legal person or other t$pe
of organization forms a contract to transfer technological achie#ements de#eloped during the course of emplo$ment,
those persons who accomplish such technological achie#ements shall ha#e the right of first refusal to ac!uire such
technological achie#ements under e!ual terms and conditions.
Technological achie#ements de#eloped during the course of emplo$ment means the technological achie#ements that
are mainl$ de#eloped in the course of carr$ing out the tas7 of the legal person or other t$pe of organization or
de#eloped under the material technological conditions of the legal person or other t$pe of organization.
Article %2* An indi#idual who de#elops technological achie#ements outside the course of emplo$ment is entitled to
the right to use or transfer such technological achie#ements, and such indi#idual ma$ enter into technolog$ contracts
with respect to such technological achie#ements de#eloped outside the course of emplo$ment.
Article %2+ An indi#idual who has de#eloped technological achie#ements shall ha#e the right to identif$ on the
rele#ant documentation for the technological achie#ements that he or she is the person who has accomplished the
technological achie#ements, and such person has the right to o"tain a certificate of honor or a reward for such
technological achie#ements.
Article %2- A technolog$ contract that unlawfull$ monopolizes technolog$, impedes technological impro#ements or
infringes upon another person:s rights to technological achie#ements is in#alid.
Part 24 Technolog$ Ce#elopment Contract
Article %%. A technolog$ de#elopment contract is a contract formed "$ the parties with respect to research and
de#elopment of a new technolog$, new product, new techni!ue or new materials and their respecti#e s$stems.
A technolog$ de#elopment contract ma$ "e a commissioned de#elopment contract or a cooperati#e de#elopment
contract.
A technolog$ de#elopment contract shall "e in written form.
/ith respect to a contract formed "$ the parties to carr$ out the transformation of the technological achie#ements that
ha#e industrial application #alue, reference shall "e made to the pro#isions go#erning technolog$ de#elopment
contracts.
Article %%1 The principal of a commissioned de#elopment contract shall pa$ the e)penditures for the research and
de#elopment wor7 and remuneration5 pro#ide technical materials and original data5 complete matters of cooperation5
and accept the research and de#elopment achie#ements as agreed.
Article %%2 The research and de#elopment part$ of a commissioned de#elopment contract shall formulate and
implement the research and de#elopment plan, use the research and de#elopment funds in a reasona"le manner,
complete the research and de#elopment wor7 as scheduled, deli#er the research and de#elopment achie#ements5
pro#ide rele#ant technical information and necessar$ technical guidance, and assist the principal in mastering the
research and de#elopment achie#ements as agreed.
Article %%% If the principal "reaches the agreement leading to the cessation, dela$ or failure of the research and
de#elopment wor7, the principal shall "ear lia"ilit$ for "reach.
Article %%& If the research and de#elopment part$ "reaches the agreement causing the cessation, dela$ or failure of
the research and de#elopment wor7, it shall "ear lia"ilit$ for "reach.
Article %%' The parties to a cooperati#e de#elopment contract shall ma7e in#estments, including pro#iding technolog$
as a form of in#estment, as agreed5 shall participate in the research and de#elopment wor7 through the di#ision of
la"or and shall cooperate and coordinate the research and de#elopment wor7.
Article %%( If a part$ to a cooperati#e de#elopment contract "reaches the agreement causing the cessation, dela$ or
failure of the research and de#elopment wor7, such part$ shall "ear lia"ilit$ for "reach.
Article %%* If the technolog$ that is the su"6ect of the technolog$ de#elopment contract has "een made pu"lic "$ a
third part$, rendering the performance of the technolog$ de#elopment contract pointless, an$ part$ ma$ rescind the
contract.
Article %%+ If insurmounta"le technical difficulties arise during the course of performance of a technolog$ de#elopment
contract, causing a total or partial failure of the research and de#elopment wor7, the lia"ilit$ for such ris7 shall "e
"orne in the manner agreed "$ the parties. If no such agreement e)ists or the agreement on the allocation of ris7 is
am"iguous and cannot "e determined pursuant to the pro#isions in Article (1 of this Law, such ris7s shall "e allocated
"$ the parties in a reasona"le manner.
If a part$ disco#ers that the research and de#elopment wor7 ma$ fail, in whole or in part, as a result of the pro#isions
in the preceding section, the part$ shall promptl$ notif$ the other part$ and ta7e appropriate measures to mitigate
losses. If such part$ fails to promptl$ notif$ the other part$ and ta7e appropriate measures, resulting in additional
losses, such part$ shall "e lia"le for the additional losses.
Article %%- 8nless otherwise agreed "$ the parties, the research and de#elopment part$ shall "e entitled to the right
to appl$ for the patent of an in#ention or creation accomplished under the commissioned de#elopment. After such
part$ has o"tained the patent right, the principal ma$ utilize such patented technolog$ free of charge.
If the research and de#elopment part$ is to transfer its right to appl$ for a patent, the principal shall ha#e the right of
first refusal to assume such patent application right under e!ual terms and conditions.
Article %&. 8nless otherwise agreed "$ the parties, the parties who cooperate in the 6oint de#elopment shall "e
entitled to the right to appl$ for a patent for an in#ention or creation accomplished under a cooperati#e de#elopment
contract. If a part$ in the cooperati#e de#elopment is to transfer its 6ointl$9owned right to appl$ for a patent, each of
the other parties shall ha#e the right of first refusal to o"tain such right under e!ual terms and conditions.
If a part$ in the cooperati#e de#elopment declares a wai#er of its 6ointl$9owned patent application right, the other part$
ma$ ma7e an application for such patent right alone, or the other parties ma$ ma7e an application 6ointl$. >nce the
applicant o"tains the patent right, the part$ that has wai#ed its right to appl$ for such patent ma$ utilize such patent
free of charge.
If one of the parties in the cooperati#e de#elopment does not agree to appl$ for a patent, none of the other parties
ma$ appl$ for a patent.
Article %&1 The right to use, the right to transfer and the manner of "enefit distri"ution of technological secrets
de#eloped under a commissioned de#elopment contract or a cooperati#e de#elopment contract shall "e agreed "$
the parties. If no agreement e)ists or the agreement on such matters is am"iguous and cannot "e determined
pursuant to the pro#isions in Article (1 of this Law, all parties shall ha#e the right to use or transfer the same5 pro#ided
that the research and de#elopment part$ in a commissioned de#elopment shall not transfer the research and
de#elopment achie#ements to a third part$ "efore it deli#ers such achie#ements to the principal.
Part %4 Technolog$ Transfer Contracts
Article %&2 A technolog$ transfer contract includes contracts for the transfer of a patent right, transfer of the right to
appl$ for a patent, transfer of technological secrets and patent licensing contracts.
Technolog$ de#elopment contracts shall "e in written form.
Article %&% The scope of the utilization of patented technolog$ or the use of technological secrets "etween the
transferor and the transferee ma$ "e agreed upon in a technolog$ transfer contract5 howe#er, such contract shall not
restrict competition in, or the de#elopment of, technolog$.
Article %&& A patent licensing contract shall onl$ "e #alid during the #alid term of the patent. After the e)piration of the
#alid term of the patent right or if the patent right ha#e "een declared in#alid, the patentee shall not enter into a patent
licensing contract with an$ person with respect to such patent.
Article %&' The licensor in a patent licensing contract shall, in accordance with the agreed upon pro#isions, grant a
license to the licensee to utilize the patented technolog$, deli#er the rele#ant technical information for the utilization of
the patented technolog$ and pro#ide necessar$ technical guidance.
Article %&( The licensee in a patent licensing contract shall utilize the patented technolog$ in accordance with the
agreement, shall not allow an$ third part$ that is not licensed in the agreement to utilize such patented technolog$,
and shall pa$ the license fee in accordance with the agreement.
Article %&* The transferor in a contract for the transfer of technological secrets shall pro#ide technical materials and
conduct technical guidance, guarantee the practicalit$ and relia"ilit$ of the technolog$ and assume the o"ligation of
confidentialit$ in accordance with the agreement.
Article %&+ The transferee in a contract for the transfer of technological secrets shall utilize the technolog$, pa$ the
license fee and assume the o"ligation of confidentialit$ in accordance with the agreement.
Article %&- The transferor in a technolog$ transfer contract shall warrant that it is the lawful owner of the technolog$
pro#ided, and that the technolog$ pro#ided is complete, free of errors, effecti#e and a"le to accomplish the agreed
o"6ecti#e.
Article %'. The transferee in a technolog$ transfer contract shall underta7e the o"ligation of confidentialit$ with
respect to the secret parts of the technolog$ pro#ided "$ the transferor that ha#e not "een made pu"lic in accordance
with the agreed upon scope and duration.
Article %'1 If the transferor fails to transfer the rele#ant technolog$ as agreed, it shall refund the license fee, in whole
or in part, and shall "e lia"le for "reach5 if the transferor:s utilization of the patented technolog$ or use of the
technological secrets e)ceeds the agreed upon scope, or if the transferor "reaches the contract "$ permitting without
authorization a third part$ to utilize the patented technolog$ or to use the technological secrets, the transferor shall
cease the act of "reach and assume lia"ilit$ for "reach5 if the transferor "reaches its o"ligation of confidentialit$, it
shall "e lia"le for "reach.
Article %'2 If the transferee fails to pa$ the license fee as agreed, the transferee shall pa$ the outstanding license fee
as well as the agreed late pa$ment penalt$. If the transferee still fails to pa$ the outstanding license fee or pa$ the late
pa$ment penalt$, it shall cease utilizing the patented technolog$ or using the technological secrets, return the
technical materials and assume lia"ilit$ for "reach of contract. If the transferee:s utilization of the patented technolog$
or use of the technological secrets e)ceeds the agreed scope, or if the transferee permits a third part$ to utilize the
patented technolog$ or use the technological secrets without o"taining authorization from the transferor, the
transferee shall cease such act of "reach and shall assume lia"ilit$ for "reach of contract. If the transferee "reaches
its o"ligation of confidentialit$, its shall assume lia"ilit$ for "reach of contract.
Article %'% 8nless the parties agree otherwise, if the utilization of the patented technolog$ or use of technological
secrets "$ the transferee pursuant to the agreement infringes upon the lawful rights or interests of another person,
the transferor shall "ear lia"ilit$.
Article %'& @ased upon the principle of mutual "enefit, the parties ma$ pro#ide in the technolog$ transfer contract for
the sharing of utilization or usage rights with respect to an$ su"se!uent impro#ement to the technological
achie#ements of the patented technolog$ or technological secrets. If no agreement on the sharing of the rights to
such su"se!uent impro#ements e)ists or such agreement is am"iguous and cannot "e determined pursuant to the
pro#isions in Article (1 of this Law, no other parties shall ha#e the right to share the technological achie#ements from
an$ su"se!uent technical impro#ements made "$ a part$.
Article %'' /here other laws or administrati#e regulations for technolog$ import contracts, patents, or patent
application contracts pro#ide otherwise, such laws or administrati#e regulations shall go#ern.
Part &4 Technical Consulting Contracts and Technical 3er#ice Contracts
Article %'( Technical consulting contracts ma$ include contracts that relate to the pro#ision of feasi"ilit$ studies,
technical forecasts, technical in#estigations on a specific topic, anal$sis and e#aluation reports with respect to a
specific technical pro6ect.
A technical ser#ice contract means a contract under which one part$ uses its technical 7nowledge to sol#e a specific
technical pro"lem for another part$. A technical ser#ice does not include construction contracts or special underta7ing
contracts.
Article %'* The principal in a technical consulting contract shall, in accordance with the agreement, clarif$ the issue1s2
for consultation5 pro#ide technical "ac7ground information and rele#ant technical materials and data5 accept the wor7
achie#ements of the commissioned part$ and pa$ the remuneration.
Article %'+ The commissioned part$ in a technical consulting contract shall, within the agreed time limit, complete the
consulting report or pro#ide answers to pro"lems5 the consulting report pro#ided shall meet the agreed upon
re!uirements.
Article %'- If the principal in a technical consulting contract fails to pro#ide the necessar$ materials and data as
agreed, there"$ affecting the progress and !ualit$ of the wor7, or does not accept or dela$s acceptance of the wor7
achie#ements, it shall not demand a refund of the remuneration alread$ paid and shall pa$ an$ remuneration due.
If the commissioned part$ in a technical consulting contract fails to pro#ide its consultation report at the scheduled
time, or the consultation report pro#ided does not meet the agreed re!uirements, it shall reduce or wai#e its
remuneration as a lia"ilit$ for "reach of contract.
8nless otherwise agreed "$ the parties, if the commissioned part$ in a technical consulting contract pro#ides a
consultation report and opinions that meet the agreed re!uirements and the principal ma7es a decision "ased upon
such reports and opinions that results in damages, such damages shall "e "orne "$ the principal.
Article %(. The principal in a technical ser#ice contract shall, in accordance with the agreed pro#isions, pro#ide
wor7ing conditions, complete matters of support, accept the wor7 achie#ements and pa$ the remuneration.
Article %(1 The commissioned part$ in a technical ser#ice contract shall, in accordance with the agreed pro#isions,
complete the ser#ice wor7, sol#e technical pro"lems, warrant the !ualit$ of the wor7, and impart 7now9how for sol#ing
technical pro"lems.
Article %(2 If the principal in a technical ser#ice contract fails to perform its o"ligations as agreed, or the performance
of its o"ligation does not conform to the agreement, there"$ affecting the progress and !ualit$ of the wor75 or if the
principal does not accept or is remiss in accepting the wor7 achie#ements, it shall not demand a refund of the
remuneration alread$ paid, and shall pa$ an$ remuneration due.
If the commissioned part$ in a technical ser#ice contract fails to complete the wor7 as agreed in the contract, it shall
wai#e its remuneration as a lia"ilit$ for "reach of contract.
Article %(% The commissioned part$ shall "e entitled to an$ new technological achie#ements de#eloped "$ the
commissioned part$ during the course of its performance of the technical consulting contract or technical ser#ice
contract through its use of technical materials and wor7ing conditions pro#ided "$ the principal. The principal shall "e
entitled to an$ new technological achie#ements de
#eloped "$ the principal "$ using the wor7 achie#ements of the commissioned part$. If the parties ha#e otherwise
agreed, such agreement shall appl$.
Article %(& If the laws and administrati#e regulations ha#e pro#isions for Technolog$ @ro7erage Contracts,
Technolog$ Training Contracts, such pro#isions shall go#ern.
Chapter BIB @ailment Contracts
Article %(' A "ailment contract is a contract under which the "ailee safe97eeps an o"6ect deli#ered "$ the "ailor and
returns such o"6ect to the "ailor.
Article %(( The "ailor shall pa$ to the "ailee the "ailment fee as agreed.
If the parties ha#e not agreed upon a "ailment fee, or the agreement on the "ailment fee is am"iguous and cannot "e
determined pursuant to the pro#isions in Article (1 of this Law, the "ailment shall "e gratuitous.
Article %(* 8nless otherwise agreed "$ the parties, the "ailment contract is concluded at the time the o"6ect is
deli#ered.
Article %(+ 8nless a customar$ "usiness practice e)ists to the contrar$, the "ailee shall pro#ide a "ailment certificate
when the "ailor deli#ers the o"6ect to the "ailee.
Article %(- The "ailee shall properl$ safe97eep the o"6ect under "ailment.
The parties ma$ agree upon the location or method of the "ailment. The location or method of "ailment of the o"6ect
shall not "e changed without authorization, e)cept in case of an emergenc$ or for the protection of the interests of the
"ailor.
Article %*. If the o"6ect deli#ered to the "ailee has a defect or re!uires special measures of care due to the nature of
the o"6ect, the "ailor shall inform the "ailee of the rele#ant circumstances. If the "ailor fails to so inform the "ailee,
resulting in damages to the o"6ect, the "ailee shall not "e lia"le for damages to the o"6ect5 if the "ailee incurs
damages as a result, the "ailor shall "e lia"le for damages, unless the "ailee 7new or should ha#e 7nown that the
o"6ect deli#ered had a defect or re!uired special measures of care and failed to ta7e remedial measures.
Article %*1 8nless otherwise agreed "$ the parties, the "ailee shall not turn the o"6ect o#er to a third part$ for
"ailment.
If the "ailee turns o#er the o"6ect to a third part$ for "ailment in #iolation of the pro#ision in the preceding section,
there"$ causing damage to, or loss of, the o"6ect, the "ailee shall "e lia"le for damages.
Article %*2 8nless otherwise agreed "$ the parties, the "ailee shall not use or permit a third part$ to use the o"6ect.
Article %*% If a third part$ e)ercises a claim of right to the o"6ect, the "ailee shall perform the o"ligation of returning
the o"6ect to the "ailor, unless the o"6ect is su"6ect to preser#ation or specific performance pursuant to the law.
If the third part$ institutes an action against the "ailee or applies for an attachment of the o"6ect, the "ailee shall
promptl$ notif$ the "ailor.
Article %*& If the "ailee improperl$ safe97eeps the o"6ect during the period of "ailment, causing destruction, damage
to, or loss of, the o"6ect, the "ailee shall "e lia"le for damages. <owe#er, if the "ailment is gratuitous and the "ailee
pro#es that it was not grossl$ negligent, the "ailee shall not "e lia"le for damages.
Article %*' If the o"6ect for "ailment is currenc$, negotia"le securities or other #alua"le o"6ects, the "ailor shall ma7e
a declaration of such to the "ailee, and the "ailee shall carr$ out an acceptance inspection or seal up such o"6ect for
"ailment. If the "ailor fails to ma7e such declaration and the o"6ect is damaged, destro$ed or lost, the "ailee ma$
compensate the "ailor as if such o"6ect were an ordinar$ o"6ect.
Article %*( The "ailor ma$ retrie#e the o"6ect at an$ time.
If the parties ha#e not agreed upon the "ailment period, or the agreement on the "ailment period is am"iguous, the
"ailee ma$, at an$ time, demand the "ailor to retrie#e the o"6ect. If the "ailment period has "een agreed upon, the
"ailee shall not, in the a"sence of a special reason, demand the "ailor to retrie#e the o"6ect prior to the e)piration of
the period.
Article %** 8pon the e)piration of the "ailment period or upon the "ailor:s earl$ retrie#al of the "ailed o"6ect, the
"ailee shall return to the "ailor the original o"6ect and an$ fruits deri#ed therefrom.
Article %*+ If the o"6ect under "ailment is currenc$, the "ailee ma$ return currenc$ of the same t$pe and amount. ,or
other replacea"le o"6ects under "ailment, the "ailee ma$ return o"6ects of the same 7ind, !ualit$ and !uantit$ as
agreed.
Article %*- 8nder a "ailment contract that is non9gratuitous, the "ailor shall pa$ the "ailment fee to the "ailee within
the agreed time.
If the parties ha#e not agreed on the time of pa$ment, or the agreement on the time of pa$ment is am"iguous and
cannot "e determined pursuant to the pro#isions in Article (1 of this Law, the fee shall "e paid at the time the o"6ect is
retrie#ed.
Article %+. 8nless otherwise agreed "$ the parties, if the "ailor fails to pa$ the "ailment fee and other fees as agreed,
the "ailee shall ha#e possessor$ lien rights to the o"6ect.
Chapter BB /arehousing Contracts
Article %+1 A warehousing contract is a contract under which a warehouseman stores goods deli#ered "$ the "ailor
and the "ailor pa$s the warehousing fee.
Article %+2 A warehousing contract shall "ecome effecti#e upon the conclusion of the contract.
Article %+% If perisha"le goods or hazardous goods such as com"usti"le, e)plosi#e, poisonous, corrosi#e or
radioacti#e goods are to "e stored, the "ailor shall specif$ the nature of such goods and pro#ide rele#ant information.
If the "ailor #iolates the pro#isions in the preceding section, the warehouseman ma$ refuse to accept the goods for
storage, or ma$ ta7e appropriate measures to pre#ent the occurrence of damage thereto, and the e)penses incurred
there"$ shall "e "orne "$ the "ailor.
If hazardous goods such as com"usti"le, e)plosi#e, poisonous, corrosi#e or radioacti#e goods are to "e stored, the
warehouseman shall ha#e the appropriate storage conditions for such goods.
Article %+& The warehouseman shall carr$ out an acceptance inspection on the goods to "e stored in the warehouse
as agreed. If during the course of the acceptance inspection, the warehouseman disco#ers that an$ of the goods
does not conform to the agreement, it shall promptl$ notif$ the "ailor of such non9conformit$. After the acceptance
inspection "$ the warehouseman, the warehouseman shall "e lia"le for damages to the e)tent the t$pe, !uantit$ or
!ualit$ of the goods fails to conform to the agreement.
Article %+' 8pon the deli#er$ of the goods "$ the "ailor for storage, the warehouseman shall issue a warehouse
receipt to the "ailor.
Article %+( The warehouseman shall sign or affi) a seal on the warehouse receipt. A warehouse receipt includes the
following items4
112 title or name and address of the "ailor5
122 t$pe, !uantit$, !ualit$, pac7aging, num"er of items and la"eling of the goods5
1%2 standard of wear and tear on the goods5
1&2 location of storage5
1'2 storage period5
1(2 warehousing charge5
1*2 polic$ amount, term of insurance and name of the insurer if insurance co#erage has "een o"tained for the goods5
and
1+2 name of the issuer, place and date of issue of the warehouse receipt.
Article %+* The warehouse receipt is the #oucher used to claim the stored goods. The "ailor or the person in
possession of the warehouse receipt ma$ transfer the right to claim the goods if he or she has endorsed the
warehouse receipt and the warehouseman has signed or affi)ed a seal thereon.
Article %++ The warehouseman shall, at the re!uest of the "ailor or person in possession of the warehouse receipt,
consent to his or her inspection of the stored goods or his or her retrie#al of the samples therefrom.
Article %+- If the warehouseman disco#ers an$ deterioration in, or other forms of damage to, the stored goods, it shall
promptl$ notif$ the "ailor or person in possession of the warehouse receipt.
Article %-. If the warehouseman disco#ers a deterioration in, or other forms of damages to, the stored goods, which
endangers the safet$ or normal safe7eeping of other stored goods, it shall demand the "ailor or person in possession
of the warehouse receipt to ma7e the necessar$ disposal of the stored goods. In an emergenc$ situation, the
warehouseman ma$ ma7e the necessar$ disposal, pro#ided that the "ailor or person in possession of the warehouse
receipt is notified of the situation promptl$ thereafter.
Article %-1 If the parties ha#e not agreed on the storage period or the agreement on the storage period is am"iguous,
the "ailor or person in possession of the warehouse receipt ma$ retrie#e the stored goods at an$ time. The
warehouseman ma$, at an$ time, re!uire the "ailor or person in possession of warehouse receipt to retrie#e the
stored goods, pro#ided that necessar$ preparator$ time is gi#en.
Article %-2 8pon the e)piration of the storage period, the "ailor or person in possession of the warehouse receipt
shall retrie#e the stored goods with the warehouse receipt. If the "ailor or person in possession of the warehouse
receipt retrie#es the stored goods after the e)piration of the storage period, an additional warehousing fee shall "e
imposed. If the "ailor or person in possession of the warehouse receipt retrie#es the warehoused goods in ad#ance,
the warehousing fee shall not "e reduced.
Article %-% If the "ailor or person in possession of the warehouse receipt fails to retrie#e the stored goods upon
e)piration of the storage period, the warehouseman ma$ demand that the stored goods "e retrie#ed within a
reasona"le period5 if the stored goods are not retrie#ed after such reasona"le period, the warehouseman ma$ escrow
the stored goods.
Article %-& Curing the storage period, if the stored goods are damaged, destro$ed or lost due to the improper
safe7eeping of the warehouseman, the warehouseman shall "e lia"le for damages.
If the deterioration in, or damage to, the stored goods is caused due to the nature of the goods, non9conformit$ with
the agreed pac7aging or storage of the goods "e$ond the e)piration of the effecti#e storage period, the
warehouseman shall not "e lia"le for damages.
Article %-' Aatters not co#ered "$ the pro#isions in this Chapter shall "e go#erned "$ the rele#ant pro#isions in
@ailment Contracts.
Chapter BBI Agenc$ Contracts
Article %-( An agenc$ contract is a contract under which the agent handles matters for the principal as agreed "$ the
principal and the agent.
Article %-* The principal ma$ entrust an agent to handle one or se#eral particular matters. The principal ma$ also
entrust an agent to handle all matters in general.
Article %-+ The principal shall pa$ in ad#ance the necessar$ e)penses for handling the matters to "e entrusted. The
principal shall reim"urse the agent for an$ necessar$ e)penses ad#anced "$ the agent for handling the matters
entrusted to it, as well as the interest thereon.
Article %-- The agent shall handle the entrusted matters according to the instructions of the principal. /here a
change to the principal:s instructions is necessar$, it shall "e consented to "$ the principal. In an emergenc$ situation
in which contact with the principal is difficult, the agent shall handle the entrusted matters in a proper manner, and
promptl$ thereafter shall notif$ the principal of the situation.
Article &.. The agent shall personall$ handle the matters entrusted to it. 8pon consent of the principal, the agent ma$
re9entrust the matter to another. After the re9entrustment is consented to, the principal ma$ directl$ instruct the third
person to whom such matters are re9entrusted, and the agent shall "ear lia"ilit$ onl$ with respect to the selection and
appointment of the third person and its instructions gi#en to the third person. /here the re9entrustment is not
consented to, the agent shall "ear lia"ilit$ for the acts of the third person, unless the agent needs to re9entrust such
matters for the protection of the interests of principal due to an emergenc$.
Article &.1 The agent shall report the status of the handling of the entrusted matter in accordance with the
re!uirements of the principal. 8pon the termination of the agenc$ contract, the agent shall report to the principal on
the outcome of the matters entrusted.
Article &.2 /here the agent uses its own name to enter into a contract with a third part$ within the scope authorized
"$ the principal, and the third part$ is aware, at the time of the formation of the contract, of the agenc$ relationship
"etween the agent and the principal, such contract shall "ind directl$ the principal and the third part$, unless clear
e#idence e)ists that pro#es that such contract "inds onl$ the agent and the third part$.
Article &.% /hen the agent uses its own name to enter into a contract with a third part$, and the third part$ has no
7nowledge of the agenc$ relationship "etween the agent and the principal, and for reasons attri"uta"le to the third
part$, the agent fails to perform its o"ligations toward the principal, the agent shall disclose the third part$ to the
principal, who ma$ there"$ e)ercise the rights of the agent against the third part$, unless the third part$ would not
ha#e entered into the contract if it had 7nowledge of the principal at the time the contract was formed.
If for reasons attri"uta"le to the principal, the agent fails to perform its o"ligations toward the third part$, the agent
shall disclose the principal to the third part$. The third part$ ma$ there"$ elect to assert its rights against the agent or
the principal as the opposite part$5 howe#er, the third part$ shall not change its selection of the opposite part$.
If the principal e)ercises the rights of the agent against the third part$, the third part$ ma$ claim against the principal
an$ defense that it has against the agent. If the third part$ selects the principal as the opposite part$, the principal
ma$ claim against the third part$ an$ defense that it has against the agent, as well as an$ defense the agent has
against the third part$.
Article &.& An$ propert$ o"tained from handling the matters entrusted "$ the agent shall "e turned o#er to the
principal.
Article &.' If the agent completes the entrusted matters, the principal shall pa$ remuneration to the agent. If for
reasons not attri"uta"le to the agent, the agenc$ contract is rescinded or the entrusted matters are una"le to "e
completed, the principal shall pa$ the agent an appropriate remuneration. If the parties otherwise agree, such
agreement shall appl$.
Article &.( 8nder an agenc$ contract that is non9gratuitous, the principal ma$ demand compensation for damages
caused "$ the fault of the agent. 8nder an agenc$ contract that is gratuitous, the principal ma$ demand
compensation for damages caused "$ the intentional act or gross negligence of the agent.
The agent shall compensate the principal for an$ damages caused "$ acts "e$ond the scope of the agent:s authorit$.
Article &.* If the agent sustains damages during the course of handling the entrusted matters due to reasons not
attri"uta"le to itself, the agent ma$ demand compensation from the principal for such damages.
Article &.+ 8pon consent of the agent, the principal ma$ entrust a third part$, in addition to the agent, to handle the
entrusted matters. If as a result, damages are caused to the agent, the agent ma$ demand the principal to
compensate for such damages.
Article &.- /here two or more agents handle the same entrusted matter, the agents shall "e 6ointl$ and se#erall$
lia"le toward the principal.
Article &1. The principal or the agent ma$ rescind the agenc$ contract at an$ time. An$ damages caused to the other
part$ as a result of the rescission of the agenc$ contract shall "e compensated, unless the reason for such rescission
is not attri"uta"le to the rescinding part$.
Article &11 8nless the parties ha#e otherwise agreed, or the contract is not suita"le for termination gi#en the nature of
the entrusted matter, the agenc$ contract shall terminate upon the death, loss of the ci#il capacit$ or "an7ruptc$ of the
principal or the agent.
Article &12 If the termination of the agenc$ contract due to the death, loss of ci#il capacit$ or "an7ruptc$ of the
principal would result in the impairment of the interests of the principal, the agent shall continue handling the
entrusted matters until the successor or legal representati#e of the principal, or a li!uidation organization underta7es
the entrusted matter.
Article &1% If the death, loss of ci#il capacit$ or "an7ruptc$ of the agent leads to the termination of the agenc$
contract, the successor, legal representati#e or li!uidation organization of the agent shall notif$ the principal in a
timel$ manner. If the termination of the agenc$ contract would impair the interests of the principal, the successor or
legal representati#e of the agent, or a li!uidation organization shall ta7e an$ necessar$ measures prior to an$
su"se!uent arrangements made "$ the principal.
Chapter BBII Commission Agenc$ Contracts
Article &1& A commission agenc$ contract is a contract under which the commission agent uses its own name to
engage in trade acti#ities on "ehalf of the principal, and the principal pa$s a remuneration to the commission agent.
Article &1' 8nless otherwise agreed "$ the parties, the e)penses incurred "$ the commission agent engaged in
handling the matters entrusted shall "e "orne "$ the commission agent.
Article &1( /hile the commission agent has possession of the entrusted o"6ect, it shall properl$ safe97eep such
o"6ect.
Article &1* /here the entrusted goods are defecti#e, perisha"le or suscepti"le to deterioration at the time of deli#er$
to the commission agent, the commission agent ma$ dispose of the goods upon the consent of the principal. If the
commission agent is una"le to contact the principal in a timel$ manner, the agent ma$ dispose of the entrusted goods
in a reasona"le manner.
Article &1+ The consent of the principal shall "e o"tained when selling goods at a price lower than the one designated
"$ the principal, or when "u$ing goods at a price higher than the one designated "$ the principal. If the principal does
not consent, "ut the commission agent ma7es up for the price difference, the sale shall "e deemed effecti#e as to the
principal.
If a commission agent sells goods at a price higher than the one designated "$ the principal or purchases goods at a
price lower that the price designated "$ the principal, the remuneration of the commission agent ma$ "e increased as
agreed. /here an increase in remuneration is not agreed or the agreement on the increase in remuneration is
am"iguous and cannot "e determined pursuant to the pro#isions in Article (1 of this Law, the principal shall "e
entitled to such "enefit.
If the principal has gi#en specific instructions as to the price of the goods, the commission agent shall not purchase or
sell goods in #iolation of such instructions.
Article &1- 8nless the principal e)presses to the contrar$, the commission agent itself ma$ act as the purchaser or
seller of goods in purchasing or selling goods with a fi)ed mar7et price.
If the situation descri"ed in the preceding section applies to the commission agent, it ma$ still demand the principal to
pa$ remuneration.
Article &2. /hen the commission agent purchases goods as agreed, the principal shall accept the entrusted goods in
a timel$ manner. If after a demand "$ the commission agent, the principal refuses to accept the goods without proper
reason, the commission agent ma$ escrow the entrusted goods pursuant to the pro#isions in Article 1.1 of this Law.
If the goods cannot "e sold or the principal re#o7es the sale, and the principal fails to either retrie#e or dispose of
such goods after a demand "$ the commission agent, the commission agent ma$ escrow the entrusted goods
pursuant to the pro#isions in Article 1.1 of this Law.
Article &21 If a commission agent enters into a contract with a third part$, the commission agent shall directl$ assume
the rights and o"ligations in such contract.
8nless otherwise agreed "$ the commission agent and principal, if the third part$ fails to perform its o"ligations,
resulting in damages to the principal, the agent shall "e lia"le for damages.
Article &22 After the commission agent has completed the entrusted matter, in whole or in part, the principal shall pa$
the commensurate remuneration to the commission agent. 8nless otherwise agreed "$ the parties, if the principal
fails to pa$ the remuneration on time, the commission agent shall ha#e possessor$ lien rights to the entrusted goods.
Article &2% Aatters not co#ered "$ the pro#isions in this Chapter shall "e go#erned "$ the rele#ant pro#isions in
Agenc$ Contracts.
Chapter BBIII @ro7erage Contracts
Article &2& A "ro7erage contract is a contract under which the "ro7er informs the principal of an opportunit$ to form a
contract, or pro#ides the principal with "ro7erage ser#ices for the formation of a contract, and the principal pa$s the
remuneration.
Article &2' The "ro7er shall pro#ide the principal with truthful information with respect to matters related to the
formation of the contract.
If the "ro7er intentionall$ conceals important facts related to the formation of a contract or pro#ides false information,
there"$ impairing the interests of the principal, the "ro7er shall not demand that remuneration "e paid and shall "e
lia"le for damages.
Article &2( If the "ro7er facilitates the conclusion of a contract, the principal shall pa$ the remuneration as agreed. If
the remuneration for the "ro7er is not agreed, or the agreement on remuneration is am"iguous and cannot "e
determined pursuant to the pro#isions in Article (1 of this Law, it shall "e determined reasona"l$ "ased on the la"or
or wor7 of the "ro7er. If the "ro7er pro#ides "ro7erage ser#ices for the formation of such contract, and such ser#ices
facilitate the conclusion of the contract, the remuneration to the "ro7er shall "e "orne e!uall$ "$ the parties to the
contract.
/hen the "ro7er facilitates the conclusion of a contract, the e)penses for the "ro7erage acti#ities shall "e "orne "$
the "ro7er.
Article &2* If the "ro7er fails to facilitate the conclusion of the contract, the "ro7er shall not demand pa$ment of
remuneration5 howe#er, it ma$ demand the principal to pa$ the e)penses necessar$ for the "ro7erage acti#ities.
3upplementar$ Pro#isions
Article &2+ This Law shall ta7e effect on >cto"er 1, 1---. At such time, the Law of the People:s ?epu"lic of China on
=conomic Contracts, the Law of the People:s ?epu"lic of China on =conomic Contracts in#ol#ing ,oreign Interests
and the Law of the People:s ?epu"lic of China on Technolog$ Contracts shall "e repealed.
The re#ised Cop$right Law of the PeopleDs ?epu"lic China was adopted "$ the 3tanding Committee of the Eational
PeopleDs Congress on 2* >cto"er, 2..1. The re#ised Law has not onl$ fulfilled the re!uirements set forth in the
T?IP3 Agreement, "ut also well responded to the challenges in cop$right protection due to the rapid scientific and
technical de#elopment. Through the re#ision, some pro"lems e)isting for $ears in cop$right protection in China has
finall$ "een sol#ed.
The ma6or changes to the Chinese Cop$right Law are as follows4
Incorporating right of rental and right of information distri"ution on internet to cop$right4 right of rental refers to the
right to authorise others to temporaril$ use cinematographic wor7s or wor7s created "$ means similar to that for
producing cinematographic wor7s, or computer software5 right of information distri"ution on networ7 refers to the right
to communicate to the pu"lic wor7s, "$ wire or wireless means, including the ma7ing a#aila"le to the pu"lic of their
wor7s in such a wa$ that mem"er of the pu"lic ma$ access these wor7s from a place and at a time indi#iduall$
chosen "$ them 13ee Article 1. of the Cop$right Law25
Pro#iding the protection on data"ases4 data"ases created "$ compilation of data that do not constitute wor7s, and
ha#ing originalit$ in the selection and arrangement of the contents are protected as wor7s of compilation 13ee Article
1& of the Cop$right Law25
=)panding the performerDs right4 Performers ha#e the right to authorise others to reproduce and distri"ute
sound#ideo recording products including their performance, to distri"ute their performance through information
networ7, and the right to recei#e remuneration5
Adding the right of sound#ideo recording producers4 The producers of sound#ideo recording products ha#e the right
to authorise others to rent or distri"ute through information networ7 their sound#ideo recording products to the pu"lic,
and the right to recei#e remuneration5
Pro#iding more legal remedies for cop$right infringees4
3pecif$ing the methods for calculating the amount of compensation for damages4 The amount of compensation for
damages ma$ "e calculated according to the real loss of the cop$right owner or the infringerDs income, plus the
reasona"le e)penses in stopping the infringement "orne "$ the cop$right owner5 where the damages cannot "e
calculated "$ either of the a"o#e methods, the court ma$ fi) the compensation for damages to an amount up to ?A@
'..,... $uan 1Article &+ of the Cop$right Law25
Adopting the pre9trial in6unction for suspension of alleged infringement and propert$ preser#ation measure4 If the
cop$right owner has eidence that the infringer is conducting or is going to conduct an infringing act which is most
li7el$ to cause irrepara"le damages to his legitimate rights and interests, he ma$ file a re!uest with the PeopleDs Court
to order the infringer to suspend the alleged infringement or adopt the propert$ preser#ation measure "efore
instituting legal proceedings 1Article &- of the Cop$right Law25
Adding the e#idence preser#ation measure4 /here the e#idence is li7el$ to "e destro$ed, or where it is difficult to
o"tain the proofs in the future, the cop$right owner ma$ appl$ to the PeopleDs Court for the preser#ation of e#idence
1Article '. of the Cop$right Law25
Adding the pro#ision for legal lia"ilities of pu"lishers, producers, distri"utors and renters of reproductions of wor7s5
where pu"lishers, producers, distri"utors and renters of reproductions of wor7s cannot pro#e that their reproductions
ha#e legitimate source, the$ shall "ear legal lia"ilities 1Article '2 of the Cop$right Law25
Adding the re!uirement for concluding a written contract for assignment of cop$right4 where the propert$ right
incorporated in a cop$right, as specified in the law, is transferred, a written contract shall "e concluded 1Article 2' of
the Cop$right Law2.