Chinese Contract Law - Theory & Practice, Second Edition

Mo Zhang is a James E. Beasley Professor of Law at Temple University Beasley School of Law, USA, and a Specially Invited Professor of Law of Tsinghua University Law School, China. He earned an LL.B and LL.M degrees from China University Political Science and Law, an LL.M from the University of Michigan, and a SJD from the University of Pennsylvania. Professor Zhang has published numerous articles in both American and Chinese law journals, and is the author of Chinese Contract Law (Brill 2006) and Introduction to Chinese Torts Law (Tsinghua University Press, 2014).

Preface to the Second Edition

Acknowledgments



Introduction

 1 Mao’s “Plain Paper” Theory and Legal Nihilism in China

 2 Post-Mao Reconstruction of the Legal System

 3 Contract Law Legislation

  3.1 Enactment of the General Principles of Civil Law

  3.2 Adoption of the Unified Contract Law

  3.3 The 2017 General Provisions of Civil Law

  3.4 The 2019 Foreign Investment Law

 4 Judicial Interpretation and Guiding Cases

 5 The Ideology of “Governing the Country by Law”

 6 Unsolved Issue: Judicial Independence



1 Contract Law in the Chinese Tradition

 1 Concept of Contract

  1.1 Chinese Tradition

  1.2 Civil Law Influence

  1.3 Theories of Contract Law

   1.3.1 Economic Means Theory

   1.3.2 Civil Act Theory

   1.3.3 Agreement Theory

   1.3.4 Exchange Theory

  1.4 Definition of Contract

 2 Contract Classification

  2.1 Named and Unnamed Contracts

  2.2 Formal and Informal Contracts

  2.3 Consensual and Real Contracts

  2.4 Onerous and Gratuitous Contracts

  2.5 Unilateral and Bilateral Contracts

 3 Application of the Contract Law

 4 Contract and the Socialist Market Economy

 5 Contracts and the State Plan



2 Freedom of Contract in China

 1 Conception of Freedom

 2 Right of Parties to a Contract

 3 Limitations on Party Autonomy

  3.1 Legal Compliance

  3.2 State Plan Mandate

  3.3 Administrative Supervision

  3.4 Government Approval and Other Special Requirements



3 Enforceability of Contracts

 1 Obligatio and Contract Obligations

 2 Governing Principles of Contracts

  2.1 Equality and Voluntariness

  2.2 Fairness and Good Faith

  2.3 Legality and Public Interests

  2.4 Observance of Contract

 3 Pre-Contractual Liabilities



4 Formation of Contracts
 1 Offer

  1.1 Offer and Invitation for Offer

  1.2 Legal Effect of Offers

  1.3 Termination of an Offer

   1.3.1 Withdrawal of Offer

   1.3.2 Revocation of Offer

   1.3.3 Void Offers

 2 Acceptance

  2.1 Requirements for Acceptance

  2.2 Withdrawal of Acceptance

  2.3 Late Acceptance

  2.4 Late Arrival of Acceptance

  2.5 Acceptance and Conclusion of Contract

 3 Conclusion and Effectiveness of Contracts

 4 Formality of Contracts

 5 Incorporation of the State Plan and Government Approval



5 Terms of Contracts

 1 Terms Generally Included in a Contract

 2 Interpretation of a Contract

  2.1 Contract Interpretation Approaches

  2.2 Contract Interpretation Theories

  2.3 Contract Interpretation under the Contract Law

 3 Supplementary Agreement for Uncertain or Missing Terms

 4 Proof of the Terms of a Contract

 5 Standard Terms

 6 Disclaimers



6 Contract Defenses—Validity Issues

 1 Issues at Stake

 2 Capacity of the Parties—Effect-to-be-Determined Contract

  2.1 Contract by a Person with Limited Capacity for Civil Conduct

  2.2 Contract by an Agent without Due Authorization

  2.3 Right to Request Ratification and to Rescind a Contract

  2.4 Contract by a Person with No-Right-to-Dispose

 3 Void Contracts

  3.1 Fraud or Duress

   3.1.1 Fraud

    3.1.1.1 Intent to Deceive

    3.1.1.2 Conduct of Deceit

    3.1.1.3 Reliance

    3.1.1.4 Mistaken Manifestation of the Consent of the Deceived

   3.1.2 Duress

  3.2 Malicious Collusion to Damage the Interests of the State, a Collective, or a Third Party

  3.3 Use of a Contract for Illegal Purpose

  3.4 Harm to the Social Public Interest

  3.5 Violation of Compulsory Provisions of Law or Regulations

 4 Voidable Contracts

  4.1 Exploitation of the Other Party’s Precarious Position

  4.2 Material Misunderstanding

  4.3 Obvious Unfairness

 5 Consequences of Void and Voidable Contracts

  5.1 Avoidance from the Very Beginning

  5.2 Partial Avoidance and the Remaining Part of the Contract

  5.3 Independence of a Dispute Settlement Clause

  5.4 Restitution and Compensation

 6 Conditions Affecting the Validity of Contacts



7 Performance of Contracts

 1 Performance Principles

  1.1 Complete and Adequate Performance

  1.2 Good Faith Performance

 2 Determination of the Obligations to Be Performed

 3 Right of Defense to Non-Performance

  3.1 Fulfillment Plea

  3.2 Unrest Defense

 4 Protective Measures for Performance

  4.1 Right of Subrogation

   4.1.1 Conditions for Subrogation

   4.1.2 Action to Seek Subrogation

   4.1.3 Defenses of the Obligor’s Debtor

   4.1.4 Legal Effect of Subrogation

  4.2 Right of Cancellation

 5 Guarantee of Performance

  5.1 Suretyship

  5.2 Security Interest

  5.3 Money Deposit

  5.4 Lien

 6 Changes of Circumstances during Performance

  6.1 Changes Related to the Parties

  6.2 Rebus Sic Stantibus



8 Modification of Contract and Assignment

 1 Modification

 2 Assignment

  2.1 Assignment of Contractual Rights

   2.1.1 Formality of Assignment

   2.1.2 Non-Assignable Rights

   2.1.3 Effect of Assignment

   2.1.4 Right of Defense in Assignment

  2.2 Delegation of Contractual Obligations

   2.2.1 Delegation as a Transfer of Debts in Whole or in Part

   2.2.2 Subordinate Duties

   2.2.3 Non-Delegable Duties

   2.2.4 Transfer of Obligor’s Defenses against Obligee

 3 Comprehensive Assignment



9 Rescission and Termination of Contracts

 1 Rescission

  1.1 Rescission by Agreement

  1.2 Rescission by the Provisions of Law

   1.2.1 Force Majeure

   1.2.2 Breach of Contract

    1.2.2.1 Anticipatory Repudiation

    1.2.2.2 Unreasonable Delay in Performance

    1.2.2.3 Frustration of the Contract Purpose

   1.2.3 Other Reasons Provided by the Law

  1.3 Rescission Notice

  1.4 Legal Consequences of Rescission

 2 Termination

  2.1 Performance

  2.2 Offset

  2.3 Deposit

  2.4 Exemption

  2.5 Merger



10 Breach of Contracts and Remedies

 1 Liability for Breach: a Chinese Concept

 2 Liability Imputation

 3 Breach

  3.1 Anticipatory Repudiation

  3.2 Actual Breach

 4 Remedies

  4.1 Continuing Performance

   4.1.1 Monetary Obligation

   4.1.2 Non-Monetary Obligation

    4.1.2.1 Impossibility Rule

    4.1.2.2 Impracticability Rule

    4.1.2.3 Rule of Timing

  4.2 Remedial Measures

  4.3 Damages

   4.3.1 Compensatory Damages

   4.3.2 Liquidated Damages

   4.3.3 Punitive Damages

   4.3.4 Earnest Money

 5 Mitigation Duty

 6 Exemption of Liability



11 Third Party Interests

 1 Third Party Receiving Performance

 2 Third Party Performing the Contract

 3 Breach Caused by a Third Party

 4 Bona Fide Third Party



12 International Contracts

 1 Foreign Elements

 2 Choice of Law in International Contracts

  2.1 Choice of Law by the Parties

  2.2 Application of Law Absent the Parties’ Choice

  2.3 Application of International Law

 3 Choice of Forum in International Contracts

 4 Dispute Settlement Mechanism

  4.1 Reconciliation

  4.2 Mediation

  4.3 Arbitration

  4.4 Litigation

 5 Statute of Limitations



13 Labor Contracts

 1 Labor Contract Legislation and Legal Framework

 2 Concept of Labor Contract

  2.1 Definition

  2.2 Categories

 3 Formation

  3.1 Requirements

  3.2 Probationary Period

  3.3 Collective Contract

  3.4 Labor Dispatch

 4 Validity and Enforceability

 5 Performance and Modificatiom

  5.1 Performance

  5.2 Modification

 6 Rescission and Termination

  6.1 Rescission

  6.2 Termination

 7 Legal Liabilities

 8 Dispute Settlement

 9 Government Supervision and Review



Index