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LeRoyH.GrawEdD,DBA,C.P.M.,CPCM,CPP,CPPM,CISCM,ChinasContractLaw,Knowledge/Skill/Ability,BeabletowriteacontractpreparedunderChinasContractLawwhenrequired.,Introduction,ContractLawofthePeoplesRepublicofChina(PRC)waspromulgatedonNationalDay,October1st,1999Itreplacedahostofexistinglaws,including:EconomicContractLawofthePRC(ECL)LawofthePRConEconomicContractsinvolvingForeignInterests(FECL)LawofthePRConTechnologyContractsContains23Chapterand428Articles,Background,ThenewPRCContractLawmirrorsprovisionsoftheU.N.ConventionontheInternationalSaleofGoods(CISG),someideasoftheUniformCommercialCode,andsomemoderntrendsinWesternlaw.Italsoremovespunitiveprovisionsofpriorlaw,providesforremediesforbreach,contemplatesspecificperformance,andfrownsonpenaltyclausesnotrelatedtoactuallosses.,DefinitionofaContract,Article2ofthenewContractLawprovidesthatacontractinthisLawreferstoanagreementestablishing,modifyingandterminatingthecivilrightsandobligationsbetweensubjectsofequalfooting.Acontractisanagreementbetweenthesubjects,nomattertheyarenaturalpersons,legalpersonsorotherorganizations.Acontractisanagreementofcivilrelationshipbeingconcludedandsignedbyandbetweenspecificcivilsubjects,thatis,byandbetweentwoormorenaturalpersons,byandbetweennaturalperson(s)andlegalperson(s)orotherorganization(s),byandbetweenlegalpersons,byandbetweenlegalperson(s)andotherorganization(s).,ScopeoftheNewLaw,Excluded:Contractsinvolvingpersonalstatusrelationship,suchasonmatrimony,adoption,guardianship,etc.,undertheprovisionsofotherlaws.Contractsforguaranteeorforinsurance.Othercontractsnotcoveredinthe“SpecificProvisions”.Allcontractsmustfollowthe“GeneralProvisions”ofthenewcontractlaw,eventhoughthereareseparatelawscoveringthesecontracttypes.,ScopeoftheNewLaw,Included:Otherthanthoseexcluded,domesticcontractsandforeigncontractswhichinvolveforeigninterests.15specifically-listedkindsofcontractsfoundintheSpecificProvisions.Theseinclude:contractsforsalescontractsforsupplyanduseofelectricity,water,gasorheatingcontractsfordonationcontractsforloanscontractsforleasecontractsforfinancialleasecontractsforworkcontractsforconstructionprojectscontractsfortransportationcontractsfortechnologycontractsforstoragecontractsforwarehousingcontractsforcommissioncontractsforbrokeragecontractsforintermediation.,WhatisIncluded?,Article12Thecontentofacontractisdeterminedbythepartiesandgenerallyincludesthefollowingclauses:(1)designationsornamesandaddressesoftheparties;(2)thetargetedmatter;(3)quantity(4)quality;(5)priceorremuneration;(6)time,placeandmodeoffulfillment;(7)liabilityforbreachofcontract;and(8)disputesettlement.,SpecificPoints,Oralcontractsallowed.Bindingcontractsmaybewrittenororal,unlesslimitedbyagreementorlaw.SimilartotheCISG.UnliketheUCC,whichlimitsoralcontractsto$5,000.,SpecificPoints,Recognitionofmoderntransactionmodes.Electronicallytransmittedcommunications(telegram,telex,facsimile,electronicdatainterchangeande-mail)constitutewritingsforpurposesofcontractlaw.,SpecificPoints,Goodfaithinnegotiatingandperforming.Apartywho,inthenegotiatingprocess,deliberatelyconcealsimportantfactsorpretendstoconcludeacontractmaybeliableforcausinglosstotheotherparty.Goodfaithisrequiredintheperformanceofcontractualrightsandduties.,SpecificPoints,Groundsforrevocation/modification.Whereseriousmisunderstandingliesatthebaseofthecontract,orwherethecontractismanifestlyunfairatthetimeitwasmade,apartymayseekmodificationorrevocation.,SpecificPoints,Businesssecretsprotected.Apartywholearnsabusinesssecretoftheotherinthecontractingprocessrisksdamagesfordisclosingorunfairlyusingtheinformation.,SpecificPoints,AdhesionandStandardFormContracts.AkintoconsumerprotectionmeasuresinU.S.law,thenewlawinvalidatesclausesthatpurporttoimmunizeapartyfrom,interalia,causingpersonalinjuryorpropertydamagetotheother.,SpecificPoints,RulesofInterpretation.Incaseofdisputes,standardizedcontractswillbeinterpretedaccordingtogeneralunderstanding,andambiguitiesshallberesolvedinfavorofthenon-draftingparty.Whereinternationalcontractsspecify,forexample,thatboththeChineseandEnglishversionswillhaveequalvalidity,disparatemeaningsshallbeinterpretedaccordingtothepurposeofthecontract.,SpecificPoints,OfferandAcceptance.Incontrasttopriorlaw,fairlydetailedrulesnowgovernofferandacceptance,formationandrevocationofoffers.Forexample,anacceptanceisgenerallyeffectivewhennoticereachestheofferor.,SpecificPoints,Acceptancethatvariesthetermsoftheoffer.Anoffereewhosubstantiallyaltersthecontentsoftheofferwillnotbepermittedtobindtheofferee.,AdditionalProvisions,Thenewlaw:encouragescontractingpartiestohaverecoursetoinformaldisputeresolution.favorsarbitrationbutalsoaffirmsaccesstocourts.,Summary/Conclusions,ThenewContractLawofChinaisappropriateforthe“NewWorldEconomy”andChinasentranceintotheWTO.ThenewContractL
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