Laws of the People's Republic of China

THE ECONOMIC CONTRACT LAW OF THE PEOPLE'S
REPUBLIC OF CHINA

(Adopted at the 4th Session of the Fifth National
People's Congress on December 13, 1981)

 

 

 

SUBJECT: ECONOMIC CONTRACTS

ISSUING-DEPT: NATIONAL PEOPLE'S CONGRESS

ISSUE-DATE: 12/13/1981

IMPLEMENT-DATE: 07/01/1982

LENGTH: 6759 words

TEXT:

CHAPTER I GENERAL PRINCIPLES

[Article 1] This Law is formulated to protect the legal rights and interests of the parties to the economic contracts, safeguard the socioeconomic order, improve economic results, guarantee the implementation of the state plans and promote the progress of the socialist modernization programe.

[Article 2] The economic contract is an agreement between legal persons specifying their mutual relations, rights and obligations in order to realize certain economic aims.

[Article 3] Economic contracts shall be in writing except those completed instantly.  Documents, telegrams and charts concerning amendments to the contract and agreed thereon between the parties form part of the contract.

[Article 4] Economic contracts must be made in accordance with state laws and in conformity with the requirements of state policies and plans.  No units or individuals are allowed to use contracts for illegal activities, disrupt economic order, undermine state plans, or damage national and social public interest to gain illegal income.

[Article 5] Economic contracts must be made according to the principles of equality and mutual benefit, agreement through consultation and compensation of equal value.  Neither party is allowed to impose its will on the other, and no unit or individual is allowed to interfere illegally.

[Article 6] An economic contract, made according to law, is legally binding.  The parties must perform the obligations in the contract, and neither party is allowed to alter or rescind the contract unilaterally.

[Article 7] The following economic contracts are null and void:

[Article 8] The provisions of this Law apply to contracts on purchasing and marketing, sub-contracting for construction projects, undertaking processing, goods transport, power supply and use, storage, property lease, loan, property insurance, scientific and technological cooperation and other economic contracts.

CHAPTER II THE ESTABLISHMENT AND PERFORMANCE OF ECONOMIC CONTRACTS

[Article 9] An economic contract is made when both parties reach agreement through consultation on the principal clauses of the contract.

[Article 10] An agent signing a contract on behalf of his principal must obtain in advance the proof of appointment and sign the contract in the name of his principal within the limits of his appointment so as to bind his principal with the rights and obligations of the contract.

[Article 11] For economic dealings involving products and items included in the state mandatory plan, the economic contracts must be signed according to the quotas set by the State; if no agreement is reached at the time of the signing, the matter shall be dealt with by the planning organ superior to both parties.  As for economic dealings involving products and items included in the state guidance plan, the economic contracts shall be signed according to the actual conditions of the units concerned in reference to the quotas set by the State.

[Article 12] An economic contract shall include the following:

Clauses which must be included according to provisions of law or the character of the economic contract and mandatory clauses of one party are also the main clauses of an economic contract.

[Article 13] Where the fulfillment of an economic contract is by payment of money, it shall be calculated and paid in Renminbi, except otherwise stipulated by law.

Unless authorized by the State to offer payment by cash, all settlements must be effected through the bank.

[Article 14] One party may pay a deposit to the other party.  The deposit should be refunded or offset when the economic contract is carried out.

When the party paying the deposit fails to fulfil the contract, he shall not be entitled to demand the refund of the deposit.  If the recipient of the deposit fails to fulfil the contract, he shall return twice the amount of the deposit.

[Article 15] Where one party to the economic contract demands a guaranty, it may be guaranteed by a guarantor unit.  The guarantor unit is the one who guarantees one party to the contract in fulfilling the contract.  When the guaranteed party fails to fulfil the contract, the guarantor unit shall be held liable to compensation for the loss.

[Article 16] After the economic contract is nullified, the party shall return to the other party the property he has obtained under the said contract.  The defaulting party shall compensate for the loss incurred therefrom to the other party; if both parties are in the wrong, each shall bear his due responsibility.

Where a contract infringes on national or social public interests, if both parties thereto are intentional, the property they have obtained or are going to obtain shall be turned over to the state treasury.  If only one party is intentional, he shall return the property he has obtained from the other party to the latter; the property which the innocent party has obtained or is going to obtain from his counterpart shall be turned over to the state treasury.

[Article 17] The quantity and quality of product, the quality of packing, the price of the product and the time limit for delivery in a purchasing and marketing contract (including contracts of supply, purchasing, forward purchase, combination of purchasing and marketing, cooperation, regulation, etc.), shall be performed under the following provisions: