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The Principles of BRICS Contract Law

Part of the book series: Ius Gentium: Comparative Perspectives on Law and Justice ((IUSGENT,volume 102))

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Abstract

The chapter focuses on the approach to international commercial contracts in mainland China. It first explains into the features of the Chinese legal system that nowadays matter most in the context of international business law. It then delves into the principles and the rules applying to contract formation, validity, interpretation, contents, performance, non-performance, and limitation of claims, paying particular attention to legislative sources (e.g., the 2020 Chinese Civil Code) and to judicial and arbitral case-law, as well as to the contributions of legal scholarship.

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Notes

  1. 1.

    Liu (2011), 30.

  2. 2.

    Ding (2007), 125–132.

  3. 3.

    Yang (2018), 177–190.

  4. 4.

    See: Chongqing 5th Intermediate People’s Court, judgement No. 00335, 2015; Hainan High People’s Court, judgement n. 44, 2012.

  5. 5.

    Yang (2018), 177–190.

  6. 6.

    See Jiangxi Province Nanchang County People’s Court Judgement No. 141, 2015.

  7. 7.

    Bu (2016), 38.

  8. 8.

    Cui (2010), 265.

  9. 9.

    Huang (2008), 43.

  10. 10.

    Sun (2018), 179–191.

  11. 11.

    Xu et al. (1999), 59.

  12. 12.

    See Zhang and Zhu (2002), 58.

  13. 13.

    See also Article 6 of 2009 Supreme Court’s Second Judicial Interpretation on Contract Law.

  14. 14.

    For instance, in the 2014 case Mr. Qin versus Shanghai Niuhai E-Commerce Co. Ltd., the judge argues as follows: “the bold service terms are non-exemption clauses. They contain the service rules and the manner of the conclusion of the contract and do not contain terms that exempt or restrict its liabilities. Therefore, they comply with the law. When the new user clicks agreement for registration or the old user clicks service agreement for updating the related system, in both cases, the standard terms comply with business custom. In addition, the website has already created bold font in order to make customers evidently note this term. Therefore, the agreement should be regarded as valid. See Shanghai Pudong District People’s Court, Civil Judgment of the first instance, No. 9378, 2014.

  15. 15.

    Cui (2010), 256; Wang (2021), 70.

  16. 16.

    See Li and Zhong (2006), 90–100.

  17. 17.

    See: Changsha Yuhua District People’s Court, judgement No. 1, 2000.

  18. 18.

    Sun (2018),188.

  19. 19.

    Yu and Wang (2017), 154.

  20. 20.

    Han (2018), 157.

  21. 21.

    Han (2018), 164.

  22. 22.

    Wang (2009), 296. In the opinions of some scholars, the private autonomy is the theoretical basis to justify the voidability of contract, since a mistake of intent does not reflect to the real intent of parties. Yet, modern civil theory seeks pluralism of values, which pays also attention to the protection of legitimate expectation of the counterparty. In view of it, in the case that when a party expresses its or her intent with gross negligence and the other party reasonably expects its legal effect, the former shall not be allowed to revoke or modify the legal effects already produced by such civil act. Yang (2016), 35.

  23. 23.

    Shang (2017), 137.

  24. 24.

    Zhang (2018), 632–650.

  25. 25.

    Bu (2016), 44; Wang (2020), 14.

  26. 26.

    Zhang (2013), 85.

  27. 27.

    Zhang (2008), 82.

  28. 28.

    Wang (2016), 59.

  29. 29.

    Han (2010), 700.

  30. 30.

    Wang (2018), 55.

  31. 31.

    See “Zibo Wanjie Hospital versus China Bank Co. Ltd, Zibo Yibo Fiber Co, Ltd., Wang Jie Holding Co. Ltd.,”, Supreme Court’s Sentence, Civil Section, No. 99 (2007).

  32. 32.

    For example, “Shanghai Chenhao Law Frim versus XinXing Heavy Industries GroudCo.Ltd.”, Tianjin Binhai District Court Sentence No. 30278 (2016).

    The court holds that in the special legal service agreement, the last part of Article 3 of the contract stipulates that “After the termination of this contract, if there are still outstanding issues in this dispute, Party A still needs Party B to provide legal services, and Party B is obliged to continue to assist Party A in handling the matter”. Article 6 of the same contract stipulates that “if Party A entrusts Party B to further provide litigation and arbitration legal services, it shall pay the lawyer’s agency fee separately. The consulting service fee for this agreement may be directly deducted from the lawyer’s legal fee”. Article 3 of the contract refers to a period of validity clause, while Article 6 is a service fee clause. Considering the integrality of contract, its Article 3 shall be interpreted as a provision on collateral obligations. Consequently, it is understood in implied way that the plaintiff shall assume the obligations.

  33. 33.

    See “Zaozhuang Mineral Co. Ltd., versus Huaxia Bank Co. Ltd.”, Supreme Court judgement, No. 137 (2009).

  34. 34.

    For instance, in its court decision on “Zhou Zhaoquan versus Guangzhou Shejian Real Estate Co. Ltd.,” No. 897 (2018), the Supreme court affirms that for the interpretation of words “the period is half year and the related interests is 180,000 yuan” in a loan contract, according to literary meaning and usual custom on loan between the parties, who are not financial institutes, it is more reasonable to hold that half year refers to the period of the loan, instead of period of interests.

  35. 35.

    See “Zhang Zhijian and Beijing Fangcun Technology Co. Ltd., versus Yangguang Kuanchang Technology Co. Ltd.”, in Beijing High Court judgement No. 438 (2017).

  36. 36.

    Cui (2010), 370. See, also Hunan TV Co, Ltd., v. Liao Qingsheng, Hunan Province High Court, judgement No. 31 (2006).

  37. 37.

    Hao (2015), 54. See also the Article 301 and 302 of CCC.

  38. 38.

    Cui (2010), 370.

  39. 39.

    Cui (2010), 127.

  40. 40.

    Shi (2020), 52. See also the Guiding Case No. 67 of the Chinese  Supreme Court: ang Changlong v. Zhou Shihai, Chengdu City Intermediate Court, judgement No. 1815 (2013).

  41. 41.

    Shaanxi Xingyun Mechanic Co. Ltd., versus Rainbow Group Electronic Co. Ltd., Supreme Court judgement No. 8 (2008).

  42. 42.

    Liang (2017) 183.

  43. 43.

    Zhu (2011) 130.

  44. 44.

    Zhou (2014), 108.

  45. 45.

    Wu (2014), 129.

  46. 46.

    Han (2002), 49.

  47. 47.

    Sui (1997), 309.

  48. 48.

    Han (2014), 666.

  49. 49.

    Zhou (2012), 161.

  50. 50.

    Zhou (2012),153.

  51. 51.

    Han (2018), 577; Cui (2016), 89; Zhuang (2018), 149.

  52. 52.

    Zhuang (2018), 147.

  53. 53.

    Li (2017), 174.

  54. 54.

    See “Daqing Kaiming Co. Ltd., versus Hua Rui Technology Co. Ltd.”, in Official Gazette of the Supreme Court of PRC, 2015, No. 11.

  55. 55.

    Li (2018), 412–413.

  56. 56.

    Han (2018), 394.

  57. 57.

    See “Guangzhou Xianyuan Real Estate Co. Ltd., versus Guangdong Zhongda Investment Design Co. Ltd., and Guangzhou Yuanxing Real Estate Co. Ltd., and China Investment Group International Financial Co. Ltd.,”, in the Official Gazette of the Supreme Court of PRC, 2010, No. 8.

  58. 58.

    See Civil Sentence, N. 1366, Sect. 3 of Court of Songjiang District of Shanghai.

  59. 59.

    See Xin Yu Co Ltd., V. S. Feng Yumei, Official Gazette of Supreme Court of China.

  60. 60.

    See Shanghai First Intermediary Court, civil section N. 4, final civil judgement N. 1191 and Case Materials of People’s Court, Vol. 24, 2012; the same opinion is shared by Wang (2017), 138.

  61. 61.

    Han (2018), 770.

  62. 62.

    Yi  (2016) 2016a, b, 152.

  63. 63.

    The regulations on the consequences of the debtor’s non-performance of obligations in case of enforcement of court decision can be found in procedure law. For monetary debt, the debtor needs to double the credit interest of the creditor during the delay in enforcement of court decision; for other debts, the debtor should pay the compensation for delay (Article 253, CCPL 1991). For failure of enforcement of monetary debt, the court can take direct enforcement measures as sealing, seizure, freeze, transfer, auction, selling, detention, lodgment, forced submission of property or bill, enforced movement from house, enforced withdrawal from land etc., (Articles 242–25, CCPL). In other cases, the court can either take supplementary measures, or entrust the third part to fulfill the debt with the debtor’s bearing cost. It is worth noting that for the debt that only the debtor can fulfill, the court may enforce it with fine, detention and other indirect measures. If the circumstance is serious, the debtor shall even bear criminal liability (Article 110, CCPL; Supreme court’s Judicial Interpretation on CCPL 1991, Article 505).

  64. 64.

    See “Peishi Investment Corporate versus Tianjin Metal Instruments Corporate”, in Official Gazette of Supreme Court of PRC, 2003, No. 4.

  65. 65.

    The Supreme Court holds that if the breached obligations is of mediocre value and the related non-performance does not hinder the buyer from reselling the goods, the purpose of contract cannot be considered unrealizable, consequently, the right of unilateral termination of contract cannot not granted to the party. See Xinjiang Yakun Commercial Co. Ltd., v. Xinjiang Jinghe County Cotton Production Co. Ltd., in Official Gazette of the Supreme Court of PRC, 2006, No. 11.

  66. 66.

    See: Peishi Investment Co. Ltd., v. Tianjin Metal Instrument Co. Ltd., in Official Gazette of the Supreme Court of PRC, 2003, vol. 4.

  67. 67.

    See: Yu Caixin v. Fujian Huachen Real Estate Co. Ltd., in Official Gazette of the Supreme Court of PRC, 2011, No. 8.

  68. 68.

    Han (2018), 684; Cui (2016), 206. For a different position, Zhao (2015), 1172 s.

  69. 69.

    See: Xinjiang Yakun Commercial Co.Ltd., v. Xinjiang Jinghe County Cotton Production Co. Ltd., in Official Gazette of the Supreme Court of PRC, 2006, No. 11.

  70. 70.

    Article 21, Supreme Court on Several Issues on Trial concerning Turistic Disputes; Zheng Xuefeng, Chen Guoqing v. Jiangsu Province People’s Hospital, in Official Gazette of the SupremeCourt of PRC, 2004, 8. See also, Han (2018), 782.

  71. 71.

    See Shangdong Province Dongying City Intermediate Court, judgement No. 97 (2002).

  72. 72.

    See Hunan Province Huaihua Intermediate Court, judgement No. 42 (2012).

  73. 73.

    See Han (2018), 796; Cui (2016), 265.

  74. 74.

    See Official Gazette of Supreme Court, vol, 1, 2013, 201.

  75. 75.

    See “Cheng Ruiyu v. Beijing Cite Coffee Co. Ltd.,” Jiangsu Province High Court, Sentence No. 271 (2015).

  76. 76.

    Sui Pengsheng, Study of Contract Law, 1997, 384–385.

  77. 77.

    Han (2018), 485.

  78. 78.

    Han (2018), 486.

  79. 79.

    See “Abdullah Waheed versus China Eastern Airlines Co. Ltd.”, Guiding Case No. 51 Issued by the Supreme Court.

  80. 80.

    Han (2018), 487.

  81. 81.

    See case of sale of shop “Xing Yu Company v.s. Feng Yu Mei”, in Supreme Court Official Gazette, vol. 6, (2006). For detailed debates and more court decisions, see Shi and Limei (2019), 40.

  82. 82.

    Han (2018), 486.

  83. 83.

    Yao (2017), 156; Cui (2016), 39; Han (2018), 825.

  84. 84.

    See Hubei Province Wuhan Intermediate Court, judgement No. 01536 (2015).

  85. 85.

    Han (2018), 827.

  86. 86.

    Zhu (2003), 223.

  87. 87.

    See “Xinjiang Yakun Commercial Co. Ltd., v. Xinjiang Jinghe County Cotton Production Co. Ltd.”, in Official Gazette of the Supreme Court of PRC, 2006, No. 11.

  88. 88.

    See “Chen Meiqiu versus Xv Jianxion”, Guangxi Autonomous Region High Court Sentence No. 4 (2007); Beijing Xuanfu Real Estate Co. Ltd., v. Beijing Huayehang Real Estate Co. Ltd., Beijing High Court, Sentence No. 1596 (2009).

  89. 89.

    Wu (2012), 70.

  90. 90.

    Liu (2013), 88.

  91. 91.

    Zhu (2003), 61.

Abbreviations

ALTCPSCH:

2003 Supreme Court’s Judicial Interpretations on the Application of Law in the Trials on Contract of Purchase and Sale of Commercial Houses

CAML:

2007Anti-Monopoly Law

CCC:

2020 Draft of Chinese Civil Code

CCPL:

1991 Chinese Civil Procedure Law

CECL:

2008 E-Commerce Law

ESL:

2004 Electronic Signature Law

GPCL:

1986 General Principles of Civil Law

GPCL:

1986 General Principles of Civil Law

JI of LCLFCR:

Judicial Interpretation of LCLFCR

JICL (2):

2009 Supreme Court’s Second Judicial Interpretation on Contract Law

LCLFCR:

2010 Law of the Choice of Law for Foreign-related Civil Relations

SITCCC:

2009 Supreme Court’s Opinion on Several Issues on Trials of Commercial and Civil Contract under Current Situation

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  1. East China University of Political Science and Law, Shanghai, People’s Republic of China

    Lihong Zhang

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Zhang, L. (2022). Chinese Report. In: Mancuso, S., Bussani, M. (eds) The Principles of BRICS Contract Law. Ius Gentium: Comparative Perspectives on Law and Justice, vol 102. Springer, Cham. https://doi.org/10.1007/978-3-031-00844-3_7

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