Civil Code of the People’s Republic of China
Promulgation Authority: The National People’s Congress of the People’s Republic of China
Release Date: 2020.05.28
Effective on: 2021.01.01
Chinese Name: 中华人民共和国民法典
Source: https://www.gov.cn/xinwen/2020-06/01/content_5516649.htm
The Civil Code of the People’s Republic of China, adopted at the Third Session of the 13th National People ‘s Congress of the People’s Republic of China on May 28, 2020, is hereby promulgated, effective January 1, 2021.
President of the People’s Republic of China
(Adopted at the Third Session of the 13th National People ‘s Congress on May 28, 2020)
Article 1 This Code is enacted in accordance with the Constitution in order to protect the legitimate rights and interests of civil subjects, adjust civil relations and maintain the social and economic order, so as to meet the requirement of developing socialism with Chinese characteristics and carrying forward socialist core values.
Article 2 The Civil Law shall adjust personal relationships and property relationships between natural persons, legal persons and unincorporated organizations as subjects with equal status.
Article 3 The personal rights, property rights and other legitimate rights and interests of civil subjects shall be protected by the law; no organization or individual may infringe upon such rights and interests.
Article 4 All civil subjects are equal as regards their legal status in civil activities.
Article 5 All civil subjects engaging in civil activities shall observe the principle of voluntariness in establishment, change or termination of any civil legal relationship as per their own intents.
Article 6 All civil subjects engaging in civil activities shall observe the principle of fairness in determining reasonably the rights and obligations of all parties.
Article 7 All civil subjects engaging in civil activities shall observe the principle of good faith, adhere to the principle of honesty and fulfill their commitments.
Article 8 No civil subject engaging in civil activities may violate laws or go against the public order and good morals.
Article 9 All civil subjects engaging in civil activities shall help save resources and protect the ecological environment.
Article 10 Civil disputes shall be dealt with in accordance with the law; where no relevant provision is prescribed by the law, social customs may apply, without violation of the public order and good morals.
Article 11 Where special provisions on civil relations are prescribed by other laws, such provisions shall apply.
Article 12 Laws of the People’s Republic of China shall apply to any civil activity within the territory of the People’s Republic of China. Where the laws provide otherwise, such provisions shall prevail.
Section 1 Capacity for Civil Rights and Capacity for Civil Conduct
Article 13 A natural person shall have the capacity for civil rights from birth to death, may enjoy civil rights and shall assume civil obligations in accordance with the law.
Article 14 All natural persons are equal as regards their capacity for civil rights.
Article 15 The date of birth or death of a natural person shall be based on the date recorded on his or her birth certificate or death certificate. Where the birth certificate or death certificate is not available, the date recorded on the household registration or any other valid identity registration shall apply. If there is other evidence sufficient to overturn the aforesaid date, the date proved by such evidence shall prevail.
Article 16 Where a fetus is involved in the protection of the interests of the fetus, such as inheritance and acceptance of gifts, the fetus shall be deemed as having the capacity for civil rights. However, if the fetus is dead at birth, his or her capacity for civil rights does not exist from the beginning.
Article 17 A natural person aged 18 or over is an adult. A natural person under the age of 18 is a minor.
Article 18 An adult has the full capacity for civil conduct and may perform civil juristic acts independently.A minor who has reached the age of 16 and whose main source of income is his or her own income from work shall be deemed as a person with full capacity for civil conduct.
Article 19 A minor who has reached the age of eight is a person with limited capacity for civil conduct and shall be represented by his or her agent ad litem or obtain consent or retroactive acknowledgement of his or her agent ad litem in the performance of civil juristic acts. However, such a minor may independently perform civil juristic acts which are purely to benefit the minor or the performance of which is compatible with his or her age and intelligence.
Article 20 A minor under the age of eight is a person having no capacity for civil conduct and shall be represented in the performance of civil juristic acts by his or her agent ad litem.
Article 21 An adult who is unable to account for his or her own conduct is a person having no capacity for civil conduct and shall be represented in the performance of civil juristic acts by his or her agent ad litem.The provisions of the preceding paragraph shall apply to a minor who has reached the age of eight but is unable to account for his or her own conduct.
Article 22 An adult who is unable to fully account for his or her own conduct is a person having limited capacity for civil conduct and shall be represented by his or her agent ad litem or obtain the consent or acknowledgment of his or her agent ad litem in the performance of civil juristic acts. However, such an adult may independently perform civil juristic acts which are purely to benefit the adult or the performance of which is compatible with his or her intelligence and mental health.
Article 23 The guardian of a person without or with limited capacity for civil conduct shall be his or her agent ad litem.
Article 24 For an adult who is unable to account for or fully account for his or her own conduct, an interested person or an organization concerned may apply to a people’s court for determination that such adult is a person without or with limited capacity for civil conduct.For a person who has been determined by a people’s court to be without or with limited capacity for civil conduct, the people’s court may, upon his or her own application or that of an interested person or an organization concerned, determine him or her to be recovered to be one with limited or full capacity for civil conduct, depending on the recovery of his or her intelligence or mental health.
For the purpose of the present Article, “the organizations concerned” shall include neighborhood committees, villagers’ committees, schools, medical institutions, women’s federations, disabled persons’ federations, organizations established according to the law for the elderly and the authorities of civil affairs.
Article 25 The domicile of a natural person shall be his or her residence recorded in the household registration or in any other valid identity registration; if the habitual residence is not the same as the domicile, the habitual residence shall be deemed as the domicile.
Article 26 Parents shall be obligated to foster, educate and protect their minor children.Adult offspring are obligated to support, assist and protect their Parents.
Article 27 Parents are guardians of their minor children.If the Parents of a minor are dead or have no competence to be guardians, one of the following persons who have the competence to be guardians shall act as the guardian in the listed sequence:
(I)Paternal or maternal grandparents;
(II) Elder brothers or sisters; or
(III) Any other individual or organization that is willing to act as the guardian, provided that it is approved by the neighborhood committee, the villagers’ committee or the authorities of civil affairs of the place of the minor’s domicile.
Article 28 One of the following persons having guardianship competence shall act in the listed sequence as the guardian for an adult without or with limited capacity for civil conduct:(I)Spouse;
(III) Any other near relative; or
(IV) Any other individual or organization that is willing to act as the guardian, provided that it is approved by the neighborhood committee, the villagers’ committee or the authorities of civil affairs in the place of the ward’s domicile.
Article 29 The Parents of a ward may appoint a guardian in their wills if they are the ward’s guardians.
Article 30 Persons legally qualified for guardianship may enter into an agreement to determine a guardian. Where a guardian is to be determined by agreement, the true will of the ward shall be respected.
Article 31 If there are disputes on the determination of a guardian, the neighborhood committee, the villagers’ committee or the authorities of civil affairs in the place of the ward’s domicile shall appoint a guardian; if the parties do not agree with the appointment, they may apply to a people’s court for appointing a guardian. The parties may also directly apply to a people’s court for appointing a guardian.The neighborhood committee, the villagers’ committee or the authorities of civil affairs or the people’s court shall follow the principles of respect for the true will of the ward and benefiting the ward to the largest extent in appointing a guardian from persons legally qualified to be a guardian.
Before a guardian is appointed in accordance with the provisions of Paragraph 1 of this Article, if the personal rights, property rights and other legitimate rights and interests of the ward are not subject to any protection, the neighborhood committee, villagers’ committee, relevant organizations specified by law or the authorities of civil affairs in the place of the ward’s domicile shall act as the guardian temporarily.
The guardian, once appointed, shall not be changed without authorization; unauthorized change does not exempt the designated guardian from liability.
Article 32 Where there is no person legally qualified to be a guardian, either the authorities of civil affairs or the neighborhood committee or villagers’ committee in the place of the ward’s domicile which is qualified to fulfill the guardianship responsibility may act as the guardian.
Article 33 For an adult with full capacity for civil conduct, he or she may negotiate with his or her close relatives or other individuals or organizations which are willing to act as the guardian in advance to determine his or her guardian in writing; if he or she loses or partially loses the capacity for civil conduct, such guardian shall fulfill the guardianship responsibility.
Article 34 A guardian is in charge of representing the ward in his or her performance of civil juristic acts and protecting the ward’s personal rights, property rights and other legitimate rights and interests.The guardian’s rights arising from the fulfillment of the guardianship responsibility according to the law shall be protected by the law.
A guardian who fails to fulfill the guardianship responsibility or infringes upon the legitimate rights and interests of the ward shall bear legal liability.
In case of an emergency or any other sudden event, where the guardian is temporarily unable to perform guardianship duties, and the ward is living unattended, the neighborhood committee, villagers’ committee or the authorities of civil affairs at the place of the ward’s domicile shall arrange necessary temporary living care measures for the ward.
Article 35 A guardian shall, according to the principle of benefiting the ward to the largest extent, fulfill the guardianship responsibility. A guardian shall not dispose of the property of his or her ward unless it is to safeguard the ward’s interests.The guardian of a minor, while fulfilling the guardianship responsibility, shall respect the ward’s true will when making the decision related to the ward’s interests according to the ward’s age and intelligence status.
The guardian of an adult, while fulfilling the guardianship responsibility, shall respect the ward’s true will to the largest extent, and safeguard and assist the ward in performing the civil juristic acts that are compatible with the ward’s intelligence and mental health. The guardian shall not interfere with the affairs which the ward is able to handle independently.
Article 36 In the event that a guardian is under any of the following circumstances, the people’s court may, based on the application of the individual or organization concerned, disqualify the guardian, arrange necessary measures for temporary guardianship, and appoint a guardian according to the law under the principle of benefiting the ward to the largest extent:(I)Performing acts that seriously damage the physical and mental health of the ward;
(II) Delaying in fulfilling the guardianship responsibility, or being unable to fulfill the guardianship responsibility and refusing to delegate part or all of the guardianship responsibility to others, which causes the ward to be in distress; and
(III) Performing other acts that seriously infringe upon the legitimate rights and interests of the ward.
The individuals or organizations concerned as mentioned in this Article shall include other persons legally qualified to act as guardians, neighborhood committees, villagers’ committees, schools, medical institutions, women’s federations, disabled persons’ federations, organizations protecting minors, organizations established according to the law for the elderly and the authorities of civil affairs.
If individuals and organizations other than the authorities of civil affairs provided for in the preceding paragraph fail to apply to the people’s court for disqualifying the guardian in time, the authorities of civil affairs shall file such application with the people’s court instead.
Article 37 Parents, children and spouses who bear the upbringing payment, alimony payment or maintenance payment for the ward according to the law shall continue to fulfil their obligation in regard to such payment after they have been disqualified by a people’s court as guardian.
Article 38 Where the Parents or offspring of a ward show true repentance after being disqualified from guardianship by a people’s court, the people’s court may, on the premise of respecting the ward’s true will, enable them to regain guardianship upon their application as the case may be, except for those who commit an intentional crime against the ward; the guardian relationship between the guardian appointed by the people’s court and the ward shall be terminated simultaneously.
Article 39 Under any of the following circumstances, the guardian relationship shall be terminated:(I)Where the ward gains or regains the full capacity for civil conduct;
(II) The guardian loses the competence to be a guardian;
(III) Either the ward or the guardian dies; or
(IV) Other circumstances where the people’s court determines that the guardian relationship shall be terminated.
Where the guardian relationship is terminated and the ward still needs guardianship, another guardian shall be determined according to the law.
Section 3 Declaration of Missing Persons and Declaration of Death
Article 40 If a natural person’s whereabouts have been unknown for two years, an interested person may apply to a people’s court for a declaration that the natural person is a missing person.
Article 41 The time period during which a natural person’s whereabouts become unknown shall be calculated from the day when contact with the natural person is lost. If a person’s whereabouts become unknown during a war, the time period during which the whereabouts are unknown shall be calculated from the day when the war ends or from the day when the person’s whereabouts are unknown as determined by relevant authorities.
Article 42 A missing person’s property shall be placed in the custody of his or her spouse, adult children, Parents or other persons who are willing to serve as custodian of the property.In case of a dispute over custody, if the persons mentioned in the preceding paragraph are unavailable or are not competent to take such custody, the property shall be placed in the custody of a person appointed by a people’s court.
Article 43 The custodian of property shall properly manage the missing person’s property and safeguard the property rights and interests of the missing person.Any tax, debt and other due charges owed by the missing person shall be paid by the custodian out of the missing person’s property.
Where the custodian of property causes losses to the missing person’s property due to intentional misconduct or gross negligence, the custodian shall be liable for compensation.
Article 44 Where the custodian of property fails to fulfill the duty of custody, infringes upon the missing person’s property rights and interests, or loses the competence to take such custody, an interested person of the missing person may file an application with a people’s court to change the custodian.If the property custodian has a justified reason, he or she may apply to a people’s court for the change of property custodian.
Where a people’s court changes the custodian of property, after the change the custodian is entitled to request the original custodian to hand over the relevant property and report the facts on property custody in a timely manner.
Article 45 In the event that a missing person reappears, the people’s court shall, upon the application of the person himself or an interested person, revoke the missing-person declaration.In the event that a missing person reappears, he or she is entitled to request the custodian to return the relevant property and report the facts on property custody in a timely manner.
Article 46 Where a natural person falls under either of the following circumstances, an interested person may apply to a people’s court for a declaration that the natural person is dead:(I)The natural person’s whereabouts have been unknown for four years; or
(II) The natural person’s whereabouts have been unknown for two years due to an accident.
If a person’s whereabouts become unknown due to an accident and it is impossible for such person to survive as proved by relevant authorities, the application for declaration of death is not subject to the aforesaid provisions of two years.
Article 47 For the same natural person, if some interested persons apply for the declaration of death while others apply for the declaration of such natural person as missing, the people’s court shall declare the death of the person provided that the conditions for declaring the death specified herein are met.
Article 48 For a person who is declared dead, the date when the people’s court renders the judgment to declare the person’s death shall be deemed as the date of death of the person; if the person is declared dead due to its unknown whereabouts caused by an accident, the date when the accident occurs shall be deemed as the date of death of the person.
Article 49 If a natural person is declared dead but is not dead, the validity of the civil juristic acts performed by him or her during the period of declared death shall not be affected.
Article 50 In the event that a person who has been declared dead reappears, the people’s court shall revoke the declaration of death upon application of the person or that of an interested person.
Article 51 The marital relationship with a person who is declared dead shall cease to exist from the date of the declaration of death. If the declaration of death is revoked, the marital relationship shall automatically resume from the date when the declaration of death is revoked. However, there shall be an exception where the spouse has remarried or has declared in writing to the marriage registration office that he or she does not wish to reinstate the marital relationship.
Article 52 Where a person’s child is adopted by another person according to the law during the period when he or she is being declared dead, he or she shall not claim for invalidation of the adoption act on the ground that he or she does not agree on the adoption after the declaration of death is revoked.
Article 53 A person for which the declaration of death is revoked shall have the right to request the return of his or her property by a civil subject who has obtained his or her property in accordance with Part VI hereof ; if such return is impossible, appropriate compensation shall be given.If an interested person conceals facts and causes another person to be declared dead, thus obtaining such person’s property, the interested person shall, apart from returning the property, be liable for compensation for the losses caused thereby.
Section 4 Individual Businesses and Households Contracting Rural Land
Article 54 Individual businesses refer to natural persons registered according to the law to engage in industrial or commercial operation. Individual businesses may adopt a trade name.
Article 55 Households contracting rural land refer to members of a rural collective economic organization who have obtained the right to the contractual management of rural land according to the law to engage in household contractual management.
Article 56 The debts of an individual business shall be borne with the individual’s property if the business is operated by an individual or with the family’s property if the business is operated by a family. If it is impossible to distinguish whether the individual business is operated by an individual or by a family, the debts of such individual business shall be borne with the family’s property.The debts of a household contracting rural land shall be borne with the property of the household that engages in the contractual management of rural land or with the property of partial members of the household who actually engage in the contractual management of rural land.
Article 57 A legal person is an organization that has capacity for civil rights and capacity for civil conduct, and independently enjoys civil rights and assumes civil obligations in accordance with the law.
Article 58 A legal person shall be established in accordance with the law.A legal person shall have its own name, organizational structure, domicile and property or funds. Specific conditions and procedures for establishing a legal person shall be subject to provisions stipulated by the laws and administrative regulations.
Where the establishment of a legal person shall be approved by the relevant authorities according to the provisions of laws and administrative regulations, such provisions shall apply.
Article 59 A legal person’s capacity for civil rights and capacity for civil conduct arise when the legal person is established and cease to exist when the legal person terminates.
Article 60 A legal person shall independently assume civil liability with all of its property.
Article 61 The principal of a legal person, who acts on behalf of the legal person in performing civil activities in accordance with the law or the articles of association of the legal person, shall be the legal representative of the legal person.Where the legal representative of a legal person engages in civil activities in the name of the legal person, the legal consequences incurred shall be undertaken by the legal person.
The restriction on the legal representative’s right of representation imposed by a legal person’s articles of association or its authority body shall not challenge any bona fide third person.
Article 62 Where the legal representative of a legal person causes any damage to others while performing duties, the legal person shall assume the corresponding civil liability.The legal person, after assuming civil liability, has the right to claim the repayment from the legal representative at fault in accordance with the law or its articles of association.
Article 63 A legal person’s domicile shall be the place where its principal place of business is located. Where a legal person needs to be registered according to the law, it shall register the place where its principal place of business is located as its domicile.
Article 64 Where any registered particular of a legal person changes during the period of its existence, an application for change of registration shall be filed with the registration authority in accordance with the law.
Article 65 The actual situations of a legal person that are inconsistent with the registered particulars shall not challenge any bona fide counterparty.
Article 66 The registration authority shall disclose the relevant information registered by a legal person in a timely manner according to the law.
Article 67 When a legal person is merged, its rights and obligations shall be enjoyed and assumed by the legal person that results from the merger.Where a legal person is divided, its rights and obligations shall be enjoyed and assumed by the legal persons after the division jointly and severally, unless otherwise agreed by the creditor and the debtor.
Article 68 A legal person that has been liquidated or deregistered according to the law due to any of the following reasons shall be terminated:(I)The legal person is dissolved;
(II) The legal person is declared bankrupt; or
(III) other reasons stipulated by the law.
Where the termination of a legal person shall be approved by the relevant authorities according to the provisions of the laws and administrative regulations, such provisions shall apply.
Article 69 A legal person shall be dissolved under any of the following circumstances:(I)The existence period specified in the legal person’s articles of association expires, or other causes of dissolution specified in the legal person’s articles of association arise;
(II) The legal person’s authority body makes a resolution for the dissolution;
(III) The legal person is dissolved due to merger or division;
(IV) The legal person’s business license or registration certificate is revoked according to the law, or the legal person is ordered to close down or is revoked; or
(V) Other circumstances stipulated by the law arise.
Article 70 Where a legal person dissolves, the liquidation obligors shall, except for being merged or divided, form a liquidation team in time to liquidate the legal person.Members of a legal person’s executive body or decision-making body, such as directors and council members, are the liquidation obligors. Where the laws and administrative regulations stipulate otherwise, such provisions shall prevail.
Where the liquidation obligors cause any damage due to their failure to fulfill their liquidation obligations in a timely manner, they shall bear civil liability; the competent authority or an interested person may petition the people’s court to appoint persons concerned to establish a liquidation team to liquidate the legal person.
Article 71 The liquidation procedures and the functions and powers of the liquidation team of a legal person shall be subject to provisions of the relevant laws; if no provisions are available, the relevant provisions of the applicable company laws shall apply mutatis mutandis.
Article 72 In the course of liquidation, a legal person shall continue in existence, but shall not conduct any activity irrelevant to the liquidation.The residual property after the legal person is liquidated shall be dealt with in accordance with provisions of the legal person’s articles of association or the resolution made by the legal person’s authority body. Where the laws provide otherwise, such provisions shall prevail.
The legal person shall terminate when the liquidation is accomplished and such legal person is deregistered; if the legal person is not required to be registered according to the law, it shall terminate once the liquidation is accomplished.
Article 73 A legal person that is declared bankrupt shall terminate when its bankruptcy liquidation is accomplished and it is deregistered according to the law.
Article 74 A legal person may establish its branches according to the law. Where the branches shall be registered in accordance with the provisions of laws and administrative regulations, such provisions shall apply.Where a branch engages in civil activities in its own name, the civil liability caused thereby shall be assumed by the legal person; it is also possible that the property managed by the branch bears the civil liability, and the legal person bears the remaining of it if any.
Article 75 For civil activities conducted by the founder for the purpose of establishing a legal person, the legal consequences incurred shall be undertaken by the legal person. If the founder fails to establish the legal person, the legal consequences incurred shall be undertaken by the founder; if two or more persons serve as the founders, they shall enjoy creditor’s rights and assume debts jointly and severally.Where a founder conducts civil activities in its own name for the purpose of establishing a legal person, the third party has the right to request the legal person or the founder to bear the civil liability arising therefrom.
Section 2 For-profit Legal Persons
Article 76 A legal person established for the purpose of seeking profits and distributing the same to its shareholders and other investors is a for-profit legal person.For-profit legal persons shall include limited liability companies, companies limited by shares and other corporate legal persons.
Article 77 A for-profit legal person is incorporated upon registration according to the law.
Article 78 The registration authority shall issue the business license to a for-profit legal person established according to the law. The issue date of the business license shall be the date when the for-profit legal person is established.
Article 79 To establish a for-profit legal person, the legal person’s articles of association shall be developed in accordance with the law.
Article 80 A for-profit legal person shall establish its authority body.The authority body is responsible for exercising its functions and powers in modifying the articles of association of the legal person and electing or replacing members of the executive body and supervision body, and other functions and powers set forth in the articles of association of the legal person.
Article 81 A for-profit legal person shall establish its executive body.The executive body is responsible for exercising its functions and powers in convening the meeting of the authority body, determining the legal person’s business plans and investment programs, setting up of the legal person’s internal management organizations, and other functions and powers set out in the articles of association of the legal person.
If a for-profit legal person’s executive body is its board of directors or executive director, the chairman of the board of directors, executive director or manager shall act as the legal representative in accordance with the articles of association of the legal person; if the legal person has not set up the board of directors or the position of executive director, the principal as stipulated in the articles of association of the legal person shall be its executive body and legal representative.
Article 82 If a for-profit legal person has set up a supervision body such as board of supervisors or supervisor, the supervision body shall legally exercise its functions and powers in inspecting the legal person’s financial affairs and supervising the performance of duties in the legal person by members of the executive body and senior executives, and other functions and powers prescribed by the legal person’s articles of association.
Article 83 No investor of a for-profit legal person may damage the interests of the legal person or other investors by abusing the investor’s rights; any investor who causes any loss to the legal person or other investors by abusing the investor’s rights shall bear the civil liability according to the law.No investor of a for-profit legal person may damage the interests of any creditor of the legal person by abusing the independent status of the legal person or the limited liability of the investor. Any investor of a for-profit legal person who avoids debts and seriously damages the interests of any creditor of the legal person by abusing the independent status of the legal person or the limited liability of the investor shall be jointly liable for the debts of the legal person.
Article 84 The controlling investor, actual controller, directors, supervisors and senior executives of a for-profit legal person shall not damage the interests of the legal person by making use of its affiliated relations; if they cause any loss to the legal person by making use of the affiliated relations, they shall be liable for compensation.
Article 85 If any procedure for convening a meeting or voting method adopted by a for-profit legal person’s authority body or executive body through a resolution is in violation of laws, administrative regulations or the articles of association of the legal person, or any content of the resolution made is in violation of the articles of association of the legal person, the investor of the for-profit legal person may request the people’s court to revoke the resolution. However, the civil legal relationship formed between the for-profit legal person and a bona fide counterparty according to the resolution shall not be affected.
Article 86 To conduct business activities, a for-profit legal person shall comply with commercial ethics, maintain transaction security, accept the supervision by the government and the public, and assume social responsibilities.
Section 3 Non-profit Legal Persons
Article 87 Any legal person that is established for public welfare or other non-profit purposes and does not distribute profits to its investors, founders or members is a non-profit legal person.Non-profit legal persons include public institutions, social groups, foundations, and social service agencies.
Article 88 Any public institution which meets the requirements for a legal person and is established in order to meet the needs of economic and social development and provide public welfare services acquires the status of public institution as a legal person after it is registered according to the law for its establishment; a public institution which is not required to be registered as a legal person according to the law shall have the status of public institution as a legal person on the day when it is established.
Article 89 Where a public institution as a legal person has established a council, the council shall be its decision-making body, unless otherwise provided for by law. The legal representative of a public institution as a legal person shall be selected according to laws, administrative regulations or the articles of association of the legal person.
Article 90 A social organization which meets the requirements for a legal person and is established based on the common will of its members for public welfare or common interests of its members and other non-profit purposes acquires the status of social organization as a legal person after it is registered according to the law for its establishment; a social organization which is not required to be registered as a legal person according to the law shall have the status of social organization as a legal person on the day when it is established.
Article 91 To establish a social organization as a legal person, the legal person’s articles of association shall be developed in accordance with the law.A social organization as a legal person shall establish its authority body such as membership assembly or membership representative congress.
A social organization as a legal person shall establish its executive body such as council. The principal such as the general director or the president shall act as the legal representative in accordance with the articles of association of the legal person.
Article 92 A foundation or social service organization which meets the requirements for a legal person and is established with donated property for public welfare purposes acquires the status of a legal person of donation after it is registered according to the law for its establishment.A venue for religious activities which is established according to the law and meets the requirements for a legal person may apply for registration as a legal person to acquire the status of a legal person of donation. Where there are provisions stipulated by laws and administrative regulations on religious activity venues, such provisions shall apply.
Article 93 To establish a legal person of donation, the legal person’s articles of association shall be developed in accordance with the law.A legal person of donation shall establish its decision-making body such as council or democratic management organization, as well as executive body. The general director or any other principal shall act as the legal representative in accordance with the legal person’s articles of association.
A legal person of donation shall establish its supervision body such as board of supervisors.
Article 94 Donators are entitled to inquire of a legal person of donation about the use and management of the donated property and give their opinions and proposals. The legal person of donation shall timely and truthfully reply to such inquiries.Where the procedures adopted by the decision-making body, executive body or legal representative of a legal person of donation to make a decision violate any laws, administrative regulations or the legal person’s articles of association, or the content of such decision violates the legal person’s articles of association, interested persons such as the donors or the competent authority may apply to the people’s court for revocation of such decision. However, the civil legal relationship formed between the legal person of donation and the bona fide counterparty according to the decision shall not be affected.
Article 95 When a non-profit legal person established for public welfare purposes terminates, it shall not distribute its residual property to its investors, founders or members. The remaining property shall be used for public welfare purposes in accordance with the provisions of the articles of association of the legal person or a resolution of the authority body of the legal person; if it is impossible to dispose of such property in accordance with the articles of association of the legal persons or a resolutions of the authority body of the legal person, the competent authority shall guide the assignment of such property to a legal person with the same or similar purposes, which shall be announced to the public.
Section 4 Special Legal Person
Article 96 Special legal persons refer to government agencies, rural collective economic organizations, urban and rural cooperative economic organizations and grass-roots self-governing mass organizations as legal persons as prescribed in this Section.
Article 97 An independently funded government agency or a statutory body with administrative functions acquires the status of a government agency as a legal person on the day when it is established and is allowed to conduct civil activities necessary for the performance of its functions.
Article 98 Where a government agency as a legal person is revoked, the legal person shall terminate and its civil rights and obligations shall be enjoyed and assumed by another legal-person government agency as its inheritor ; if there is no legal-person government agency as its inheritor , such rights and obligations shall be enjoyed and assumed by the legal-person government agency which makes the revocation decision.
Article 99 A rural collective economic organization shall obtain the status of a legal person according to the law.Where there are provisions stipulated by the laws and administrative regulations on rural collective economic organizations, such provisions shall apply.
Article 100 An urban or rural cooperative economic organization shall obtain the status of a legal person according to the law.Where there are provisions stipulated by the laws and administrative regulations governing urban or rural cooperative economic organizations, such provisions shall apply.
Article 101 Neighborhood committees and villagers’ committees have the status of grass-roots self-governing mass organizations as legal persons and are allowed to conduct civil activities necessary for the performance of their functions.Where no village collective economic organization is established, the villagers’ committee may perform the functions of the village collective economic organization according to the law.
Chapter 4 Unincorporated organizations
Article 102 An unincorporated organization is an association that is not qualified as a legal person but is able to engage in civil activities in its own name according to the law.Unincorporated organizations include, among others, sole proprietorships enterprises, partnerships and specialized service organizations not qualified as a legal person.
Article 103 An unincorporated organization shall be registered as prescribed by the law.Where the establishment of an unincorporated organization shall be approved by the relevant authorities according to provisions of the laws and administrative regulations, such provisions shall apply.
Article 104 Where the property of an unincorporated organization is not sufficient to pay off its debts, its investors or founders shall assume unlimited liability. Where the laws provide otherwise, such provisions shall prevail.
Article 105 An unincorporated organization may choose one or more persons to engage in civil activities on its behalf.
Article 106 An unincorporated organization shall be dissolved under any of the following circumstances:(I)The existence period specified in its articles of association expires, or other causes of dissolution specified in its articles of association arise;
(II) Its investors or founders decide to dissolve it; or
(III) other circumstances stipulated by the law arise.
Article 107 Where an unincorporated organization is to be dissolved, it shall carry out liquidation according to the law.
Article 108 In addition to the provisions of this Chapter, the relevant provisions prescribed in Section 1 of Chapter 3 of this Part shall apply mutatis mutandis to unincorporated organizations.
Article 109 The personal freedom and human dignity of a natural person shall be protected by the law.
Article 110 A natural person enjoys the rights to life, body, health, personal name, portrait, reputation, honor, privacy, and marital autonomy, as well as other rights.A legal person or an unincorporated organization shall enjoy the rights to name, reputation and honor.
Article 111 The personal information of a natural person shall be protected by the law. Any organization or individual shall legally obtain the personal information of others when necessary and ensure the safety of such personal information, and shall not illegally collect, use, process or transmit the personal information of others, or illegally buy or sell, provide or make public the personal information of others.
Article 112 Personal rights of a natural person that arise from marriage and family relations shall be protected by the law.
Article 113 The property rights of civil subjects shall receive equal protection under the law.
Article 114 A civil subject enjoys real rights in accordance with the law.Real rights refer to an obligee’s exclusive rights of direct control over specific res, including ownership, real right for usufruct and security interest.
Article 115 Res shall include immovables and personal estate. Where rights are deemed as the object of real rights by provisions of the law, such provisions shall apply.
Article 116 The categories of real rights and their contents shall be prescribed by law.
Article 117 Fair and reasonable compensation shall be paid if any real or personal estate is expropriated or requisitioned for public interests according to the authority and procedure as prescribed by the law.
Article 118 A civil subject enjoys creditor’s rights in accordance with the law.The creditor’s right refers to the right possessed by an obligee to require a specific obligor to perform or not to perform certain obligations arising from contracts, torts, negotiorum gestio and unjust enrichment, and other provisions of the law.
Article 119 A contract entered into in accordance with the law is legally binding on the parties.
Article 120 In the case of any infringement of civil rights and interests, the infringed is entitled to request the infringer to assume the liability for such infringement.
Article 121 A person, who manages affairs for the purpose of preventing the loss of another person’s interests without a statutory or contractual obligation, has the right to request the beneficiary to reimburse the necessary expenses incurred.
Article 122 A person who gains unjust enrichment without any legal basis, resulting in loss to another person, shall return the unjust enrichment to the person who suffers the loss upon the request thereof.
Article 123 A civil subject enjoys intellectual property in accordance with the law.Intellectual property is a proprietary right enjoyed by a holder in accordance with law in respect of the following objects:
(II) Inventions, utility models and designs;
(IV) Geographical indications;
(VI) Layout designs of integrated circuits;
(VII) New varieties of plants; and
(VIII) Other objects specified by the law.
Article 124 A natural person enjoys the right to inheritance in accordance with the law.A natural person’s legal private property may be inherited in accordance with the law.
Article 125 A civil subject enjoys equity and other investment rights in accordance with the law.
Article 126 A civil subject enjoys other civil rights and interests specified by the law.
Article 127 Where the law contains provisions in respect of the protection of data and network virtual property, such provisions shall apply.
Article 128 Where certain laws have special provisions to protect the civil rights of minors, the elderly, the disabled, women and consumers, such provisions shall apply.
Article 129 Civil rights may be acquired on the basis of civil juristic acts, de facto acts, acts prescribed by law or other means provided for by law.
Article 130 Civil subjects shall, at their own will, exercise civil rights in accordance with the law without interference.
Article 131 When exercising their rights, civil subjects shall fulfill their obligations as required by the law and as agreed with the parties.
Article 132 No civil subject may impair the national interests, public interests or the legitimate rights and interests of others by abuse of civil rights.
Article 133 A civil juristic act shall be the act of a civil subject to establish, change or terminate a civil juristic relationship through manifestation of intent.
Article 134 A civil juristic act may be instituted either based on the unanimous manifestation of intent made by two or more parties or based on the manifestation of intent made by one party.A resolution of a legal person or an unincorporated organization shall be instituted if it is made according to the discussion methods and voting procedures stipulated by the law or by its articles of association.
Article 135 A civil juristic act may be in written, oral or other forms. If the law or administrative regulation stipulates or the parties agree that a particular form shall be adopted, such form shall be adopted.
Article 136 A civil juristic act shall become effective once it is instituted, unless otherwise stipulated by the law or agreed between the parties.No person may arbitrarily alter or rescind his or her civil juristic act, except in accordance with the law or with the other party’s consent.
Section 2 Expression of Intent
Article 137 An expression of intent made in a real-time communication becomes effectivefrom the time the person to whom the intent is expressed is aware of its content.
An expression of intent made in a form other than a real-time communicationbecomes effective from the time it reaches the person to whom the intent is expressed.
Where such an expression of intent is made through an electronic data message andthe person to whom the intent is expressed has designated a specific data-receiving
system, it becomes effective from the time such a data message enters that system;
where no data-receiving system is specifically designated, it becomes effective from
the time the person to whom the intent is expressed knows or should have known that
the data message has entered the system. Where the parties have agreed otherwise on
the effective time of the expression of intent made in the form of an electronic data
message, such an agreement shall prevail.
Article 138 An expression of intent that is not made to any specific person shall become effective immediately once it is made. Where the laws provide otherwise, such provisions shall prevail.
Article 139 An expression of intent made in the form of an announcement shall become effective once it is announced.
Article 140 A person performing a civil juristic act may make an expression of intent eitherexpressly or implicitly. Silence is deemed as an expression of intent only when it is so provided by law, agreed by the parties, or accords with the course of dealing between the parties.
Article 141 A person performing a civil juristic act may withdraw an expression of intent.The notice of withdrawal of the expression of intent shall reach the counterparty prior to or at the same time with the counterparty’s receipt of the expression of intent.
Article 142 Where an expression of intent is made to a specific person, the meaning of theexpression shall be interpreted according to the words and sentences used, with
reference to the relevant terms, the nature and purpose of the civil juristic act, the
custom, and the principle of good faith.
Where an expression of intent is not made to any specific person, the true intentof the person performing a civil juristic act shall not be interpreted solely on the
words and sentences used, but along with the relevant terms, the nature and purpose
of the civil juristic act, custom, and the principle of good faith.
Section 3 Effect of a Civil Juristic Act
Article 143 A civil juristic act is valid if it satisfies the following conditions:
(I) The person has relevant capacity for civil conduct; and
(II) The intention expressed is genuine; and
(III) Such act does not violate the mandatory provisions of laws and administrative regulations or the public order and good morals.
Article 144 A civil juristic act performed by a person who has no capacity for civil conduct is null and void.
Article 145 A civil juristic act, performed by a person with limited capacity for performing civil juristic acts that is purely beneficial to the person or is appropriate to the age, intelligence, or mental status of the person is valid; any other civil juristic act performed by such a person is valid if a consent or ratification is obtained from his legal representative.A third person involved in the act performed by a person with limited capacity for performing civil juristic acts may request the legal representative of the latter to ratify the act within 30 days from receipt of the notification. Inaction of the legal representative is deemed as refusal of ratification. Before such an act is ratified, a bona fide third person is entitled to revoke the act. The Revocation shall be made by notice.
Article 146 A civil juristic act performed by a person and another person based on a false expression of intent is void.Where an expression of intent deliberately conceals a civil juristic act, the validity of the concealed act shall be determined in accordance with the relevant laws.
Article 147 For a civil juristic act that is performed based on a substantial misunderstanding, the person performing such act has the right to request a people’s court or an arbitral institution to revoke such act.
Article 148 For a civil juristic act that is performed by a party against his or her real intention as a result of fraud committed by another party, the party has the right to request a people’s court or an arbitral institution to revoke such act.
Article 149 In the event that a civil juristic act is performed by a party against his or her real intention as a result of fraud committed by a third party, the party may request a people’s court or an arbitral institution to revoke such act only under the circumstance that the other party knows or should have known about the fraud.
Article 150 For a civil juristic act that is performed by a party against his or her real intention as a result of coercion by another party or a third party, the party coerced has the right to request a people’s court or an arbitral institution to revoke such act.
Article 151 Where a civil juristic act is obviously unfair when instituted by a party making use of another party’s dangerous or unfavorable position or lack of judgment, the aggrieved party has the right to request a people’s court or an arbitral institution to revoke such act.
Article 152 The right to revoke a civil juristic act shall be extinguished under any of the following circumstances:(I)The party concerned does not exercise his or her right of revocation within one year from the date when he or she knows or should have known the cause for revocation or the party concerned with gross misunderstanding does not exercise his or her right of revocation within 90 days from the date when he or she knows or should have known the cause for revocation;
(II) The party coerced does not exercise his or her right of revocation within one year from the date when the coercion ceases; or
(III) The party concerned waives his or her right of revocation by an explicit statement or by his or her own act after he or she knows the cause for revocation.
Where the party concerned does not exercise the right of revocation within five years from the date when the civil juristic act is performed, the right of revocation shall be extinguished.
Article 153 Any civil juristic act that violates the mandatory provisions of laws and administrative regulations shall be null and void. Exception applies where the mandatory provision does not render the civil juristic act null and void.Any civil juristic act that violates public order and good morals is null and void.
Article 154 Where a person colludes with his counterparty to perform a civil juristic act that impair others’ legitimate rights and interests, such act shall be null and void.
Article 155 A civil juristic act that is null and void or revoked shall not be legally binding from the very beginning.
Article 156 Where part of a civil juristic act is null and void and it does not affect the validity of other parts, such other parts shall remain valid.
Article 157 When a civil juristic act becomes null and void, or has been revoked or has been determined as having no binding force, the person who acquired property as a result of such act shall return the same; if it is impossible or unnecessary to return such property, compensation shall be paid at an estimated price. The party at fault shall compensate the other party for the loss it suffers as a result of the act; if both parties are at fault, they shall bear the corresponding liability respectively. Where the laws provide otherwise, such provisions shall prevail.
Section 4 Civil Juristic Acts with Conditions and Time Limits
Article 158 A civil juristic act may be subject to conditions, except that conditions are not allowed to be imposed according to the nature of the civil juristic act. If a civil juristic act is subject to a condition on its entry into effect, it becomes effective upon fulfillment of the condition. The civil juristic act with a condition subsequent shall become null and void upon fulfillment of the condition.
Article 159 For a conditional civil juristic act, if One party prevents the fulfillment of a condition by improper means for the sake of its own interests, the condition shall be deemed to have been fulfilled; where One party hastens the fulfillment of a condition by improper means, the condition shall be deemed not to have been fulfilled.
Article 160 A civil juristic act may be subject to a time limit, except that the time limit is not allowed to be imposed according to the nature of the civil juristic act. If a civil juristic act is subject to a time limit in effect, it becomes effective upon expiration of the time limit. If a civil juristic act is subject to a time limit for termination, the civil juristic act ceases to be effective upon expiration of the time limit.
Article 161 A civil subject may perform civil juristic acts through agents.Civil juristic acts that shall be performed by a principal himself or herself pursuant to legal provisions or an agreement between the parties or the nature of such civil juristic acts, shall not be performed through an agent.
Article 162 Civil juristic acts that are performed by an agent in the name of the principal within the scope of power of agency shall have binding force on the principal.
Article 163 Agency shall include agency by agreement and statutory agency.An agent by agreement shall exercise the power of agency as authorized by the principal. The statutory agent shall exercise the power of agency in accordance with the provisions of the law.
Article 164 Where an agent fails to perform or does not fully perform his or her duties, thereby causing damage to the principal, the agent shall undertake civil liability.Where an agent and a third person commit malicious collusion, thereby harming the principal’s legitimate rights and interests, the agent and the third person shall be held jointly liable.
Article 165 Where a civil juristic act is entrusted to an agent in written form, the power of attorney shall clearly state the agent’s name, the entrusted matters and the scope and duration of the power of agency and be signed or sealed by the principal.
Article 166 Where a matter is entrusted to several agents, all of such agents shall exercise the power of agency jointly, unless otherwise agreed by the parties.
Article 167 If an agent knows or should have known that the matters entrusted are illegal but still performs the act of agency, or if a principal knows or should have known that his or her agent’s acts are illegal but fails to raise an objection, the principal and the agent shall be held jointly liable.
Article 168 An agent shall not perform a civil juristic act in the name of the principal with himself or herself, unless otherwise with the consent or acknowledgment of the principal.An agent shall not perform a civil juristic act in the name of the principal with any other party for which it acts as an agent simultaneously, unless otherwise with the consent or acknowledgment of both principals.
Article 169 Where an agent needs to assign its rights related to the matters under agency to a third party, he or she shall seek the consent or acknowledgment from the principal.With the consent or acknowledgment of the principal regarding the assignment of agency, the principal may directly instruct the third party to whom the agency has been assigned for the matters under agency, and the agent shall only bear the liability for the selection of the third party and the instructions to the third party.
Without the consent or acknowledgment of the principal regarding the assignment of agency, the agent shall bear the liability for the acts of the third party to whom the agency has been assigned, except where it is necessary for the agent to assignment the agency to a third party in an emergency in order to safeguard the interests of the principal.
Article 170 Civil juristic acts that are performed by a person who performs work tasks for a legal person or an unincorporated organization on matters within the limit of his or her functions and powers in the name of the legal person or the unincorporated organization shall have binding force on such legal person or unincorporated organization .Any restrictions imposed by the legal person or unincorporated organization on the limit of functions and powers of the person performing work tasks for the legal person or unincorporated organization shall not go against any bona fide counterparty.
Article 171 Any acts of agency continually performed by a person without the power of agency, beyond the scope of his power of agency or after his power of agency has expired shall not be binding on the principal without the acknowledgement of such principal.The counterparty may urge the principal to acknowledge the acts within 30 days of the date of receipt of the notice. Where the principal does not respond, acknowledge shall be deemed to have been refused. Before the acknowledge of the acts performed by the said person, the bona fide counterparty has the right of revocation. The revocation shall be made by giving a notice.
Where the principal refuses to acknowledge such acts performed by the said person, the bona fide counterparty has the right to request the said person to perform obligations or pay compensation for any injury incurred. However, the scope of compensation shall not exceed the benefits that can be obtained by the other party at the time of acknowledgement by the principal.
Where the counterparty knows or should have known that the said person has no power of agency, the counterparty and the said person shall respectively bear the liability according to their own faults.
Article 172 For any act of agency continually performed by a person without the power of agency, beyond the scope of his or her power of agency or after his or her power of agency has expired, such act of agency is valid if the other party has reasons to believe that the person has the power of agency.
Section 3 Termination of Agency
Article 173 An agency by agreement shall be terminated under any of the following circumstances:(I)When the period of agency expires or when the tasks entrusted are completed;
(II) When the principal dissolves the agency by agreement or the agent declines the agency by agreement;
(III) When the principal loses his or her capacity for civil conduct;
(IV) Where the agent or the principal dies; or
(V) The legal person or an unincorporated organization acting as the principal or the agent is terminated.
Article 174 The act of agency performed by an agent by agreement after the principal dies is valid under any of the following circumstances:
(I) Where the agent does not know and should not have known that the principal has died;
(II) Where the inheritor of the principal acknowledges such act;
(III) Where the power of attorney explicitly states that the power of agency shall be terminated upon completion of the matters entrusted; or
(IV) Where such act has been performed before the principal dies and continues for the sake of the principal’s inheritors.Where a legal person or an unincorporated organization acting as the principal is terminated, the provisions of the preceding paragraph shall apply mutatis mutandis.
Article 175 The statutory agency shall be terminated under any of the following circumstances:
(I) Where the principal obtains or recovers the full capacity for civil conduct;
(II) Where the principal loses his or her capacity for civil conduct;
(III) Where the agent or the principal dies; or
(IV) Where other circumstances stipulated by the law occur.
Article 176 A civil subject shall fulfill his or her civil obligations and bear civil liability in accordance with provisions of the law or agreements reached between the parties.
Article 177 Where two or more persons share civil liability according to the law, they shall bear the corresponding civil liability respectively if their respective liability can be determined; or evenly undertake civil liability if it is difficult to determine their respective liability.
Article 178 Where two or more persons are jointly held liable according to the law, the obligee is entitled to request part or all of the persons jointly held liable to bear the relevant liability.The share of liability of persons jointly held liable shall be determined based on the liability borne respectively; and they shall evenly undertake the liability if it is difficult to determine the liability borne respectively. Where liability actually borne by a person jointly held liable exceeds his or her share of liability, he or she is entitled to claim compensation from other persons jointly held liable.
The joint and several liability shall be provided for by law or agreed by the parties.
Article 179 The methods of bearing civil liability mainly include:(I)Cessation of infringements;
(V) Restoration to the original condition;
(VI) Repair, reworking or replacement;
(VIII) Compensation for losses;
(IX) Payment of damages for breach of contract;
(X) Elimination of ill effects and rehabilitation of reputation; and
Where the law contains provisions on punitive compensation, such provisions shall apply.
The ways of bearing civil liability set forth in this Article may be applied exclusively or concurrently.
Article 180 If civil obligations fail to be performed due to force majeure, no civil liability shall be borne. Where the laws provide otherwise, such provisions shall prevail.Force majeure is unforeseeable, unavoidable and insurmountable objective events.
Article 181 A person who causes harm in exercising a justifiable defense shall not bear civil liability.If such justifiable defense exceeds the limits of necessity and undue harm is caused, the person exercising such justifiable defense shall bear civil liability on a reasonable basis.
Article 182 If an injury is caused by an action taken to avoid an imminent danger, the person who gave rise to such danger shall bear civil liability.If the danger arose from natural causes, the person acting to avoid such danger shall not bear civil liability, and may pay reasonable compensation.
If the action taken to avoid such danger is improper or exceeds the limit of necessity and undue harm is caused, the person acting to avoid such danger shall bear civil liability on a reasonable basis.
Article 183 Where a person acts in order to protect any other’s civil rights and interests, thereby harming himself or herself, the infringer shall bear civil liability and the beneficiary may pay reasonable compensation. Where there is no infringer, or the infringer has fled or is unable to bear civil liability, the beneficiary shall pay appropriate compensation if the infringed claims compensation.
Article 184 A person who causes harm to any recipient in volunteering to provide emergency relief shall not bear civil liability.
Article 185 Whoever impairing the public interests by infringing upon the name, portrait, reputation or honor of a hero or a martyr shall bear civil liability.
Article 186 Where One party breaches an agreement, thus causing harm to the other party’s personal or property rights and interests, the aggrieved party has the right to request such party to assume the liability for the breach or for the infringement.
Article 187 Where a civil subject shall bear civil liability, administrative liability and criminal liability simultaneously for a single act, the administrative liability or criminal liability borne does not affect the civil liability to be borne; if the civil subject’s property is insufficient to cover the payment, the property shall be used in the first place for civil liability purposes.
Chapter 9 Limitation of Action
Article 188 The limitation of action regarding applications to a people’s court for protection of civil rights shall be three years. Where the laws provide otherwise, such provisions shall prevail.A limitation of action shall run from the date when an obligee knows or should have known that his or her rights have been infringed upon and who the obligor is. Where the laws provide otherwise, such provisions shall prevail. However, the people’s court shall not protect his or her rights if 20 years have passed since the infringement. Under special circumstances, the people’s court may decide to extend the limitation of action upon application filed by the obligee.
Article 189 Where the parties have agreed that the same obligation will be performed in installments, the limitation of action shall run from the date when the time limit for payment of the last installment expires.
Article 190 The limitation of action for the right of claim between a person who has no or limited capacity for civil conduct and his or her agent ad litem shall run from the date when the statutory agency is terminated.
Article 191 The limitation of action for the right to claim damages for a minor who suffers from sexual assault shall run from the date when the victim reaches the age of 18.
Article 192 When the limitation of action expires, the obligor may raise a plea of not fulfilling his or her obligations.If the obligor agrees to fulfill his or her obligations after the expiration of the limitation of action, he or she shall not raise a plea on the ground of the expiration of the limitation of action; if the obligor has fulfilled his or her obligations voluntarily, no request for return may be made.
Article 193 A people’s court shall not take the initiative to apply the provisions on the limitation of action.
Article 194 A limitation of action shall be suspended during the last six months of the limitation if the right of claim cannot be exercised because of the following obstacles:(I)Force majeure;
(II) Where the person who has no or limited capacity for civil conduct has no statutory agent, or his or her statutory agent dies or loses the capacity for civil conduct or the power of agency;
(III) Where neither an inheritor nor a legacy administrator has been determined after the commencement of inheritance;
(IV) Where the obligee is controlled by the obligor or other persons; and
(V) Where there are other obstacles that result in the failure of the obligee to exercise the right of claim.
A limitation of action shall expire after six months from the date on which the causes of suspension of the limitation are eliminated.
Article 195 A limitation of action shall be interrupted under any of the following circumstances, and it shall recommence from the time when the interruption or the relevant procedure is terminated:
(I) Where the obligee claims for the fulfillment of obligations by the obligor;
(II) Where the obligor agrees to fulfill the obligations;
(III) Where the obligee files a lawsuit or applies for arbitration; or
(IV) Where other circumstances which have the same effect as filing a lawsuit or applying for arbitration arise.
Article 196 The limitation of action shall not apply to the following rights of claim:(I)A claim for ceasing infringements, removing obstacles and eliminating dangers;
(II) The holder of reals rights to immovables or registered movables claims the returning of his property;
(III) A claim for the payment of child support, alimony or maintenance; and
(IV) Other rights of claim that shall not be subject to a limitation of action in accordance with the law.
Article 197 The periods, calculation methods, and the reasons for a suspension or interruption in respect of the limitation of action shall be prescribed by the law and those agreed by and between the parties shall be null and void.A party’s prior waiver of the benefit of the limitation of action shall be null and void.
Article 198 Where the law contains provisions on the limitation of arbitration, such provisions shall prevail; where there is no provision on the limitation of arbitration in the law, the provisions on the limitation of action shall apply.
Article 199 Unless otherwise prescribed by law, the duration of such rights as the right of revocation and the right of termination stipulated by the law or agreed by the parties shall run from the date when a right holder knows or should have known that such right is established. The provisions on the suspension, interruption and extension of the limitation of action shall no longer apply to the above duration. At the expiration of the duration, the right of revocation, the right of termination and other rights shall be extinguished.
Chapter 10 Calculation of Periods
Article 200 For the purpose of the Civil Law, a period of time shall be calculated by the Gregorian calendar in years, months, days and hours.
Article 201 When a period of time is calculated in years, months and days, the day on which the period begins shall not be counted as within the period; calculation shall begin from the next day.When a period of time is calculated in hours, calculation of such period shall begin from the time stipulated by the law or agreed by the parties.
Article 202 When a period of time is calculated in years and months, the same day of the due month as the day on which the period begins shall be taken as the last day of the time period; where there is no such same day, the end of the due month shall be taken as the last day of the time period.
Article 203 If the last day of a period of time falls on a Sunday or an official holiday, the day after the holiday shall be taken as the last day.The last day of a period of time shall end at 24: 00. If business hours are applicable, the last day shall end at closing time.
Article 204 The calculation of a period of time shall conform to the provisions hereof, unless otherwise stipulated by the law or agreed by the parties.
Article 205 This Part deals with the civil relations arising from the attribution and utilization of matters.
Article 206 The State upholds and improves the socialist basic economic system, under which public ownership is dominant and diverse forms of ownership develop side by side, and distribution according to work remains the dominant form and a variety of other modes of distribution coexist.The State consolidates and develops the public economy, and encourages, supports and guides the development of the non-public economy.
The State implements a socialist market economy and protects equal legal status and development rights of all market entities.
Article 207 The real rights of the State, collective real rights, private real rights and the real rights of other right holders shall be protected equally by the law and shall not be infringed upon by any organization or individual.
Article 208 The establishment, modification, assignment or extinguishment of real rights to immovables shall be subject to registration according to law. The establishment or assignment of real rights to movables shall be delivered in accordance with the law.
Chapter 2 Establishment, Modification, Assignment and Extinguishment of Real Rights
Section 1 Registration of Immovables
Article 209 Establishment, modification, assignment and extinguishment of real rights to immovables shall be effective upon registration pursuant to law; unless the law stipulates otherwise, such establishment, modification, assignment and extinguishment shall be ineffective without registration.Registration is not required for natural resources which belong to the State pursuant to the law.
Article 210 Registration of immovables shall be handled by the registration authority at the locality of the immovables.The State applies a uniform registration system for immovables. The scope, authority and measures for uniform registration shall be specified by the relevant laws and administrative regulations.
Article 211 In light of different registration items, an applicant shall, when applying for registration of immovables, provide such necessary materials as the certificate of immovable ownership and the location and area of the immovables.
Article 212 The registration authority shall perform the following duties:(I)Examining the ownership certificate and other necessary materials as provided by the applicant;
(II) Inquiring the applicant about the registration items concerned;
(III) Registering the relevant matters in a faithful and timely manner; and
(IV) Performing other duties stipulated by laws and administrative regulations.
Where further proof is required for the relevant information of immovables under an application for registration, the registration authority may require the applicant to provide supplementary materials and may conduct onsite inspection where necessary.
Article 213 No registration authority may commit any of the acts as follows:
(I) Requiring an evaluation of immovables;
(II) Repeated registration in the name of annual inspection; or
(III) Other acts performed beyond the scope of registration duties.
Article 214 As regards the establishment, modification, assignment or extinguishment of real rights to immovables, it shall go into effect since the date when it is recorded in the immovables register if the registration thereof is required by law.
Article 215 Where a contract is entered into by the parties on the establishment, modification, assignment or extinguishment of real rights to immovables, it shall go into effect upon the establishment of the contract, unless it is otherwise prescribed by any law; and the validity of the contract is not affected, whether the real rights have been registered or not.
Article 216 The immovables register shall be the basis of ownership and contents of real rights.The immovables register shall be managed by the registration authority.
Article 217 A certificate of immovable ownership is evidence that the right holder is entitled to ownership of the immovables. The items recorded in the certificate of immovable ownership shall accord with those recorded in the immovables register; unless it is proved that there is anything wrong in the immovables register, the one recorded therein shall prevail in the case of any inconsistence.
Article 218 Obligees and interested parties may apply for consulting or copying immovables registration materials, and the registration authority shall provide them with such materials.
Article 219 An interested party shall not make public or illegal use of immovables registration materials of the right holder.
Article 220 An obligee or interested party claiming that there is an error in the records of the immovables register may apply for correction registration. Where the obligee as recorded in the register of immovables agrees to a correction in writing or evidence to the contrary proves an error in the registration information, the registration authority shall make the relevant correction.Where the obligee as recorded in the register of immovables does not agree to make correction, an interested party may apply for registration of objection. Where the registration authority grants registration of objection but the applicant fails to file a lawsuit within 15 days from the date of such registration, the registration of objection becomes ineffective. Where the registration of objection is improper and damage is thus caused to the obligee, the obligee may claim damages against the applicant.
Article 221 Where the parties enter into an agreement on the sale of a house or any other agreement on the real rights to immovables, they may apply to the registration authority for advance-notice registration so as to ensure the realization of real rights in the future. Without the consent of the right holder specified in the advance-notice registration, any disposal of the immovable after the advance-notice registration may not produce effect of real right.After the advance-notice registration, where the creditor’s rights are extinguished or an application for registration is not made within 90 days from the date on which registration of immovables can be made, the advance-notice registration shall become void.
Article 222 Where a party provides false materials in an application for registration and causes others to suffer damages, it shall bear the liability for compensation.In case any registration authority causes damages to any other person due to any error in registration, it shall assume the liability for compensation. The registration authority may, after making compensation, seek recourse against the person liable for the error in registration.
Article 223 Immovables registration fees shall be charged per unit and may not be charged based on the size, volume or price of the immovables.
Section 2 Delivery of Movables
Article 224 Unless it is otherwise prescribed by any law, the establishment or assignment of real rights to movables shall come into effect upon delivery of such property.
Article 225 The establishment, modification, assignment or extinguishment of real rights to any vessel, aircraft or motor vehicle and so on may not challenge any bona fide third party if it is not registered.
Article 226 Where the obligee has taken possession of movables prior to the establishment or assignment of real rights to such property, the real right in the movable property becomes effective at the time when the civil juristic act is effected.
Article 227 Where a third party has the possession of movables prior to the establishment or assignment of real rights to such property, the person assuming the obligation of delivery may, instead of delivery, assign the right to request the third party to return the original object.
Article 228 Where both parties agree to let the assignor continuously possess the movables when real rights to such property are assigned, the real right in the movable property becomes effective at the time when such an agreement enters into effect.
Section 3 Miscellaneous Provisions
Article 229 Where the establishment, variation, assignment or extinguishment of real rights is due to a legal document of a people’s court or an arbitration agency or a requisition decision of a people’s government, etc., the establishment, variation, assignment or extinguishment shall take effect upon the legal document or requisition decision taking effect.
Article 230 Where real rights are acquired by inheritance, the real rights shall take effect upon the commencement of inheritance.
Article 231 Where real rights are established or extinguished as a result of such factual events as the legal construction or demolition of houses, the real rights shall take effect upon the accomplishment of the factual event.
Article 232 A disposal of real rights to immovables enjoyed pursuant to the provisions of this Section which is required to be registered pursuant to the provisions of the law shall not be effective unless such disposal is registered.
Chapter 3 Protection of Real Rights
Article 233 Where real rights are infringed, the right holder may resolve the matter through reconciliation, mediation, arbitration, litigation, etc.
Article 234 Where there is a dispute over the ownership and contents of a real right, an interested party may request for a confirmation of the right.
Article 235 Where immovable or movable property is under an unauthorized possession, the right holder may require the returning of the original object.
Article 236 Where real rights are under impairment or may be impaired, the right holder may request the removal of the impairment or the elimination of the danger.
Article 237 Where immovable or movable property is damaged, the right holder may, in accordance with the law, request the repair, remaking, replacement or restoration of the original state of the immovable or movable property.
Article 238 Where an infringement upon real rights causes damages to the right holder, the right holder may claim damages or the assumption of any other civil liability in accordance with the law.
Article 239 The ways for protecting real rights as prescribed in this Chapter may apply either independently or jointly in light of the specific situation of an infringement upon real rights.
Article 240 An owner of immovable or movable property is entitled to possession, use, earnings, and disposal of such property in accordance with the law.
Article 241 An owner of immovables or movables shall have the right to establish a usufruct and real rights granted by way of security over its own property. When exercising the right, the holder of usufruct or real rights granted by way of security may not infringe upon the rights and interests of the owner.
Article 242 No organization or individual may acquire the ownership of any immovable or movable property exclusively owned by the State as provided for by law.
Article 243 Collectively-owned land as well as premises and other immovables of organizations and individuals may be expropriated pursuant to the authority and procedures stipulated by the law for public interest needs.When expropriating land owned collectively, it is required to, in accordance with law and in a timely manner and in full amount, pay land compensation fees, resettlement subsidies and compensations for rural residential houses and other above-ground structures as well as young crops, arrange for social security expenses for the farmers with land requisitioned, guarantee their livelihood and protect their legitimate rights and interests.
In the expropriation of premises or other immovables of organizations and individuals, compensation for expropriation shall be given in accordance with the law to protect the legitimate rights and interests of the expropriated; where the houses of individuals are expropriated, the housing conditions of the expropriated shall be guaranteed.
No organization or individual may embezzle, misappropriate, privately divide, withhold, or delay the payment of compensation fees for expropriation and other fees.
Article 244 The State implements special protection for arable land, strictly restrict conversion of agricultural land to development land use and control the total quantity of development land use. It is not allowed to expropriate any land owned collectively in violation of the authority and procedures stipulated by the law.
Article 245 Immovables or movables of organizations and individuals may be requisitioned pursuant to the authority and procedures stipulated by the law for emergency rescue and disaster relief, epidemic prevention and control etc. Such immovable or movable property shall, after the use, be returned to the owners. In case the immovable or movable property owned by an organization or individual is requisitioned or damaged or lost after being requisitioned, corresponding compensation shall be made.
Chapter 5 State Ownership, Collective Ownership, and Private Ownership
Article 246 Property owned by the State as provided for by law shall belong to the State, that is, to the whole people.The State Council shall exercise the ownership of state-owned property on behalf of the State. Where the laws provide otherwise, such provisions shall prevail.
Article 247 Mineral deposits, waters and sea areas shall be in the ownership of the State.
Article 248 Uninhabited sea islands shall belong to the State and the State Council shall exercise the ownership of uninhabited sea islands on behalf of the State.
Article 249 Urban land shall be in the ownership of the State. Land in the rural areas and suburban areas legally owned by the State is owned by the State.
Article 250 Natural resources such as forests, mountains, grasslands, wastelands and tidal flats are owned by the State, except for those owned collectively by law.
Article 251 As regards the wild animal and plant resources that shall be owned by the State as provided for by law, they shall be in the ownership of the State.
Article 252 Radio frequency spectrum resources shall be owned by the State.
Article 253 Cultural relics owned by the State as provided for by law shall belong to the State.
Article 254 Defense assets are owned by the State.Infrastructures such as railways, highways, electric power facilities, telecommunication facilities, and petrol and gas pipelines legally owned by the State shall be in the ownership of the State.
Article 255 State organs have the right to possess, utilize and, in accordance with the law and the relevant provisions of the State Council, dispose of any immovable or movable property directly controlled by them.
Article 256 Institutions established by the State shall have the right to possess, use, benefit and dispose of immovables and movables under their direct control pursuant to the laws and the relevant provisions of the State Council.
Article 257 The State Council and local people’s governments at various levels shall, in accordance with the relevant laws and administrative regulations, perform the duties of an investor and enjoy the rights and interests of an investor in state-invested enterprises on behalf of the State respectively.
Article 258 Property owned by the State shall be protected by law and shall not be occupied, looted, privately divided, withheld or destroyed by any organization or individual.
Article 259 Institutions and their personnel in charge of administration and supervision of State-owned property shall strengthen administration and supervision of State-owned property pursuant to the law, promote value preservation and appreciation of State-owned property and prevent losses to State-owned property; legal liability shall be borne pursuant to the law for abuse of official powers and dereliction of duties which cause losses to State-owned property.Whoever, in violation of the provisions on the administration of state-owned property, causes any loss to state-owned property in the process of restructuring, merger or division of enterprises or related-party transactions by conducting an assignment at a low price, conspiring to divide up privately, providing a guarantee without authorization or in any other manner shall bear legal liability in accordance with the law.
Article 260 Collectively-owned immovables and movables include:(I)Land, forests, mountains, grasslands, un-reclaimed land and beaches that are owned collectively as provided for by law;
(II) Buildings, production facilities, and irrigation and water conservancy facilities that are owned collectively;
(III) Collectively-owned facilities for, among others, education, science, culture, public health and sports; and
(IV) Other immovables and movables that are collectively owned.
Article 261 Immovables and movables collectively-owned by farmers shall be collectively-owned by members of the collective.Members of a collective shall decide on the following matters according to statutory procedures:
(I)The land contracting plan and whether to contract land out to organizations or individuals that are not part of the collective;
(II) The adjustment of contracted land among the right holders of the contracted management of land;
(III) The methods for using and distributing land compensation fees and other expenses;
(IV) The modification of ownership of an enterprise invested by the collective and other related matters; and
(V) Other matters as stipulated by law.
Article 262 With regard to any land, forest, mountain, grassland, wasteland or tidal flat under collective ownership, the ownership thereof shall be exercised according to the following provisions:(I)Where owned by a rural collective of a village, the village collective economic organization or the villagers’ committee shall exercise the ownership on behalf of the collective according to law;
(II) Where owned respectively by two or more rural collectives of a village, all the collective economic organizations or villagers’ groups of the village shall exercise the ownership on behalf of the collective according to law; and
(III) Where owned by a rural collective of a town, the collective economic organization of the town shall exercise the ownership on behalf of the collective.
Article 263 With regard to any immovable or movable owned by an urban collective, the urban collective is entitled to the possession, use, benefit and disposal of such immovables and movables according to the laws and administrative regulations.
Article 264 The rural collective economic organization or the villagers’ committee or the villagers’ group shall, in accordance with the relevant laws, administrative regulations, articles of association and village regulations and non-governmental agreements, make public the situation of the property collectively owned to the members of the collective. Group members shall have the right to access and make copies of such materials.
Article 265 Property owned by a collective is protected by law. It is prohibited for any organization or individual to encroached, open plunder, privately divide or damage such property.Where the legitimate rights and interests of any member of a collective are infringed upon by any decision made by a rural collective economic organization, villagers’ committee or the principal thereof, such member may request the people’s court to revoke such decision.
Article 266 An individual is entitled to the ownership of his/her legal income, premise, household goods, production instruments, raw materials and other immovables and movables.
Article 267 An individual’s legal property shall be protected by law, no organization or individual may encroach, plunder or destroy such property.
Article 268 The State, any collective or individual may invest to establish a limited liability company, a company limited by shares or any other enterprise in accordance with the law. Where the immovables or movable property owned by the State, a collective or an individual is invested in an enterprise, the investor shall, pursuant to the agreement or capital contribution ratio, enjoy rights such as returns on assets, significant decision -making and selection of business managers and perform obligations.
Article 269 A for-profit legal person has the right to possess, utilize, seek profits from and dispose of its immovables and movables in accordance with the laws, administrative regulations and its articles of association.The provisions of the relevant laws, administrative regulations and articles of association shall apply to legal persons other than for-profit legal persons on their rights over their immovables and movables.
Article 270 The immovables and movables lawfully owned by corporation aggregates and legal persons established with donations are protected by law.
Chapter 6 Owner’s Partitioned Ownership of Building
Article 271 An owner is entitled to the ownership of the private areas including residential premises or premises used for business purposes within a building, and to the common ownership and management over the common areas other than the private areas.
Article 272 An owner is entitled to possess, use, seek profits from and dispose of the exclusive parts of the building. No owner may endanger the safety of the building or infringe upon the legitimate rights and interests of any other owner when exercising his or her rights.
Article 273 An owner enjoys the rights and assumes the obligations over the common parts other than the exclusive parts of the building and may not refuse to perform the obligations on the ground of waiving the rights.Where an owner assigns his or her residential premises or premises used for business purposes within the building, the common ownership and management right enjoyed by him/her over the common parts shall be assigned at the same time.
Article 274 The roads within a building’s premises shall be co-owned by the owners, with the exception of urban public roads owned. Green space within the building’s premises shall be co-owned by the owners, with the exception of urban public green space or individuals where it is expressly stated. Other public premises, common facilities and premises used for property services within the building’s premises shall be co-owned by the owners.
Article 275 The ownership of the parking places and garages within a building’s premises planned as vehicle parking spaces shall be agreed upon by the parties in the manners of selling, gifting or leasing, etc.The parking places, which occupy the roads or other places commonly owned by all owners, shall be in the common ownership of all the owners.
Article 276 The parking spaces and garages within a building’s premises planned as vehicle parking spaces shall first be used to meet the needs of the owners.
Article 277 Owners may establish the owners’ congress or elect for the owners’ committee. The specific conditions and procedures for the establishment of the owners’ congress and the owners’ committee shall be subject to the provisions of laws and regulations.The relevant departments of the local people’s government at all levels and the neighborhood committees shall provide guidance and assistance for the establishment of the owners’ congress and the election of the owners’ committee.
Article 278 The following matters shall be decided jointly by the owners:(I)Formulating and amending the rules of procedure for the owners’ congress;
(II) The formulation and revision of the management regulations;
(III) Election of the owners’ committee or replacement of the members of the owners’ committee;
(IV) Selecting and dismissing the property service enterprise or any other administrator;
(V) Using maintenance funds for buildings and auxiliary facilities; and
(VI) Raising funds for maintaining buildings and auxiliary facilities;
(VII) The renovation or reconstruction of buildings and auxiliary facilities;
(VIII) Changing the use of common areas or conducting operational activities by using common areas; and
(IX) Other important matters related to common ownership and joint management rights.
Matters to be jointly decided by the owners shall be voted by the owners whose exclusive parts account for two-thirds or more of the total areas and the number of which accounts for two-thirds or more of the total number of owners. A decision on any matter stipulated in Items (VI) through (VIII) of the preceding paragraph shall require the consent of the voting owners whose exclusive parts accounts for three-fourths or more of the total areas and the number of which accounts for three-fourths or more of the total number of owners. And a decision on any other matter stipulated in the preceding paragraph shall require the consent of the voting owners whose exclusive parts account for half or more of the total areas and the number of which accounts for more than half of the total number of owners.
Article 279 Owners shall not change a residential premise into a premise used for business purposes by violating any law, regulation or management rule. An owner shall, when changing a residential premise into a premise used for business purposes, obtain the unanimous consent of the interested owners, in addition to observing the laws, regulations and management rules.
Article 280 Any decisions of the owners’ congress or the owners’ committee shall be legally binding on the owners.Where a decision made by the owners’ congress or the owners’ committee infringes upon the legitimate rights and interests of an owner, the infringed owner may apply to a people’s court to revoke the decision.
Article 281 Funds for maintaining a building and the ancillary facilities thereof shall be commonly owned by the owners of the building. The funds may, upon the codetermination of the owners, be used for the maintenance, renewal and reconstruction of elevators, roofs, exterior walls, barrier-free facilities and other common parts. Raising and use of maintenance and repair funds for buildings and auxiliary facilities shall be disclosed on a regular basis.Where there is a need to repair a building and its auxiliary facilities under emergency circumstances, the owners’ congress or the owners’ committee may apply for the use of the repair and maintenance fund for the building and its auxiliary facilities pursuant to the law.
Article 282 Income derived by a developer, property service enterprise or any other administrator from utilizing the common part of the owners shall, upon deduction of reasonable costs, belong to the owners.
Article 283 The apportionment of expenses and distribution of gains in respect of a building and its auxiliary facilities shall be determined pursuant to the agreement where available; where no agreement exists or the agreement is ambiguous, the apportionment of expenses and distribution of gains shall be determined pursuant to the ratio of the area occupied exclusively by the owners.
Article 284 The owners of a building may manage the building and auxiliary facilities thereof by themselves or they may entrust a property service enterprise or any other administrator to conduct the management.As regards the property service enterprise or any other administrator lease expensed by the developer, the owners are entitled to change it in accordance with law.
Article 285 The property service enterprise or any other administrator shall, upon the entrustment of the owners and pursuant to the relevant provisions of Part III of this Code governing property service contracts, manage the building and auxiliary facilities thereof within the building’s premises planned, accept the supervision of the owners and make timely replies to the inquiries of the owners about the property services.The property service enterprise or administrator shall implement the emergency measures and other management measures adopted by the government pursuant to the law, and actively cooperate in the relevant tasks.
Article 286 Owners shall comply with the laws, regulations and management rules, the relevant acts shall satisfy the requirements for conservation of resources and protection of ecological environment. Where the property service enterprise or administrator implements emergency handling measures and other management measures adopted by the government pursuant to the law, owners shall render cooperation pursuant to the law.As regards any act infringing upon the legitimate rights and interests of others, such as discarding wastes at will, discharging pollutants and noises, breeding animals in violation of the related provisions, illegally building shelters, occupying passages or rejecting paying property management fees, etc., the owners’ congress or the owners’ committee has the right, in accordance with the relevant laws, regulations and management stipulations, to request the person performing the said acts to cease the infringement, remove the obstacles, eliminate the danger, recover the original state and compensate for the losses.
If the owner or any other person performing the acts refuses to perform his or her obligations, the parties may report or complain to the competent administrative department. The competent administrative department shall handle the case according to law.
Article 287 Where a developer, an property service enterprise or any other administrator or any other owner has committed an act which harms the legitimate rights and interests of an owner, the owner shall have the right to request the party concerned to bear civil liability.
Chapter 7 Neighboring Relations
Article 288 Neighboring obligees of immovables shall handle the neighboring relationship properly under the principles of facilitating production and living, solidarity and mutual assistance, fairness and reasonableness.
Article 289 Where there exists any provision governing the neighboring relationship in any law or regulation, such provision shall apply; in the absence of such provision, the local customs shall apply.
Article 290 An obligee of immovables shall provide neighboring obligees with the requisite convenience to the supply and drainage of water.Neighboring obligees of immovables shall rationally distribute the utilization of natural running water. The natural flow direction of water shall be respected when draining natural running water.
Article 291 An obligee of immovables shall provide neighboring obligees with such requisite convenience as using its land as a passage where necessary.
Article 292 Where an obligee of immovables has to use neighboring land or building for the construction or repairing of a building, or the laying of wires, cables, water pipes, heating pipelines or fuel gas pipelines, etc., necessary convenience shall be provided by the oblige of such neighboring land or building.
Article 293 The construction of a building may not violate the relevant engineering construction standards of the State or obstruct the ventilation, lighting or sunshine of any neighboring building.
Article 294 No obligee of immovables may discard solid wastes or discharge such harmful substances as atmospheric pollutants, water pollutants, soil pollutants, noise, light radiation and electromagnetic radiation in violation of the provisions of the State.
Article 295 An obligee of immovables must not endanger the safety of neighboring immovables when excavating land, constructing a building, laying pipelines or installing equipment.
Article 296 Where an obligee of immovables makes use of Neighboring immovables for using water, drainage, passage or laying pipelines, etc., he or she shall make efforts to avoid causing damages to the neighboring obligee of immovables.
Article 297 Immovable property or movable property may be jointly owned by two or more organizations or individuals. Common ownership includes co-ownership by shares and joint ownership.
Article 298 As regards commonly owned immovable or movable property, a several co-owner shall, on the basis of his proportion, have the ownership of the immovable or movable property.
Article 299 Joint co-owners of a co-owned immovable or movable property shall be, on a common basis, entitled to the ownership of such immovable or movable property.
Article 300 Co-owners shall manage the immovable or movable property commonly owned by them as agreed; in the case of no or unclear agreement, all co-owners have the right and obligation of management.
Article 301 As regards the disposal, major repair, and changes to nature or purpose of commonly owned immovable or movable property, unless otherwise stipulated by the co-owners, the consent of the several co-owners holding two third shares or more or of all joint owners shall be obtained therefor, unless otherwise agreed by the all joint owners.
Article 302 As regards the management expenses or any other burden for commonly owned property, where there exists any stipulation on these, such stipulation shall apply; in the case of no or unclear stipulation, the expenses or burden shall be borne by the several co-owners according to their respective shares or commonly borne by all joint owners.
Article 303 In the case that the co-owners of commonly owned immovable or movable property has stipulated that it is not allowed to partition the property so as to maintain the relationship of joint ownership, such stipulation shall apply; but where any co-owner has certain significant reasons for partitioning the property, he or she may request the partition; in the case of no or unclear stipulation, a several co-owner may request the partition at any time, and a joint owner may request the partition when the basis for the common ownership disappears or he or she has certain significant reasons. In case any harm is caused to any other co-owner by partition, compensation shall be made.
Article 304 The co-owners of commonly owned immovable or movable property may decide on through negotiation the way of partition. In case no agreement is reached, if the immovable or movable property may be partitioned without impacting its value, the property shall be partitioned. If it is difficult to partition it or its value would be impaired by the partition, the amount generated from converting it into money, auctioning or selling it shall be partitioned.Where there is any flaw in the immovable or movable property obtained by a co-owner from the partition, the other co-owners shall jointly bear the losses.
Article 305 A several co-owner may assign his share of the commonly owned immovable or movable property. The other co-owners shall have the right of preemption under the same conditions.
Article 306 Where a several co-owner assign his share of commonly owned immovable or movable property, he shall notify the other co-owners of the conditions for assignment in time. The other co-owners shall exercise right of preemption within a reasonable period.If more than two other co-owners exercise the right of preemption, they shall determine their respective purchase percentage through consultation; if such consultation fails, they shall exercise the right of preemption in proportion to their respective co-ownership shares at the time of assignment.
Article 307 As regards a creditor’s right or a debt generated from commonly owned immovable or movable property, unless it is otherwise prescribed by any law or the third party is aware of the fact that a co-owner does not have the relation of joint and several creditor’s right or debt, the co-owners shall enjoy joint and several creditor’s right or undertake joint and several debt in terms of external relationship. In terms of the internal relationship among the co-owners, unless it is otherwise stipulated by the co-owners, a several co-owner shall enjoy the creditor’s right and undertake the debt on the basis of his own share, while joint owners shall enjoy the creditor’s right and undertake the debt on a common basis. Where any several co-owner overpays his share of the debt, he has the right to recover the overpaid amount from the other co-owners.
Article 308 In case the co-owners fail to stipulate whether the commonly owned immovable or movable property is under several co-ownership or joint ownership, or if the stipulation is unclear, it shall be deemed as a several co-ownership unless there is a family relationship among the co-owners.
Article 309 A several co-owner’s share of commonly owned immovable or movable property shall, in the case of no or unclear stipulation, be determined on the basis of his capital contribution. Where it is impossible to determine the amount of capital contribution, he shall enjoy an equal share.
Article 310 Where two or more organizations or individuals jointly own usufruct or security interest for the immovable or movable property, the relevant provisions of this Chapter shall apply mutatis mutandis.
Chapter 9 Special Provisions Regarding Acquisition of Ownership
Article 311 Where a person without the disposal right for immovable or movable property assigns the immovable or movable property to an assignee, the owner of such property is entitled to the recovery of the immovable or movable property. Unless otherwise prescribed by law, the assignee shall obtain the ownership of the immovable or movable property if all of the following conditions are met:(I)The assignee is assigned the immovable or movable property in good faith;
(II) The property is assigned at a reasonable price; and
(III) The assigned immovable or movable property for which registration is required by law has been registered. Where registration is not required, the immovable or movable property has been delivered to the assignee.
Where the assignee has obtained ownership of the immovable property or movable property pursuant to the provisions of the preceding paragraph, the original owner shall have the right to claim damages from the assignor with no right of disposal.
In case One party obtains any other real right in good faith, the preceding two paragraphs shall apply mutatis mutandis.
Article 312 An owner or any other right holder shall have the right to recover lost property. In case the lost property is possessed by any other person through assignment , the right holder shall have the right to claim damages against the person with no right of disposal, or require the assignee to return the original property within two years from the date the right holder becomes aware of or should have become aware of the assignee. However, where the assignee purchases the lost property through auction or from a qualified operator, the right holder shall, when requiring the return of the original property, pay the assignee the amount the assignee paid for purchasing the property. The right holder, after paying the expenses to the assignee, is entitled to recover them from the person with no right of disposal.
Article 313 After a bona fide assignee obtains a movable, the original rights on the movable shall be extinguished. However, the exception is in cases where the bona fide assignee knew or ought to have known the rights at the time of the assignment.
Article 314 A lost-and-found object shall be returned to the owner. The person finding such object shall inform the owner to claim it or hand it over to such relevant authorities as the public security department in time.
Article 315 Upon receipt of a lost-and-found object, where the relevant authorities are aware of the owner, they shall promptly notify the owner to collect the property; in case they are not aware of the owner, they shall promptly make a public announcement on collection of the object.
Article 316 The person who finds the object shall, prior delivery of the object to the relevant authorities, safekeep the object with due care; and the relevant authorities shall safekeep the object with due care prior to collection by the owner. Civil liability shall be borne where the object is damaged or lost as a result of willful conduct or gross negligence.
Article 317 The owner, when claiming the lost-and-found object, shall pay the finder or the relevant authorities the expenses incurred from the safekeeping of the property.Where the owner has offered a reward for finding the object, he or she shall fulfill his/her obligation of granting the reward when claiming the object.
Where the person who finds the object misappropriates it, he or she will be deprived of the right to ask for paying the expenses he or she has paid for safekeeping the object or require the owner to perform the obligation as promised.
Article 318 Where lost-and-find object fails to be claimed within one year as of the date when the claiming announcement is published, it shall be owned by the State.
Article 319 For any drifter or any item buried underground or hidden item found, the relevant provisions on the finding of a lost-and-found object shall apply mutatis mutandis. Where the laws provide otherwise, such provisions shall prevail.
Article 320 Unless it is otherwise stipulated by the parties, accessory res shall be assigned together with the assignment of principal res.
Article 321 The owner of property shall be entitled to natural fruits of the property. Where there are both an owner and a usufruct holder for the property, the usufruct holder shall be entitled to the natural fruits of the property. Where the parties agree otherwise, their agreement shall prevail.In the event of an agreement on statutory fruits, the parties shall obtain statutory fruits in accordance with the agreement. Where there is no agreement or such agreement is unclear, statutory fruits shall be obtained in light of trading practices.
Article 322 The ownership of res arising from processing, attachment or mixing shall be determined according to the agreement where available; where no agreement exists or the agreement is unclear, the ownership shall be determined in accordance with the law; where the law does not provide, the ownership shall be determined in accordance with the principles of maximizing the utility of the res and protecting innocent parties. If one party’s fault or the ownership of the res established has caused damage to the other party, compensation or indemnity shall be given.
Article 323 As regards the immovable or movable property owned by someone else, a usufruct holder is entitled to possess, use and seek proceeds from it in accordance with law.
Article 324 As regards the natural resources that are owned by the State or that are owned by the State but used by a collective as well as those that are owned by a collective as prescribed by law, any organization or individual may possess, use and seek proceeds from them.
Article 325 Unless the law provides to the contrary, the State implements a system of compensated use of natural resources.
Article 326 When exercising his/her rights, a usufruct holder shall comply with the provisions on protecting, reasonably exploiting and utilizing resources and protecting the ecological environment. The owner shall not interfere with the usufruct holder’s exercise of rights.
Article 327 Where the usufruct for immovable or movable property is terminated or its exercise is affected due to the expropriation or requisition of such property, the usufruct holder has the right to obtain corresponding compensations in accordance with Articles 243 and 245 hereof.
Article 328 The lawfully obtained right to use sea areas shall be protected by law.
Article 329 The mineral prospecting right, the mining right, the water drawing right and the right to use water areas or tidal flats for breeding or fishery shall be protected by law.
Chapter 11 Right to Land Contractual Management
Article 330 Rural collective economic organizations shall apply the dual-layer management system characterized by the combination of centralized operation with decentralized operation on the basis of operation by households under a contract.Arable land, woodland, grassland and other land used for agriculture which are collectively-owned by farmers or owned by the State but collectively used by farmers shall be subject to a contractual land operation system pursuant to the law.
Article 331 A holder of right to contractual land management shall, pursuant to the law, have the right to possess, use and benefit from arable land, woodland, grassland, etc. under contractual operations and the right to engage in planting, forestry, husbandry, etc.
Article 332 The term of contract for arable land is 30 years. The term of contract for grassland shall be 30 to 50 years. The term of contract for woodland ranges from 30 to 70 years.Upon expiry of the term of contract stipulated in the preceding paragraph, the holder of right to contractual land management may continue contractual operation pursuant to the provisions of the rural land contract law.
Article 333 The right to contractual land management shall be established from the effective date of the contract for contractual land management.The registration authority shall issue the certificate of the right to contractual land management or the certificate of the right to contractual management of forestland to the right holder, and record it in the register so as to confirm such right.
Article 334 A holder of right to contractual land management shall, pursuant to the provisions of the law, have the right to exchange or assign such right. Without approval granted according to law, no contracted land may be used for non-agricultural development.
Article 335 In the event of exchange or assignment of the land contracted management right, the parties may apply to the registration authority for registration; no claims may be made against a bona fide third party where registration is not completed.
Article 336 The contract-letting party may not readjust the contracted land within the term of contract.Where appropriate adjustments need to be made to the contracted arable land or grassland due to serious damage from natural disasters or other special circumstances, the matter shall be dealt with pursuant to the provisions of the laws on rural land contracting.
Article 337 The contract-letting party may not take back the contracted land within the term of contract. Where the laws provide otherwise, such provisions shall prevail.
Article 338 In case a contracted land is expropriated, the holder of the right to contractual land management has the right to obtain corresponding compensations in accordance with Article 243 hereof.
Article 339 A holder of right to contractual land management may, at its own discretion, assign its right to others by way of lease, equity participation or any other method pursuant to the law.
Article 340 A holder of right to contractual land management shall have the right to possess rural land within the period stipulated in the contract, carry out agricultural production and operation independently and derive gains.
Article 341 The land management right assigned with a term of more than five years shall be established when the assignment contract comes into effect. The parties may apply to the registration authority for registration of the land management right; no claims may be made against a bona fide third party where registration has not been completed.
Article 342 Where a person enters into a contract for rural land through bidding, auction or public consultation and obtains the ownership certificate after registration according to law, he or she may, according to law, assign his/her right to land management by means of leasing, equity investment, mortgaging or by other means.
Article 343 Where contractual management is implemented over any state-owned agricultural land, the relevant provisions of this Part shall apply mutatis mutandis.
Chapter 12 Construction Land Use Right
Article 344 The holder of the construction land use right has the right to possess, use and seek proceeds from the land owned by the State, and shall be entitled to the construction of buildings, structures and their auxiliary facilities by making use of such land.
Article 345 The construction land use right may be established separately on the surface of or above or under the land.
Article 346 Establishment of the right to use construction land shall conform to the requirements of conservation of resources and environmental protection and the provisions of laws and administrative regulations on land use, and shall not harm existing usufructs.
Article 347 The construction land use right may be established through assignment or allotment, etc.Open bidding methods such as bidding, auction, etc. shall be adopted for assignment of the land use right for profit-oriented land use for such sectors as industry, commerce, tourism, entertainment and commercial housing, etc., as well as the land use right for which there are two or more prospective land users.
The establishment of construction land use right through allocation is strictly restricted.
Article 348 Where construction land use right is established through assignment methods such as bidding, auction or agreement, the parties shall enter into a written contract for assignment of such right.A contract on assignment of the construction land use right shall generally contain the following items:
(I)The names and domiciles of the parties;
(II) Boundaries and area, etc. of the land;
(III) Space to be occupied by buildings, structures and auxiliary facilities thereof;
(IV) Land use and planning conditions;
(V) The term of the construction land use right;
(VI) Payments of assignment fees and other expenses; and
(VII) Dispute settlement method.
Article 349 For establishment of the construction land use right, an application for registering such right shall be submitted to the registration authority. The construction land use right shall be established at the time of registration. The registration authority shall issue an ownership certificate to the holder of such right.
Article 350 The holder of the construction land use right shall reasonably use the land and may not alter the use purpose. In case the purpose of land use needs to be altered, the approval of the relevant administrative department shall be obtained according to the law.
Article 351 The holder of construction land use right shall pay assignment fee etc. pursuant to the provisions of the law and the contractual agreement.
Article 352 Unless there is evidence to the contrary, the ownership to buildings, structures and auxiliary facilities constructed by a holder of construction land use right shall belong to the holder of such right.
Article 353 Unless it is otherwise prescribed by any law, the holder of the construction land use right has the right to assign, exchange, use as equity contributions, endow or mortgage the construction land use right.
Article 354 For assigning, exchanging, using as equity contributions, endowing, or mortgaging the construction land use right, the parties shall enter into a corresponding written contract. The term of use shall be agreed between the parties but shall not exceed the remaining term of the construction land use right.
Article 355 Change registration formalities shall be completed with the registration authority for assignment, exchange, use as equity contribution, endowment, or mortgage of the construction land use right.
Article 356 When assigning, exchanging, using as equity contribution, endowing, or mortgaging the construction land use right, the buildings, structures and affiliated facilities thereof on such land shall be disposed of concurrently.
Article 357 In the event of assignment, exchange, use as equity contribution, endowment, or mortgage of buildings, structures and auxiliary facilities thereof, the construction land use right for the land occupied by the buildings, structures and auxiliary facilities thereof shall be disposed of concurrently.
Article 358 Before the term of the construction land use right expires, where it is necessary to take back the land in advance by virtue of public interests, compensations shall, according to Article 243 hereof, be given for the houses and other realties on such land, and corresponding land assignment fees shall be returned.
Article 359 The term of the construction land use right for residential property shall be automatically renewed upon expiry. The payment, reduction of or exemption from the renewal fee shall be handled in accordance with the provisions of laws and administrative regulations.The term of the construction land use right for non-residential property shall be renewed upon expiry pursuant to the provisions of the law. In case there exists any stipulation on the ownership of houses and other realties on the aforesaid land, such stipulation shall prevail; in the case of no or unclear such stipulation, the ownership shall be determined in accordance with the provisions in the laws and administrative regulations.
Article 360 Upon extinguishment of the construction land use right, the assignor shall promptly complete deregistration formalities. The registration authority shall take back the ownership certificate.
Article 361 Collectively-owned land used as construction land shall be subject to the provisions of land administration laws.
Chapter 13 Rural Residential Land Use Right
Article 362 The holder of the rural residential land use right has the right to possess and use land owned by a collective, and to construct residential houses and affiliated facilities thereof by making use of such land.
Article 363 The relevant laws on land administration and the relevant provisions of the State shall apply to obtaining, exercise and assignment of the rural residential land use right.
Article 364 The rural residential land use right shall be extinguished where the rural residential land is lost due to any natural disaster, etc. A new residential land shall be allocated to villagers suffered the loss in accordance with the law.
Article 365 Change registration or de-registration formalities shall be promptly completed for any assignment or extinguishment of the registered right to use residential land.
Chapter 14 Right of Habitation
Article 366 The holder of the right of habitation shall, according to the stipulations of a contract, have the usufruct to possess and use the dwelling house of others so as to meet the need of living and dwelling.
Article 367 For the establishment of the right of habitation, the parties shall enter into a written right of habitation contract.In general, a right of habitation contract shall contain the items as follows:
(I)Names or titles and domiciles of the parties;
(II) Location of the dwelling house;
(III) The conditions and requirements for habitation;
(IV) The term of the right of habitation; and
(V) Dispute settlement method.
Article 368 The right of habitation shall be established without compensation, unless otherwise agreed by the parties. Those who establish the right of habitation shall apply to the registration authority for registration of the right of habitation. The right of habitation shall be established upon registration.
Article 369 The right of habitation shall not be assigned or inherited. The dwelling house on which the right of habitation is established shall not be leased except where the parties agree otherwise.
Article 370 The right of habitation shall be extinguished upon the expiration of its term or upon the death of the person who has the right of habitation. Upon extinguishment of the right of habitation, deregistration formalities shall be promptly completed.
Article 371 The relevant provisions of this Chapter shall apply mutatis mutandis to the establishment of the right of habitation in the form of wills.
Article 372 A servitude holder shall, according to the contract, be entitled to utilize an immovable of someone else so as to enhance the efficiency of his own immovable.The term “immovable of someone else” as mentioned in the preceding paragraph shall be the servient tenement, and “one’s own immovable property” shall be the dominant tenement.
Article 373 The parties shall conclude a written contract of Servitude to establish a servitude.In general, a servitude contract shall contain the items as follows:
(I)Names or titles and domiciles of the parties;
(II) Locations of the servient tenement and dominant tenement;
(III) Purpose of use and method;
(V) Fees and payment method; and
(VI) Dispute settlement method.
Article 374 A servitude shall be established from the effective date of a contract for servitude. The parties may apply to the registration authority for servitude registration if they request for registration; no claims may be made against a bona fide third party where a servitude is not registered.
Article 375 The owner of the servient tenement shall, pursuant to the provisions of the contract, allow the servitude holder to use his immovable and shall not interfere with the servitude holder’s exercise of rights.
Article 376 The servitude holder shall, according to the purpose and method of use as stipulated in the contract, use the servient tenement, and make efforts to reduce the restrictions on the real rights of the owner of the servient tenement.
Article 377 The servitude period shall be agreed between the parties; however, the servitude period shall not exceed the remaining period of usufructs such as contracted land management rights, construction land use right, etc.
Article 378 As regards the servitude enjoyed or borne by a land owner, where such usufructs as the right to contractual land management, the residential land use right, etc. are established, the aforesaid usufruct holder may continuously enjoy or bear the established servitude.
Article 379 Where usufructs such as the right to contractual land management, the construction land use right, the rural residential land use right, etc. have been established on the land, the land owner shall not establish servitude without the consent of the usufruct holder.
Article 380 Servitude may not be solely assigned. Unless otherwise stipulated in a contract, servitude shall be assigned together with the assignment of the rights to contractual land management or the construction land use right.
Article 381 Servitude may not be solely mortgaged. Where the right to land management, the construction land use right or any other right is mortgaged, servitude shall be assigned upon the realization of the mortgage.
Article 382 When the dominant tenement as well as the right to contractual land management, the construction land use right or any other right thereon are partially assigned, and the assigned part involves the servitude, the assignee shall enjoy the servitude simultaneously.
Article 383 When the servient tenement as well as the right to contractual land management, the construction land use right or any other right thereon are partially assigned, the servitude shall be legally binding upon the assignee if the servitude is involved in the assignment
Article 384 The owner of the servient tenement has the right to rescind the servitude contract, and the servitude shall be extinguished, where the servitude holder:(I)abusing servitude in violation of the law or the contract; or
(II) as regards the paid use of servient tenement, upon expiration of the stipulated time limit for payment, failing to pay fees within a reasonable time limit for two times after being urged to do so.
Article 385 Change registration or de-registration formalities shall be promptly completed for any change, assignment or extinguishment of a registered servitude.
Article 386 Where the obligor fails to pay its due debts or any circumstance for realizing security interest as stipulated by the parties occurs, the obligee of security interest shall enjoy the right of priority in seeking payments with the secured property, except as otherwise prescribed by any law.
Article 387 In civil activities such as loans and sales, where security is required to ensure the realization of creditor’s rights, a creditor may establish security interest in accordance with this Code or any other law.Where a third party provides security to the creditor for a debtor, counter-security from the debtor may be required. The countersecurity shall be pursuant to this Code and other related laws.
Article 388 For establishing security interest, a security contract shall be concluded in accordance with this Code and other related laws. Security contracts shall include mortgage contract, pledge contract and other contracts with the security function. A security contract shall be a subordinate one to the principal credit- debt contract. Unless it is otherwise prescribed by any law, the security contract shall be null and void if the principal contract is null and void.If a security contract is confirmed to be null and void and the debtor, security provider or creditor is at fault, he shall bear the corresponding civil liability according to his fault.
Article 389 The security range shall cover the principal creditor’s rights and their interests, default fines, damages as well as expenses for keeping the secured property and for realizing the security interest. Where the parties agree otherwise, their agreement shall prevail.
Article 390 Where the secured property is damaged, lost or expropriated during the term of the security interest, the obligee of security interest may have a priority over the compensation received from any insurance money, damages or indemnities, etc. If the term for performing the secured creditor’s rights has not expired, such insurance money, damages or indemnities, etc. may be placed in escrow.
Article 391 Where a guarantee is provided by a third party and the creditor allows the debtor to assign all or part of the debt without the written consent of the guarantor, the guarantor shall no longer bear the corresponding guarantee liability.
Article 392 Where a secured creditor’s right are secured by property and a guarantor, the creditor shall realize creditor’s rights pursuant to the agreement when the debtor defaults on its debt obligations or where circumstances for realization of the security interest as agreed by the parties have occurred; where no agreement exists or the agreement is ambiguous, and the debtor has provided security in the form of property, the creditor’s rights shall be realized first in respect of the property; where security in the form of property is provided by a third party, the creditor may realize creditor’s rights in respect of the property or request that the guarantor assume guarantee liability. After undertaking the guarantee liability, the third party that provide guarantee has the right to seek recourse against the debtor.
Article 393 The security interest may be extinguished under any of the following circumstances:(I)The principal creditor’s rights are extinguished;
(II) The security interest has been realized;
(III) The creditor waives the security interest; or
(IV) Any other circumstance occurs under which the security interest will be extinguished as provided for by any law.
Article 394 In the event that a debtor or a third party mortgage his property to the creditor without assigning the possession of such property in order to ensure the payment of debts, if the debtor fails to pay due debts or any circumstance as stipulated by the parties for realizing the mortgage occurs, the creditor has the right to seek preferred payments from such property.The debtor or third party referred to in the preceding paragraph shall be the mortgagor; the creditor shall be the mortgagee and the property provided as a guarantee shall be the mortgaged property.
Article 395 A mortgage may be established on the following property of which the debtor or third party has the right of disposal:(I)Buildings and other objects attached to the land;
(II) Construction land use right;
(IV) Manufacturing facilities, raw materials, semi-manufactured goods and finished products;
(V) Buildings, vessels and aircrafts under construction;
(VII) Other property not prohibited from being mortgaged by any law or administrative regulation.
A mortgagor may mortgage all the property listed in the preceding paragraph together.
Article 396 An enterprise, individual business or agricultural production operator may mortgage existing or prospective production equipment, raw materials, semi-finished products and finished products, and where the debtor defaults on its debt obligations or where circumstances for the realization of the mortgage interest as agreed by the parties has occurred, the creditor shall have a priority right to the movable property to be repaid at the time the mortgaged property is determined.
Article 397 When a building is mortgaged, the right to use construction land as possessed by the building shall also be mortgaged simultaneously. When mortgaging the construction land use right, all the buildings on such land shall be mortgaged together.Where a mortgagor fails to mortgage the property in accordance with the provisions in the preceding paragraph, the property not mortgaged shall be deemed to be mortgaged together.
Article 398 The construction land use right of a township or village enterprise may not be individually mortgaged. Where a plant or any other building of a township or village enterprise is mortgaged, the construction land use right within the area of such building shall be mortgaged concurrently.
Article 399 The following property may not be mortgaged:(I)The ownership of land;
(II) The right to use such collectively-owned land as rural residential land, land and hills allotted for private use, except for those that may be mortgaged as prescribed by any law;
(III) Educational, medical and other public welfare facilities of non-profit legal persons established for the purpose of public welfare by, among others, schools, kindergartens and medical institutions;
(IV) Property with unclear or controversial ownership or use rights;
(V) Property legally sealed up, seized, distrained or under supervision according to law; or
(VI) Any other property that cannot be mortgaged as prescribed by any law or administrative regulation.
Article 400 For establishing a mortgage, the parties shall enter into a written mortgage contract.In general, a mortgage contract shall contain the items as follows:
(I)The variety and amount of the secured creditor’s rights;
(II) The time limit for the debtor to fulfill obligations;
(III) The name and quantity of mortgaged property; and
Article 401 Where, before the expiration of the time limit for paying debts, the mortgagee and the mortgagor stipulate that the ownership of the mortgaged property shall be attributed to the creditor when the debtor fails to pay due debts, the mortgagee may only have priority in getting compensation from the mortgaged property.
Article 402 Where any of the property stipulated in Item (I) to Item (III) of the first paragraph of Article 395 or a building under construction as stipulated in Item (V) is mortgaged, mortgage registration formalities shall be completed. mortgage shall be established at the time of registration.
Article 403 The mortgage of movable property shall be established from the effective date of the mortgage contract; without registration, the parties shall not challenge any bona fide third party.
Article 404 The mortgage of movable property may not be used against a purchaser who, in the ordinary course of business, has already paid a reasonable price and obtained the mortgaged property.
Article 405 Where the mortgaged property has been leased and assigned for possession prior to the establishment of the mortgage, the original leasehold relation shall not be affected by such mortgage.
Article 406 The mortgagor may assign the mortgaged property during the mortgage term. Where the parties agree otherwise, their agreement shall prevail. Where mortgaged property is assigned, the mortgage shall not be affected.Where a mortgagor assigns the mortgaged property, he shall timely notify the mortgagee. If the mortgagee can prove that the mortgage may be damaged by the assignment of the mortgaged property, he may require the mortgagor to pay off the debt in advance with the money obtained from such assignment or place the money obtained from such assignment in escrow. The money exceeding the creditor’s rights shall be attributed to the mortgagor, and the gap shall be paid off by the mortgagee.
Article 407 Mortgage may not be assigned independently from the creditor’s rights or used to secure other creditor’s rights. Unless it is otherwise prescribed by any law or is otherwise stipulated by the parties, when the creditor’s rights are assigned, the mortgage thereof shall be assigned concurrently.
Article 408 Where any act of a mortgagor is sufficient to cause a reduction in value of the mortgaged property, the mortgagee shall have the right to require the mortgagor to cease such act; where the value of the mortgaged property is reduced, the mortgagee shall have the right to require the mortgagor to recover the value of the mortgaged property, or provide security equivalent to the reduced value. Where the mortgagor neither recovers the value nor provides any security, the mortgagee has the right to require the debtor to pay off the debts in advance.
Article 409 A mortgagee may waive the mortgage or the sequence thereof. A mortgagee and a mortgagor may, through negotiations, alter the sequence in respect of mortgage or the amount of secured creditor’s rights, etc. However, a change of mortgage which has not been consented to in writing by the other mortgagees shall not adversely affect such other mortgagees.Where the debtor mortgages his own property, and the mortgagee waive the mortgage, the sequence thereof or alter the mortgage, the other guarantors shall be exempted from the guarantee liability, to the extent that the mortgagee has lost the right to seek preferred payments of compensation, unless any other guarantors undertake to continue to provide the guarantee.
Article 410 Where the debtor fails to pay due debts or any circumstance as stipulated by the parties for realizing the mortgage arises, the mortgagee may, upon negotiation with the mortgagor, convert the mortgaged property into money or seek preferred payments from the money generated from the auction or sale of the mortgaged property. Where the agreement has harmed the interests of other creditors, the other creditors may apply to a people’s court for revocation of the agreement.Where no agreement on the means of realizing the mortgage is reached by the mortgagee and the mortgagor, the mortgagee may request the people’s court to auction or sell off the mortgaged property.
When cashing or selling the mortgaged property, its market price shall be referred to.
Article 411 As regards the mortgage established in accordance with Article 396 hereof, the mortgaged property shall be determined when any of the following circumstances arises:(I)Upon expiration of the time limit for paying debts, the creditor’s rights have not been realized;
(II) The mortgagor is declared bankrupt or dissolved;
(III) Any other circumstances as stipulated by the parties for realizing the mortgage arises; or
(IV) Any other circumstance seriously impacting the realization of creditor’s rights arises.
Article 412 When the debtor fails to pay due debts or any circumstance as stipulated by the parties for realizing the mortgage arises, and as a result of which the mortgaged property is distrained by the people’s court in accordance with the law, the mortgagee has the right to collect natural or statutory fruits of the mortgaged property as of the date of distrainment, unless the mortgagee fails to notify the obligor for statutory fruits to pay off statutory fruits.The “fruits” as referred to in the preceding paragraph shall be firstly used for paying the expenses for collecting the fruits.
Article 413 Any proceeds from the discount, auction or sale of mortgaged property in excess of the amount of the obligation hall be attributed to the mortgagor and any shortfall shall be borne by the debtor.
Article 414 Where the same property is mortgaged to two or more creditors, the proceeds from the auction or sale of the mortgaged property shall be applied to paying debts in accordance with the following provisions:(I)where the mortgage has been registered, the repayment order shall be determined according to the time of registration; and
(II) The registered mortgage shall have priority over the unregistered ones for compensation; and
(III) Where no mortgage is registered, the repayment shall be made on the basis of the proportion of creditor’s rights.
For other security interests which may be registered, the provisions of the preceding paragraph shall apply mutatis mutandis to sequential repayment.
Article 415 Where both a mortgage and a pledge are established on the same property, the sequence of repayment from the proceeds of the auction or sale of such property shall be determined according to the time of registration and delivery.
Article 416 Where the principal obligation secured by a mortgage on movable property is the price of the mortgaged property and the mortgage registration formalities are completed within 10 days after the delivery of the subject matter, the mortgagee shall have priority over other holders of security interest of the purchaser of the mortgaged property in receiving payment, except for the lienor.
Article 417 Any building newly constructed on the land after the mortgage of the construction land use right shall not belong to the mortgaged property. In realizing the mortgage, such newly-constructed building and the construction land use right shall be disposed of concurrently. However, the mortgagee has no right to be paid in priority with the money obtained from the newly added building.
Article 418 Where a collectively owned land use right is mortgaged in accordance with the law, following the realization of mortgage the nature of the land ownership and the purpose of the land use must not be changed without undergoing the statutory procedures.
Article 419 A mortgagee shall, within the limitation of action for the principal creditor’s rights, exercise the mortgage, otherwise, such mortgage will not be protected by a people’s court.
Article 420 Where a debtor or third party, for the purpose of guaranteeing the payment of debts, provides mortgaged property for the creditor’s rights that will continuously happen within a certain term, and the debtor fails to pay the due debts or any circumstance as stipulated by the parties for realizing the mortgage happens, the mortgagee has the right to seek preferred payments from the secured property within the maximum amount of creditor’s rights.The creditor’s rights existing prior to the establishment of the mortgage at maximum amount may, upon the consent of the parties, be incorporated into the scope of creditor’s rights under the mortgage security at maximum amount.
Article 421 Where part of a creditor’s right is assigned prior to the establishment of mortgage security the maximum amount, the maximum amount of mortgage may not be assigned unless otherwise stipulated by the parties.
Article 422 A mortgagee and a mortgagor may, by agreement, alter the period of confirmation, the scope and maximum amount of the creditor’s right before the obligation secured by the mortgage at maximum amount is confirmed. However, the content of the change shall not have adverse effect on other mortgagees.
Article 423 The creditor’s right of a mortgagee shall be confirmed under any of the following circumstances:(I)The stipulated term for the confirmation of the creditor’s right expires;
(II) Where there is no agreement on the confirmation period or such agreement is unclear, the mortgagee or the mortgagor may request confirmation of the creditor’s right after two years from the date the mortgage at maximum amount is established;
(III) The new creditor’s right cannot arise;
(IV) Where the mortgagee knows or should know that the mortgaged property is seized or distrained;
(V) The debtor or the mortgagor is declared bankrupt or is dissolved; or
(VI) Any other circumstance as prescribed by any law for determining the creditor’s rights arises.
Article 424 The mortgage at maximum amount shall be governed by, in addition to the provisions in this Section, the relevant provisions in Section 1 of this Chapter.
Article 425 In the event that a debtor or a third party pledges his movables to a creditor for possession for guaranteeing the payment of debts, if the obligor fails to pay due debts or any circumstance for realizing the pledge as stipulated by the parties occurs, the creditor has the right to seek preferred payments from the pledged movables.The debtor or third party referred to in the preceding paragraph shall be the pledgor; the creditor shall be the pledgee and the delivered movables shall be the pledged property.
Article 426 Movables which are prohibited by laws and administrative regulations from being pledged may not be pledged.
Article 427 For establishing a pledge, the parties shall enter into a written pledge contract.In general, a pledge contract shall contain the items as follows:
(I)The variety and amount of the secured creditor’s right;
(II) The time limit for the debtor to fulfill obligations;
(III) The name and quantity, etc. of the pledged property;
(IV) The scope of guarantee; and
(V) The time and way of delivery of the pledged property.
Article 428 Where, prior to the expiration of the term for paying debts, the pledgee and the pledgor stipulate that the ownership of the pledged property shall be attributed to the creditor when the debtor fails to pay due debts, the pledgee shall have priority in receiving payment from the pledged property.
Article 429 The pledge shall be established after the pledgee has delivered the pledged property.
Article 430 Unless it is otherwise stipulated in the contract, a pledgee has the right to obtain the fruits of the pledged property.The “fruits” as referred to in the preceding paragraph shall be firstly used for paying the expenses for collecting the fruits.
Article 431 Where a pledgee, without consent of the pledgor, illegally uses or disposes of the pledged property within the duration of the pledge, and thus damages are caused to the pledgor, the pledgee shall make compensations.
Article 432 A pledgee shall be obliged to properly keep pledged property; and where pledged property is damaged or lost due to improper safekeeping, the pledgee shall make compensations.Where pledged property may be damaged or lost by act of the pledgee, the pledgor may ask for the pledgee to place the pledged property in escrow or request to pay debts in advance and take back such property.
Article 433 Where any cause not attributable to the pledgee’s fault may result in the destruction of the pledged property or an obvious decrease of the value of the pledged property, and which is sufficient to damage the pledgee’s rights, the pledgee has the right to require the pledgor to provide corresponding security. If the pledgor fails to do so, the pledgee may auction or sell off the pledged property, and may, upon negotiation with the pledgor, seek preferred payments for the creditor’s right in advance with the money generated from such auction or sell-off, or place the said money in escrow.
Article 434 Where a pledgee assigns, without consent of the pledgor, the pledge within the duration of the pledge, thus causing damage or loss to the pledged property, he/it shall make compensations.
Article 435 A pledgee may waive the pledge right. Where a debtor pledges his/its own property, and the pledgee waives the pledge, unless any of other security providers promises to provide the security all the same, other security providers’ security liability will be exempted within the scope for which the pledgee has lost the right to seek preferred payments.
Article 436 Where the debtor has paid off the debts or the pledgor has fulfilled the secured creditor’s right in advance, the pledgee shall return the pledged property.Where the debtor defaults on his/its debt obligations or where any of the circumstances for the realization of the pledge as agreed by the parties occurs, the pledgee may, by agreement with the pledgor, claim the proceeds from a discount, auction or sale of the pledged property in priority.
When cashing or selling the pledged property, the market price shall be referred to.
Article 437 A pledgor may, upon expiration of the time limit for paying debts, request the pledgee to exercise the pledge in a timely manner. If the pledgee fails to do so, the pledgor may request the people’s court to auction or sell off the pledged property.The pledgee shall indemnify pledgor for any damage suffered by pledgor as a result of the pledgee’s indolence in exercising the pledge.
Article 438 Any proceeds from the discount, auction or sale of pledged property in excess of the amount of debt secured shall belong to the pledgor and any shortfall shall be borne by the debtor.
Article 439 The pledgor and the pledgee may, upon negotiation, agree on the pledge at maximum amount.Pledge at maximum amount shall be governed by, in addition to the relevant provisions of this Section, the provisions of Section 2 of Chapter 17 of this Part mutatis mutandis.
Article 440 The following rights of which a debtor or third party has the right of disposal may be pledged:
(1) Bills of exchange, promissory notes and cheques;
(II) Bonds and certificates of deposit;
(III) warehouse receipts and bills of lading;
(IV) Assignable fund units and equities;
(V) Such assignable property rights in intellectual property as exclusive trademark rights, patent rights, copyrights, etc.;
(VI) Receivables existing and to be existing; and
(VII) Other property rights that can be pledged as prescribed by any law or administrative regulation.
Article 441 Where a pledge is made on bills of exchange, promissory notes, cheques, bonds, certificates of deposit, warehouse receipts or bills of lading, the pledge right shall be established upon the delivery of documents of title to the pledgee. Where there is no document of title, the pledge right shall be established upon the registration of the pledge. Where the laws provide otherwise, such provisions shall prevail.
Article 442 Where the date of cashing or the date of delivery of goods for a bill of exchange, promissory note, cheque, bond, certificate of deposit, warehouse receipt or bill of lading is prior to the due date of the principal creditor’s right, the pledgee may get them cashed or take delivery of goods, and may, upon negotiation with the pledgor, seek early payments with the money or the collected goods, or place the said money or goods in escrow.
Article 443 The pledge of fund units or equities shall be established as of the date when the pledge is registered.Pledged fund units and equities may not be assigned unless the pledgor and the pledgee agree upon negotiations to the contrary. The pledgor shall apply the proceeds received from the assignment of fund units or equities to discharge the debt with the pledgee in advance or place the proceeds in escrow.
Article 444 Pledge of property rights in intellectual property such as exclusive rights to use registered trademarks, patent rights, copyrights, etc., shall be established at the time of registration of the pledge.After the property rights in the intellectual property have been pledged, unless it is otherwise agreed to between the pledgor and the pledgee upon negotiations, the pledgor may not assign the pledge or permit anyone else to use it. The pledgor shall apply the proceeds received from the assignment or license of the pledged intellectual property to discharge the debt with the pledgee in advance or place the proceeds in escrow.
Article 445 The pledge of receivables shall be established as of the date when the pledge is registered.After the receivables have been pledged, unless it is otherwise agreed on by the pledgor and the pledgee upon negotiations, the pledgor may not assign the pledged receivables. The pledgor shall apply the proceeds received from the assignment of receivables to discharge the debt with the pledgee in advance or place the proceeds in escrow.
Article 446 The pledge of rights shall be governed by, in addition to the provisions prescribed in this Section, the relevant provisions in Section 1 of this Chapter.
Article 447 Where a debtor fails to pay off its due debts, the creditor may take lien of the movables that are lawfully possessed by the creditor, and has the right to seek preferred payments from such movables.The “creditor” as referred to in the preceding paragraph shall be the lienor, and the possessed movables shall be the property under lien.
Article 448 The movables taken as lien by the creditor and the creditor’s rights shall fall into a same legal relationship, except for the lien between enterprises.
Article 449 As regards movables of which no lien may be taken as prescribed by law or stipulated by the parties, lien may not be taken of them.
Article 450 Where the property under lien is a divisible object, its value shall be equal to the amount of debts.
Article 451 A lienor shall be obliged to properly keep the property under lien, and shall make compensations in case the property under lien is damaged or lost by virtue of improper safekeeping.
Article 452 A lienor shall be entitled to the fruits generated from the property under lien.The “fruits” as referred to in the preceding paragraph shall be firstly used for paying the expenses for collecting the fruits.
Article 453 A lienor shall, after the property is taken as lien, stipulate with the debtor the time limit for the discharge of debts; in the case of no or unclear stipulation, 60 days or more shall be given to the debtor for discharge of debts, except for such movables that are not easy to be kept as fresh goods, perishable goods, etc. Where the debtor defaults on the debt obligations within the stipulated period, the lienor may, by agreement with the debtor, claim the proceeds from a discount, auction or sale of the property under lien in priority.Reference shall be made to the market price for any discounting or sale of property under lien.
Article 454 The debtor may, upon expiration of the time limit for discharge of debts, request the lienor to exercise the lien; and where the lienor fails to do so, the debtor may request the people’s court to sell or auction the property under lien.
Article 455 Any excess of the proceeds of the discounting, auction or sale of the property under lien over the amount of the obligation hall belong to the debtor, and any shortfall shall be settled by the debtor.
Article 456 The lienor has the right to seek preferred payments in case the right to mortgage or the right to pledge has been established on a movable before it is taken as lien.
Article 457 The lien shall be extinguished in case the lienor losses the possession of the property under lien or accepts other security separately provided by the debtor.
Article 458 In the case that possession occurs on the basis of a contractual relationship, the relavant stipulations in the contract shall be applicable to the use, proceeds and default liability of the immovable or movable property concerned; and the relevant legal provisions shall apply if there is no such stipulation in the contract or the stipulations are not clear.
Article 459 Where the use of immovable property or movable property by a possessor results in damage to the said property, the possessor who acted in bad faith shall be liable for compensation.
Article 460 Where immovable or movable property is possessed by the possessor, the obligee may request the possessor to return the original object and fruits thereof, provided that the obligee shall pay the bona fide possessor necessary expenses for maintaining such immovable or movable property.
Article 461 Where immovable property or movable property is damaged or lost in possession and the obligee of the immovable property or movable property claims compensation, the possessor shall return any insurance benefit, damages or indemnity obtained for the damage or loss to the obligee; a malicious possessor shall compensate for any damage not fully compensated which the obligee suffers.
Article 462 Where immovable or movable property under possession is encroached upon, the possessor has the right to request the return of the original object; where any act impairs interfere with the possession, the possessor has the right to request the termination of interference or elimination of danger; and where any damage is caused by virtue of encroachment or interference, the possessor has the right to claim damages in accordance with law.The claim of a possessor for returning the original object shall be extinguished, if the possessor fails to exercise it within one year as of the date of encroachment.
Article 463 This Part governs civil relations arising from contracts.
Article 464 A contract is an agreement between civil subjects which establishes, modifies or terminates a civil legal relationship.Agreements concerning identity relationships such as marriage, adoption and guardianship shall be governed by the provisions of the law governing such identity relationships; in the absence of such provisions, the provisions of this Part may be applied mutatis mutandis in light of the nature of such agreements.
Article 465 Any contract established in accordance with the law is protected by the law.Unless otherwise provided for by law, a contract concluded in accordance with the law shall be legally binding only on the parties thereto.
Article 466 Where a dispute arises between the parties over the understanding of a contractual clause, the meaning of the disputed clause shall be determined in accordance with the provisions of the first paragraph of Article 142 hereof.Where a contract is concluded in two or more languages and it is agreed that all versions are equally authentic, the words and sentences in each version are presumed to have the same meaning. In case of any discrepancy in the words and sentences used in different versions, they shall be interpreted in accordance with the relevant terms, nature and purpose of the contract as well as the principle of good faith.
Article 467 For the contracts not expressly provide for by this Code or any other law, the provisions of the General Rules of this Part shall apply, and the provisions of this Part or any other law governing the contracts the closest to such contracts may apply mutatis mutandis.The laws of the People’s Republic of China shall apply to contracts that are to be performed within the territory of the People’s Republic of China, namely contracts for Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures and Sino-foreign cooperative exploration and development of natural resources.
Article 468 As to the creditor-debtor relationship that does not arise from contracts, the legal provisions on the said creditor-debtor relationship shall apply; in the absence of such provision, the relevant provisions in the General Rules of this Part shall apply, unless the General Rules of this Part are not applicable to the said relationship in light of its nature.
Chapter 2 Conclusion of Contracts
Article 469 The parties may conclude a contract in writing, orally or in some other form.An agreement is in writing if it is contained in the tangible form of a document such as a contract, letter, telegram, telex, or facsimile.
Any electronic data that can show, in material form, the contents that it specifies through electronic data exchange or e-mail and can be accessed for reference and used at any time shall be regarded as a written form.
Article 470 The contents of a contract shall be agreed upon by the parties, and shall generally contain the following clauses:(I)Personal names or names and domiciles of the parties;
(VI) Time limit, place and method of performance;
(VII) Liability for breach of contract; and
(VIII) Dispute settlement method.
The parties may conclude a contract by reference to a model text of each type of contract.
Article 471 The parties may conclude a contract through the use of an offer, acceptance or other methods.
Article 472 An offer is an expression of intent to conclude a contract with another person. Such manifestation of intent shall satisfy the following conditions:(I)The contents shall be specific and definite; and
(II) It indicates that the offeror will be bound by the manifestation of intent in case of acceptance by the offeree.
Article 473 An invitation to offer is an expression of intent that the party invited makes an offer to the inviter. Announcements of auction or bidding, prospectus, measures for raising bonds, prospectus of fund raising, commercial advertisements and publicity, price lists sent are invitations to offer.Commercial advertisements and publicity constitute an offer if their contents satisfy conditions of offer.
Article 474 The provisions of Article 137 hereof shall apply to the time when an offer becomes effective.
Article 475 An offer may be withdrawn. The provisions of Article 141 hereof shall apply to the withdrawal of an offer.
Article 476 An offer may be revoked, except in any of the following circumstances:(I)The offeror indicates expressly in a fixed time limit for acceptance or in any other form that the offer is irrevocable; or
(II) The offeree has reasons to believe that the offer is irrevocable and has made reasonable preparations to perform the contract.
Article 477 If the manifestation of intent to revoke an offer is made in a verbal form, the contents of the manifestation of intent shall become known to the offeree before it has been accepted by the offeree; if the manifestation of intent to revoke an offer is made in a non-verbal form, such contents shall reach the offeree before it has been accepted by the offeree.
Article 478 An offer shall be null and void under any of the following circumstances:(I)The offer is rejected;
(II) The offer is revoked in accordance with the law;
(III) The offeree fails to make an acceptance within the time limit for acceptance; or
(IV) The offeree materially alters the contents of the offer.
Article 479 An acceptance is a manifestation of the offeree’s assent to the offer.
Article 480 An acceptance shall be made by notification, except where acceptance may be made by an act on the basis of customary business practice or as expressed in the offer.
Article 481 An acceptance shall reach the offeror within the time limit fixed in the offer.In the absence of the time limit in the offer, an acceptance shall reach the offeror in accordance with the following provisions:
(I)If the offer is made verbally, the acceptance shall be made immediately; and
(II) If the offer is made in a form other than verbal communication, the acceptance shall reach the offeror within a reasonable time limit.
Article 482 Where an offer is made by letter or telegram, the time limit for acceptance commences from the date indicated in the letter or from the date on which the telegram is handed in for sent. If no such date is indicated in the letter, the time limit commences from the postmark date on the envelope. Where the offer is made by means of instantaneous communication, such as telephone, facsimile or electronic mail, the time limit for acceptance commences from the time the offer reaches the offeree.
Article 483 A contract is concluded at the time an acceptance takes effect, except where laws stipulate otherwise or the parties agree otherwise.
Article 484 The provisions of Article 137 hereof shall apply to the time when an acceptance entered into force by means of a notification.If an acceptance does not require notification, it becomes effective when an act of acceptance is performed in accordance with trade practices or as required in the offer.
Article 485. An acceptance may be withdrawn. The provisions of Article 141 hereof shall apply to the withdrawal of an acceptance.
Article 486 Where an offeree accepts an offer beyond the time limit for acceptance or within the time limit for acceptance but under normal circumstances it is not possible for the acceptance to reach the offeror in time, it shall constitute a new offer, except where the offeror informs the offeree that the said acceptance is effective.
Article 487 If an offeree, within the time limit for acceptance, sends out an acceptance which would under normal circumstances be able to reach the offeror in due time but for other reasons reaches the offeror after the time limit for acceptance has expired, the acceptance shall be effective, unless the offeror notifies the offeree in a timely manner that the acceptance is not accepted because the time limit for acceptance expires.
Article 488 The contents of an acceptance shall be consistent with those of the offer. If the offeree materially modifies the contents of the offer, it shall constitute a new offer. The modification relating to the subject matter, quantity, quality, price or remuneration, time limit, place and method of performance, liability for breach of contract and method of dispute resolution, etc. shall constitute the substantial modification of an offer.
Article 489 If an acceptance immaterially modifies the contents of an offer, it shall be effective, and the contents of the contract shall be subject to those of the acceptance, except as rejected promptly by the offeror or indicated in the offer that an acceptance may not modify the offer at all.
Article 490 Where the parties conclude a contract in written form, the contract is established when both parties have signed it, affixed their seals thereon or have affixed their fingerprints thereon. A contract is established when one party has performed its principal obligation before signing, sealing or affixing its fingerprint and the other party has accepted it.Where a contract is to be concluded in written form as provided for by laws and administrative regulations or as agreed by the parties, and the parties fail to conclude the contract in written form, but one party has performed its principal obligation and the other party has accepted it, the contract is established.
Article 491 Where the parties conclude a contract in the form of a letter or electronic data etc., subject to the execution of a letter of confirmation, the contract shall be established at the time of execution of the letter of confirmation.Where the information of any commodity or service released by one party via the Internet or any other information network meets the conditions of offer, the contract shall be established when the other party selects such commodity or service and submits the order successfully, unless otherwise agreed by the parties.
Article 492 The place where an acceptance becomes effective is the place where the contractis formed.
If a contract is concluded in the form of electronic messages, the main business place of the recipient shall be the place of establishment of the contract; if there is no main business place, the domicile thereof shall be the place of establishment of the contract. Where the parties agree otherwise, their agreement shall prevail.
Article 493 Where the parties conclude a contract in written form, the place of establishment of the contract shall be the place where the parties last sign or affix their seals on it or place their fingerprints on it, except as otherwise agreed upon by the parties.
Article 494 In the event that the State, as required for emergency rescue and disaster relief, epidemic prevention and control or other needs, sets ordering tasks or mandatory tasks to the relevant civil subjects, the said subjects shall conclude a contract between them in accordance with the rights and obligations provided by the relevant laws and administrative regulations.Any party who is obligated to make an offer in accordance with the provisions of laws and administrative regulations shall make a reasonable offer without delay.
Any party who is obligated to make acceptance in accordance with the laws or administrative regulations may not refuse the reasonable request of the other party for conclusion of a contract.
Article 495 A letter of subscription, letter of order, and letter of reservation, which the parties agree to conclude a contract within a certain period in the future, shall constitute a preliminary contract.Where one party fails to perform the obligations under the preliminary contract, the other party may request it to assume the liability for breach of the preliminary contract.
Article 496 Standard terms are clauses which are prepared by one party in advance for repeated use and which are not the subject of negotiation with the other party when concluding a contract.Where standard terms are adopted in concluding a contract, the party providing the standard terms shall observe the principle of fairness in determining the rights and obligations of the parties, remind the other party in a reasonable way of the provisions that greatly affect the other party, such as those that exclude or mitigate the liability of the party providing the standard terms, and explain the standard terms at the request of the other party. If the party providing the standard terms fails to perform the obligation of reminding or explanation, causing the other party to fail to notice or understand the terms in which it has a material interest, the other party may claim that the terms do not form the contents of the contract.
Article 497 Under any of the following circumstances, the standard terms shall be null and void:(I)Invalid circumstances under Section 3 of Chapter VI of Part I hereof and under Article 506 hereof occur;
(II) The party providing the standard terms unreasonably exempts or reduces its liability, increases the liability of the other party or limits the major rights of the other party; or
(III) The party providing the standard terms excludes the main rights of the other party.
Article 498 If a dispute over the understanding of a standard term occurs, the term shall be interpreted based on the usual understanding. Where there are two or more interpretations for such term, the interpretation unfavorable to the party providing such term shall prevail. Where a standard term is inconsistent with a non- standard term, the non- standard term shall prevail.
Article 499 Where a person who offers a reward makes a public announcement on payment of remuneration to a person who performs a specific act, the person who has performed the specific act may request for payment of remuneration.
Article 500 A party shall be liable for compensation if it falls under any of the following circumstances in the course of concluding a contract, thereby causing losses to the other party:(I)Negotiating the contract in bad faith under the pretext of concluding a contract;
(II) Deliberately concealing material facts relating to the conclusion of the contract or providing false information; or
(III) Other acts that violate the principle of good faith.
Article 501 A party shall not disclose or improperly use trade secrets or other confidential information known to it in the course of concluding a contract, no matter whether the contract is established or not; if it discloses or improperly uses such trade secrets or information and causes losses to the other party, it shall be liable for compensation.
Article 502 A contract which is concluded in accordance with the law takes effect from the time it is concluded, except where the law stipulates otherwise or the parties agree otherwise.Where there are laws or administrative regulations providing that a contract shall
be subject to the approval and other procedures, such provisions shall be followed.
Where failure to complete the approval or other procedures is to affect the validity ofthe contract, the validity of the clauses concerning the performance of an obligation of
filing for approval, and the like, and the other relevant clauses in the contract shall not
be affected. Where the party obligated to complete application for approval or other
procedures fails to do so, the other party may request the former party to bear the
liability for breach of such obligation.
Where the laws and administrative regulations provide that the modification, assignment, rescission of a contract etc. shall undergo approval formalities, the provisions of the preceding paragraph shall apply.
Article 503 Where an agent without the power of agency enters into a contract in the name of the principal, and the principal has begun to perform the contractual obligations or accepts the performance of such obligations by the counterparty, the contract shall be deemed to have been ratified.
Article 504 Where the legal representative of a legal person or the principal of an unincorporated organization concludes a contract beyond the scope of his/her authority, such act of representation shall be effective and the concluded contract shall have binding force on the legal person or unincorporated organization , unless the counterparty knows or ought to know that such person is exceeding the scope of his authority.
Article 505 The validity of a contract concluded by the parties in excess of the business scope shall be determined in accordance with the relevant provisions of Section 3 of Chapter VI of Part I and this Part. It shall not be permitted to determine a contract as ineffective only on the ground of exceeding the business scope.
Article 506 The following exculpatory clauses in a contract are null and void:(I)Those that cause personal injury to the other party; or
(II) Those involving property damage to the other party as a result of deliberate intent or gross negligence.
Article 507 If a contract is ineffective, null and void, revoked or terminated, it shall not affect the validity of the clauses on the methods of dispute settlement contained in the contract.
Article 508 If this Part does not specify the validity of a contract, the relevant provisions of Chapter VI of Part I hereof shall apply.
Chapter 4 Performance of Contracts
Article 509 The parties shall fully perform their respective obligations as agreed.The parties shall, under the principle of good faith, perform such obligations as notification, rendering assistance and maintaining confidentiality according to the nature and purpose of the contract as well as trading practices.
In the course of performing a contract, the parties shall avoid wasting resources, polluting the environment and damaging the ecology.
Article 510 Where, after a contract becomes effective, there is no agreement in the contract between the parties on the terms regarding quality, price or remuneration or place of performance, or such agreement is unclear, the parties may enter into a supplementary agreement; if no supplementary agreement is reached, the relevant terms of the contract or trading practices shall govern.
Article 511 Where the relevant terms as agreed by the parties in a contract are unclear, and still cannot be determined in accordance with the provisions of the preceding Article, the following provisions shall apply:
(I) Where quality requirements are unclear, the contract shall be performed according to the compulsory national standards; in the absence of compulsory national standards, the recommended national standards shall apply; in the absence of recommended national standards, the industry standards shall be followed; in the absence of national standards or industry standards, the contract shall be performed in accordance with customary standards or specific standards in conformity with the purpose of the contract;
(II) Where the price or remuneration is unclear, the market price of the place of performance at the time the contract was concluded shall apply; if the government-fixed price or government-directed price shall be followed in accordance with the law, the relevant provisions shall apply;
(III) Where the place of performance is unclear, and money is paid, the performance shall be affected at the place of the party receiving the money; if immovable property is to be delivered, the contract shall be performed at the place where the immovable property is situated; in the case of other subject matters, the contract shall be performed at the place of the party fulfilling the obligations;
(IV) Where the time limit of performance is unclear, the obligor may perform, and the obligee may request performance, at any time, provided that the other party shall be given the time required for preparation;
(V) Where the method of performance is unclear, performance shall be affected in a manner which is conducive to realizing the purpose of the contract; and
(VI) Where the attribution of performance expenses is unclear, such expenses shall be borne by the party fulfilling the obligations; the expenses increased due to reasons attribute to the obligee’s shall be borne by the obligee.
Article 512 Where the subject matter of an electronic contract concluded through information network such as the Internet is delivery of goods and delivery is made via express courier, the date of acknowledgement of receipt by the consignee shall be the date of delivery. Where the subject matter of the electronic contract is provision of services, the time specified in the generated electronic or physical voucher shall be the time of provision of services; if the time is not specified in the foregoing voucher or the time specified in the foregoing voucher is inconsistent with the time of actual provision of services, the time of actual provision of services shall prevail.Where the subject matter of an electronic contract is delivered via online transmission, the delivery time shall be the time when the subject matter enters the specific system designated by the other party and can be retrieved and identified.
Where the parties to an electronic contract have agreed otherwise on the method and time for delivery of goods or provision of services, such agreement shall prevail.
Article 513 Where the government-fixed price or government-directed price shall be followed in a contract, if the said price is readjusted within the time limit for delivery as stipulated in the contract, the payment shall be calculated based on the price at the time of delivery. Where any party delays in delivering the subject matter, the original price shall be adopted if the price rises, and the new price shall be adopted if the price falls. Where any party delays in taking delivery of the subject matter or making payment, the new price shall be adopted if the price rises, and the original price shall be adopted if the price declines.
Article 514 With respect to the payment of money for a debt, the obligee may require the obligor to pay in the legal tender of the place where actual performance takes place, unless otherwise stipulated by the law or agreed by the parties.
Article 515 Where there are several subject matters and the obligor only needs to perform one of them, the obligor shall have the right to choose, unless otherwise stipulated by the law or agreed between the parties, or there are other transaction practices.Where the party entitled to the option fails to make a choice within the agreed time limit or upon expiry of the performance period, and still fails to make a choice within a reasonable time limit after being urged, the option shall be transferred to the other party.
Article 516 In exercising its option, the party concerned shall promptly notify the other party, and the subject matter shall be determined when the notice reaches the other party. The subject matter shall not be changed after being determined, unless otherwise agreed by the other party.Where an event of impossibility of performance occurs to optional subject matters, the party who has an option may not choose the subject matter of impossibility of performance unless the impossibility is caused by the other party.
Article 517 Where there are two or more obligees, the subject matter is severable, and each obligee is entitled to its own share of the claim, it shall be deemed as claim by share. Where there are two or more obligors, the subject matter is divisible and each obligor assumes its own share of the debt, it shall be deemed as debt by share.If it is difficult to determine the share of the obligee or the obligor by share, it shall be deemed to be the same.
Article 518 Where there are two or more obligees, and part or all of them may request the obligor to perform the debt, it shall be deemed as joint and several claim. Where there are two or more obligors, and the obligee may request part or all of them to perform all of the debt, it shall be deemed as joint and several debts.Joint and several claim or debt shall be stipulated by the law or agreed upon by the parties.
Article 519 Where it is difficult to determine the shares held among the joint and several obligors, they shall be deemed to be the same.Where a joint and several obligor has actually borne debts in excess of its own share, it shall be entitled to seek recourse against the other joint and several obligors in respect of the excess portion within the scope of their unperformed share, and shall enjoy the rights of an obligee correspondingly, provided that the interests of the obligee are not prejudiced. The other joint and several obligors may, in respect of the obligor, avail themselves of any defense they have against the obligee.
Where a joint and several obligor against which the recourse is sought cannot perform its share, other joint and several obligors shall perform the same on a pro rata basis within the corresponding scope.
Article 520 Where part of the joint and several obligors perform or offset debts or place the subject matter in escrow, the debts of the other obligors to the obligee shall be extinguished within the corresponding scope; the obligors may seek recourse against the other obligors according to the provisions of the preceding Article.Where the debts of part of the joint and several obligors are released by the obligee, the debts of other obligors to the obligee shall be extinguished within the scope of the share that the joint and several obligors shall assume.
Where the debts of part of joint and several obligors and the claims of an obligee are vested in the same person, the claims entitled by the obligee against other obligors shall continue to exist after deduction of the share to be borne by such obligors.
Where the obligee delays in receiving payment from part of the joint and several obligors, such act shall be binding on the other joint and several obligors.
Article 521 Where the shares among the joint and several obligees are difficult to determine, they shall be deemed to be the same.The joint and several obligees who have actually received the claims shall return them to the other joint and several obligees on a pro rata basis.
The relevant provisions of this Chapter on joint and several debts shall apply as reference to joint and several claims.
Article 522 Where the parties agree that the obligor performs obligations for a third party, but the obligor fails to perform the obligations for the third party or the performance does not comply with the terms of the contract, the obligor shall be liable to the obligee for breach of contract.Where the laws stipulate or the parties agree that a third party may directly request the obligor to perform the obligations for it, but the third party does not specifically refuse such performance within a reasonable period, and the obligor fails to perform the obligations for the third party or the performance does not comply with the terms of the contract, the third party may request the obligor to bear liability for breach of contract; the obligor may, in respect of the third party, avail itself of any defense it has against the obligee.
Article 523 Where the parties agree that a third party performs obligations to the obligee, but the third party fails to perform the obligations or the performance does not comply with the terms of the contract, the obligor shall be liable to the obligee for breach of contract.
Article 524 Where the obligor fails to perform its obligations, and a third party has the legitimate interest in the performance of such obligations, the third party shall have the right to perform the obligations to the obligee on behalf of the obligor, except where the obligations can only be performed by the obligor based on the nature of the obligations, the agreement between the parties or the provisions of the law.After the obligee accepts performance by a third party, the claims against the obligor shall be assigned to such third party, unless otherwise agreed by the obligor and such third party.
Article 525 Where both parties have obligations towards each other and there is no order of priority in respect of the performance of obligations, the parties shall perform the obligations simultaneously. A party has the right to reject any request for performance by the other party prior to performance by the other party. A party has the right to reject the corresponding request of the other party for performance if such other party’s performance does not comply with the provisions of contract.
Article 526 Where both parties have obligations towards each other and there is an order of priority in respect of the performance of the obligations, and the party which shall first perform its obligations fails to perform the obligations, the other party has the right to reject such party’s request for performance. If the performance of the obligations by the party which shall first perform is not in conformity with the agreement, the other party has the right to reject such party’s corresponding performance request.
Article 527 The party which shall render its performance first may suspend its performance if it has conclusive evidence proving that the other party falls under any of the following circumstances:
(I) The business is seriously deteriorating;
(II) Transferring property or surreptitiously withdrawing funds in order to evade debts;
(III) Losing business reputation; or
(IV) Other circumstances showing that it has lost or is likely to lose the ability to perform its obligations.Where any party suspends performance without conclusive evidence, it shall be liable for breach of contract.
Article 528 Where any party suspends its performance in accordance with the preceding Article, it shall timely notify the other party. Where the other party provides an appropriate guarantee, the party shall resume performance. After the suspension of the performance, if the other party fails to restore its capacity for performance and provide appropriate guarantee within a reasonable time limit, it shall be deemed to be unable to perform its principal debts by its acts, the party suspending the performance may rescind the contract and may request the other party to bear the liability for breach of contract.
Article 529 Where the obligee fails to notify the obligor of its division, merger or change of domicile, thereby making it difficult for the obligor to perform its obligations, the obligor may suspend performance or have the subject matter in escrow.
Article 530 The obligee may reject an advance performance by the obligor, except where the advance performance does not harm the interests of the obligee.Any additional expenses incurred by the obligee from the obligor’s advance performance shall be borne by the obligor.
Article 531 The obligee may reject the obligor’s partial performance, except that the partial performance of its obligations does not harm the obligee’s interests.Any additional expense incurred by the obligee from the obligor’s partial performance shall be borne by the obligor.
Article 532 Once a contract becomes effective, a party may not refuse to perform its obligations thereunder due to a change in its name, or its legal representative, the person-in-charge, or the person handling the contract.
Article 533 After a contract has been concluded, if the basic conditions of the contract have undergone a significant change which is unforeseeable by the parties at the time it was concluded and which does not belong to commercial risks, and it is clearly unfair for the party concerned to continue to perform the contract, the party adversely affected may renegotiate with the other party. If negotiation fails within a reasonable period of time, the parties may request a people’s court or an arbitration agency to modify or rescind the contract.The people’s court or arbitration agency shall, in light of the actual circumstances of the case, amend or rescind the contract under the principle of fairness.
Article 534 The market regulatory authorities and other relevant competent authorities shall be responsible for supervision and punishment of parties that make use of a contract to harm State interests and public interests pursuant to the provisions of laws and administrative regulations.
Chapter 5 Preservation of Contracts
Article 535 Where the obligor is remiss in exercising its claims or the accessory rights related to its claims, thereby affecting the realization of the matured claims of the obligee, the obligee may petition the People’s Court to exercise the rights of the obligor against the counterparty in subrogation in its own name, except that such rights exclusively belong to the obligor.The scope of subrogation shall be limited to the matured claims of the obligee. The expenses necessary for the obligee to exercise such subrogation rights shall be borne by the obligor.
A counterparty may, in respect of the obligee, avail itself of any defense it has against the obligor.
Article 536 Prior to the maturity of the claims of an obligee, where the limitation of action period for the claims of the obligor or the accessory rights related to the claims soon expires or the claims of bankruptcy are not declared in time, thus affecting the realization of the claims of the obligee, the obligee may request in subrogation the counterparty of the obligor to perform the obligations thereof for the obligor, to declare to the bankruptcy administrator or to conduct other necessary acts.
Article 537 Where the People’s Court determines that subrogation is established, the counterparty of the obligor shall perform obligations for the obligee; upon acceptance of performance by the obligee, the corresponding rights and obligations between the obligee and the obligor, and between the obligor and the counterparty, shall be terminated. Where preservation or enforcement measures are adopted in respect of the claims of the obligor against the counterparty or the accessory rights relating to the claims, or the obligor is bankrupt, the matter shall be dealt with pursuant to the provisions of the relevant laws.
Article 538 Where the obligor disposes of its property rights and interests without compensation by giving up its claims, giving up the guarantee of the claims, or transferring the property free of charge, or maliciously extending the performance term of its due claims, which influences the realization of the claims of the obligee, the obligee may require the people’s court to revoke the obligor’s act.
Article 539 Where the obligor transfers its property at an obviously unreasonable low price, or accepts the transfer of another’s property at an obviously unreasonable high price, or provides a guarantee for the debts of another party, thereby affecting the realization of the claims of the obligee, and the counterparty of the obligor knows or ought to know of such circumstance, the obligee may request the People’s Court to revoke the obligor’s act.
Article 540 The extent to which the right of revocation can be exercised is limited to the claims of the obligee. The necessary expenses incurred by the obligee in exercising the right of revocation shall be borne by the obligor.
Article 541 The right of revocation shall be exercised within one year from the date when the obligee knows or ought to know of the cause for cancellation. If the right of revocation is not exercised within five years from the date when the act of the obligor takes place, the right of revocation shall be extinguished.
Article 542 Any act of an obligor that affects the fulfillment of the claims of an obligee shall not be legally binding ab initio.
Chapter 6 Alteration and Assignment of Contracts
Article 543 A contract may be modified if the parties reach a consensus through consultation.
Article 544 Where an agreement by the parties on the contents of a modification is unclear, the contract shall be presumed as not having been modified.
Article 545 The obligee may assign, in whole or in part, its claims to a third party, except under any of the following circumstances:
(I) Such claims may not be assigned in light of the nature thereof;
(II) Such claims may not be assigned according to the agreement between the parties; or
(III) Such claims may not be assigned according to the provisions of the laws.Where the parties have agreed that the non-monetary claims cannot be assigned, the parties shall not act against a bona fide third party. Where the parties agree that the monetary claims may not be assigned, such an agreement shall not be enforceable against any third party.
Article 546 Where the obligee assigns its claims without notifying the obligor, such assignment is not binding on the obligor.Notification of the assignment of the claims shall not be revoked, except with the consent of the assignee.
Article 547 Where the obligee assigns its claims, the assignee shall acquire the accessory rights related to the claims, except that the accessory rights exclusively belong to the obligee.The accessory rights obtained by the assignee shall not be affected because the accessory rights have not been registered for transfer or have not been transferred.
Article 548 Upon receipt of the notice of assignment of claims, the obligor may, in respect of the assignee, avail itself of any defenses it has against the assignor.
Article 549 Under any of the following circumstances, the obligor may claim set-off against the assignee:
(I) Upon receipt of the notice of assignment of the claims, the obligor shall have claims against the assignor which are due prior to or at the same time as the assigned claims; or
(II) The claims of the obligor and the assigned claims arise from the same contract.
Article 550 The expenses increased due to the transfer of the claims shall be borne by the assignor.
Article 551 Where the obligor assigns all or part of its obligations to a third party, the consent of the obligee must be obtained.The obligor or a third party may urge the obligee to give its consent within a reasonable period. If the obligee makes no expression, it shall be deemed dissent.
Article 552 Where a third party agrees with the obligor to join in the debts and notifies the obligee, or where the third party indicates to the obligee that it/he is willing to join in the debts, but the obligee does not explicitly reject within a reasonable period, the obligee may request the third party to bear the joint and several debts with the obligor to the extent of the debts it/he is willing to bear.
Article 553 Where the obligor assigns its obligations, the new obligor may claim any defence which the original obligor has against the obligee; where the original obligor has claims against the obligee, the new obligor may not claim any set-off against the obligee.
Article 554 Where the obligor assigns its debts, the new obligor shall assume all accessory debts related to the principal debts, except where the said accessory debts exclusively belong to the original obligor.
Article 555 A party may, with the consent of the other party, assign to a third party all its rights together with its obligations under the contract.
Article 556 Where the rights and obligations under a contract are assigned together, the relevant provisions on assignment of claims and transfer of debts shall apply.
Chapter 7 Termination of Contractual Rights and Obligations
Article 557 The claims and debts shall be terminated under any of the following circumstances:
(I) The debts have been repaid;
(II) The debts are mutually offset;
(III) The obligor has escrowed the subject matter in accordance with the law;
(IV) The obligee waives the debts;
(V) Both claims and debts belong to the same person; or
(VI) Other circumstances for termination as stipulated by the law or agreed upon by the parties.The contractual rights and obligations shall be terminated in case of rescission of a contract.
Article 558 Upon termination of claims and debts, the parties shall perform obligations such as notification, assistance, confidentiality, recycling of used items, etc. under the principle of good faith, and in accordance with transaction practices.
Article 559 Unless otherwise stipulated by the law or agreed between the parties, the accessory rights of claims shall be extinguished simultaneously upon termination of the claims and debts.
Article 560 Where the obligor bears the same variety of several debts to the same obligee, and the payment by the obligor is insufficient to pay off all the debts, unless otherwise stipulated by the parties, the obligor shall designate the debts to be paid off when paying off the debts.In the absence of such designation by the obligor, priority shall be given to the performance of the debts that are due; where several debts are due, priority shall be given to the performance of the debt for which there is no security to the obligee or the debt with the least security; where there is no security for all of the debts or the debts are secured equally, priority shall be given to the performance of the debts for which the obligor bears a heavier burden; where the burdens borne are the same, the debts shall be performed in the order of their maturity; and where the debts are due at the same time, they shall be performed in proportion.
Article 561 In addition to the performance of the principal debts, the obligor shall also pay any interest accrued thereon and any expenses incurred in the realization of the claims. Where any such payment is insufficient to pay off all the debts owed, the obligations shall be performed in the following order, unless otherwise agreed by the parties:
(I) Expenses related to the realization of claims;
Article 562 A contract may be rescinded if the parties reach a consensus through consultation.The parties may agree upon causes for rescission of the contract by either party. When a cause for rescission of the contract occurs, the party who has the right to rescind may rescind the contract.
Article 563 The parties to a contract may rescind the contract under any of the following circumstances:
(1) It is impossible to achieve the purpose of the contract due to force majeure;
(II) Any party expressly states, or indicates through its conduct, that it will not perform its principal debts prior to the expiration of the performance period;
(III) Any party delays in performing its principal debts and fails to perform the same within a reasonable period after being urged to do so;
(IV) Any party delays performance of its debts, or has other violations, rendering it impossible to achieve the purpose of the contract; or
(V) Other circumstances stipulated by the law arise.If an indefinite-term contract contains the continuing performance of obligations, any party may rescind the contract at any time, provided that it shall notify the other party before a reasonable time limit.
Article 564 Where the law stipulates or the parties agree upon the time limit to exercise the right to rescind the contract, and no party exercises it when the time limit expires, the said right shall be extinguished.Where the law does not provide for or the parties do not agree upon a time limit for the exercise of the right to rescind a contract, and no party exercises such right within one year from the date on which the party entitled to rescind the contract knows or should have known of the cause for rescission or fails to exercise such right within a reasonable time period after being urged by the other party to do so, such right shall be extinguished.
Article 565 A party which lawfully claims that a contract be rescinded shall notify the other party. The contract shall be rescinded when the notice reaches the other party; if such notice specifies that the obligor fails to perform its obligations within a certain time period, the contract shall be rescinded automatically; if the obligor fails to perform its obligations within the said time period, the contract shall be terminated upon the expiration of such time period specified in the notice. Where the other party objects to the dissolution of the contract, either party may petition the people’s court or an arbitration agency to confirm the validity of the dissolution.Where any party does not notify the other party but claims rescission of contract pursuant to the law by way of filing a lawsuit or applying for arbitration, and the people’s court or the arbitration agency confirms the claim, the contract shall be rescinded upon service of the duplicate copy of the statement of claim or the duplicate copy of the application form for arbitration on the other party.
Article 566 After the rescission of a contract, performance shall cease if the contract has not been performed; if the contract has been performed, a party may, in accordance with the circumstances of performance or the nature of the contract, request that the original state be restored or that other remedial measures be adopted, and shall have the right to request compensation for any losses sustained.Where a contract is rescinded due to breach of contract, the party with the right to rescind may request the breaching party to bear the liability for the breach of contract, except as otherwise agreed upon by the parties.
After the master contract has been rescinded, the guarantor shall continue to bear guarantee liability in respect of the civil liability to be borne by the obligor, except where the guarantee contract stipulates otherwise.
Article 567 The termination of the rights and obligations under the contract shall not affect the validity of the provisions governing settlement and winding-up in the contract.
Article 568 Where parties owe each other obligations, and the subject matters of the said obligations are of the same kind and quality, either party may offset its own obligations against matured obligations of the other party, except where the obligations shall not be offset depending on the nature of the obligations, agreed by the parties or stipulated by the law.The party who claims such offset shall notify the other party. The notice shall become effective when it reaches the other party. The offset shall not be subject to any condition or time limit.
Article 569 Where the parties have obligations towards each other, and the subject matters are of different types and quality, the obligations may also be offset upon consensus through consultation.
Article 570 The obligor may place the subject matter in escrow if the obligations are difficult to be performed under any of the following circumstances:
(I) The obligee refuses to accept the performance without justified reasons;
(II) The whereabouts of the obligee are unknown;
(III) The obligee is deceased and the inheritor or estate administrator has not been determined, or the obligee has lost civil capacity and a guardian has not been appointed; or
(IV) Other circumstances stipulated by the law arise.Where the subject matter is not fit for escrow or the escrow expenses are too high, the obligor may auction or sell off the subject matter in accordance with the law, and escrow the proceeds therefrom.
Article 571 Escrow is established when the obligor delivers the subject matter or proceeds from auction or sale of the subject matter pursuant to the law to the escrow agent.Where the escrow is admissible, the obligor shall be deemed to have delivered the subject matter within the scope of the escrow.
Article 572 After the subject matter of the contract has been placed in escrow, the obligor shall promptly notify the obligee, or the obligee’s inheritor, estate administrator, guardian or custodian of the property.
Article 573 Once the subject matter has been placed in escrow, the risk of damage to, destruction or loss of the subject matter shall be borne by the obligee. The obligee shall own the fruits of the subject matter during escrow. Escrow expenses shall be borne by the obligee.
Article 574 The obligee may claim the subject matter in escrow at any time. However, where the obligee owes matured obligations to the obligor, the escrow agent shall, prior to the obligee’s performance of the obligations or provision of guarantee, refuse the obligee’s collection of the escrowed subject matter upon request by the obligor.The right of an obligee to claim the subject matter in escrow shall lapse if it is not exercised within five years from the date on which the subject matter is placed in escrow. The subject matter in escrow shall revert to the State after deduction of the escrow expenses. However, if the obligee fails to perform its due obligations to the obligor, or the obligee waives the right to collect the subject matter in escrow by sending a written notice to the escrow agent, the obligor is entitled to retrieve the subject matter in escrow after paying the escrow expenses.
Article 575 Where the obligee releases the obligor from its debts in part or in whole, the claims and debts shall terminate in part or in whole, except where the obligor rejects the discharge within a reasonable period of time.
Article 576 Where all the claims and debts are vested in the same person, the claims and debts shall terminate, unless they harm the interests of a third party.
Chapter 8 Liability for Breach of Contract
Article 577 Where any party fails to perform its obligations under a contract, or its performance fails to satisfy the terms of the contract, it shall bear the liability for breach of contract such as continuing to perform its obligations, taking remedial measures, or compensating for losses.
Article 578 Where any party express explicitly or indicates by its conduct that it will not perform its obligations under a contract, the other party may request it to bear the liability for the breach of contract before the expiry of the performance period.
Article 579 In the event that any party fails to pay the price, remuneration, lease expense or interest, or fails to perform other monetary obligations, the other party may request it to make payment.
Article 580 Where any party fails to perform the non-monetary obligations or its performance of the non-monetary obligations fails to satisfy the terms of the contract, the other party may request it to perform except under any of the following circumstances:
(I) They are unable to be performed in law or in fact;
(II) The subject matter of the obligation is unfit for compulsory performance or the performance expenses are excessively high; or
(III) The obligee does not request performance within a reasonable time.Where the purpose of a contract can no longer be achieved due to any of the exceptions specified in the preceding paragraph, the people’s court or an arbitration agency may terminate the contractual rights and obligations at the request of the parties, without prejudice to the assumption of liability for breach of contract.
Article 581 Where any party fails to perform its obligations, or has rendered non-conforming performance, if the performance cannot be compelled depending on the nature of the obligations, the other party may request that it bear the expenses of performance by a third party.
Article 582 If the performance does not comply with the parties’ agreement, liability for breach of contract shall be borne as agreed by the parties. Where there is no agreement or agreement is unclear as to liability for breach of contract, and it is not possible to determine in accordance with the provisions of Article 510 hereof, the party which has sustained the loss, based on the nature of the subject matter and the size of the loss, may reasonably choose to request that the other party assume its liability for breach of contract by carrying out repairs, reworking, replacing or returning the goods, or by reducing the price charged or the remuneration received, etc.
Article 583 Where any party fails to perform its obligations under the contract or its performance fails to conform to the agreement, and the other party still suffers from other losses after the performance of the obligations or adoption of remedial measures, such party shall compensate the other party for such losses.
Article 584 Where any party fails to perform its obligations under the contract or its performance fails to conform to the agreement and thus causes losses to the other party, the amount of compensation for losses shall be equal to the losses caused by the breach of contract, including the interests receivable after the performance of the contract; provided that it shall not exceed the probable losses caused by the breach of contract which have been foreseen or ought to be foreseen by the breaching party when the contract is concluded.
Article 585 The parties may agree that if one party breaches the contract, it shall pay a certain sum of liquidated damages to the other party in light of the circumstances of the breach, and may also agree on a method for the calculation of the amount of damages incurred as a result of the breach.Where the amount of liquidated damages agreed upon is lower than the losses incurred, the people’s court or an arbitration agency may increase such amount upon the request of the parties; where the amount of liquidated damages agreed upon is excessively higher than the losses incurred, the people’s court or the arbitration agency may appropriately reduce such amount upon the request of the parties.
Where the parties agree upon the amount of liquidated damages for delayed performance, the breaching party shall perform the obligations after paying the liquidated damages.
Article 586 The parties may agree that one party pays a deposit to the other party as security for the claims. The deposit contract shall be formed upon the actual payment of the deposit.The amount of the deposit shall be determined by the parties; however, it shall not exceed 20 per cent of the value of the subject matter of the master contract, and the excess portion shall not be valid as a deposit. Where the actual payment of deposit is more or less than the stipulated amount, the stipulated amount shall be deemed to be changed.
Article 587 Where the obligor performs its obligations, the deposit shall be set off against the price or refunded. Where the party paying the deposit fails to perform its obligations or its performance of obligations does not conform to the agreement, making it impossible to achieve the purpose of the contract, such party is not entitled to demand a refund of the deposit; where the party receiving the deposit fails to perform its obligations or its performance of obligations does not conform to the agreement, making it impossible to achieve the purpose of the contract, it shall refund twice the amount of the deposit.
Article 588 Where the parties agree on both liquidated damages and a deposit, if one party is in breach, the other party may choose to apply either the provisions for liquidated damages or that for the deposit.If the deposit is insufficient to compensate for the losses caused by any party’s breach of contract, the other party may request compensation for the losses exceeding the deposit.
Article 589 Where the obligor performs its obligations as agreed, but the obligee refuses to accept such performance without justified reasons, the obligor may request the obligee to compensate the increased expenses.During the period of delay in acceptance by the obligee, the obligor is not required to pay interest.
Article 590 Where any party is unable to perform the contract due to force majeure, it shall be partially or wholly exempted from liability in light of the impact of the force majeure, except otherwise provided for by law. Where the contract cannot be performed due to force majeure, a notice shall be given to the other party in time so as to reduce the losses possibly caused to the other party, and the proof shall be provided within a reasonable time limit.If force majeure occurs after any party has delayed its performance, such party’s liability for breach of contract shall not be exempted.
Article 591 After any party breaches the contract, the other party shall take appropriate measures to prevent the aggravation of losses; where the other party’s failure to take appropriate measures results in additional losses, it may not claim compensation for the additional losses.Any reasonable expenses incurred by one party in preventing additional losses shall be borne by the party in breach.
Article 592 Both parties that breach the contract shall bear their respective liability.Where any party breaches the contract, thereby causing the other party to incur losses, and the other party is at fault for the occurrence of such losses, the amount of compensation for the corresponding losses may be reduced.
Article 593 Where any party’s breach is attributable to a third party, it shall nevertheless be liable to the other party for breach under the law. Any dispute between the said party and the third party shall be resolved in accordance with the provisions of the law or the agreement between the parties.
Article 594 The limitation period for bringing a suit or applying for arbitration regarding disputes over contracts for international sale of goods and contracts for technology import and export is four years.
Article 595 A sales contract is a contract whereby the seller transfers the ownership of a subject matter to the purchaser, and the purchaser pays the price for it.
Article 596 The contents of a sales contract generally include terms such as the name, quantity, quality and price of the subject matter, time limit for performance, place and method of performance, packaging method, inspection standards and method, settlement method, and the language used in the contract and the validity thereof.
Article 597 Where the ownership of the subject matter cannot be transferred due to the seller’s failure to obtain the right of disposal, the purchaser may rescind the contract and request the seller to bear the liability for breach of contract.Where the transfer of a subject matter is prohibited or restricted by laws or administrative regulations, such provisions shall apply.
Article 598 The seller shall perform its obligation to deliver the subject matter to the purchaser or to deliver a document entitling the purchaser to taking delivery of the subject matter, and to assign ownership of the subject matter.
Article 599 In addition to the document for taking delivery of the subject matter, the seller shall deliver to the purchaser the relevant documents and materials as agreed or under transaction practices.
Article 600 With respect to the sale of a subject matter with intellectual property rights, except where laws provide otherwise or the parties agree otherwise, the intellectual property rights in respect of such subject matter do not belong to the purchaser.
Article 601 The seller shall deliver the subject matter at the agreed time. Where a period of time for delivery is agreed upon, the seller may deliver at any time within the said time period.
Article 602 Where the parties have not agreed, or have not come to a clear agreement, on a deadline for the delivery of the subject matter, the provisions of Article 510 and Item (IV) of Article 511 hereof shall apply.
Article 603 The seller shall deliver the subject matter at the agreed place of delivery.Where there is no agreement in the contract between the parties on the place to deliver the subject matter or such agreement is unclear, nor can it be determined in accordance with the provisions of Article 510 hereof, the following provisions shall apply:
(I)If the subject matter needs to be transported, the seller shall deliver the subject matter to the first carrier so as to hand it over to the purchaser;
(II) The subject matter does not need to be transported, and the seller and purchaser know the place of the subject matter when concluding the contract, the seller shall deliver the subject matter at such place; where the place is unknown, the subject matter shall be delivered at the seller’s place of business at the time of conclusion of the contract.
Article 604 The risk of the subject matter being damaged or lost shall be borne by the seller prior to the delivery of the subject matter, and by the purchaser after the delivery of the subject matter, except where laws provide otherwise or the parties agree otherwise.
Article 605 Where, for reasons attributable to the purchaser, the subject matter is not delivered at the agreed time, the purchaser shall, as from the time it breaches the contract, bear the risk of damage to or loss of the subject matter.
Article 606 Where the seller sells a subject matter that is delivered to a carrier for carriage and is in transit, unless otherwise agreed upon by the parties, the risk of damage to or loss of the subject matter shall be borne by the purchaser at the time when the contract is established.
Article 607 After the seller transports the subject matter to the place designated by the purchaser and delivers the subject matter to the carrier under the contract, the risk of damage to or loss of the subject matter shall be borne by the purchaser.Where there is no agreement in the contract between the parties as to the place of delivery or such agreement is not clear, and the subject matter needs to be transported according to the provisions of Item 1 of Paragraph 2 of Article 603 hereof, the risk of damage to or loss of the subject matter shall be borne by the purchaser after the seller has delivered the subject matter to the first carrier.
Article 608 Where the seller has placed the subject matter at the place of delivery under the agreement or in accordance with the provisions of Item 2 of Paragraph 2 of Article 603 hereof, while the purchaser fails to take delivery in breach of the agreement, the risk of damage to or loss of the subject matter shall be borne by the purchaser as of the time of breach of the agreement.
Article 609 The failure of the seller to deliver the documents and materials relating to the subject matter as agreed upon shall not affect the transfer of the risk of damage to or loss of the subject matter.
Article 610 Where the subject matter does not meet quality requirements, and as a result it is impossible to realize the purposes of the contract, the purchaser may refuse to accept the subject matter or may rescind the contract. Where the purchaser refuses to accept the subject matter or rescinds the contract, the risk of damage to or loss of the subject matter shall be borne by the seller.
Article 611 Where the risk of damage to or loss of the subject matter is borne by the purchaser, the purchaser’s right to demand the seller to bear liability for breach of contract because the seller’s performance of its obligations is not in conformity with the agreement shall not be affected.
Article 612 Unless otherwise provided for by law, the seller is obliged to warrant that no third party shall have any right in respect of the delivered subject matter.
Article 613 Where the purchaser knows or ought to know, at the time of concluding the contract, that a third party has rights on the subject matter to be sold, the seller does not assume the obligation prescribed in the preceding article.
Article 614 Where the purchaser has conclusive evidence to prove that a third party has the rights on the subject matter, it may suspend the payment of the corresponding price, unless the seller provides a proper guaranty.
Article 615 The seller shall deliver the subject matter of the contract according to the agreed quality requirements. Where the seller provides the quality specifications for the subject matter, the subject matter delivered shall comply with the quality requirements set forth therein.
Article 616 Where there is no agreement between the parties to the contract on the quality requirements of the subject matter or such agreement is unclear, nor can it be determined in accordance with the provisions of Article 510 hereof, the provisions of Item 1 of Article 511 hereof shall apply.
Article 617 Where the subject matter delivered by the seller does not meet quality requirements, the purchaser may claim that the seller shall assume liability for breach of contract in accordance with the provisions of Articles 582 to 584 hereof.
Article 618 Where the parties agree to relieve or exempt the liability of the seller for the defects of the subject matter, and the seller fails to inform the purchaser of the defects of the subject matter intentionally or due to gross negligence, the seller shall have no right to claim for relief or exemption of its liability.
Article 619 The seller shall use the agreed method of packaging when delivering the subject matter of the contract. Where there is no agreement in the contract on packaging manner or such agreement is unclear, nor can it be determined in accordance with the provisions of Article 510 hereof, the subject matter shall be packed in a general manner; in the absence of a general manner, a packaging manner sufficient to protect the subject matter and conducive to resource conservation and ecological environment protection shall be adopted.
Article 620 When the purchaser receives the subject matter, it shall inspect the subject matter within the agreed inspection period. Where there is no agreement on the inspection period, the goods shall be inspected promptly.
Article 621 Where the parties have agreed on an inspection period, the purchaser shall, within the said inspection period, notify the seller of any circumstances whereby the quantity or quality of the subject matter is not as agreed. Where the purchaser is negligent in notifying the seller, the quantity or quality of the subject matter is deemed to be in compliance with the contract.Where the parties have no agreement on an inspection period, the purchaser shall notify the seller within a reasonable period, commencing on the date when the purchaser discovered or should have discovered the quantity or quality non-compliance. Where the purchaser fails to notify within a reasonable period or fails to notify within two (2) years from the date of receipt of the subject matter, the quantity or quality of the subject matter shall be deemed to be in compliance with the parties’ agreement. However, if the subject matter has a quality guarantee period, the said quality guarantee period shall apply, and the said two-year provision shall not apply.
Where the seller knows or ought to know that the subject matter provided does not conform to the terms of the contract, the purchaser is not subject to the time limits for notification prescribed in the preceding two paragraphs.
Article 622 Where the inspection period agreed upon by the parties is too short, and it is difficult for the purchaser to complete the inspection within the inspection period due to the nature of the subject matter and transaction practice, the period shall be deemed only as the period for the purchaser to raise objection to the appearance defects of the subject matter.Where the agreed inspection period or quality guarantee period is shorter than the period stipulated in the laws and administrative regulations, the period stipulated in the laws and administrative regulations shall prevail.
Article 623 Where the parties do not agree on an inspection period, and the delivery note, confirmation slip, etc. signed by the purchaser states the quantity, model number, specifications of the subject matter, the purchaser shall be deemed to have inspected the quantity and checked whether there is any visible defect, unless there is adequate evidence to subvert.
Article 624 Where the seller delivers the subject matter to a third party as instructed by the purchaser, and the inspection standards agreed by the seller and the purchaser are inconsistent with those agreed by the purchaser and the third party, the inspection standards agreed by the seller and the purchaser shall prevail.
Article 625 Where, in accordance with the provisions of laws and administrative regulations or the agreement between the parties, the subject matter shall be recycled after the expiration of its valid service life, the seller shall be obligated to recycle the subject matter by itself or by entrusting a third party.
Article 626 The purchaser shall pay the price in the agreed amount and according to the agreed method of payment. Where there has been no agreement, or no clear agreement, the provisions of Article 510 and Items II and V of Article 511 hereof shall apply to the amount of the price and the method of payment.
Article 627 The purchaser shall pay the purchase price at the agreed place. If there is no agreement in the contract on the place of payment or such agreement is unclear, nor can it be determined in accordance with the provisions of Article 510 hereof, the purchaser shall make payment at the seller’s business place. However, if it is agreed that the delivery of the subject matter or the document for taking delivery thereof is conditional upon the payment of the price, the payment shall be made at the place where the subject matter or the document for taking delivery thereof is delivered.
Article 628 The purchaser shall pay the purchase price at the agreed time. Where the time for payment is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 510 hereof, the purchaser shall make payment at the same time it receives the subject matter or the document for taking delivery thereof.
Article 629 Where the seller delivers the subject matter in a quantity greater than that agreed in the contract, the purchaser may accept or refuse to accept the excess quantity. Where the purchaser accepts the excess quantity, it shall pay for the excess quantity at the agreed price; where the purchaser refuses to accept the excess quantity, it shall promptly notify the seller.
Article 630 The fruits of the subject matter belong to the seller if accrued before delivery, and to the purchaser if accrued after delivery. However, if the parties have agreed otherwise, such agreement shall prevail.
Article 631 Where a contract is rescinded due to non-compliance of any principal component of the subject matter, the effect of rescission extends to the ancillary components. Where a contract is rescinded due to non-compliance of any ancillary component of the subject matter, the effect of rescission does not extend to the principal component.
Article 632 Where the subject matter of a contract is made up of a number of items, and one of the said items does not conform to the parties’ agreement, the purchaser may rescind the portion of the contract in respect of the said item. However, if the separation of the said item from other objects significantly impairs the value of the subject matter, the purchaser may rescind the contract in respect of several items.
Article 633 In the event that the seller delivers the subject matter in installments, if the seller fails to deliver one installment of the subject matter or the delivery fails to satisfy the terms of the contract so that the said installment cannot realize the contract purpose, the purchaser may rescind the portion of the contract in respect thereof.If the seller fails to deliver one installment of the subject matter or the delivery fails to satisfy the terms of the contract so that the delivery of subsequent installments of the subject matter cannot realize the contract purpose, the purchaser may rescind the portion of the contract in respect of such installment as well as any subsequent installment.
If the purchaser rescinds the portion of the contract in respect of one batch of the subject matter and the said batch of the subject matter and the other batches of the subject matter are interdependent, the purchaser may rescind the contract in respect of batches of the subject matter delivered and undelivered.
Article 634 Where the purchaser making payment by installments fails to pay the price due and the amount unpaid accounts for one fifth of the total price, and still fails to pay the price due within a reasonable time limit after being urged, the seller may request the purchaser to pay the total price or rescind the contract.Where the seller rescinds the contract, it may require the purchaser to pay a fee for the use of such subject matter.
Article 635 In a sale by sample, the parties shall place the sample under seal, and may specify the quality of the sample. The subject matter delivered by the seller shall comply with the samples as well as the quality specifications.
Article 636 In a sale by sample, if the purchaser is not aware of a latent defect in the sample, the subject matter delivered by the seller shall nevertheless comply with the normal quality standard for a like item, even though the subject matter delivered complies with the sample.
Article 637 The parties to a sales transaction by trial use may agree on a trial period for the use of the subject matter. Where such period is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 510 hereof, it shall be determined by the seller.
Article 638 A purchaser who purchases items on a trial basis may either purchase the subject matter or refuse to purchase the subject matter during the trial period, as appropriate. Upon expiration of the trial period, if the purchaser fails to express whether or not to purchase the subject matter, it shall be deemed to have purchased the subject matter.Where the purchaser in a sale by trial use has made partial payment within the trial period or has sold or leased the subject matter or established security interest over the subject matter, the purchaser shall be deemed to have agreed to purchase the subject matter.
Article 639 In a sale by trial use, if the parties have not agreed, or have not come to a clear agreement, on a fee for the use of the subject matter, the seller shall have no right to demand payment by the purchaser.
Article 640 The risk of damage to or loss of the subject matter during the trial use period shall be borne by the seller.
Article 641 The parties may agree in a sales contract that the ownership of the subject matter shall belong to the seller if the purchaser fails to pay the price or perform other obligations.Where the seller retains ownership of the subject matter of the contract without registration, the subject matter may not be used against any bona fide third party.
Article 642 In the event that the parties agree that the seller shall retain the ownership of the subject matter of the contract, if the purchaser is under any of the following circumstances before the ownership of the subject matter is assigned, causing damage to the seller, the seller shall have the right to take back the subject matter, unless otherwise agreed by the parties:(I)Fails to make payment as agreed and still fails to make payment within a reasonable period after being urged to do so;
(II) The specified conditions are not fulfilled as agreed; or
(III) Selling, pledging or otherwise disposing of the subject matter improperly.
The seller may negotiate with the purchaser to take back the subject matter; where negotiation is unsuccessful, reference may be made to the procedures for realization of security interests.
Article 643 After the seller takes back the subject matter in accordance with the provisions of Paragraph 1 of the preceding Article, the purchaser may request to redeem the subject matter if the reasons for the seller’s taking back the subject matter are eliminated within the reasonable redemption period agreed by both parties or specified by the seller.Where the purchaser does not redeem the subject matter within the redemption period, the seller may sell the subject matter to a third party at a reasonable price; where there is a balance after deducting the amount unpaid by the purchaser and the requisite expenses from the sale proceeds, the balance shall be refunded to the purchaser; the purchaser shall pay any shortfall.
Article 644 In a sale by bidding, matters such as the rights and obligations of the parties and the bidding procedure, etc. are governed by the relevant laws and administrative regulations.
Article 645 The rights and obligations of the parties to an auction and the procedures therefor shall be governed by the provisions of the relevant laws and administrative regulations.
Article 646 If there are provisions in the law for other non-gratuitous contracts, such provisions shall apply; in the absence of such provisions, the relevant provisions on sales contracts shall apply mutatis mutandis.
Article 647 Where the parties agree on a barter transaction involving assignment of title to the subject matter, the relevant provisions on sales contracts shall apply mutatis mutandis.
Chapter 10 Contracts for Supply of Power, Water, Gas, or Heat
Article 648 A power supply contract is a contract whereby a power supplier supplies power to a power customer, and the power consumer pay an electricity fee.The power supplier supplying power to the general public may not refuse the reasonable request of any power customer to conclude a contract.
Article 649 The contents of a power supply contract generally include terms such as the method, quality, and time of power supply, and the capacity, location and nature of power use, and the metering method, electricity rate, the method of settlement of electricity fees, and the responsibility for maintenance of the power supply and use facilities, etc.
Article 650 The place at which a contract for the supply of power is to be performed shall be agreed on by the parties; where the parties have not agreed, or have not come to a clear agreement, on the place of performance, the place of performance shall be at the boundary where ownership of the electricity supply facilities is divided.
Article 651 The power supplier shall safely supply power in accordance with the standards for power supply stipulated by the State and with the terms of the contract. Where the power supplier fails to supply power in a safe manner in accordance with the standards for power supply stipulated by the State and with the terms of the contract, thereby causing losses to a power customer, it shall be liable for compensation.
Article 652 Where the power supplier needs to suspend the supply of power for such reasons as planned or ad hoc inspection and repair of the facilities for supply of power, restriction on power in accordance with the law, or illegal use of power by a consumer, etc., it shall notify the consumer(s) in advance in accordance with the relevant provisions of the State; if it fails to notify the consumer(s) in advance to suspend the supply of power, thereby causing losses to the consumer(s), it shall be liable for compensation.
Article 653 Where the power supply is suspended due to a natural disaster or other reasons, the power supplier shall make prompt repairs in accordance with the relevant provisions of the State; if the power supplier fails to make prompt repairs, thereby causing losses to the power customer, it shall be liable for compensation.
Article 654 Power customers shall timely pay electricity charges in accordance with the relevant provisions of the State and with the terms of the contract. If a power consumer fails to pay the electricity charge within the time limit, the consumer shall pay liquidated damages in accordance with the terms of the contract. In case the power customer fails to pay the electricity charges and liquidated damages within a reasonable time limit after receiving demand for payment, the power supplier may suspend the power supply under the procedures prescribed by the State.Where the power supplier suspends the power supply in accordance with the provisions of the preceding paragraph, it shall notify the power customer in advance.
Article 655 Power customers shall consume electricity in a safe, economical and planned manner in accordance with the relevant provisions of the State and with the terms of the contract. Where a power customer fails to use power in accordance with the relevant provisions of the State and with the terms of the contract, thereby causing losses to the power supplier, it shall be liable for compensation.
Article 656 Contracts for the supply of water, gas and heat shall be governed by the relevant provisions applicable to power supply contracts mutatis mutandis.
Article 657 A gift contract is a contract whereby the donor conveys his property to the donee gratuitously and the donee manifests his acceptance of the gift.
Article 658 The donor may revoke the gift prior to the assignment of ownership to the donated property.The provisions of the preceding paragraph shall not apply to any notarized gift contract or any gift contract of such public welfare or moral obligation nature as disaster relief, poverty alleviation or disability assistance that may not be revoked in accordance with the law.
Article 659 Where conveyance of the donated property is subject to registration or other procedures in accordance with the law, the relevant procedures shall be undergone.
Article 660 Where the donor fails to deliver the donated property under a notarized gift contract or a gift contract of such public welfare or moral obligation nature as disaster relief, poverty alleviation or disability alleviation, etc. that may not be revoked in accordance with the law, the donee may require delivery.Where the donated property to be delivered in accordance with the preceding paragraph is damaged or lost due to any intentional misconduct or gross negligence of the donor, he shall be liable for compensation.
Article 661 The donation may be subject to obligations.Where obligations are attached to the making of a gift, the donee shall perform those obligations as agreed.
Article 662 Where the donated property contains a defect, the donor shall not bear any liability. In the case of a donation subject to obligations, if the donated property is defective, the donor shall bear the same liability as a seller to the extent of the obligations.Where the donor intentionally fails to inform the donee of the defects or warrants that there are no defects, thereby causing losses to the donee, he shall be liable for compensation.
Article 663 Where the donee is in any of the following circumstances, the donor may revoke the donation:(I)Seriously infringing the legitimate rights and interests of the donor or close relatives thereof;
(II) Failure to perform his/her maintenance obligation to the donor; or
(III) Failure to perform the obligations under the gift contract.
The donor shall exercise its/his right of revocation within one year from the date on which it knew or ought to have known of the cause for revocation.
Article 664 If, as a result of the donee’s illegal acts, the donor dies or loses his capacity for civil conduct, the donor’s heir or statutory agent may revoke the gift.The heir or statutory agent of the donor shall exercise the right of revocation within six months after he or she knows, or ought to know, the cause for revocation.
Article 665 Where the party with the right of revocation revokes the gift, it may request that the donee return the donated property.
Article 666 If the donor’s economic situation is deteriorated significantly, thereby seriously impacting on his or her business operation or family life, he or she may no longer perform the gift obligations.
Article 667 A loan contract is a contract whereby the borrower borrows a sum of money from the lender, and repays the borrowed money with interest thereon when the loan becomes due.
Article 668 A loan contract shall be in writing, except where the loan is between natural persons who have agreed otherwise.The contents of a loan contract generally include terms such as the type, currency, purpose, amount, interest rate and term of loan and method of repayment, etc.
Article 669 In entering into a loan contract, the borrower shall provide true information concerning its business operation and financial condition in connection with the loan as required by the lender.
Article 670 Interest on the loan shall not be deducted from the loan principal in advance. If interest is deducted from the principal in advance, the loan shall be repaid and interest shall be calculated on the basis of the actual amount borrowed.
Article 671 Where the lender fails to make the loan amount available on the agreed date and in the agreed amount, thereby causing losses to the borrower, it shall compensate for such losses.Where the borrower fails to accept the loan on the agreed date and in the agreed amount, it shall pay the interest on the agreed date and in the agreed amount.
Article 672 The lender may inspect and supervise the use of the loan in accordance with the terms of the contract. The borrower shall, as agreed, regularly provide the lender with relevant financial and accounting statements or other information.
Article 673 Where the borrower fails to use the loan in accordance with the purpose of the loan as agreed, the lender may cease issuing the loan, call in the loan ahead of schedule, or rescind the contract.
Article 674 The borrower shall pay the interest within the agreed time limit and in accordance with the contract. Where there has been no agreement or no clear agreement as to the time limit for the payment of interest, and the said time limit cannot be determined by reference to the provisions of Article 510 hereof, in the case that the loan period is less than one (1) year, then interest shall be paid at the same time that the principal is repaid in full; in the case that a loan period is one (1) year or longer, then interest shall be paid at the completion of each annual period; and in the case that the remaining loan period is less than one (1) year, then interest shall be paid at the same time that the principal is repaid in full.
Article 675 The borrower shall repay the loan within the agreed time period. Where there has been no agreement or no clear agreement as to the loan term, and the said loan term cannot be determined by reference to the provisions of Article 510 hereof, the borrower may repay the loan at any time; the lender may call on the borrower to repay the loan within a reasonable period of time.
Article 676 Where the borrower fails to repay the loan within the agreed time limit, it shall pay overdue interest in accordance with the terms of the contract or the relevant provisions of the State.
Article 677 Where the borrower repays the loan ahead of schedule, unless otherwise agreed by the parties, the interest shall be calculated based on the actual period of loan.
Article 678 The borrower may apply to the lender for an extension of the loan term before its maturity; the loan term may be extended if the lender so agrees.
Article 679 A loan contract between natural persons shall be established at the time the lender makes the loan amount available.
Article 680 It is forbidden to lend money at a high interest rate, and the interest rates on loans must not violate relevant State regulations.Where the loan contract does not stipulate the payment of interest, the loan shall be deemed interest free.
Where the agreement on payment of interest in a loan contract is unclear, and the parties are unable to reach a supplementary agreement, interest shall be determined in accordance with the transaction method, transaction practice, market interest rate etc. of the locality or the parties; where a loan is between natural persons, no interest shall be deemed.
Chapter 13 Guarantee Contracts
Article 681 A guarantee contract is a contract whereby the guarantor and the creditor agree that the guarantor will perform the obligation or assume liability when the debtor fails to perform the obligation on time or when circumstances agreed upon by the parties occur to ensure the realization of the obligation.
Article 682 A guarantee contract shall be a subordinate one to the principal claim-debt contract. Unless it is otherwise prescribed by any law, the guarantee contract shall be null and void if the principal claim-debt contract is null and void.If a guarantee contract is confirmed to be null and void and the debtor, guarantor and creditor are at fault, they shall bear the corresponding civil liability according to their respective fault.
Article 683 Government agencies with legal person status must not act as guarantors, except where loans from foreign governments or international economic organizations are used in the form of a sub-loan with the approval of the State Council.A non-profit legal person or unincorporated organization for the purpose of public welfare shall not be a guarantor.
Article 684 The content of a guarantee contract generally includes clauses dealing with the type and amount of the principal obligation guaranteed, the time limit for the debtor to discharge the obligation, the method, scope and term of the guarantee, etc.
Article 685 A guarantee contract may be a written contract entered into separately or a guarantee clause in the principal claim-debt contract.If a third party unilaterally gives the creditor a written guarantee and the creditor receives such guarantee without objection, a guarantee contract is established.
Article 686 The forms of guarantee include general guarantee and joint and several liability guarantee.In the absence of agreement or if the agreement is not clear on the guarantee mode in a guarantee contract, the parties shall bear the guarantee liability according to the general guarantee.
Article 687 A general guarantee is a guarantee whereby the parties agree in a guarantee contract that the guarantor shall bear guarantee liability when the debtor fails to perform his obligation.The guarantor under a general guarantee shall have the right to refuse to assume guarantee liability to the creditor before a dispute concerning the principal contract has been adjudicated or arbitrated and when such debtor has failed to perform his obligation despite enforcement against his property in accordance with the law, except under any of the following circumstances:
(I)The whereabouts of the debtor is unknown and there is no property available for enforcement;
(II) The people’s court has accepted the debtor’s bankruptcy case;
(III) The creditor has evidence to prove that the debtor’s property is insufficient to perform all the debt obligations or the debtor has lost the capacity to discharge the debts; or
(IV) The guarantor expresses in writing to waive his right as stipulated in this paragraph.
Article 688 A guarantee with joint and several liability is a guarantee whereby the parties agree in a guarantee contract that the guarantor and the debtor are jointly and severally liable for the obligation.When the debtor in a guarantee with joint and several liability fails to perform his obligation on time or any circumstance agreed by the parties occurs, the creditor may require the debtor to perform his obligation or the guarantor to assume guarantee liability within the scope of his guarantee.
Article 689 A guarantor may require the debtor to provide a counter-guarantee.
Article 690 The guarantor and the creditor may conclude a contract for a guarantee up to the maximum amount, agreeing to provide a guarantee for successive obligations over a certain period up to a maximum obligation amount.In addition to the provisions of this Chapter, the relevant provisions on maximum mortgage in Part II hereof shall apply mutatis mutandis to maximum guarantee.
Section 2 Liability for Guarantee
Article 691 The scope of a guarantee shall include the principal claim and its interest, fines for default, damage awards and expenses incurred in the satisfaction of the claim. Where the parties agree otherwise, their agreement shall prevail.
Article 692 The guarantee term is the period during which the guarantor’s responsibility under the guarantee is determined and is not subject to suspension, interruption or extension.The creditor and the guarantor may agree on the guarantee term, however, if the stipulated term of guarantee expires earlier than the term for performing the principal obligation or at the same time as the term for performing the principal obligation, such term shall be deemed to have not been agreed; if there is no agreement or such agreement is unclear, the guarantee term shall be six months from the date of expiration of the term for performing the principal obligation.
Where there is no agreement in the contract between the creditor and the debtor on the term for performance of the principal obligation or such agreement is unclear, the guarantee term shall commence on the expiry date of the grace period for the debtor to perform his obligation.
Article 693 Where the creditor secured by a general guarantee fails to institute proceedings or apply for arbitration against the debtor during the term of the guarantee, the guarantor no longer bears guarantee liability.Where the creditor secured by a joint and several guarantee fails to request the guarantor to assume his guarantee liability during the term of the guarantee, the guarantor shall no longer bear guarantee liability.
Article 694 Where the creditor secured by in a general guarantee lodges a suit against the debtor or applies for arbitration before the expiration of the guarantee term, the limitation of action for the guarantee obligation shall be calculated from the date on which the right of the guarantor to refuse to assume guarantee liability ceases to exist.Where the creditor secured by a joint and several guarantee requests the guarantor to assume his guarantee liability before the expiration of the guarantee term, the limitation of action for the guarantee liability shall be calculated from the date on which the creditor requests the guarantor to assume his guarantee liability.
Article 695 Where the creditor and debtor, without the written consent of the guarantor, alter the contents of the principal claim-debt contract through consultation to reduce the debt, the guarantor shall continue to bear guarantee liability for the altered debt. If the debt is increased, the guarantor shall bear no guarantee liability for the increased part.Where the creditor and debtor modify the term for performance of the principal claim-debt contract without the written consent of the guarantor, the guarantee term shall not be affected.
Article 696 Where the creditor assigns all or part of the claim without notifying the guarantor, the assignment shall be of no effect on the guarantor.If the guarantor and the creditor agree to prohibit the assignment of the claim, and the creditor assigns the claim without the written consent of the guarantor, the guarantor no longer bears guarantee liability for the assignee.
Article 697 Where the creditor, without the written consent of the guarantor, allows the debtor to assign all or part of his obligation, the guarantor no longer bears guarantee liability on the obligation assigned without his consent, unless otherwise agreed upon by the creditor and the guarantor.Where a third party becomes a debtor, the guarantee liability of the guarantor shall not be affected.
Article 698 After the term for the performance of the principal obligation has expired, the guarantor under a general guarantee shall provide to the creditor true information concerning the debtor’s property available for enforcement. Where the creditor waives or neglects to exercise his right, as a result of which the property cannot be enforced, the guarantor no longer bears guarantee liability to the extent of the value of the property available for enforcement that he provided.
Article 699 Where there are two or more guarantors for the same obligation, the guarantors shall bear guarantee liability according to their respective shares of guarantee as stipulated in the guarantee contract. Where no shares of guarantee are stipulated in the guarantee contract, the creditor may require any of the guarantors to bear guarantee liability within the scope of its guarantee.
Article 700 After a guarantor has borne his guarantee liability, unless the parties agree otherwise, he has the right to seek compensation from the debtor within the scope of his guarantee liability, and he enjoys the rights of the creditor against the debtor, without prejudice to the interests of the creditor.
Article 701 The guarantor may claim the debtor’s defenses against the creditor. It shall still have the right to claim against the creditor such defense waived by the debtor.
Article 702 Where the debtor has the right of offset or revocation against the creditor, the guarantor may refuse to bear guarantee liability within the corresponding scope.
Article 703 A lease contract is a contract whereby the lessor delivers to the lessee the item for the latter’s use or benefit therefrom, and the lessee pays the lease expense.
Article 704 The contents of a lease contract generally include terms such as the name, quantity and purpose of the leased property, lease term, lease expense as well as time limit and method for its payment, and maintenance of the leased property.
Article 705 The term of a lease shall not exceed twenty years. Where the term of a lease exceeds twenty (20) years, that part of the lease beyond the said limit shall be null and void.At the expiration of the term of a lease, the parties may renew the lease contract; however, the renewed term as agreed may not exceed 20 years commencing on the date of renewal.
Article 706 If the parties to a lease contract fail to go through the formalities of registration of such contract accordance with the provisions of laws and administrative regulations, the validity of the contract shall not be affected.
Article 707 Where the term of a lease is six (6) months or longer, the lease shall be in writing. If the parties fail to adopt a written form, and it is impossible to determine the term of the lease, the lease shall be deemed as a non-fixed term lease.
Article 708 The lessor shall deliver the leased property to the lessee in accordance with the contract and shall, within the lease term, keep the leased property fit for the agreed purpose.
Article 709 The lessee shall use the leased property in accordance with agreed methods. Where there is no agreement in the contract on the method of use of the leased property or such agreement is unclear, nor can it be determined in accordance with the provisions of Article 510 hereof, the leased property shall be used in light of its nature.
Article 710 If the lessee uses the leased property in accordance with the agreed usages or in a manner consistent with its nature, and there is wear and tear to the leased property as a result, the lessee shall not be liable for compensation.
Article 711 Where the lessee fails to use the leased property in the agreed manner or in a manner consistent with its nature, thereby causing damage to it, the lessor may rescind the contract and claim compensation for losses.
Article 712 The lessor shall perform its obligation to make repairs to the leased property, except where the parties agree otherwise.
Article 713 When the leased property needs to be repaired, the lessee may request the lessor to make repairs within a reasonable period of time. If the lessor fails to perform its obligations of maintenance or repair, the lessee may maintain or repair the leased property on its own at the lessor’s expense. Where the lessee’s use of the leased property is impaired due to maintenance or repair thereof, the lease expense shall be reduced or the lease term shall be extended accordingly.Where the leased property needs maintenance and repair due to the fault of the lessee, the lessor does not assume the maintenance and repair obligations as provided in the preceding paragraph.
Article 714 The lessee shall keep the leased property with due care and shall be liable for compensation in case of damage or loss to the leased property due to improper care.
Article 715 With the consent of the lessor, the lessee may make improvements to, or affix attachments to the leased property.Where the lessee makes improvement on or addition to the leased property without consent of the lessor, the lessor may require the lessee to restore the leased property to its original condition or compensate for the losses.
Article 716 Subject to consent of the lessor, the lessee may sublease the leased property to a third party. Where the lessee subleases the leased property, the lease contract between the lessee and the lessor shall remain effective; where a third party causes losses to the leased property, the lessee shall compensate for such losses.Where the lessee subleases the leased property without the consent of the lessor, the lessor may rescind the contract.
Article 717 Where the lessee subleases the leased property to a third party with the consent of the lessor, and the sublease term exceeds the remaining lease term of the lessee, the agreement on the part in excess shall not be legally binding upon the lessor, unless otherwise agreed upon by the lessor and the lessee.
Article 718 Where the lessor knows or should know about the sublease of the lessee but fails to raise any objection within six months, it shall be deemed that the lessor agrees to the sublease.
Article 719 If the lessee defaults on the payment of the lease expense, the sub- lessee may pay the outstanding lease expense and liquidated damages on behalf of the lessee, except that the sublease contract has no legally binding force upon the lessor.The lease expense and liquidated damages paid by the sub- lessee on behalf of the lessee may be used to offset the lease expense payable by the sub- lessee to the lessee; if the amount of the lease expense exceeds the payable lease expense, the sub-lessee may have recourse against the lessee.
Article 720 During the lease term, any benefit accrued from the possession or use of the leased property shall belong to the lessee, except as otherwise agreed by the parties.
Article 721 The lessee shall pay the lease expense within the time limit agreed upon. Where there has been no agreement or no clear agreement as to the deadlines for the payment of lease expense, and it is not possible to determine the issue in accordance with the provisions of Article 510 hereof, if the lease term is less than one (1) year, lease expense shall be paid at the expiry of the lease term; if the lease term is one (1) year or longer, lease expense shall be paid at the expiry of each year of the lease term, and if the remaining term is less than one (1) year, lease expense shall be paid at the expiry of the lease term.
Article 722 In the event that the lessee fails to pay or delays in paying the lease expense without justified reasons, the lessor may request the lessee to pay the lease expense within a reasonable time limit. If the lessee fails to pay the lease expense within the time limit, the lessor may rescind the contract.
Article 723 If, due to any claim by a third party, the lessee is unable to use or accrue benefit from the leased property, the lessee may request a reduction in lease expense or refuse to pay lease expense.Where rights are claimed by a third party, the lessee shall notify the lessor in time.
Article 724 The lessee may rescind the contract under any of the following circumstances where the leased property cannot be used due to reasons not attributable to the lessee:(I)Where the leased property is legally sealed up or seized by the judicial authority or administrative authority;
(II) There is dispute over the ownership of the leasehold property right;
(III) Where the leased property is in violation of the mandatory provisions of laws and administrative regulations in respect of use conditions.
Article 725 Where there is a change of ownership of the leased property during the period of the lessee’s possession under the lease contract, this shall not affect the validity of the lease contract.
Article 726 Where the lessor is to sell a dwelling unit under a lease, it shall give the lessee a notice within a reasonable time limit before the sale, and the lessee has the right of first refusal under the same conditions, except where the co-owners by shares exercise their right of first refusal or the lessor is to sell the dwelling unit to their close relatives.Where the lessee does not clearly express to purchase the dwelling unit within 15 days after the lessor performs the obligation of notice, the lessee shall be deemed to waive the right of first refusal.
Article 727 Where the lessor entrusts an auctioneer with auction of a leased dwelling unit, it shall notify the lessee five days prior to the auction. Where the lessee does not participate in the auction, it shall be deemed to have waived the right of first refusal.
Article 728 Where the lessor fails to notify the lessee or hinders the lessee from exercising the right of first refusal, the lessee may request the lessor to bear the liability for compensation. However, the validity of the house transaction contract concluded by and between the lessor and the third party shall not be affected.
Article 729 Where the leased property is damaged or lost in part or in whole due to any reason not attributable to the lessee, the lessee may request a reduction of the lease expense or not to pay the lease expense; where the purpose of the contract cannot be achieved due to damage to or loss of the leased property in part or in whole, the lessee may rescind the contract.
Article 730 Where the term of a lease is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 510 hereof, such lease is deemed a non-fixed term lease. The parties may rescind the contract at any time, provided that they notify the other party within a reasonable period of time in advance.
Article 731 Where the leased property endangers the safety or health of the lessee, the lessee may rescind the contract at any time even if the lessee knows the leased property does not meet the quality requirements when concluding the contract.
Article 732 Where the lessee is deceased during the term of a house lease, the persons who live together with the deceased or the joint operators may lease the house under the original lease contract.
Article 733 Upon the expiry of the lease period, the lessee shall return the leased property. The property returned shall be in conformity with the conditions after use in accordance with the contract or in light of its nature.
Article 734 Where the lessee continues to use the leased property after the expiry of the lease term, and the lessor does not raise any objections, the original lease contract shall continue to be valid, but the lease will become a non-fixed term lease.When the term of the lease expires, the lessee of the house shall have the priority to lease the house on the same conditions.
Chapter 15 Contracts for Financial Lease
Article 735 A financial lease contract is a contract whereby the lessor, purchase the lessee -selected leased property from a lessee -selected seller, provides the leased property to the lessee for its use, and the lessee pays the lease expense.
Article 736 The contents of a financial lease contract generally include clauses dealing with the name, quantity, specifications and technical performance of the leased property, the method of inspection, the lease term, the lease expense components and the time, method and currency of payment, the ownership of the leased property upon the expiry of the lease term, etc.A financial lease contract shall be in writing.
Article 737 Financial lease contracts concluded by the parties in the form of fictitious leased property shall be null and void.
Article 738 Where the operation or use of the leased property is subject to administrative license in accordance with laws and administrative regulations, failure on the part of the lessor to obtain such administrative license shall not affect the validity of the finance lease contract.
Article 739 Under the sales contract concluded by the lessor according to the lessee’s selection of the seller and the leased property, the seller shall deliver the subject matter to the lessee under the contract, and the lessee enjoys the rights of the purchaser in respect of taking delivery of the subject matter.
Article 740 Where a seller fails to perform its obligation of delivery of the subject matter to the lessee, the lessee may refuse to accept the subject matter delivered by the seller to it under any of the following circumstances:(I)he subject matter is materially inconsistent with the agreement;
(II) Failing to deliver the subject matter as agreed and still failing to do so within a reasonable time limit after being urged by the lessee or the lessor.
Where the lessee refuses to take delivery of the subject matter, it shall timely notify the lessor.
Article 741 The lessor, the seller and the lessee may agree that any claim arising from the seller’s failure in the performance of its obligations under the sales contract will be made by the lessee. Where the lessee exercises the right to claim compensation, the lessor shall provide assistance.
Article 742 The lessee’s exercise of the right to claim against the seller shall not affect the performance of its obligation of lease expense payment. However, if the lessee relies on the skills of the lessor in selecting the leased property or the lessor interferes in the selection of the leased property, the lessee may request reduction of or exemption from the corresponding lease expense.
Article 743 Under any of the following circumstances on the part of the lessor, which causes the lessee’s failure in exercising the right to claim against the seller, the lessee has the right to request the lessor to bear corresponding liability:(I)Not informing the lessee of any quality defect of the leased property knowingly;
(II) The lessor fails to timely provide necessary assistance when the lessee exercises the right to claim compensation.
Where the lessor is remiss in exercising the right to claim compensation which may only be exercised by it against the seller, thus causing losses to the lessee, the lessee has the right to claim compensation from the lessor.
Article 744 Without the consent of the lessee, the lessor may not amend any lessee -related term in the sales contract concluded by it according to the lessee’s selection of the seller and the leasehold property.
Article 745 Where the ownership of the leased property by the lessor is not registered, the lessor may not challenge a bona fide third party.
Article 746 Unless otherwise agreed by the parties, the lease expense under a financial lease contract shall be determined based on the major portion of or full costs of purchasing the leased property and the lessor’s reasonable profit.
Article 747 Where the leased property does not comply with the contract or is not fit for the intended purpose, the lessor is not liable therefor. However, there shall be an exception where the lessee relies on the skills of the lessor in selecting the leased property or the lessor interferes in the selection of the leased property.
Article 748 The lessor shall ensure the lessee’s possession and use of the leased property.The lessee shall be entitled to claim compensation for losses if the lessor is under any of the following circumstances:
(I)Taking back the leased property without justifiable reason;
(II) Impeding or interfering with the lessee’s possession or use of the leased property without justifiable reasons;
(III) Causing a third party to claim rights on the leased property due to the reasons attributable to the lessor; or
(IV) Other circumstances improperly affecting the lessee’s possession or use of the leased property.
Article 749 Where the leased property causes personal injury or property loss to a third party during the period when the lessee possesses the leased property, the lessor shall not bear any liability.
Article 750 The lessee shall keep and use the leased property with due care.The lessee shall perform the obligations of maintenance and repair of the leased property during the period when the lessee possesses the leased property.
Article 751 Where the leased property is damaged or extinguished during the period when the lessee possesses the leased property, the lessor shall have the right to request the lessee to continue to pay the lease expense, unless otherwise provided for by law or agreed by the parties.
Article 752 The lessee shall pay the lease expense as agreed upon. Where the lessee still fails to pay the lease expense within a reasonable time limit after being urged, the lessor may either request it to pay all the lease expense, or rescind the contract and take back the leased property.
Article 753 Where the lessee assigns, mortgage, pledges, invests with or otherwise disposes of the leased property without the consent of the lessor, the lessor may rescind the finance lease contract.
Article 754 In any of the following circumstances, the lessor or the lessee may rescind the finance lease contract:(I)Where the purchase and sale contract concluded by the seller and the lessor is rescinded, confirmed to be null and void or revoked, and the lessor and the seller fail to re-conclude the purchase and sale contract;
(II) The leased property is damaged or lost for reasons not attributable to either party and it is impossible to repair it or determine a substitute for it; or
(III) The purpose of the finance lease contract cannot be realized due to reasons attributable to the seller.
Article 755 Where a finance lease contract is rescinded due to the rescission, confirmation of invalidity or revocation of the sale and purchase contract, and the seller and the leased property are selected by the lessee, the lessor shall have the right to request that the lessee makes compensation for the corresponding losses, except where the rescission, confirmation of invalidity or revocation of the sale and purchase contract is attributable to the lessor.Where the loss of the lessor has been compensated when the sale and purchase contract is rescinded, deemed invalid or revoked, the lessee shall no longer be liable for corresponding compensation.
Article 756 In the event that a finance lease contract is rescinded for reasons not attributable to either party such as accidental damage or extinguishment of the leased property after delivery to the lessee, the lessor may request the lessee to make compensation in light of the depreciation status of the leased property.
Article 757 The lessor and the lessee may agree on ownership of the leased property upon the expiry of the lease period. Where there has been no agreement or no clear agreement as to ownership of the leased property, and the issue cannot be determined by reference to the provisions of Article 510 hereof, the lessor shall own the leased property.
Article 758 Where the parties agree that the leased property shall belong to the lessee at the expiry of the lease term, the lessee has paid the most of the lease expense but is unable to pay the remaining party, and the lessor rescinds the contract for this reason and takes back the leased property, if the value of the leased property taken back exceeds the lease expense and other expenses which the lessee owes to the lessor, the lessee may request the lessor to return the same.In the event that the parties agree that the leased property shall belong to the lessor at the expiry of the lease term, if the lessee is unable to return the leased property due to damage, loss, addition to or mixing with other property of the leased property, the lessor has the right to request the lessee to make reasonable compensation.
Article 759 Where the parties agree that at the expiration of the lease term the lessee only needs to pay a symbolic price to the lessor, the ownership of the leased property shall belong to the lessee after the agreed lease expense obligation has been performed.
Article 760 In the event that a finance lease contract is null and void and the parties have agreed on the ownership of the leased property under such circumstance, such agreement shall apply; where there is no agreement or such agreement is unclear, the leased property shall be returned to the lessor. However, if the contract is null and void for reasons attributable to the lessee, and the lessor does not request for return of the leased property or the return of the leased property will significantly reduce the utility thereof, the ownership of the leased property shall belong to the lessee, and the lessee shall make reasonable compensation to the lessor.
Chapter 16 Factoring Contracts
Article 761 A factoring contract shall mean a contract whereby a creditor of receivables assigns its existing receivables or receivables to be existed to the factor, and the factor provides services such as financing, receivables management or collection, payment guarantee by debtors of receivables, etc.
Article 762 The contents of a factoring contract shall generally include clauses such as type of business, scope of services, term of services, information on basic transaction contract, receivables information, financing funds under factoring or service remuneration, and payment method thereof.Factoring contracts shall be in writing.
Article 763 Where a creditor and a debtor of receivables have fabricated receivables as the subject matter of assignment and entered into a factoring contract with a factor, the debtor of receivables shall not cite non-existence of receivables as a reason to counter the factor, except where the factor is aware of the fabrications.
Article 764 Where a factor notifies a debtor of receivables of an assignment of receivables, he or she shall state his/her identity and attach the requisite proof.
Article 765 Upon receipt of a notice of assignment of receivables by the debtor, where the creditor of the receivables and the debtor negotiate on amendment to or termination of the underlying transaction contract without a proper reason, which has an adverse impact on the factor, such amendment or termination shall not be binding on the factor.
Article 766 Where the parties agree on factoring with recourse, the factor may claim against the creditor of receivables on refund of principal and interest of the factoring financing monies or redemption of creditor’s rights on receivables, or claim against the debtor of receivables on creditor’s rights on receivables. Where the factor claims creditor’s rights over receivables against the debtor of receivables, and there is a balance after deduction of the principal and interest of the factoring financing monies and the relevant expenses, the balance shall be refunded to the creditor of receivables.
Article 767 Where the parties have agreed on factoring without recourse, the factor shall claim creditor’s rights on receivables against the debtor of receivables, and the factor is not required to return the excess amount over the principal and interest of the factoring financing monies and the relevant fees obtained to the creditors of receivables.
Article 768 Where a creditor of receivables concludes several factoring contracts for the same receivables, causing multiple factors to claim their rights, registered receivables shall be obtained prior to unregistered receivables; registered receivables shall be obtained in chronological order of registration date; unregistered receivables shall be obtained by the factor stated in the notice of assignment from the debtor of the receivables who first reaches the debtor of the receivables; where registered receivables are neither registered nor notified, the receivables shall be obtained in proportion of factoring financing funds or service remuneration.
Article 769 Matters not addressed in this Chapter shall be governed by the relevant provisions on assignment of claims of Chapter 6 of this Part.
Article 770 A contract for work is a contract whereby the contractor shall, in light of the requirements of the party which has placed the order, complete certain work and deliver the results therefrom, and the party which has placed the order pays the remuneration therefor.Work includes processing, custom-made work, repair, reproduction, testing, inspection, and other task.
Article 771 The contents of a contract for work shall, in general, contain such clauses as the subject matter, quantity, quality and remuneration, method of the work, supply of materials, term of performance, and standards and method of acceptance.
Article 772 The contractor shall use its own equipment, technology and labor force to complete the main part of the work, except as otherwise agreed upon by the parties.Where the contractor assigns the main work contracted to a third party for completion, the contractor shall be liable to the party which has placed the order for the work results completed by the third party; where the assignment is not approved by the party which has placed the order, the party which has placed the order may rescind the contract.
Article 773 The contractor may assign an ancillary work task under the contract to a third party for completion. Where the contractor assigns an auxiliary work task under the contract to a third party for completion, the contractor shall be liable to the party which has placed the order for the work results completed by the third party.
Article 774 Where the contractor is to supply the materials, it shall select the materials under the contract and shall make such materials available for inspection by the party which has placed the order.
Article 775 Where the party which has placed the order is to supply the materials, it shall supply the materials under the contract. The contractor shall inspect the materials supplied by the party which has placed the order in time and shall, if discovering that they do not conform to the terms of the contract, instruct in time the party which has placed the order to replace or supplement the materials or take other remedial measures.The contractor may neither, without authorization, replace materials supplied by the party which has placed the order nor replace components which do not need to be repaired.
Article 776 Where the contractor discovers that the drawings or technical requirements provided by the party which has placed the order are unreasonable, it shall notify the party which has placed the order in a timely manner. Where the contractor suffers losses because the party which has placed the order is negligent in making a reply or for other reasons, the said party shall provide compensation for the contractor’s losses.
Article 777 Where the party which has placed the order changes its requirements for the contracted work while the work is under way, thereby causing losses to the contractor, the party which has placed the order shall be liable for making compensation.
Article 778 Where the performance of the contracted work requires assistance of the party which has placed the order, the party which has placed the order shall have the obligation to provide assistance. Where the contracted work is unable to be completed due to the party which has placed the order’s failure in fulfilling its obligation of assistance, the contractor may urge the party which has placed the order to perform its obligation within a reasonable time limit and may extend the term of its performance; where the party which has placed the order fails to perform such obligation within the time limit, the contractor may rescind the contract.
Article 779 During the period of working, the contractor shall accept the necessary supervision over and inspection of the work by the party which has placed the order. The supervision and inspection by the party which has placed the order may not obstruct the contractor’s normal work.
Article 780 Upon the completion of the contracted work, the contractor shall deliver the work results to the party which has placed the order, and shall submit necessary technical materials and the relevant quality certificate. The party which has placed the order shall conduct acceptance inspection of the work results.
Article 781 Where the work results delivered by the contractor fail to meet the quality requirements, the party which has placed the order may reasonably choose to request the contractor to assume such liability for breach of contract as maintenance and repair, reprocessing, and reduction in remuneration and compensation.
Article 782 The party which has placed the order shall pay remuneration within the agreed time limits. Where there has been no agreement, or no clear agreement, on the deadlines for the payment of remuneration, and the said deadlines cannot be determined by reference to the provisions of Article 510 hereof, the said party shall pay remuneration at the same time that the contractor delivers the work product; where the work product is only delivered in part, the said party shall pay a corresponding amount.
Article 783 Where the party which has placed the order has not made remuneration payments or payments of materials expenses, etc., to the contractor, the contractor shall enjoy a lien over the completed work product or shall have the right to refuse delivery, except where the parties agree otherwise.
Article 784 The contractor shall keep the materials supplied by the party which has placed the order and the work results completed with due care, and shall be liable for compensation in case of any damage or loss due to improper care.
Article 785. The contractor shall maintain confidentiality in accordance with the requirements of the party which has placed the order, and may not retain replicas or technical information without the consent of the said party.
Article 786 Joint contractors shall bear joint and several liability to the party which has placed the order, except where the parties agree otherwise.
Article 787 The party which has placed the order may rescind the contract at any time prior to the contractor completing work, but the said party shall provide compensation for any losses suffered by the contractor as a result.
Chapter 18 Contracts for Construction Projects
Article 788 A contract for construction project is a contract whereby the contractor performs engineering construction, and the contract letting party pays the price.Contracts for construction projects include contracts for survey, design, and construction.
Article 789 A contract for construction project shall be in written form.
Article 790 Bidding for a construction project shall be conducted in an open, fair and impartial manner in accordance with the relevant laws.
Article 791 The contract letting party may conclude a contract for a construction project with a prime contractor, and may also conclude separate surveying, design and construction work contracts with surveyors, designers and builders. The contract letting party may not divide a construction project which should be completed by one contractor into several parts and contract them out to several contractors.Subject to consent by the contract letting party, the prime contractor or the contractor for survey, design, or construction may assign part of the work contracted thereby to a third party for completion. The third party and the prime contractor or the contractor for survey, design, or construction shall be jointly and severally liable to the contract letting party in respect of the work product completed by such third party. A contractor may not subcontract the entire contracted construction project to a third party, nor may it divide up the entire contracted construction project into several parts and separately subcontract each part to a third party in the name of subcontracting.
A contractor is prohibited from subcontracting a project to an entity without the appropriate qualifications. Subcontractors are prohibited from further subcontracting their subcontracted work. The main structure of a construction project must be constructed by the contractor itself.
Article 792 Contracts for major construction projects of the State shall be concluded in accordance with the procedures provided by the State and the investment plans, feasibility study reports and other documents approved by the State.
Article 793 For a construction project contract that is null and void but passes the acceptance inspection, the contractor may be compensated with reference to the agreement on the construction price in the contract.Where a construction project contract is null and void, and the construction project fails to pass the acceptance inspection, the following provisions shall apply:
(I)If the restored construction project passes the acceptance inspection, the contract letting party may request the contractor to bear the costs of the restoration; or
(II) If the repaired construction project fails to pass the acceptance inspection, the contractor has no right to claim compensation at the agreed price of the project in the contract.
Where the contract letting party has any fault for the loss caused by the substandard construction project, it shall bear the corresponding liability.
Article 794 The contents of a survey and design contract generally include terms such as the time limit for the submission of documents such as basic information and estimated budget, quality requirements, fees and other conditions of cooperation, etc.
Article 795 The contents of a construction contract generally include terms such as scope of work, construction period, the commencement and completion time of work to be delivered in the interim, project quality, project costs, the time of delivery of technical materials, responsibility for the supply of materials and equipment, appropriation and settlement, completion acceptance, scope and period of quality warranty, mutual assistance, etc.
Article 796 Where a construction project is subject to supervision, the contract letting party shall enter into contract for project supervision with a supervisor in writing. The rights, obligations and legal liability of the said party and the supervisor shall comply with the provisions of this Part governing contracts for commission and other relevant laws and administrative regulations.
Article 797 The contract letting party may inspect the progress and quality of the work at any time provided that it does not interfere with the contractor’s normal operation.
Article 798 In the case of concealed work, the contractor shall give the contract letting party notice for inspection prior to concealment. Where the said party fails to timely conduct inspection, the contractor may extend the relevant project milestones, and is entitled to claim damages for work stoppage or work slowdown, etc.
Article 799 The contract letting party shall, upon completion of construction, pursuant to the drawings and specifications, completion acceptance rules and standards for quality inspection issued by the State, process the acceptance in time. Once the construction project has passed the acceptance inspection, the contract letting party shall pay the prescribed price and accept the construction project.A construction project may be delivered for use only after it has passed the acceptance inspection; no construction project may be delivered for use without being inspected or passing the acceptance inspection.
Article 800 Where the contract letting party suffers any loss from construction delay due to non-compliance of the survey or design or due to delayed delivery of the survey or design documents, the surveyor or the designer shall continue to improve the survey or design, reduce or forgo the survey fee or design fee, and pay damages.
Article 801 Where a construction project fails to meet the prescribed quality requirements due to any reason attributable to the constructor, the contract letting party is entitled to require the constructor to repair, re-construct or make modification free of charge within a reasonable time limit. Where delivery of the project is delayed due to such repair, re-construction or modification, the constructor shall be liable for breach of contract.
Article 802 Where a construction project caused personal injury and property losses during its reasonable usage period due to any reason attributable to the contractor, the contractor shall be liable for compensation.
Article 803 Where the contract letting party fails to provide raw materials, equipment, site, funds, or technical information at the prescribed time and in accordance with the contractual requirements, the contractor may extend the relevant project milestones, and is entitled to claim damages for work stoppage or work slowdown, etc.
Article 804 Where an ongoing project is stopped or delayed due to any reason attributable to the contract letting party, the said party shall take the appropriate measures to make up or mitigate the loss, and shall indemnify the contractor for its loss and out-of-pocket expenses arising from resulting work stoppage, slowdown, reshipment, re-dispatch of mechanical equipment, and excess inventory of materials and components.
Article 805 Where in the course of survey or design, any repeating work, work stoppage or change of design occurs due to the contract letting party’s change of plan, the incorrect information provided by it, or its failure to provide the working conditions necessary for the survey or design at the prescribed time, the said party shall increase its payments in light of the actual amount of work done by the surveyor or designer.
Article 806 Where a contractor assigns the contract for or illegally subcontracts a construction project, the contract letting party may rescind the contract.Where the main building materials, building structural pieces and parts and equipment provided by the contract letting party fail to conform to the compulsory standards or the said party fail to perform assistance obligations, resulting in the contractor’s failure of construction and the failure of performance of corresponding obligations within a reasonable period after being urged, the contractor may rescind the contract.
If, after the contract is rescinded, the quality of the completed construction project is found to be up to standard, the contract letting party shall pay the agreed price for the project. If the quality of the completed construction project is found to be substandard, the matter shall be handled according mutatis mutandis to the provisions of Article 793 hereof.
Article 807 Where the contract letting party fails to pay the price under the contract, the contractor may urge the said party to pay the price within a reasonable period. If the said party has not made such payments within the specified period, then except where it is not appropriate to conduct a sale at a depreciated price or an auction, due to the nature of the construction project, the contractor may conclude an agreement with the said party to sell the construction project at a depreciated price, or may request a people’s court to auction the project in accordance with the law. The construction project price shall be paid in priority with the proceeds from the liquidation or auction of the project.
Article 808 Matters not provided for in this Chapter shall be governed by the relevant provision governing contracts for work.
Chapter 19 Contracts of Carriage
Article 809 A contract of carriage is a contract whereby the carrier carries passengers or cargos from the starting place of carriage to the agreed destination, and the passengers, consignor or consignee pays the ticket fare or the freight.
Article 810 A carrier engaged in public transportation may not refuse the normal and reasonable carriage request of a passenger or consignor.
Article 811 The carrier shall safely carry the passengers or cargos to the agreed destination within the agreed time limit or within a reasonable time.
Article 812 The carrier shall carry the passengers or cargos to the agreed destination via the agreed route or the customary carriage route.
Article 813 A passenger, a consignor or a consignee shall pay for the ticket fare or the freight. Where a carrier has not taken the agreed or customary carriage route, and consequently increases the ticket fare or the freight, the passenger, the consignor or the consignee may refuse to pay for the increased part of the ticket fare or the freight.
Section 2 Contracts of Carriage of Passengers
Article 814 A contract of carriage of passengers is established at the time when the carrier issues the ticket to the passenger except as otherwise agreed upon by the parties or there are other transaction practices.
Article 815 A passenger shall board the means of transportation pursuant to the time, flight and seat number recorded on the valid ticket. Where a passenger travels without a ticket, travels a longer distance or exceeds the class or travels on a preferential ticket which does not comply with the terms of price reduction, the passenger shall pay the excess ticket fare retrospectively and the carrier may collect the additional ticket fare pursuant to the provisions; where the passenger fails to pay the ticket fare, the carrier may refuse to undertake the carriage.Where a passenger under a real-name contract of carriage of passengers loses his or her passenger ticket, he or she may request that the carrier report the loss and reissue a ticket, and the carrier shall not collect ticket fares or other unreasonable fees again.
Article 816 Where the passenger is unable to board the means of transportation at the time stated on the passenger ticket due to any reason attributable to himself or herself, he or she shall go through the formalities for ticket refund or change within the agreed time limit. Where the formalities are gone through beyond the time limit, the carrier may refuse to refund the ticket fare, and no longer bear the obligation of carriage.
Article 817 The carry-on baggage of a passenger shall be in conformity with the agreed limit of quantity and the requirements for the category; if the baggage exceeds the limit of quantity or is carried in violation of the requirements for the category, the passenger shall complete the formalities for check-in baggage.
Article 818 The passenger may not carry in person or place in his or her baggage any dangerous articles which are flammable, explosive, toxic, corrosive, or radioactive as well as those that might endanger the safety of life and property on board the means of transportation or contraband articles.If a passenger violates the provisions of the preceding paragraph, the carrier may discharge the dangerous articles or contraband articles, destroy them or send them to the relevant departments. Where the passenger insists on carrying in person or placing in his or her baggage dangerous articles or contraband articles, the carrier shall refuse to undertake the carriage.
Article 819 The carrier shall strictly fulfill its obligation of safe carriage and timely inform the passenger of the matters which need to be noted in connection with safe carriage. The passenger shall give active assistance and be cooperative in the reasonable arrangements made by the carrier for safe carriage.
Article 820 A carrier shall transport passengers in accordance with the time, flight and seat number recorded on the valid ticket. Where the carrier delays in carriage or cannot normally conduct the carriage, it shall inform and remind the passenger in a timely manner, take necessary measures for arrangement, and shall, at the request of the passenger, arrange the passenger to change to another flight, or refund the ticket; the carrier shall be liable for compensation for any losses thus caused to the passenger, unless such losses are not attributable to the carrier.
Article 821 Where the carrier unilaterally lowers the standards of service, it shall, upon the passenger’s request, refund the ticket fare or reduce the ticket fare; where the standards of service are raised, no additional ticket fare may be charged.
Article 822 In the course of carriage, the carrier shall give its best efforts to assist the passenger who suffers from acute diseases, or who is giving birth to a baby or whose life is in danger.
Article 823 The carrier shall be liable for compensation for the death of or personal injury to the passenger in the course of carriage, except where such death or personal injury results from the passenger’s own health problem, or the carrier proves that such death or personal injury is caused by the passenger’s intentional misconduct or gross negligence.The provisions of the preceding paragraph shall apply to a passenger who, in accordance with the relevant provisions, is exempted from buying a ticket, holds a preferential ticket, or is permitted by the carrier to be on board without a ticket.
Article 824 Where articles that the passenger carries with him or her on board are damaged or lost during the period of carriage, the carrier shall be liable for compensation if the carrier has committed faults.Where the check-in baggage of a passenger is damaged or lost, the relevant provisions on the carriage of cargos shall apply.
Section 3 Contracts of Carriage of Cargos
Article 825 In undergoing the formalities for carriage of cargos, the consignor shall precisely indicate to the carrier the personal name or the name of the consignee or the consignee by order, the name, nature, weight, quantity and the place for taking delivery of the cargos, and other information necessary for carriage of cargos.Where a carrier suffers losses due to untrue declaration or omission of important information by the consignor, the consignor shall bear the liability for compensation.
Article 826 Where carriage of the cargo is subject to such procedures as examination and approval or inspection, the consignor shall submit to the carrier the documents of fulfillment of the relevant procedures.
Article 827 A consignor shall pack the cargos in accordance with agreed packaging methods. Where there has been no agreement or no clear agreement on packaging methods, the provisions of Article 619 hereof shall be applied.Where the consignor violates the provisions of the preceding paragraph, the carrier may refuse to undertake the carriage.
Article 828 In consigning any dangerous articles which are inflammable, explosive, toxic, corrosive, or radioactive, the consignor shall, in accordance with the provisions of the State on the carriage of dangerous articles, properly pack the dangerous articles and affix thereon signs and labels for dangerous articles, and shall submit the written documents relating to the name and nature of the dangerous articles as well as the precautionary measures to the carrier.Where the consignor violates the provisions of the preceding paragraph, the carrier may refuse to undertake the carriage, or take corresponding measures to avoid losses, and expenses thus caused shall be borne by the consignor.
Article 829 Before the carrier delivers the cargos to the consignee, the consignor may request the carrier to suspend the carriage, return the cargos, change the destination or deliver the cargos to another consignee. However, the consignor shall compensate the carrier for losses thus caused.
Article 830 Upon arrival of the cargos, if the carrier has the knowledge of the consignee, it shall timely notify the consignee and the consignee shall timely take delivery. If the consignee fails to take delivery of the goods within the prescribed time limit, the consignee shall pay the carrier storage fees and other expenses.
Article 831 Upon taking delivery of the cargos, the consignee shall inspect the cargos at the agreed time. Where there is no agreement in the contract on the time limit or such agreement is unclear, nor can it be determined in accordance with Article 510 hereof, the consignee shall inspect the goods within a reasonable time limit. The failure of the consignee to raise any objection against the quantity or any damage of the cargos within the agreed time limit or within a reasonable time limit is deemed as prima facie evidence that the carrier has delivered the cargos in conformity with the description in the transport documents.
Article 832 The carrier shall be liable for the damage to or loss of the cargos in the course of carriage. However, the carrier shall not be liable if it proves that the damage to or loss of the cargos is caused by force majeure, the intrinsic characteristics of the cargos, reasonable wear and tear, or the fault of the consignor or consignee.
Article 833 Where the parties agree on the amount of damages payable in case of damage to or loss of the cargos, the damages payable is the agreed amount; if the amount of damages is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 510 hereof, it shall be calculated on the basis of the prevailing market price at the destination when the cargos are or ought to be delivered. However, where laws and administrative regulations provide otherwise with respect to the method of calculation of damages and the limit of the amount of damages, such provisions shall prevail.
Article 834 Where two or more carriers jointly carry the cargos using the same means of transportation, the carrier contracting with the consignor shall bear the liability for the whole course of carriage; if the losses occur at a particular segment, the carrier contracting with the consignor and the carrier operating on that segment shall be jointly and severally liable.
Article 835 Where the cargos are lost in the course of carriage due to force majeure, if the freight has not been collected, the carrier may not request the payment thereof; if the freight has been collected, the consignor may request the refund of the freight. Where the laws provide otherwise, such provisions shall prevail.
Article 836 Where the consignor or the consignee fails to pay the freight, storage fees or other expenses, the carrier is entitled to have a lien on the relevant carried cargos, except as otherwise agreed upon by the parties.
Article 837 Where the consignee is not known or refuses to take delivery of the cargos without justified reasons, the carrier may place the cargos in escrow according to law.
Section 4 Multi-modal Transport Contracts
Article 838 A multi-modal transport operator is responsible for performing or organizing the performance of a multimodal transport contract, and it enjoys the rights and bears the obligations of a carrier with respect to the whole course of transport.
Article 839 The multimodal transport operator may agree with the carriers participating in each segment of the multimodal transport on their mutual responsibilities with respect to each segment of the transport of the multimodal transport contract. However, such an agreement shall not affect the obligations of the multimodal transport operator with respect to the whole course of transport.
Article 840 Upon receipt of the cargos delivered by the consignor, the multi-modal transport operator shall issue thereto a multi-modal transport document. The multi-modal transport document may, as required by the consignor, be either negotiable or non-negotiable.
Article 841 Where the multi-modal transport operator suffers any loss due to the fault of the consignor in the course of consigning the cargos, the consignor shall be liable for compensation notwithstanding its subsequent assignment of the multi-modal transport document.
Article 842 If damage to or loss of the cargos occurred in a particular segment of the course of a multi-modal transport, the multi-modal transport operator’s liability for damages and any limitation thereon shall be governed by relevant provisions governing the mode of transport in this segment; if the segment in which the damage to or loss of the cargos occurred cannot be determined, the operator shall be liable for damages in accordance with the provisions of this Chapter.
Chapter 20 Technology Contracts
Article 843 A technology contract is a contract that the parties conclude for establishing their rights and obligations in respect of technology development, assignment, license, consulting or service.
Article 844 The conclusion of a technology contract shall be conducive to the protection of intellectual property rights as well as scientific and technological progress, and promote the research and development, transformation, application and popularization of scientific and technological achievements.
Article 845 The contents of a technology contract shall generally include clauses dealing with the name of the project, the content, scope and requirements of the subject matter, the plan, location and method of performance, the confidentiality of technical information and data, the ownership of technical achievements and the method of profit distribution, standards and methods of examination and acceptance, and explanation of terms and phrases.The parties may agree to include the following materials relating to the performance of the contract as an integral part thereof: technical background information, feasibility studies and technical evaluation report, project charter and project plan, technical standard, technical specifications, original design and technique documents, as well as other technical documentation.
Where a technology contract involves a patent, the name of the invention or creation, the patent applicant and the patentee, the date of application, the number of application, the patent number as well as the term of validity of the patent right shall be indicated.
Article 846 The method for payment of the price, remuneration or royalties under a technology contract shall be agreed upon by the parties, who may agree upon lump-sum payment based on one-time calculation or installment payment based on one-time calculation, and may also agree upon royalty payment or royalty payment plus advance payment of initial fee.Where royalty payment is agreed, the said amount may be calculated according to a fixed percentage of the product’s price, of any increase in output or profit following the exploitation of the patent or the use of the technical secret, or of the product’s sales volume, or according to other agreed methods. The royalty payment may be made at a fixed rate, or on the basis of an increasing or decreasing rate year by year.
Where royalty payment is agreed, the parties may agree on a method for access to the relevant accounts.
Article 847 Where the right to use and the right to assign job-related technological achievement belong to a legal person or an unincorporated organization, such legal person or unincorporated organization may enter into a technology contract in respect of such job-related technological achievement. If the legal person or unincorporated organization concludes a technology contract to assign the job-related technological achievement, the individual who has accomplished this achievement shall have the priority to be the assignee under the same conditions.A job-related technological achievement refers to a technological achievement accomplished in the process of carrying out the task assigned by a legal person or an unincorporated organization, or by mainly using the material and technological resources thereof.
Article 848 The right to use and assign a non-job-related technological achievement shall belong to the individual who has accomplished it. The individual may conclude a technology contract in respect of such a non-job-related technological achievement.
Article 849 An individual who has accomplished a technological achievement shall have the right to be named as such in the documents concerning the technological achievement and the right to receive certificates of honor and awards for the achievement.
Article 850 A technology contract which illegally monopolizes technology or infringes on the technology of a third party is invalid.
Section 2 Technology Development Contracts
Article 851 A technology development contract is a contract concluded between parties in respect of the research and development of new technologies, new products, new techniques, new varieties or new materials and the associated system.Technology development contracts include commissioned development contracts and cooperative development contracts.
A technology development contract shall be in written form.
A contract on the transformation of a scientific and technological achievement with practical value shall be governed mutatis mutandis by the relevant provisions on technology development contracts.
Article 852 The principal to a commissioned development contract shall, as agreed in the contract, provide research and development funds and remuneration, supply technical materials, set development requirements, complete tasks of cooperation and accept the research and development achievement.
Article 853 The developer under a commissioned development contract shall, as agreed in the contract, prepare and implement the research and development plan, use research and development funds in a reasonable manner, timely complete the research and development and deliver the research and development achievement, as well as provide the relevant technical materials and necessary technical guidance so as to help the principal master the research and development achievement.
Article 854 Where a party to a commissioned development contract breaches the contract, thereby causing stoppage, delay or failure of the research and development, it shall be liable for the breach of contract.
Article 855 Parties to a cooperative development contract shall, as agreed in the contract, make their investment, including investment of technology, participate in the research and development by performing their respective tasks and cooperate with each other in the research and development.
Article 856 Where a party to a cooperative development contract breaches the contract, thereby causing stoppage, delay or failure of the research and development, it shall be liable for the breach of contract.
Article 857 If the technology which is the subject matter of a technology development contract is made public by a third party, thereby making the performance of the technology development contract meaningless, the parties may rescind the contract.
Article 858 If, in the course of performing a technology development contract, the research and development is failed in whole or in part due to any insurmountable technical difficulty, such risks shall be agreed upon by the parties. If there is no such agreement in the contract or such agreement is unclear, nor can they be determined in accordance with the provisions of Article 510 hereof, such risks shall be shared reasonably by the parties.If a party discovers circumstances which are likely to result in a failure or partial failure in research and development as stipulated in the preceding paragraph, it should promptly notify the other party and adopt appropriate measures to reduce the loss. If the loss is increased as a result of a failure to promptly notify the other party and adopt appropriate measures, the party shall bear liability for the additional loss.
Article 859 With respect to an invention or creation accomplished in the performance of a commissioned development, the right to apply for a patent belongs to the party that undertakes the research and development, except as otherwise provided for by law or agreed upon by the parties. Where the party which has undertaken the research and development is granted a patent, the principal may exploit such patent in accordance with the law.If the party which has undertaken the research and development assigns its right to apply for a patent, the principal shall enjoy the priority to acquire the assignment on equal terms.
Article 860 For an invention or creation accomplished in cooperative development, the right to apply for a patent shall be jointly owned by the parties to the cooperative development. If one of the parties assigns its jointly owned right to apply for a patent, the other parties shall have a priority right to be assigned on equal terms. However, if the parties have agreed otherwise, such agreement shall prevail.If a party in the cooperative development declares that it waives its joint right to apply for a patent, the patent may be applied for independently by the other party or jointly by the other parties, unless otherwise agreed upon by the parties. If a patent is granted to the applicant, the party that waives its right to apply for the patent may exploit the patent for free.
If a party in the cooperative development does not agree to apply for a patent, the other party or parties may not apply for it.
Article 861 The right to use and assign the technical secret resulting from a commissioned or cooperative development, and the method for distribution of the benefits accrued therefrom shall be agreed upon by the parties. Where there is no such agreement in the contract or such agreement is unclear, nor can they be determined in accordance with the provisions of Article 510 hereof, the parties shall all have the right to use and assign the technical secret prior to the grant of the patent right for the same technical solution. However, the party that are entrusted to undertake research and development may not assign the research and development achievements to a third party before delivering them to the principal.
Section 3 Technology Assignment Contracts and Technology License Contracts
Article 862 A technology assignment contract is a contract whereby a right holder lawfully owning a technology assign to others the relevant rights and interests in respect of a specific patent, patent application or technical secret.A technology license contract is a contract whereby the lawful owner of the technology authorizes others to exploit and use the particular patent and technical secret.
The agreements on provision of special equipment and raw materials for implementation of technology or provision of relevant technical consultation and service in technology assignment contract and technology license contract are integral parts of the contract.
Article 863 Technology assignment contracts include contracts for the assignment of patent, assignment of patent application right, assignment of technical secrets, etc.Technology license contracts include contracts for patent exploitation license, contracts for license of use of technical secrets, etc.
Technology assignment contracts and technology license contracts shall be in written form.
Article 864 Technology assignment contracts and technology license contracts may stipulate the scope of exploitation of patents or use of technical secrets, provided that they do not restrict technological competition and technological development.
Article 865 The contract for patent exploitation license is only valid for the term of the patent. Where the term of the patent expires or the patent is declared invalid, the patentee may not conclude a contract for patent exploitation license with another person.
Article 866 The licensor under a contract for patent exploitation license shall, as agreed in the contract, license the patent to the licensee, deliver the technical materials related to the exploitation of the patent, and provide the necessary technical guidance.
Article 867 The licensee under a contract for patent exploitation license shall exploit the patent as agreed in the contract and may not license the patent to any third party except as agreed in the contract, and shall pay the royalties in accordance with the contract.
Article 868 The assignor under a contract for assignment of technical secret and the licensor under a contract for license of use of technical secret shall, in accordance with the contract, supply the technical materials, provide technical guidance, guarantee the practical applicability and reliability of the technology, and undertake the obligation of confidentiality.The obligation of confidentiality stipulated in the preceding paragraph shall not restrict patent application by the licensor, unless otherwise agreed between the parties.
Article 869 The assignee under a contract for assignment of technical secret and the licensee under a contract for license of use of technical secret shall, in accordance with the contract, use the technology, pay the assignment fee and royalties and undertake the obligation of confidentiality.
Article 870 The assignor under a technology assignment contract or the licensor under a technology license contract shall guarantee that it is the lawful owner of the technology provided, and shall guarantee that the technology provided is complete, free from error, effective, and capable of achieving the prescribed goals.
Article 871 The assignee under a technology assignment contract and the licensee under a technology license contract shall, in conformity with the scope and the time period as agreed upon in the contract, undertake the obligation of confidentiality in respect of the secret portion of the technology that is not made public provided by the assignor or the licensor.
Article 872 Where the licensor fails to license technology in accordance with the contract, it shall refund the royalties in part or in whole, and shall be liable for the breach of contract; where the licensor exploits the patent or uses the technical secret beyond the agreed scope, or, without authorization, licenses a third party to exploit the patent or use the technical secret in violation of the contract, it shall cease the breach and be liable for the breach of contract; where the licensor breaches any agreed obligation of confidentiality, it shall be liable for the breach of contract.The provisions of the preceding paragraph shall apply mutatis mutandis to the assignor’s liability for the breach of contract.
Article 873 Where the licensee fails to pay the agreed royalties, it shall pay the overdue royalties and pay liquidated damages in accordance with the contract; where it fails to pay the overdue royalties and liquidated damages, it shall cease exploitation of the patent or use of the technical secret, return the technical materials, and be liable for the breach of contract; where the licensee exploits the patent or uses the technical secret beyond the agreed scope, or unilaterally allows the patent to be exploited or the technical secret to be used by a third party without consent of the licensor, it shall cease the breach and be liable for the breach of contract; where the licensee breaches any agreed confidentiality obligation, it shall be liable for the breach of contract.The provisions of the preceding paragraph apply mutatis mutandis to the liability for breach of contract borne by the assignee.
Article 874 Where the exploitation of a patent or the use of a technical secret by the assignee or licensee in accordance with the contract infringes on the legitimate rights and interests of another person, the assignor or the licensor shall bear the liability, unless the parties have agreed otherwise.
Article 875 The parties may, on the basis of mutual benefit, provide in the contract for the method of sharing any subsequent improvement made in the exploitation of the patent or the use of the technical secret. Where there is no such agreement or such agreement is unclear, nor can it be determined in accordance with the provisions of Article 510 hereof, the other parties shall have no right to share any subsequent improvement made by one party.
Article 876 The relevant provisions of this Section shall apply mutatis mutandis to the assignment and license of exclusive rights to integrated circuit layout designs, rights to new plant varieties, computer software copyrights and other intellectual property rights.
Article 877 Where the relevant laws or administrative regulations provide otherwise in respect of technology import or export contracts or in respect of patent contracts or contracts for patent application, such provisions shall prevail.
Section 4 Technical Consulting Contracts and Technical Service Contracts
Article 878 A technical consulting contract refers to a contract whereby one party provides for the other party feasibility studies, technical forecasts, specialized technical investigations and analysis and evaluation reports, etc. in respect of a specific technical project by utilizing its technical knowledge.A technical service contract is a contract whereby one party solves a particular technical problem for the other party by utilizing its technical knowledge, excluding a contract of lease expensed work or a contract for construction project.
Article 879 The principal under a technical consulting contract shall, as agreed in the contract, describe the problem on which consultancy is sought, provide the technical background information and the relevant technical materials, accept from the consulting service provider its work result and pay the remuneration.
Article 880 The consulting service provider under a technical consulting contract shall complete the consultancy report or answer the questions raised by the principal within the agreed period of time, and the consultancy report thus submitted shall meet the requirements set forth in the contract.
Article 881 Where the principal under a technical consulting contract fails to provide the necessary materials as agreed in the contract, thereby impairing the progress and quality of the work, or fails to accept or delays in accepting the work result, it may not claim refund of the remuneration paid, and shall pay any unpaid remuneration.If the consulting service provider under a technical consulting contract fails to submit the consultancy report on schedule or the report thus submitted does not meet the requirements as agreed in the contract, the consulting service provider shall bear the liability for breach of contract by way of reduction or waiver of the remuneration thereof.
The principal under a technical consulting contract shall bear any loss resulting from any decision made by it based on the consultancy report and opinion provided by the consulting service provider in conformity with the requirements of the contract, unless the parties have agreed otherwise.
Article 882 The principal under a technical service contract shall, as agreed in the contract, provide the work facilities, complete its tasks of cooperation, accept the work results and pay the remuneration.
Article 883 The consulting service provider under a technical service contract shall, as agreed in the contract, complete the services, solve the technical problem, guarantee the quality of its work, and communicate the knowledge for solving the technical problem.
Article 884 Where the principal under a technical service contract fails to perform its contractual obligations, or the performance of obligation is not in conformity with the contract, thereby impairing the progress and quality of the work, or fails to accept or delays in accepting the work results, it may not claim refund of the remuneration paid, and shall pay any unpaid remuneration.Where the consulting service provider under a technical service contract fails to complete services as agreed in the contract, it shall be liable for the breach of contract by way of waiver of the remuneration, etc.
Article 885 Any new technological achievement accomplished by the consulting service provider in the performance of a technical consulting contract or a technical service contract by using the technological materials and work facilities provided by the principal shall belong to the consulting service provider. Any new technological achievements achieved by the principal through the use of the work results of the consulting service provider shall belong to the principal. Where the parties agree otherwise, their agreement shall prevail.
Article 886 Where there is no agreement in the technical consulting contracts or the technical service contracts on bearing the expenses needed for the consulting service provider to carry out the normal work, or such agreement is not clear, the said expenses shall be borne by the consulting service provider.
Article 887 Where laws and administrative regulations provide otherwise with respect to contracts for technology intermediary contracts and technical training contracts, such provisions shall prevail.
Chapter 21 Contracts for Safekeeping
Article 888 A contract for safekeeping is a contract whereby the keeper keeps the articles delivered by the person who has his or her articles kept, and eventually returns such articles thereto.Where the person who has his or her articles kept goes to the keeper for shopping, dining, lodging or other activities, and keeps his or her articles at a designated place, it is deemed as safekeeping, except as otherwise agreed by the parties or there are other transaction practices.
Article 889 The person who has his or her articles kept shall pay keeping expenses to the keeper in accordance with the agreement.Where there is no agreement in the contract on keeping expenses or such agreement is unclear, nor can such expenses be determined in accordance with the provisions of Article 510 hereof, the safekeeping shall be deemed as free of charge.
Article 890 A contract for safekeeping is concluded from the time the articles under keeping are delivered, except where the parties agree otherwise.
Article 891 Upon the delivery of the articles under keeping by the person who has his or her articles kept to the keeper, the keeper shall issue a safekeeping voucher, except for situations where there are other transaction practices.
Article 892 The keeper shall properly keep the articles under keeping.The parties may agree on the place or method of keeping. The place or method of keeping may not be changed without authorization, except in an emergency situation or in order to protect the interests of the person who has his or her articles kept.
Article 893 Where the articles delivered by the person who has his or her articles kept for safekeeping has defects, or special measures need to be taken due to the nature of the articles, the person who has his or her articles kept shall inform the keeper of the relevant situation. Where the person who has his or her articles kept fails to inform the keeper such information and causes damage to the articles under keeping, the keeper shall not be liable for compensation. Where the keeper suffers any loss as a result of such failure, the person who has his or her articles kept shall be liable for compensation, except where the keeper is, or ought to be, aware of the situation and fails to take remedial measures.
Article 894 The keeper shall not be permitted to pass on the articles under keeping to a third party for keeping, except where the parties agree otherwise.Where the keeper, in violation of the provisions of the preceding paragraph, transfers the articles under keeping to a third party for keeping, thereby causing damage to the articles under keeping, the keeper shall be liable for compensation.
Article 895 The keeper shall not use the articles under keeping or permit a third party to use the articles under keeping, except where the parties agree otherwise.
Article 896 Where a third party makes a claim on the articles under keeping, the keeper shall perform its obligation of returning the articles under keeping to the person who has his or her articles kept, except where preservation or enforcement measures shall be taken in relation to the articles under keeping in accordance with the law.Where a third party brings a lawsuit against the keeper or applies for seizure of the articles under keeping, the keeper shall timely notify the client.
Article 897 Where, during the period of custody, the articles under keeping are damaged or lost due to lack of due care by the keeper, the keeper shall be liable for compensation. However, if the keeper proves that it has no intent or gross negligence, it shall not be liable for compensation.
Article 898 Where the person who has his or her articles kept is to keep money, negotiable securities or other valuables, it shall declare the case to the keeper, and the keeper shall inspect them before acceptance or seal them up; if the person who has his or her articles kept fails to declare the case, after the said valuables are damaged or lost, the keeper may compensate for them as if they are ordinary goods.
Article 899 The person who has his or her articles kept may collect the articles under keeping at any time.Where there is no agreement between the parties in the contract on the period of keeping or such agreement is not clear, the keeper may, at any time, request the person who has his or her articles kept to collect the articles under keeping; where there is such an agreement on the period of keeping, the keeper may not, without special reasons, request the person who has his or her articles kept to collect the articles under keeping ahead of time.
Article 900 At the expiry of the period of keeping or if the person who has his or her articles kept collects the articles under keeping before the expiry of the period of keeping, the keeper shall return the original item together with any fruit thereof to the client.
Article 901 Where the keeper keeps money, it may return money of the same type and quantity; where it keeps other fungible goods, it may return articles of the same type, quality and quantity in accordance with the terms of the contract.
Article 902 With respect to non-gratuitous contracts for safekeeping, the person who has his or her articles kept shall pay keeping expenses to the keeper in accordance with the agreed time.Where the time of payment of keeping expenses is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 510 hereof, the keeping expenses shall be paid at the same time when the articles under keeping are collected.
Article 903 Where the person who has his or her articles kept fails to pay keeping expenses or other fees as agreed by the parties, the keeper shall enjoy a lien over the articles under keeping, except where the parties agree otherwise.
Chapter 22 Contracts for Warehousing
Article 904 A warehousing contract is a contract whereby the warehousing service provider stores the goods delivered by the client, and the client pays the warehousing fee.
Article 905 A warehousing contract is established when there is a consensus between the warehousing service provider and the client.
Article 906 Where a client intends to store any dangerous goods which are inflammable, explosive, toxic, corrosive, or radioactive, etc., or any goods susceptible to deterioration, it shall indicate the nature of such goods and provide the relevant information.Where the client violates the provisions of the preceding paragraph, the warehousing service provider may reject the goods to be stored, or take corresponding measures to avoid losses, and expenses thus incurred shall be borne by the client.
Where the warehousing service provider intends to store any dangerous goods that are inflammable, explosive, toxic, corrosive, or radioactive, etc., it shall have the appropriate storage facilities.
Article 907 The warehousing service provider shall, as agreed, conduct inspection and acceptance procedures with respect to goods entering the warehouse for storage. Where the warehousing service provider discovers in the course of inspection and acceptance that the goods entering the warehouse for storage do not conform to the terms of the contract, it shall timely notify the client. After inspection and acceptance by the warehousing service provider, if it is discovered that the type, quantity or quality of the stored goods is not in conformity with the terms of the contract, the warehousing service provider shall be liable for compensation.
Article 908 Upon the client ‘s delivery of the goods to be stored, the warehousing service provider shall issue the warehouse receipt, warehousing entry order and other vouchers.
Article 909 The warehousing service provider shall sign or affix its seal on the warehouse receipt. A warehouse receipt shall contain the following items:
(I) The personal name or name and domicile of the client;
(II) Type, quantity, quality and packaging of the stored goods and the number and labels thereof;
(III) Standards for wear and tear of the stored goods;
(VI) Warehousing fees;(VII)The insured amount, term of insurance and name of the insurer if the stored goods have been insured; and
(VIII) The applicant, place and date of filling in and issuance.
Article 910 The warehouse receipt is the voucher for collecting the goods. Where the client or the holder of the warehouse receipt endorses the warehouse receipt and the warehousing service provider signs or affixes its seal to the receipt, the right to collect the stored goods may be assigned.
Article 911 At the request of the client or the holder of the warehouse receipt, the warehousing service provider shall allow the said person to inspect the stored goods or take samples therefrom.
Article 912 Where the warehousing service provider discovers that the goods entering the warehouse for storage have deteriorated or are otherwise damaged, it shall timely notify the client or holder of the warehouse receipt.
Article 913 Where the warehousing service provider discovers that the warehoused goods are deteriorating or are otherwise damaged, thereby endangering the safety and normal storage of other stored goods, it shall demand disposal of the goods by the client or the holder of the warehouse receipt as necessary. In an emergency situation, the warehousing service provider may dispose of the goods as necessary. However, the client or holder of the warehouse receipt shall be notified of the situation promptly afterwards.
Article 914 Where there is no agreement in the contract between the parties on the period of storage or such agreement is not clear, the client or holder of the warehouse receipt may collect the stored goods at any time, and the warehousing service provider may also at any time require the client to collect the stored goods, provided that the other party shall be given the time required for preparation.
Article 915 At the expiry of the period of storage, the client or holder of the warehouse receipt shall collect the stored goods by presenting the warehouse receipt, warehousing entry order, or other documents. Where the client or holder of the warehouse receipt delays the collection of stored goods, additional warehousing fees shall be paid. If the goods are collected ahead of time, the warehousing fees shall not be reduced.
Article 916 Where the client or holder of the warehouse receipt fails to collect the stored goods at the expiry of the period of storage, the warehousing service provider may demand collection within a reasonable period; where the goods are still not collected at the expiry of the aforesaid reasonable period, the warehousing service provider may place the goods in escrow.
Article 917 If, during the period of storage, the stored goods are damaged or lost due to lack of due care, the warehousing service provider shall be liable for compensation. If the stored goods are deteriorated or damaged due to the intrinsic characteristics of the goods or inconformity of the packaging with the terms of the contract, or because the goods are stored beyond their valid period of storage, the warehousing service provider shall not be liable for compensation.
Article 918 Matters not provided for in this Chapter shall be governed by the relevant provision on custody contracts.
Chapter 23 Contracts for Commission
Article 919 A contract for commission refers to a contract whereby the commissioning party and the commissioned party agree that the commissioned party will handle the commissioning party’s affairs.
Article 920 The commissioning party may specifically appoint the commissioned party to handle one or more of its affairs, or generally appoint the commissioned party to handle all of its affairs.
Article 921 The commissioning party shall prepay the expenses for the handling of the commissioned affair. With respect to any advanced necessary expenses incurred by the commissioned party in the course of handling the commissioned affair, the commissioning party shall reimburse such expenses and pay interest thereof.
Article 922 The commissioned party shall handle the commissioned affairs according to the instruction of the commissioning party. Where it is necessary to alter the commissioning party’s instructions, the commissioning party’s consent shall be obtained; where an emergency arises and it is difficult to contact the commissioning party, the commissioned party shall properly handle the commissioned affairs, but after the event the commissioned party shall immediately report the situation to the commissioning party .
Article 923 The commissioned party shall handle the commissioned affairs personally. With the consent of the commissioning party, the commissioned party may entrust the agency to a third party. With the consent or subsequent ratification of the sub-entrustment, the commissioning party may directly instruct the commissioned third party to handle the commissioned affairs, and the commissioned party shall only bear the liability for its selection of the third party and the instructions it gives to the third party. Where the agency is commissioned without consent or subsequent confirmation, the commissioned party shall be liable for any act of the commissioned third party, except in an emergency where the commissioned party has to entrust the agency to a third party in order to safeguard the interests of the commissioning party.
Article 924 The commissioned party shall report the handling of the commissioned affairs at the request of the commissioning party. The commissioned party shall report the result of the commissioned affairs when the contract for commission is terminated.
Article 925 Where the commissioned party, acting within the scope of commission granted by the commissioning party, enter into a contract in its own name with a third party who is aware of the commission relationship between the commissioning party and commissioned party, the contract is directly binding upon the commissioning party and such third party, except where there is conclusive evidence establishing that the contract is only binding upon the commissioned party and such third party.
Article 926 Where the commissioned party concludes a contract in its own name with a third party and the third party has not been aware of the commission relationship between the commissioned party and the commissioning party, if the commissioned party fails to perform its obligation to the commissioning party due to any reason attributable to the third party, the commissioned party shall disclose to the commissioning party the existence of the third party, and the commissioning party may therefore exercise the commissioned party’s rights against the third party. However, there is an exception where the third party would not have entered into a contract with the commissioned party if it had been aware of the commissioning party when concluding the contract.Where the commissioned party fails to perform a duty owed to the third party due to a reason associated with the commissioning party, the commissioned party shall immediately disclose to the third party the existence of the commissioning party, and the third party may then choose either the commissioned party or the commissioning party as the counterparty against whom it claims its rights. However, the third party may not change its choice of counterparty.
If the commissioning party exercises the commissioned party’s rights to defenses against the third party, the third party may claim its defenses against the commissioned party to the commissioning party. If the third party opts to take the commissioning party as its counterparty, the commissioning party may claim its defenses against the commissioned party to the third party as well as the defenses of the commissioned party against the third party.
Article 927 Any property obtained by the commissioned party in the course of handling commissioned affairs shall be passed on to the commissioning party.
Article 928 Upon completion of the commissioned affairs by the commissioned party, the commissioning party shall pay remuneration to the commissioned party as agreed.Where, due to causes not attributable to the commissioned party, the contract for commission is rescinded or the commissioned affairs cannot be completed, the commissioning party shall pay the commissioned party corresponding remuneration. Where the parties agree otherwise, such agreement shall prevail.
Article 929 With respect to a non-gratuitous contract for commission, if the commissioning party suffers losses due to the fault of the commissioned party, the commissioning party may demand compensation for the losses sustained. Under a gratuitous contract for commission, if the commissioning party suffers any loss due to the commissioned party’s intentional misconduct or gross negligence, the commissioning party may demand compensation.The commissioned party shall provide compensation for losses sustained by the commissioning party as a result of the commissioned party acting in excess of its commission.
Article 930 If the commissioned party, in the course of handling the commissioned affairs, suffers any loss due to a reason not attributable to itself, the commissioned party may seek compensation from the commissioning party.
Article 931 With the consent of the commissioned party, the commissioning party may entrust a third party other than the commissioned party to handle the commissioned affairs. Where the commissioned party suffers any loss as a result thereof, the commissioned party may seek compensation from the commissioning party.
Article 932 Where two or more commissioned party s jointly handle the commissioned affairs, they shall be jointly and severally liable to the commissioning party.
Article 933 Either the commissioning party or the commissioned party may rescind the contract for commission at any time. If the other party suffers any loss due to such termination, except for causes not attributable to such party, the party that rescinds a gratuitous contract for commission shall indemnify the other party for direct loss due to the improper termination time, and the party that rescinds a non-gratuitous contract for commission shall compensate the other party for the direct loss and the benefit it may gain after the performance of the contract.
Article 934 Where the commissioning party dies or terminates, or where the commissioned party dies or loses its capacity for civil acts or terminates, the contract for commission shall be terminated, unless the parties have agreed otherwise, or termination is not appropriate due to the nature of the commissioned affairs.
Article 935 Where the commissioning party dies or is declared bankrupt or dissolved, and the resulting termination of the contract for commission will be detrimental to the commissioning party’s interests, then prior to the commissioning party’s successor, estate administrator or liquidator assuming responsibility for the commissioned affairs, the commissioned party shall continue to handle the commissioned affairs.
Article 936 Where the commissioned party dies, loses its capacity for civil acts, or is declared bankrupt or dissolved, resulting in the termination of the contract for commission, the commissioned party’s heirs, estate administrator, legal commissioned party or liquidator shall promptly notify the commissioning party. Where the termination of the contract for commission will be detrimental to the commissioning party’s interests, then prior to the commissioning party acting to rectify the situation, the successor, estate administrator, legal commissioned party or liquidator shall take necessary measures.
Chapter 24 Property Service Contracts
Article 937 A property service contract refers to a contract whereby the property service provider provides the owner with property services such as repair and maintenance of the building and ancillary facilities thereof, management and maintenance of environmental health and relevant order within the property service area and the owner pays property management fees.Property service providers shall include property service enterprises and other administrators.
Article 938 The contents of a property service contract shall generally include clauses such as service items, service quality, standard and collection method of service fees, use of maintenance and repair funds, management and use of service premises, service period, handover of services, etc.A service commitment made publicly by the property service provider in favor of the owners is an integral part of the property service contract.
The property service contract shall be established in writing.
Article 939 The property service contract for the preparatory phase concluded by a construction entity and a real property service provider pursuant to law as well as the property service contract concluded by the Committee of Owners and the real property service provider selected by the Owners’ Congress pursuant to law shall be legally binding on the owners.
Article 940 Where a property service contract entered into by the Committee of Owners or an owner and a new property service provider comes into effect prior to expiry of the service period agreed in the property service contract for the preparatory phase entered into between the construction entity and the property service provider pursuant to the law, the property services contract for the preparatory phase shall be terminated.
Article 941 Where a property service provider has commissioned part of the special services within the property service area to a specialized services organization or a third party, it shall be accountable to the owners for such part of the special services within the property service area.The property service provider shall not sub-entrust a third party to provide all the property services it is required to provide, or shall not, upon division of all the property services, sub-entrust them to a third party separately.
Article 942 A property service provider shall, in accordance with the agreements and the nature of use of the real property, properly repair, maintain, clean, afforest, and manage the common parts of the owners within the property service area, maintain the basic order within the real property service area, and take reasonable measures to protect the personal and property safety of the owners.A property service provider shall, in good time, take reasonable measures to stop the acts that violate the relevant laws and regulations on public security, environmental protection, and fire control, etc., within the property service area, report such acts to the relevant administrative department and assist in the handling thereof.
Article 943 A property service provider shall regularly announce service items, persons-in-charge, quality requirements, fee items, fee rates, performance status, usage of maintenance and repair fund, operation and earnings of common areas of the owners, etc. to the owners in a reasonable manner, and report the same to the Owners’ Congress and the Committee of Owners.
Article 944 An owner shall pay property management fees to the property service provider pursuant to the stipulations. Where the property service provider has provided services pursuant to the agreement and the relevant provisions, the owners shall not refuse payment of property management fees with the reason of not receiving or no need to receive the relevant property services.Where an owner violates the agreement in failing to pay property management fees within the stipulated period, the property service provider may remind the owner to make payment within a reasonable period; where the owner fails to make payment within the reasonable period, the property service provider may file a lawsuit or apply for arbitration.
Property service providers shall not urge the payment of property management fees by suspending the supply of electricity, water, heat, or gas, or by other means.
Article 945 An owner who decorates or renovates the property shall notify the property service provider beforehand, comply with the reasonable precautions highlighted by the property services provider, and cooperate in the requisite onsite inspection.Where an owner transfers or leases the exclusive parts of the property, establishes residential rights or changes the purpose of use of the common parts pursuant to the law, the owner shall promptly notify the property service provider of the relevant information.
Article 946 Where the owners jointly decide to dismiss any property service provider pursuant to the statutory procedures, they may rescind the property service contract. Where a decision on dismissal is made, the property service provider shall be notified in writing 60 days in advance, unless the contract stipulates otherwise on the notice period.Where the rescission of contract pursuant to the provisions of the preceding paragraph causes the property service provider to suffer losses, the owners shall make compensation for the losses, except where the rescission is not attributable to the owners.
Article 947 Where the owners jointly decide on renewal of employment prior to expiry of the term of property services pursuant to the law, they shall renew the property service contract with the original property service provider before expiry of the term of the contract.Where the property service provider does not agree to renew the employment prior to the expiration of the term of property services, it shall, 90 days prior to the expiration of the contract term, notify the owner or the Committee of Owners in writing, unless it is otherwise stipulated in the contract on the period of notice.
Article 948 Upon expiry of the term of property services, where the owners have not decided on renewal of employment or engagement of a new property service provider and the property service provider continues to provide property services, the original property service contract shall continue to be valid but the term of service shall be unspecified.The party may rescind a property service contract with unspecified term at any time, but shall notify the other party in writing 60 days in advance.
Article 949 Upon termination of a property services contract, the original property service provider shall exit the property service area within the agreed period or a reasonable period, return the property services premises, the relevant facilities and the relevant materials required for the property services to the Committee of Owners, the owners who have decided on management of the estate by themselves or the personnel designated by them, cooperate with the new property service provider in handover, and notify the new property service provider of the use and management of the property truthfully.Where the original property service provider has violated the provisions of the preceding paragraph, it shall not request for payment of property management fees by the owners following termination of the property services contract; where the violation causes the owners to suffer losses, the original property service provider shall compensate for the losses.
Article 950 Upon termination of the property services contract, prior to the handover of the new property service provider that is appointed by the owners or the Owners’ Congress or the owners who decide to manage the property by themselves, the original property service provider shall continue to handle property service matters and may request the owners to pay property management fees for such period.
Chapter 25 Contracts for Brokerage
Article 951 A contract for brokerage refers to a contract whereby the broker conducts trade activities in its own name for the client, and the client pays the remuneration.
Article 952 Expenses paid by the broker in the course of handling entrusted affairs shall be borne by the broker, except where the parties agree otherwise.
Article 953 Where the broker is in possession of the entrusted item, it shall keep the entrusted item with due care.
Article 954 If an entrusted item is defective, perishable, or susceptible to deterioration at the time it was delivered to the broker, the broker may dispose of it with the consent of the client. If the broker is unable to contact the client in time, it may dispose of the entrusted item in a reasonable manner.
Article 955 Where the broker sells the entrusted item at a price lower than the price specified by the client or purchases the entrusted item at a price higher than the price specified by the client, the client ‘s consent shall be obtained. Where the broker makes up for any shortfall without the client ‘s consent, the said purchase or sale is binding on the client.Where the broker sells the entrusted item at a price higher than the price specified by the client , or buys the entrusted item at a price lower than the price specified by the client , the remuneration may be increased in accordance with the contract; where there is no such agreement in the contract or such agreement is not clear, nor can it be determined in accordance with the provisions of Article 510 hereof, the benefit shall belong to the client.
Where the client gives special pricing instructions, the broker may not make any sale or purchase in contravention thereof.
Article 956 Where the broker is to sell or purchase a commodity the price of which is determined by the market, it may act as the purchaser or seller itself, unless the client has expressed a contrary intention.Under the circumstance specified in the preceding paragraph, the broker may still request the client to pay remuneration.
Article 957 Where the broker purchases the entrusted item as agreed, the client shall promptly collect the said item. If, after the broker’s demand for collection, the client refuses to accept the item without justified reasons, the broker may place the entrusted item in escrow in accordance with the law.Where the entrusted item cannot be sold or the client withdraws the sale, and the client fails to take it back or dispose of the item after the broker’s demand for collection, the broker may place the entrusted item in escrow in accordance with the law.
Article 958 Where the broker concludes a contract with a third party, it shall directly enjoy rights and assume obligations under the said contract.Where the third party fails to perform its obligations, thereby causing damage to the client, the broker shall be liable for compensation, unless the broker and the client have agreed otherwise.
Article 959 Where the broker has completed all or part of the entrusted affairs, the client shall pay the appropriate remuneration thereto. Where the client fails to pay the remuneration in due time, the broker shall be entitled to a lien on the entrusted item, unless the parties have agreed otherwise.
Article 960 Matters not addressed in this Chapter shall be handled with reference to the relevant provisions on contract for brokerage.
Chapter 26 Intermediary Contracts
Article 961 An intermediary contract is a contract whereby the intermediary reports to the client on an opportunity for concluding a contract or provides intermediary services in connection with the conclusion thereof, and the client pays the remuneration.
Article 962 The intermediary shall faithfully report to the client the relevant matters for concluding a contract.Where the intermediary intentionally conceals important facts relating to conclusion of the contract or provides false information, thus harming the interests of the client, the intermediary shall not request for payment of remuneration and shall bear the liability for compensation.
Article 963 Where the intermediary facilitates the establishment of a contract, the client shall pay remuneration in accordance with the agreement. Where there has been no agreement or no clear agreement on intermediary remuneration, and it is not possible to determine remuneration in accordance with the provisions of Article 510 hereof, remuneration shall be determined reasonably on the basis of the intermediary’s labor. Where the conclusion of a contract has been facilitated by the provision of intermediary services, the remuneration to be paid to the intermediary shall be borne equally by the parties to the contract.If the intermediary facilitates the establishment of a contract, the expenses of intermediary activities shall be borne by the intermediary.
Article 964 An intermediary which fails to facilitate the establishment of a contract shall not request for payment of remuneration; however, the intermediary may, pursuant to the agreement, request the client to pay the requisite expenses incurred for intermediary activities.
Article 965 The client shall pay remuneration to the intermediary if it, after accepting the intermediary’s service, takes advantage of the opportunity for transaction or medium service provided by the intermediary and bypasses the intermediary to conclude a contract directly.
Article 966 Matters not addressed in this Chapter shall be handled with reference to the relevant provisions on contract for commission.
Chapter 27 Contracts of Partnership
Article 967 A contract of partnership shall refer to an agreement concluded between two or more partners for the purpose of achieving common business objectives, and the partners shall share profits and risks.
Article 968 A partner shall fulfill the obligation of capital contribution in accordance with the mode, amount and time limit for contribution.
Article 969 The capital contributions of the partners, the profits lawfully obtained as a result of the partnership affairs and other property shall belong to the property of the partnership.Prior to the termination of a contract of partnership, no partner may request for the division of partnership property.
Article 970 Unless the contract of partnership stipulates otherwise, a decision made by the partners on partnership affairs shall require the unanimous consent of all the partners.The partnership affairs shall be executed jointly by all the partners. One or more partners may be entrusted to execute partnership affairs in accordance with the provisions of the contract of partnership or the decision by all the partners. The other partners shall cease to execute partnership affairs but shall have the right to supervise the status of execution.
In case partners execute partnership affairs separately, an executive partner may object to the affairs executed by other partners, in which case the other partners shall suspend the execution of such affairs.
Article 971 Unless the contract of partnership stipulates otherwise, a partner shall not be permitted to request the payment of remuneration for the execution of partnership affairs.
Article 972 The profits and losses of a partnership shall be distributed among the partners according to the stipulations of the contract of partnership; if there are no such stipulations in the contract of partnership or the stipulations are not clear, the profits and losses shall be distributed among the partners through consultation; if no agreement has been reached through consultation, the profits and losses shall be distributed among the partners according to the proportion of their capital contributions; if the proportion of capital contributions cannot be determined, the profits and losses shall be equally distributed among the partners.
Article 973 Partners shall bear joint and several liability for partnership debts. The partner whose payment for clearing off the debts of the partnership exceeds the proportion that this partner should bear shall have the right to recover the difference from the other partners.
Article 974 Unless the contract of partnership stipulates otherwise, a partner proposing to transfer all or part of his or her share to an external party shall obtain the unanimous consent of all other partners.
Article 975 A creditor of a partner shall not be permitted to subrogate the partner to exercise the rights enjoyed by the partner pursuant to the provisions of this Chapter and the contract of partnership, except for the right to claim a distribution of profits enjoyed by the partner.
Article 976 Where there is no agreement in the contract between the partners on the duration of the partnership or such agreement is unclear, nor can it be determined in accordance with the provisions of Article 510 hereof, the partnership shall be deemed as partnership with unspecified term.Where the term of a partnership has expired and partners continue to execute partnership affairs, and no objections have been raised by the other partners, the original contract of partnership shall continue to be valid, but the term of the partnership shall be for unspecified.
A partner may rescind a contract of partnership with unspecified term at any time, but shall notify the other partners a reasonable time in advance.
Article 977 A contract of partnership shall be terminated in the event of the death, loss of capacity for civil conduct or termination of a partner, unless the contract of partnership stipulates otherwise or where termination is inappropriate due to the nature of the partnership matter.
Article 978 After the termination of the contract of partnership, any balance of the property of the partnership after the payment of expenses incurred due to such termination and the repayment of debts of the partnership shall be distributed in accordance with Article 972 hereof.
Article 979 Where an administrator with no statutory or agreed obligations to manage the affairs of another party does so in order to avoid any loss in the interests of such party, the administrator may request that the beneficiary repay any necessary expenses incurred in the course of managing the affairs of such party. Where the administrator suffers any loss in the course of managing affairs, the administrator may request that the beneficiary give appropriate compensation.Where the management affairs do not comply with the true intent of the beneficiary, the administrator shall not enjoy the rights stipulated in the preceding paragraph, except where the true intent of the beneficiary violates the law or the public order and good morals.
Article 980 Where the management affairs of the administrator do not fall under the circumstances stipulated in the preceding Article, but the beneficiary enjoys gains generated from management, the beneficiary shall bear the obligations stipulated in the first paragraph of the preceding Article within the scope of their gains.
Article 981 An administrator that manages the affairs of another party shall adopt measures favorable to the beneficiary. Where the suspension of management is unfavorable to the beneficiary, management shall not be suspended without a justified reason.
Article 982 Where the administrator manages the affairs of another party and is able to notify the beneficiary, the beneficiary shall be notified promptly. If there is no need to deal with the management matters urgently, it shall wait for the instruction of the beneficiary.
Article 983 Upon completion of administration, the administrator shall report the status of management affairs to the beneficiary. The property acquired by the administrator in management affairs shall be promptly transferred to the beneficiary.
Article 984 Where the management affairs of the administrator are subsequently ratified by the beneficiary, the relevant provisions governing contracts for commission shall apply with effect from the commencement of the management affairs, unless the administrator has any intent manifested otherwise.
Article 985 If a person who has obtained unjust enrichment without any legal basis, the person who has suffered loss may request the person who has obtained the benefit to return the gained interest, except under any of the following circumstances:
(I) Any payment made in order to fulfill a moral obligation;
(II) Settlement of debts prior to their maturity; or
(III) Settlement of debts in full awareness of no obligation to pay.
Article 986 If a person who has obtained unjust enrichment does not know and should not have known that the interest obtained has no legal basis and the interest obtained has ceased to exist, such person is not obliged to return the said interest.
Article 987 Where a person who has obtained unjust enrichment knows or ought to know that the interest obtained has no legal basis, the person suffering losses may request the such person to return the interest obtained and indemnify him or her for the losses in accordance with the law.
Article 988 Where a person who has obtained unjust enrichment has transferred the interest obtained for free to a third party, the person suffering losses may request the third party to assume the obligation of returning the interest within a corresponding scope.
Article 989 This Part governs civil relationships arising from the enjoyment and protection of personality rights.
Article 990 Personality rights are the right to life, right to body, right to health, right to personal name, right to name, right to portrait, right to reputation, right to honor, right to privacy, and other rights enjoyed by civil subjects.In addition to the personality rights provided in the preceding paragraph, a natural person shall enjoy other personality rights and interests generated from personal freedom and personal dignity.
Article 991 The personality rights of civil subjects shall be protected by the law; no organization or individual may infringe upon such rights.
Article 992 Personality rights shall not be renounced, assigned or inherited.
Article 993 A civil subject may license others to use his or her personal name, name, portrait, etc., except where such license is not allowed according to the law or the nature of the civil subject.
Article 994 Where the personal name, portrait, reputation, honor, privacy or remains of the deceased is infringed upon, his or her spouse, children or Parents shall have the right to request the infringer to bear civil liability according to law. Where the deceased has no spouse or children and his or her Parents are dead, other close relatives shall have the right to request the infringer to bear civil liability according to law.
Article 995 Where the personal rights are infringed, the victim shall have the right to request the infringer to bear civil liability in accordance with the provisions hereof and other laws. The provisions on the limitation of action shall not apply to a victim’s rights to request for cessation of an infringement, removal of an obstacle, elimination of danger, elimination of ill effects, rehabilitation of reputation or extension of a formal apology.
Article 996 Where a party’s breach of contract harms the other party’s personality rights and causes serious mental impairment, and the aggrieved party opts to request such party to assume liability for breach of contract, the aggrieved party’s request for emotional damages shall not be affected.
Article 997 Where a civil subject has evidence to prove that an infringer is committing or is to commit an illegal act that infringes upon his or her personality rights and that his or her legitimate rights and interests will suffer irreparable damage if such act is not stopped in a timely manner, he or she has the right to apply to the people’s court for taking measures to order the infringer to cease the relevant act.
Article 998 In determining an infringer’s civil liability for infringing upon personal rights other than the right to life, right to body and right to health, such factors as the occupations of the infringer and the victim, scope of influence, degree of fault, as well as the purpose, method and consequence of the act shall be considered.
Article 999 Persons who carry out news reporting, public opinion supervision, etc. for public interest may make reasonable use of the personal name, name, portrait, personal information, etc. of a civil subject; persons who make unreasonable use of the aforesaid items to infringe upon the personality rights of a civil subject shall bear civil liability pursuant to the law.
Article 1000 Such civil liability as elimination of ill effects, rehabilitation of reputation and extension of a formal apology to be assumed by an infringer due to infringement upon the personality rights shall be appropriate to the specific way of the act and the scope of influence caused.If the infringer refuses to bear the civil liability prescribed in the preceding paragraph, the people’s court may enforce the judgment or ruling by publishing an announcement or by publishing the effective judgment documents in the newspapers, the Internet or other media, the cost of which shall be borne by the infringer.
Article 1001 For the protection of the identity rights of natural persons arising from marriage and family relations, the relevant provisions of Part I and Part V hereof and other laws shall apply; if there is no provision, the relevant provisions of this Part on the protection of personality rights may apply mutatis mutandis according to the nature thereof.
Chapter 2 Right to Life, Right to Body and Right to Health
Article 1002 A natural person shall enjoy the right to life. The safety and dignity of life of natural persons are protected by law. No organization or individual may infringe upon the right to life of any other person.
Article 1003 A natural person shall enjoy the right to body. Physical integrity and freedom of movement of natural persons are protected by law. No organization or individual may infringe upon the right to body of any other person.
Article 1004 A natural person shall enjoy the right to health. The physical and mental health of natural persons is protected by law. No organization or individual may infringe upon the right to health of any other person.
Article 1005 Where the right to life, right to body or right to health of a natural person is infringed upon or is in other dangerous situations, the organization or individual that is obliged to rescue in accordance with the law shall rescue him or her without delay.
Article 1006 A person with full capacity for civil conduct shall have the right to decide on his or her own voluntary donation of human cells, human tissues, human organs or remains pursuant to the law. No organization or individual may force, cheat or induce him or her to donate.If the person with full capacity for civil conduct agrees to donate in accordance with the preceding paragraph, he or she shall make the donation in writing or make a will.
If a natural person does not express disapproval to make aforesaid donations during his or her lifetime, his or her spouse, adult children and Parents may jointly decide to donate after his or her death. The decision on such donation shall be made in writing.
Article 1007 It is prohibited to purchase or sell human cells, human tissues, human organs or remains in any form.Any purchase or sale in violation of the preceding paragraph shall be null and void.
Article 1008 Where clinical trials are required to develop new drugs and medical devices or new prophylactic and treatment methods, such clinical trials shall be approved by the relevant competent departments in accordance with the law and shall be subject to the examination and approval of the ethics committee. The subjects or their guardians shall be informed of the trial objective, purpose, possible risks and other details of the trials, with their consent in writing obtained.To conduct a clinical trial, no charge may be collected from the subjects.
Article 1009 Persons engaged in medical and scientific research activities related to human genes or human embryos shall abide by the laws, administrative regulations and the relevant provisions of the State, and shall not endanger human health, violate ethics or damage public interests.
Article 1010 Where a person conducts sexual harassment of another person in the forms of verbal remarks, written language, images, physical behaviors or otherwise against the will of another person, the victim has the right to request the person to bear civil liability according to the law.Agencies, enterprises, schools, etc. shall adopt reasonable measures on prevention, acceptance and handling of complaints, investigation and disposal, etc. to prevent and curb sexual harassment by making use of official powers and affiliation, etc.
Article 1011 Where a person is deprived of or restricted in his or her freedom of movement by such means as illegal detention, or makes an illegal search of another person, the victim shall have the right to request the person committing the act to bear civil liability in accordance with law.
Chapter 3 Right to Personal Name and Right to Name
Article 1012 A natural person shall enjoy the right to personal name and shall be entitled to determine, use, change or license others to use his or her personal name in accordance with the law, provided that the public order and good morals are not violated.
Article 1013 A legal person or an unincorporated organizationshall enjoy the right to name and shall be entitled to determine, use, change and assign its name or license others to use its name in accordance with the law.
Article 1014 No organization or individual may infringe upon the right to personal name or the right to name of any other person by interference, usurpation, counterfeit or other means.
Article 1015 A natural person shall adopt his or her father’s or mother’s surname, but may choose a surname other than that of his or her father or mother under any of the following circumstances:
(I) Choosing the surname of a senior lineal relative by blood;
(II) Choosing the surname of the fosterer where he or she is raised by a person other than the legal fosterers; and
(III) Where there is any other justified reason not in violation of public order and good morals.The surnames of natural persons of ethnic minorities may follow the cultural traditions and customs of their own ethnic groups.
Article 1016 Where a natural person determines or changes his or her name, or a legal person or an unincorporated organization determines, changes or assigns its name, registration formalities shall be completed with the relevant authorities in accordance with the law, unless otherwise stipulated by the law.Where a civil subject changes his or her personal name or name, the civil juristic acts performed by him or her before such change shall be legally binding on him ore her.
Article 1017 For a pen name, stage name, online name, translated name, courtesy name, abbreviation of a personal name or name, etc., which enjoys certain social popularity, the use of which by others is sufficient to cause public confusion, the relevant provisions on the protection of the rights to personal name and right to name shall apply mutatis mutandis.
Article 1018 A natural person shall enjoy portrait rights and shall be entitled to produce, use, make public, or license others to use his or her own portrait.A portrait is an external image that a specific natural person can be recognized reflected on a certain carrier by means of image, sculpture and painting, etc.
Article 1019 No organization or individual may infringe upon the portrait rights of any other person by vilifying, defacing, forging by means of information technology or otherwise. Without the consent of a holder of portrait rights, the portrait of such person shall not be produced, used or made public, unless otherwise provided by law.Without the consent of a holder of portrait rights, the holder of portrait rights shall not use or make public the portrait of such person by means of publication, reproduction, distribution, lease, exhibition, etc.
Article 1020 The consent of a holder of portrait rights is not required for reasonable performance of any of the following acts:
(I) Using a public portrait of a holder of portrait rights within a necessary scope for the purpose of personal study, artistic appreciation, classroom teaching or scientific research;
(II) Producing, using or making public the portrait of a holder of portrait rights inevitably for the purpose of news report;
(III) Producing, using or making public the portrait of a holder of portrait rights within a necessary scope for performing duties in accordance with the law by State organs;
(IV) Inevitably producing, using or making public the portrait of a holder of portrait rights for the purpose of displaying the specific public environment; and
(V) Other acts of making, using or making public the portrait of a holder of portrait rights, for the purpose of safeguarding public interests or the legitimate rights and interests of the person.
Article 1021 Where any dispute arises between the parties over the understanding of any term on the use of a portrait under a portrait licensing contract, an interpretation in favor of the holder of portrait rights shall be made.
Article 1022 Where there are no stipulations between the parties on the duration of the license for the use of portrait or such stipulations are unclear, any of the parties may rescind the contract for the license for the use of portrait at any time, but shall notify the other party a reasonable time in advance.Where the parties have expressly agreed upon the term of license for use of portrait, and the holder of portrait rights has justified reasons, the contract for license for use of portrait may be rescinded, provided that the other party shall be notified a reasonable time in advance. For the losses to the other party due to the rescission of the contract, compensation shall be made, except for causes not attributable to the holder of portrait rights.
Article 1023 The relevant provisions on license for use of portrait shall apply mutatis mutandis to the license for use of names, etc.The relevant provisions on protection of rights to portrait shall apply mutatis mutandis to protection of voices of natural persons.
Chapter 5 Right to Reputation and Right to Honor
Article 1024 A civil subject shall enjoy the right to reputation. No organization or individual may infringe upon the right to reputation of any other person by such means as insult or libel.Reputation is the social evaluation of the moral character, prestige, ability and credit of the civil subject.
Article 1025 If an infringer carries out news reporting or public opinion supervision for the public interest, thus affecting the reputation of another person, he or she shall not bear civil liability, except under any of the following circumstances:
(I) Fabricating or distorting the facts;
(II) Failing to fulfill its obligation of reasonable verification of seriously inaccurate contents provided by others; or
(III) Using insulting words to belittle the reputation of others.
Article 1026 The following factors shall be considered in determining whether or not an infringer has fulfilled its obligation of reasonable verification as prescribed in Item (II) of the preceding Article:
(I) Credibility of the source of contents;
(II) Whether necessary investigations have been made into the content that is obviously likely to cause a dispute;
(III) Time limits of the content;
(IV) Relevance between contents and public order and good morals;
(V) The possibility that the victim’s reputation may be belittled; and
(VI) Verification capability and verification cost.
Article 1027 If a literary or artistic work published by an infringer uses a real person, a real fact or a specific person as the subject of description to insult or slander others and thus infringes upon the rights to reputation of others, the victim shall have the right to request the infringer to bear civil liability in accordance with the law.If a literary or artistic work published by an infringer does not take a specific person as the property of description but has circumstances similar to those of such specific person, he or she shall not bear civil liability.
Article 1028 Where a civil subject has evidence to prove that any content reported by newspapers, periodicals, the internet or other media is inaccurate, thereby infringing his or her right to reputation, he or she shall have the right to request the media to promptly take necessary measures to correct or delete the content.
Article 1029 A civil subject may inquire about his or her own credit rating according to the law; if he or she finds that any credit rating is improper, he or she has the right to raise an objection and request necessary measures such as corrections or deletions. The credit evaluator shall, if the verification is true, conduct the verification in a timely manner, and take necessary measures in a timely manner.
Article 1030 The relationship between civil subjects and credit information processors such as credit reporting agencies shall be governed by the provisions of this Part on personal information protection and the relevant provisions of other laws and administrative regulations.
Article 1031 A civil subject shall enjoy the right to honor. No organization or individual may unlawfully deprive other people of their honorary titles, or defame or belittle their honors.Where an honorary title obtained shall be recorded but has not been recorded, the civil subject may request such record; where an honorary title obtained is recorded incorrectly, the civil subject may request a correction.
Chapter 6 Right to Privacy and Protection of Personal Information
Article 1032 A natural person shall enjoy the right to privacy. No organization or individual may infringe upon the right to privacy of any other person by spying, invading and harassing, disclosing or publishing the relevant information or by any other means.Privacy is a natural person’s private life peace, as well as private space, private activities and private information that do not want to be known by others.
Article 1033 Unless otherwise prescribed by the law or specifically agreed by the right holders, no organization or individual may carry out any of the following acts:
(I) Disturbing the private peace of others by means of telephone, text message, instant messaging tools, e-mails, leaflets, etc.;
(II) Entering, taking pictures of or peeping into others’ houses or hotel rooms or other private space;
(III) Taking pictures of, peeping into, eavesdropping, or making public the private activities of others;
(IV) Taking pictures of or peeping into any private part of the body of another person;
(V) Dealing with the confidential information of others; or(VI)Infringing upon the right to privacy of others by other means.
Article 1034 The personal information of a natural person shall be protected by the law.Personal information refers to all kinds of information recorded by electronic or otherwise that can be used to independently identify or be combined with other information to identify specific natural persons, including the natural persons’ names, dates of birth, ID numbers, biometric information, addresses, telephone numbers, e-mail addresses, health information, whereabouts, etc.
For the confidential information included in personal information, the relevant provisions on the right to privacy shall apply; if no provisions are available, the provisions on personal information protection shall apply.
Article 1035 The processing of personal information shall be subject to the principle of legitimacy, rightfulness and necessity, with no excessive processing, and shall meet the following conditions:
(I) With the consent of the natural person or the guardian thereof, unless otherwise provided by laws or administrative regulations;
(II) Disclosing rules on processing information;
(III) Expressly stating the purpose, method and scope of information to be processed; and
(IV) Not violating the provision of the laws and administrative regulations and the agreement of both parties.Processing of personal information includes the collection, storage, use, processing, transmission, provision and disclosure of personal information, etc.
Article 1036 Where the processing of personal information falls under any of the following circumstances, the infringer concerned shall not bear civil liability:
(I) Acts performed reasonably within the scope agreed by the natural person or his or her guardian;
(II) Reasonably processing the information made public by the natural person himself or herself or other information that has been legally made public, unless the natural person explicitly refuses to do so or deals with the circumstance where such information infringes upon his or her major interests; or
(III) Other reasonable acts performed to protect the public interests or the legitimate rights and interests of the natural persons.
Article 1037 A natural person may consult or copy his or her personal information with any information processor in accordance with the law; if any error is found in the information, the natural person has the right to raise an objection and request the information processor to take necessary measures such as corrections in a timely manner.Where a natural person discovers that an information processor has processed his or her personal information in violation of the provisions of laws and administrative regulations or the agreement between both parties, he or she shall have the right to request that the information processor promptly delete the information.
Article 1038 Information processors shall not divulge or tamper with personal information collected or stored by them; without the consent of a natural person, information processors shall not illegally provide personal information of such person to others, except for information that has been processed so that specific persons cannot be identified and that cannot be restored.An information processor shall take technical measures and other necessary measures to ensure the security of the personal information that is collected and stored and to prevent the information from being divulged, tampered with or lost; where personal information has been or may be divulged, tampered with or lost, the information processor shall take remedial measures in a timely manner, inform the natural person concerned in accordance with the provisions and report the case to the relevant competent department.
Article 1039 State organs, statutory bodies assuming administrative functions and their functionaries shall keep confidential the privacy and personal information of natural persons that they come to know during the performance of their duties, and shall not divulge the same or illegally provide the same to others.
Article 1040 This Part governs civil relationships arising from marriage and family.
Article 1041 Marriage and the family are protected by the State.A marriage system based on the free choice of partners, on monogamy and on equality between men and women shall be applied.
The legitimate rights and interests of women, minors, the elderly and the disabled shall be protected.
Article 1042 Marriage upon arbitrary decision by any third party, mercenary marriage and any other acts of interference in the freedom of marriage shall be prohibited. Exaction of money or gifts through marriage shall also be prohibited.Bigamy shall be prohibited. Those who have spouses shall be prohibited to cohabit with others.
Domestic violence shall be prohibited. Maltreatment and abandonment among family members shall be prohibited.
Article 1043 Families shall cultivate good family tradition, carry forward family virtues, and attach importance to the construction of family civilization.Husband and wife shall be loyal to each other, respect and care for each other; family members shall respect the old and care for the young, help each other, and maintain the marriage and family relationship characterized by equality, harmony and civility.
Article 1044 Adoption shall follow the principle of benefiting the adoptee to the largest extent, and the legitimate rights and interests of both the adoptee and the adopter shall be protected.It is prohibited to buy or sell minors under the cloak of adoption.
Article 1045 Relatives include spouses, relatives by blood and relatives by marriage.Spouse, Parents, children, brothers and sisters, paternal grandparents, maternal grandparents, paternal grandchildren, and maternal grandchildren are close relatives.
Spouses, Parents, children and other close relatives living together are family members.
Article 1046 Marriage shall be based upon the complete willingness of both man and woman. Coercion by either party against the other party shall be prohibited, and interference by any organization or individual shall be prohibited.
Article 1047 No marriage may be contracted before the man has reached 22 years of age and the woman 20 years of age.
Article 1048 It shall be forbidden for people who are lineal relatives by blood or collateral relatives by blood up to the third degree of kinship to get married.
Article 1049 Both a man and a woman desiring to contract a marriage shall apply in person to the marriage registration office for marriage registration. If the proposed marriage is found to conform with the provisions hereof, the couple shall be allowed to register and issued a marriage certificate. Upon completion of marriage registration, the marriage relationship is established. A couple shall go through the formality of marriage registration if it has not done so.
Article 1050 After a marriage has been registered, the woman may become a member of the man’s family or vice versa, depending on the agreement of the two parties.
Article 1051 The marriage shall be null and void under any of the following circumstances:
(II) With prohibited degree of kinship between the married parties; or
(III) Not reaching the legal age for marriage.
Article 1052 Where marriage is contracted by coercion, the coerced party may appeal to the people’s court for revocation of marriage.The appeal for revoking marriage shall be submitted within one year from the date when the coercion ceases.
For the party whose personal freedom is illegally restrained, such an appeal for revocation of marriage shall be submitted within one year from the date of the restoration of the personal freedom.
Article 1053 Where one party suffers from a serious illness, the other party shall be informed truthfully prior to marriage registration; if the other party fails to do so, the other party may request a people’s court to revoke the marriage.An application for revocation of marriage shall be submitted within one year from the date on which the grounds for revocation are known or ought to be known.
Article 1054 Invalid or revoked marriages shall have no legal binding force ab initio, and the parties shall be devoid of any rights or obligations of a husband and a wife. The property acquired by them during the period of their cohabitation shall be disposed of by agreement between the parties; if they fail to reach an agreement, the people’s court shall make a judgment on the principle of giving consideration to the innocent party. The disposal of the property acquired through invalid marriage because of bigamy shall not infringe upon the rights and interests concerning the property enjoyed by the party under lawful contract of marriage. With regard to the children born by the party concerned, the provisions hereof on Parents and children shall apply.Where the marriage is null and void or revoked, the innocent party shall have the right to compensation for damages.
Section 1 Conjugal Relationship
Article 1055 Husband and wife shall have equal status in marriage and family.
Article 1056 Both husband and wife shall have the right to use his or her personal name.
Article 1057 Both husband and wife shall have the freedom to engage in production and other work, to study and to participate in social activities; neither party shall restrict or interfere with the other party.
Article 1058 Both husband and wife shall equally enjoy the right to raise, educate and protect their minor child (children), and shall jointly bear the obligation to raise, educate and protect their minor child (children).
Article 1059 Husband and wife shall have the duty to maintain each other.The party in need of maintenance shall have the right to demand cost of maintenance from the other party if that other party fails to perform this obligation.
Article 1060 Any civil juristic act that is performed by one party of a couple due to the needs of daily family life shall be binding on both parties thereto, unless otherwise agreed upon by the said party and the counterparty.The restriction on the scope of civil juristic acts that can be performed by one party between a couple shall not challenge any bone fide counterparty.
Article 1061 Husband and wife shall have the right to inherit each other’s property.
Article 1062 The following property acquired by the husband and the wife during the existence of the marriage relationship is their common property:
(I) Wages, bonuses, and remuneration for labor services;
(II) Proceeds of production, business operation or investment;
(III) Proceeds of intellectual property rights;
(IV) Property inherited or donated, except for that provided for in Item (III) of Article 1063 hereof; and
(V) Other property which should be in their joint possession.Husband and wife shall have equal rights in the disposal of their common property.
Article 1063 The following property shall be deemed as the movables of either party of a couple:
(I) The property that belongs to one party before marriage;
(II) Compensation or indemnity obtained by one party for a personal injury;
(III) The property to be in the possession of one party as determined by a will or by a contract of gift;
(IV) One party’s daily necessities; and
(V) Other property which should be in the possession of one party.
Article 1064 Debts incurred jointly by a couple in the form of signatures by the couple, acknowledgement by either spouse after such debt was incurred by the other spouse or other form of expression of their common will, as well as debts incurred by either spouse in his or her own name during the existence of the marriage relationship for the purpose of meeting the needs of the couple’s daily family life shall be deemed as joint debts of the couple.Any debt that is incurred by either spouse in his or her own name during the existence of the marriage relationship beyond meeting the needs of the couple’s daily family life shall not be deemed as common debt, unless the creditor can prove that such debt is used for the couple’s life or common production or operation activities, or is incurred based on expression of the couple’s common will.
Article 1065 Both the husband and the wife may conclude an agreement that the property acquired by them during the existence of the marriage relationship and the property acquired before marriage shall be in their separate possession or in joint possession with the other party or that part of the property shall be in their separate possession and the other part shall be in their joint possession with the other party. Such an agreement shall be in writing. Where such an agreement is lacking, or the provisions in the agreement are not clear, the provisions of Articles 1062 and 1063 hereof shall apply.The agreement concluded by the husband and the wife with regard to the property acquired during the existence of the marriage relationship and the property acquired before marriage shall be legally binding on both parties.
Where the husband and the wife agree that the property acquired by them during the existence of the marriage relationship shall be in their separate possession, debts contracted by the husband or the wife shall be paid off with the movables of the party of the husband or the wife, if the other party knows that there is such an agreement.
Article 1066 During the existence of the marriage relationship, either of the couple may make a request to the people’s court for partition of their common property under any of the following circumstances:
(I) Where one party commits the acts that seriously harm the interests of common property, such as concealing, assignment, selling off, destroying, or squandering common property or forging common debts; or
(II) Where one party disagrees with payment of relevant medical costs for a person to whom the other party is legally obliged to maintain, who suffers from a serious disease and needs medical treatment.
Section 2 Parent -Child Relationship and Relationship with Other Close Relatives
Article 1067 If Parents fail to perform their duty, minor children or adult children that are not capable of living on their own shall have the right to demand the costs of maintenance from their Parents.If adult children fail to perform their duty to support Parents, Parents that are unable to work or have difficulty in providing for themselves shall have the right to demand cost of maintenance from their children.
Article 1068 Parents shall have the right and duty to educate and protect their minor children. If minor children cause damage to others, their Parents shall bear civil liability according to law.
Article 1069 Children shall respect their Parents’ right of marriage, and shall not be allowed to interfere in their Parents’ divorce, remarriage and post-marriage life. The duty of the children for supporting their Parents shall not come to an end with the change in the marriage relationship of their Parents.
Article 1070 Parents and children shall have the right to inherit each other’s property.
Article 1071 Children born out of wedlock shall enjoy the same rights as children born in wedlock. No organization or individual may harm or discriminate against them.The biological father or mother who does not directly raise a child born out of wedlock shall bear the costs of support for his or her minor children or adult children that are not capable of living on their own.
Article 1072 Maltreatment and discrimination between step-Parents and step-children shall not be allowed.The provisions hereof governing the parent -child relationship shall apply to the rights and duties in the relationship between step-fathers or step-mothers and their step-children who receive care and education from them.
Article 1073 Where a paternity dispute is raised with proper reasons, the father or the mother may file a lawsuit to the people’s court to request confirmation or denial of parenthood.Where parenthood is objected with justification, the adult child may file a lawsuit to the people’s court to request confirmation of parenthood.
Article 1074 Paternal grandparents and maternal grandparents with affordability shall have the duty to bring up their grandchildren who are minors and whose Parents are deceased or have no means to bring them up.Paternal grandchildren and maternal grandchildren with affordability shall have the duty to support their paternal grandparents and maternal grandparents whose children are deceased or have no means to support them.
Article 1075 Elder brothers and elder sisters with affordability shall have the duty to maintain their younger brothers and sisters who are minors, if their Parents are deceased or have no means to bring them up.Younger brothers and sisters with affordability who are brought up by their elder brothers and sisters shall have the duty to maintain their elder brothers and sisters who lack not only the ability to work but also source of income.
Article 1076 Where both husband and wife intend to get divorced voluntarily, they shall sign a written divorce agreement and shall apply for divorce registration in person to the marriage registration office.The divorce agreement shall set forth both parties’ intention of voluntary divorce and consensus on matters of children rearing, property and debt settlement through consultation.
Article 1077 If, within 30 days after the marriage registration office receive the divorce registration applications, any of the parties does not want to get divorced, he or she may withdraw the divorce registration applications from the marriage registration office.Within 30 days after the expiration of the above prescribed period, both parties shall, in person, apply to the marriage registration office for the issuance of divorce certificates; those who fail to make the application shall be deemed to have withdrawn the application for divorce.
Article 1078 The marriage registration office, after clearly ascertaining that both parties desire divorce voluntarily and have reached consensus on matters of child rearing, property and debt settlement through consultation, shall grant registration of divorce and issue the divorce certificates.
Article 1079 If one party alone desires a divorce, the organization concerned may carry out mediation or the party may directly file a divorce suit in a people’s court.In dealing with a divorce case, the people’s court should carry out mediation; and divorce shall be granted if mediation fails because mutual affection no longer exists.
In any of the following circumstances, divorce shall be granted if mediation fails:
(I) Bigamy or cohabitation with another person;
(II) With domestic violence, maltreatment or abandonment of family members;
(III) With gambling, drug taking and other bad habits, which are not changed after repeated education;
(IV) Having separated from each other for two full years due to lack of mutual affection; or
(V) Other cases which lead to the alienation of mutual affection.
Where one party is declared to be missing and the other party starts divorce proceedings, divorce shall be granted.
Where, after the people’s court has made a judgment that divorce shall not be granted, both parties live apart for another year and a party files a divorce suit again, divorce shall be granted.
Article 1080 Upon completion of divorce registration, or where the divorce judgment or mediation statement takes effect, the marriage relationship shall be dissolved.
Article 1081 If the spouse of a soldier in active service desires a divorce, the matter shall be subject to the soldier’s consent, unless the soldier commits a grave fault.
Article 1082 A husband may not apply for a divorce when his wife is pregnant, or is within one year after the birth of the child, or within six months after the termination of her gestation, except where the wife applies for a divorce, or where the people’s court deems it necessary to accept the divorce application made by the husband.
Article 1083 If, after divorce, both parties desire to resume their marriage relationship, they shall apply for marriage registration anew with the marriage registration office.
Article 1084 The relationship between parents and children shall not come to an end with the Parents’ divorce. After divorce, whether the children are directly put in the custody of the father or the mother, they shall remain the children of both Parents.After divorce, both Parents shall still have the right and duty to bring up, educate and protect their children.
After divorce, children under the age of two shall, in principle, be directly put in the custody of their mother. If the Parents of a child who has reached the age of two fail to reach an agreement on the matter of the child’s rearing, the people’s court shall, in accordance with the actual conditions of both parties and on the principle of benefiting the minor child to the greatest extent, make a judgment. If a child has reached the age of eight, his or her real willingness shall be respected.
Article 1085 If, after divorce, the children are directly put in the custody of one party, the other party shall bear part or the whole of the cost of maintenance. The two parties shall seek agreement regarding the amount and duration of such payment. If they fail to reach an agreement, the people’s court shall make a judgment.The agreement or judgment specified in the preceding paragraph shall not prevent the child from making a reasonable request, when necessary, to either parent for an amount exceeding what is decided upon in the said agreement or judgment.
Article 1086 After divorce, the father or the mother who does not directly bring up the child shall have the right to visit his or her child, and the other party shall have the duty to cooperate.The manner and time for exercising the right to visit a child shall be decided by the parties through consultation; if they fail to reach an agreement upon in this regard, the people’s court shall make a judgment.
Where the visit to a child paid by the father or the mother is not conducive to the physical and mental health of the child, the people’s court shall terminate such visit; after the cause of such termination disappears, such visit shall be resumed.
Article 1087 At the time of divorce, the husband and the wife shall seek agreement regarding the disposal of their common property. If they fail to reach an agreement, the people’s court shall, on the basis of the actual circumstances of the property and on the principle of taking into consideration the rights and interests of the child, the wife and the innocent party.The rights and interests enjoyed by the husband or the wife in contracting land management on a household basis shall be protected in accordance with law.
Article 1088 Where one party of a couple bears comparatively more obligations for bringing up a child, taking care of the elderly or assisting the other party in work, it shall, at the time of divorce, have the right to request the other party to make compensation for the above, and the other party shall do so accordingly. Specific arrangements shall be made by both parties through consultation. If they fail to reach an agreement, the people’s court shall make a judgment.
Article 1089 At the time of divorce, the husband and the wife shall repay their common debts jointly. Where their common property is insufficient to pay the debts or where the property is in their separate possession, the two parties shall discuss alternative ways of payment; if they fail to reach an agreement, the people’s court shall make a judgment.
Article 1090 Where, at the time of divorce, one party has difficulty in supporting himself or herself, the other party with affordability shall render appropriate assistance. Specific arrangements shall be made by both parties through consultation. If they fail to reach an agreement, the people’s court shall make a judgment.
Article 1091 Where one of the following circumstances leads to divorce, the innocent party shall have the right to claim compensation:
(II) Cohabiting with another person;
(IV) Maltreating or abandoning family members; or
(V) With any other grave faults.
Article 1092 Where one party of a couple conceals, assigns, sells off, destroys or squanders the common property of the couple, or forges the common debts of the couple in an attempt to encroach upon the property of the other party, the former may get less or no property when the common property of the couple is partitioned because of divorce. After divorce, if the other party discovers the above, it may bring a suit in the people’s court to demand re-partition of the common property of the couple.
Section 1 Establishment of Adoptive Relationship
Article 1093 The following minors may be adopted:
(I) Orphans bereaved of Parents;
(II) Minors whose biological Parents cannot be ascertained or found; and
(III) Children whose Parents are unable to rear them due to unusual difficulties.
Article 1094 The individuals and institutions listed below may be entitled to place out children for adoption:
(II) Child welfare institutions; and
(III) Biological Parents that are unable to rear their children due to unusual difficulties.
Article 1095 Where the Parents of a minor do not have full capacity for civil conduct and are likely to do serious harm to the minor, the guardian of the minor may place out the minor for adoption.
Article 1096 Where a guardian intends to place out an orphan for adoption, the guardian shall obtain the consent of the person who has obligations to support the orphan. Where the person who has obligations to support the orphan disagrees to place out the orphan for adoption, and where the guardian is unwilling to continue the performance of his or her guardianship, a new guardian shall be determined according to the provisions of Part I hereof.
Article 1097 Where the biological Parents intend to place out their child for adoption, they shall act in concert. Where one parent cannot be ascertained or found, the other parent may place out the child for adoption alone.
Article 1098 Adopters shall simultaneously meet all of the following requirements:
(I) Having no child or only one child;
(II) Being capable of bringing up, educating and protecting the adoptee; and
(III) Not having any disease that is medically regarded as unfit for adopting a child;
(IV) Having no illegal or criminal record that is detrimental to the healthy growth of the adoptee; and
(V) Having reached the age of 30.
Article 1099 A person that adopts a child belonging to a collateral relative by blood of the same generation and up to the third degree of kinship may not be restricted by the regulations specified in Item (III) of Article 1093, Item (III) of Article 1094 or Article 1102 hereof.An overseas Chinese that adopts a child belonging to a collateral relative by blood of the same generation and up to the third degree of kinship may also not be subject to the restriction specified in Item (I) of Article 1098 hereof.
Article 1100 An adopter without children may adopt two children; while an adopter with children may adopt one child only.Whoever adopts an orphan, a disabled minor or a minor under the care of a child welfare institution whose Parents cannot be ascertained or found may be exempted from the restrictions specified in the preceding paragraph and in Item (I) of Article 1098 hereof.
Article 1101 Where a person with spouse adopts a child, the husband and wife shall adopt the child in concert.
Article 1102 Where a person without spouse adopts a child of the opposite sex, the age difference between the adopter and the adoptee shall be no less than 40 years.
Article 1103 A step-father or step-mother may, with the consent of the biological Parents of the step-son or step-daughter, adopt the step-son or step-daughter, and such adoption may not be restricted by the regulations specified in Item (III) of Article 1093, Item (III) of Article 1094, Article 1098 and Paragraph 1 of Article 1100 hereof.
Article 1104 Adoption of a child and the placing out of the child for the adoption shall both take place on a voluntary basis. Where the adoption involves a minor aged eight or more, the consent of the adoptee shall be obtained.
Article 1105 The adoption shall be registered with the authorities of civil affairs under the people’s government at or above the county level. The adoptive relationship shall be established as of the date of registration.Where a minor whose biological Parents cannot be ascertained or found is adopted, the authorities of civil affairs in charge of registration shall make it known to the general public before registration.
If the parties involved in the adoptive relationship wish to enter into an agreement on adoption, they may conclude such an agreement.
If the parties or one party involved in the adoptive relationship wishes that the adoption be notarized, it shall be done accordingly.
The authorities of civil affairs under the people’s government at or above the county level shall conduct an assessment of the adoption according to the law.
Article 1106 After the adoptive relationship is established, public security authorities shall, in accordance with the relevant regulations of the State, handle the household registration for the adoptee.
Article 1107 Orphans or children whose biological Parents are unable to rear them may be supported by relatives or friends of their biological Parents; the provisions of this Chapter shall not apply to the relationship between the supporter and the supported.
Article 1108 Where a spouse places out a minor child for adoption after the death of the other spouse, the Parents of the deceased shall have the priority in rearing the child.
Article 1109 A foreigner may, in accordance with the law, adopt a child in the People’s Republic of China.Where a foreigner adopts a child in the People’s Republic of China, the matter shall be subject to examination and approval of the competent authorities of the country to which he or she belongs, in accordance with the law of that country. The adopter shall provide documents certifying such particulars of the adopter as age, marital status, profession, property, health and whether the adopter has subjected to criminal punishment or not, which are issued by the competent agencies of the country to which the adopter belongs. The adopter shall also sign a written agreement with the person who places out the child for adoption and register in person with the authorities of civil affairs under the people’s government of the relevant province, autonomous region, or centrally-administered municipality.
The certifying documents mentioned in the preceding paragraph shall be authenticated by the diplomatic department of the adopter’s country or by an agency authorized by the diplomatic department and by the embassy or consulate of the People’s Republic of China in the adopter’s country, unless otherwise provided by the State.
Article 1110 When the adopter and the person placing out the child for adoption wish to make a secret of the adoption, others shall respect their wish and shall not make a disclosure thereof.
Section 2 Effectiveness of Adoption
Article 1111 As from the date of establishment of the adoptive relationship, the provisions hereof governing the parent -child relationship shall apply to the rights and duties in the relationship between adoptive Parents and adopted children; the provisions hereof governing the relationship between children and close relatives of their Parents shall apply to the rights and duties in the relationship between adopted children and close relatives of the adoptive Parents.The rights and duties in the relationship between an adopted child and his or her biological Parents and other close relatives shall terminate with the establishment of the adoptive relationship.
Article 1112 An adopted child may adopt his or her adoptive father’s or adoptive mother’s surname, and may also retain his or her original surname, if so agreed through consultation between the parties.
Article 1113 Any act of adoption violating the provisions of Part I hereof concerning the regulations on the circumstances of invalid civil juristic acts or violating the provisions of Part V hereof shall be null and void.Any null and void adoption is not legally binding ab initio.
Section 3 Termination of Adoptive Relationship
Article 1114 No adopter may terminate the adoptive relationship before the adoptee comes of age, except when the adopter and the person having placed out the child for the adoption agree to terminate such relationship. If the adopted child involved reaches the age of eight or more, his or her consent shall be obtained.Where an adopter fails to perform the duty of rearing the adoptee or commits maltreatment, abandonment, or other acts of infringement upon the legitimate rights and interests of the adopted minor child, the person having placed out the child for adoption shall have the right to demand termination of the adoptive relationship. Where the adopter and the person having placed out the child for adoption fail to reach an agreement thereon, they may bring a lawsuit in a people’s court.
Article 1115 Where the relationship between the adoptive Parents and an adult adopted child deteriorates to such a degree that their living together in the same household becomes impossible, they may terminate their adoptive relationship by agreement. In the absence of an agreement, they may bring a lawsuit in a people’s court.
Article 1116 Where the parties agree to terminate the adoptive relationship, they shall register the termination of the adoptive relationship with authorities of civil affairs.
Article 1117 Upon termination of an adoptive relationship, the rights and duties in the relationship between an adopted child and his or her adoptive Parents and their close relatives shall also terminate, and the rights and duties in the relationship between the child and his or her biological Parents and their close relatives shall be restored automatically. However, with respect to the restoration of the rights and duties in the relationship between an adult adopted child and his or her Parents and their close relatives, it may be decided through consultation.
Article 1118 Upon termination of an adoptive relationship, an adult adopted child who has been reared by the adoptive Parents shall provide cost of maintenance to support the adoptive Parents who have lost ability to work and are short of any source of income. If the adoptive relationship is terminated on account of the maltreatment or abandonment of the adoptive Parents by the adult adopted child, the adoptive Parents may demand compensation from the adopted child for the cost of maintenance paid during the period of adoption.If the biological Parents of an adopted child request the termination of the adoptive relationship, the adoptive Parents may demand appropriate compensation from the biological Parents for the cost of maintenance paid during the period of adoption, except if the adoptive relationship is terminated on account of the maltreatment or abandonment of the adopted child by the adoptive Parents.
Article 1119 This Part governs the civil relations arising from inheritance.
Article 1120 The State protects natural persons’ right to inheritance.
Article 1121 Inheritance begins at the death of a decedent.Where several persons who have inherited each other die in the same event and it is difficult to determine their time of death, it shall be presumed that the person without any other inheritor dies first. Where they all have other inheritors and are of different generations, the elder shall be presumed to die first; if they are of the same generation, they shall be presumed to die at the same time, and no inheritance shall occur to each other.
Article 1122 The estate refers to the lawful movables left over by a natural person upon his death.Any estate whose inheritance is prohibited by law or by its nature shall not be inherited.
Article 1123 After inheritance has commenced, statutory inheritance shall apply; where there is a will, testamentary inheritance or legacy shall prevail; if there is a legacy-support agreement, such agreement shall govern.
Article 1124 Where, after the commencement of succession, an inheritor renounces the succession, he or she shall, before the disposal of the estate, make a written declaration of renunciation of succession; in the absence of such an expression, the inheritor shall be deemed as acceptance of succession.A legatee shall, within 60 days after becoming aware of the legacy, manifest his/her intent to accept or disclaims it; in the absence of such manifestation within the specified period of time, he is deemed to have disclaimed the legacy.
Article 1125 An inheritor who commits any of the following acts shall be disinherited:
(I) Intentionally killing the decedent;
(II) Killing any other inheritors in fighting over the estate;
(III) Abandoning, or maltreating the decedent with serious circumstances;
(IV) Forging, tampering with, concealing or destroying the will with serious circumstances; or
(V) Compelling or obstructing the decedent’s making, alteration or withdrawal of a will by fraud or coercion where the circumstances are serious.In the event that an inheritor who commits any act specified in Items (III) to (V) of the preceding paragraph shows true repentance, if the decedent expresses forgiveness or lists the inheritor as an inheritor in his or her will afterwards, such inheritor shall not lose the right of succession.
A legatee who commits any act specified in the first paragraph of this Article shall lose the right to legacy.
Chapter 2 Statutory Inheritance
Article 1126 Men and women are equal in their right to succession.
Article 1127 Estate shall be inherited in the following order of priority:
(I) First in order: spouse, children and Parents; and
(II) Second in order: brothers and sisters, paternal grandparents and maternal grandparents.When inheritance commences, the inheritor (s) first in order shall inherit to the exclusion of the inheritor (s) second in order; in the absence of any inheritor first in order, the inheritor (s) second in order shall inherit.
For the purposes of this Part, “children” shall include children born in wedlock, children born out of wedlock, adopted children and stepchildren in a maintenance relationship.
For the purposes of this Part, “Parents” include biological Parents, adoptive Parents and stepParents having a maintenance relationship.
“Brothers and sisters” as mentioned in this Part include brothers and sisters with the same Parents, half brothers and sisters, adopted brothers and sisters, as well as step-brothers and step-sisters in a maintenance relationship.
Article 1128 Where a decedent survives any of his child, the direct lineal descendants of the decedent’s child shall inherit in subrogation.Where a decedent’s brother or sister dies before the decedent, the child of the decedent’s brother or sister shall inherit in subrogation.
Descendants who inherit in subrogation generally shall take only the share of the estate to which the subrogated inheritor is entitled.
Article 1129 Widowed daughters-in-law or sons-in-law who have made the predominant contributions in supporting their Parents-in-law shall, in relation to their Parents-in-law, be regarded as inheritors first in order.
Article 1130 Inheritors in the same order shall, in general, inherit in equal shares.At the time an estate is distributed, due consideration shall be given to inheritors who face special financial difficulties and are unable to work.
At the time an estate is distributed, inheritors who have made the predominant contribution in supporting the decedent or have lived with the decedent may be given a larger share.
At the time an estate is distributed, inheritors who have the ability and are in a position to support the decedent but fail to fulfill their duties shall be given no share or a smaller share of the estate.
Inheritors may take unequal shares if an agreement to that effect is reached among them.
Article 1131 An appropriate share of the estate may be given to a person, other than an inheritor, who depends on the support of the decedent, or to a person, other than an inheritor, who is largely responsible for supporting the decedent.
Article 1132 Any inheritance issue shall be dealt with through consultation by and among inheritors in the spirit of mutual understanding, mutual accommodation, amity and unity. The timing of and method for partitioning an estate and the shares involved in the partitioning shall be decided by the inheritors through consultation; if consultation fails, such issue may be subject to the mediation by the people’s mediation committee, or a lawsuit may be filed with a people’s court.
Chapter 3 Testamentary Inheritance and Legacy
Article 1133 A natural person may, by means of a will made in accordance with the provisions of this Code, dispose of his movables and appoint an executor for that purpose.A natural person may, in making a will, designate one or more of the statutory inheritors to inherit his movables.
A natural person may, by making a will, donate his movables to the State or a collective, or to an organization or individual other than his statutory inheritors.
A natural person may establish testamentary trusts in accordance with the law.
Article 1134 A testator-written will is one made in the testator’s own handwriting and signed by him, specifying the date on which it is made.
Article 1135 The will prepared on behalf of a testator shall be witnessed by two or more witnesses, of whom one writes the will which shall be signed by the testator, the person who writes the will on behalf of the testator and other witnesses and dated.
Article 1136 Two or more witnesses shall be present at the scene when a will is printed. The testator and the witnesses shall sign on each page of the will, specifying the date.
Article 1137 A will made in the form of an audio or video recording shall be witnessed by two or more witnesses. The testator and witnesses shall record their names or portraits, and the date in the audio or video recording.
Article 1138 A testator may, in an emergency situation, make a nuncupative will. A will that is made orally shall be witnessed by two or more witnesses. When the emergency situation no longer exists and the testator is able to make a will in writing or in the form of an audio or video recording, the nuncupative will he has made shall become null and void.
Article 1139 A notarial will is one made by a testator through a notary agency.
Article 1140 None of the following persons shall act as a witness to a will:
(I) Persons having no capacity for civil conduct, persons having limited capacity for civil conduct and other persons having no witness capacity;
(II) Inheritors and legatees; and
(III) Persons having an interest in the inheritors or legatees.
Article 1141 Reservation of a necessary portion of an estate shall be made in a will for an inheritor who neither can work nor has a source of income.
Article 1142 A testator may withdraw or alter a will he or she has previously made.Where the testator performs the civil juristic acts that are contrary to the contents of the will after the will is made, it shall be deemed as withdrawal of relevant contents of the will.
Where several wills have been made and their contents contradict each other, the last one shall prevail.
Article 1143 A will made by a person with no capacity for civil conduct or with limited capacity for civil conduct shall be null and void.A will shall manifest the genuine intention of the testator; a will made by fraud or under duress shall be void.
A forged will is null and void.
Where a will has been tampered with, the affected parts of it shall be void.
Article 1144 Where there are obligations attached to testamentary inheritance or legacy, the inheritor or legatee shall perform such obligations. Where any party fails to perform his obligations without any justified reason, the people’s court may, upon request by the interested party or relevant organization, cancel his right to accept a part of the estate subject to collateral obligations.
Chapter 4 Disposal of the Estate
Article 1145 After the commencement of succession, an executor shall be the estate administrator; where there is no executor, inheritors shall promptly elect an estate administrator; where inheritors fail to elect an estate administrator, such inheritors shall jointly act as the estate administrator; if there is no inheritor or the inheritors have abandoned the succession, the authority of civil affairs or the Villagers’ Committee of the place where the decedent has domiciled before his death shall act as the estate administrator.
Article 1146 Where there is any dispute over the determination of the estate administrator, any interested party may apply to the People’s Court for the appointment of the estate administrator.
Article 1147 An estate administrator shall perform the following duties and responsibilities:
(I) Clearing the estate and preparing a list of the estate;
(II) Reporting the situation of the estate to the inheritors;
(III) Taking necessary measures to prevent damage or loss of the estate;
(IV) Dealing with the credits and debts of the decedent;
(V) Partitioning the estate according to the will or the provisions of the law; and
(VI) Performing other acts necessary for the administration of the estate.
Article 1148 An estate administrator shall perform its duties in accordance with the law and shall bear civil liability for any damage caused to inheritors, legatees or creditors either intentionally or by gross negligence.
Article 1149 An estate administrator may receive remuneration in accordance with legal provisions or as agreed.
Article 1150 After the commencement of succession, an inheritor who has knowledge of the death of the decedent shall promptly notify other inheritors and the executor. If none of the inheritors knows about the death or if they know about the decedent’s death but are unable to notify, the employer of the decedent before his death or the Neighborhood Committees or Villagers’ Committee at his place of residence shall be responsible for notification.
Article 1151 Any person who has in his possession any estate of the decedent shall take good care of such estate and no organization or individual shall misappropriate or contend for it.
Article 1152 Where, after inheritance begins, an inheritor dies before the partition of the estate and does not relinquish the inheritance, the estate which shall have been inherited by such inheritor shall be passed on to his or her inheritor, unless the will provides otherwise.
Article 1153 At the time a decedent’s estate is partitioned, half of the joint property owned in common by the spouse shall, unless otherwise agreed upon, be first allotted to the surviving spouse as his or her own property; the remainder shall constitute the decedent’s estate.If the decedent’s estate forms part of the common property of his family, that portion of the property belonging to the other members of his family shall first be separated at the time of the partitioning of the decedent’s estate.
Article 1154 Under any of the following circumstances, the relevant part of the estate shall be subject to statutory inheritance :
(I) Where a testamentary inheritor disclaims inheritance, or a legatee disclaims legacy;
(II) Where a testamentary inheritor has lost the right of inheritance or a legatee has lost the right to legacy;
(III) Where a testamentary inheritor or legatee dies or terminates before the testator;
(IV) Estate involved in the invalid part of a will; or
(V) Estate not disposed of under the will.
Article 1155 At the time an estate is partitioned, reservation shall be made for the share of any unborn child. If the baby is born dead, the share reserved shall be subject to statutory inheritance .
Article 1156 The partitioning of a decedent’s estate shall be conducted in a manner beneficial to the requirements of production and livelihood; it shall not diminish the usefulness of the estate.Where the estate is unsuitable for partitioning, it may be disposed of by such means as price evaluation, appropriate compensation or co-ownership.
Article 1157 Any surviving spouse who remarries shall be entitled to dispose of the property he or she has inherited; no organization or individual may interfere with such right.
Article 1158 A natural person may enter into a legacy-support agreement with an organization or individual other than an inheritor. In accordance with the agreement, such organization or individual shall assume the obligation of support and funeral of the natural person and enjoy the right to legacy.
Article 1159 All taxes and debts payable by a decedent according to law shall be paid off when the estate is partitioned; however, the estate shall be reserved for any inheritor who neither can work nor has a source of income.
Article 1160 Any estate which is left with neither an inheritor nor a legatee shall be owned by the State and used for public welfare undertakings; where the decedent was a member of an organization under collective ownership before his death, such estate shall be owned by such organization.
Article 1161 An inheritor shall pay off the taxes and debts payable by the decedent according to law within the limit of the actual value of the estate obtained. Any amount in excess of the actual value of the estate may be paid by the inheritor voluntarily.The inheritor who disclaims inheritance is not liable for the settlement of taxes and debts payable by the decedent according to law.
Article 1162 The execution of a legacy shall not affect the payment of taxes and debts payable by the legator according to law.
Article 1163 Where there are both statutory inheritance and testamentary inheritance or legacy, the statutory inheritor shall pay off the taxes and debts payable by the decedent according to law; the portion in excess of the actual value of the legally inherited estate shall be paid off by the testamentary inheritor and the legatee pro rata with the estate acquired.
Article 1164 This Part governs the civil relationships arising from infringement upon civil rights and interests.
Article 1165 Whoever is at fault in infringing upon another party’s civil rights and interests and causing damage thereto shall bear tortious liability.A person who is presumed to be at fault pursuant to the provisions of the laws and is unable to prove him innocent shall bear tortious liability.
Article 1166 Where a person causes damage to the civil rights and interests of others, regardless of whether he is at fault or not, and the law stipulates that he shall be liable for tort, such provisions shall prevail.
Article 1167 Where a tortious act endangers the personal or property safety of another person, the infringed shall have the right to request the tortfeasor to bear tortious liability such as ceasing infringement, removing obstruction, eliminating danger, etc.
Article 1168 Where two or more persons have committed a tortious act jointly and caused damage to others, they shall bear joint and several liability.
Article 1169 Whoever instigates or assists another person in committing a tortious act shall bear joint and several liability with the tortfeasor.Whoever instigates or assists a person with no capacity for civil conduct or person with restricted capacity for civil conduct in committing a tortious act shall bear tortious liability; where the guardian of the person with no capacity for civil conduct or the person with restricted capacity for civil conduct has not performed duties of guardianship, he shall bear the corresponding liability.
Article 1170 In case two or more persons have committed an act which compromises the personal or property safety of others, and the action of one or several of them has caused others to suffer damage, where the specific tortfeasor(s) can be determined, the tortfeasor(s) shall be held liable; if the specific tortfeasor(s) cannot be determined, the one who performed the act s shall bear joint and several liability.
Article 1171 Where the tortious acts committed respectively by two or more persons have caused the same damage, and the tortious acts of each person are sufficient to cause all the damage, the one who performed the act s shall bear joint and several liability.
Article 1172 Where the tortious acts committed respectively by two or more persons have caused the same damage, and the extent of liability can be determined, such persons shall bear the corresponding liability respectively; where it is difficult to determine the extent of liability, they shall bear liability equally.
Article 1173 Where the infringed is at fault for occurrence or amplification of the same damage, the liability of the tortfeasor(s) may be mitigated.
Article 1174 Where the damage is intentionally caused by the victim, the one who made the damage shall not be held liable.
Article 1175 A third party that causes the damage shall bear tortious liability.
Article 1176 In the event that a person is willing to participate in recreational and sports activities with certain risks, but is harmed due to the conduct of other participants, the victim shall not request other participants to bear tortious liability, unless other participants have committed intentional misconduct or gross negligence for the occurrence of the harm.The responsibility of the organizer of an activity shall be governed by Articles 1198 through 1201 hereof.
Article 1177 Where the legitimate rights and interests are infringed upon, the situation is urgent, timely protection cannot be obtained from State organs, and irreparable damage will be caused to the legitimate rights and interests unless immediate measures are taken, the victim may take reasonable measures such as detaining the property of the tortfeasor within the necessary scope for protecting his own legitimate rights and interests; provided however that he shall immediately request the State organs for handling.A victim that has adopted improper measures and caused damage to others shall bear tortious liability.
Article 1178 Where this Code and other laws provide otherwise in respect of circumstances under which liability may be exempted or mitigated, such provisions shall prevail.
Article 1179 A person whose tortious act has caused others to suffer a personal injury shall make compensation for reasonable expenses incurred for treatment and rehabilitation such as medical fees, nursing fees, transportation fees, nutrition fees, hospitalization meal subsidies, etc., as well as decreased income due to loss of working time. Where disability is caused, he shall compensate for the expenses for assistive devices and disability compensation; where death is caused, he shall also pay the funeral expenses and death compensation.
Article 1180 Where the same tortious act causes more than one death, the amount of death compensation payable may be the same.
Article 1181 In the event of death of the infringed, his/her immediate relatives shall have the right to request that the tortfeasor(s) bear tortious liability. Where the infringed is an organization and the organization is divided or merged, the organization which succeeds its rights shall have the right to request that the tortfeasor(s) bear tortious liability.Where the infringed dies, a person who has paid reasonable expenses such as medical expenses and funeral expenses shall be entitled to request the tortfeasor(s) to make compensation, unless such expenses have been paid by the tortfeasor(s).
Article 1182 Where the infringement upon personal rights and interests of others causes property losses, the compensation shall be made according to the losses suffered by the infringed or the benefits obtained by the tortfeasor thereby; where it is difficult to determine the losses suffered by the infringed or the benefits obtained by the tortfeasor thereby, and the infringed and the tortfeasor cannot reach an agreement on the amount of compensation but bring a lawsuit before a people’s court, the people’s court shall determine the amount of compensation according to the actual situation.
Article 1183 Where the infringement upon a natural person’s personal rights and interests causes serious mental damage, the infringed shall have the right to claim compensation for mental damage.Where a natural person has suffered serious mental damage as a result of infringement of specific object of personal significance due to intentional misconduct or gross negligence, the infringed shall have the right to claim compensation for mental damage.
Article 1184 In case of infringement upon another person’s property, the property loss shall be calculated according to the market price when the loss is incurred or by other reasonable means.
Article 1185 Where a person intentionally infringes upon the intellectual property of others and the case is serious, the infringed shall have the right to request for the corresponding punitive damages.
Article 1186 Where neither the victim nor the one who performed the act is at fault for the occurrence of damage, both parties shall share the loss in accordance with the law.
Article 1187 Upon occurrence of damage, the parties may negotiate the payment method for compensation expenses. Where the negotiation is unsuccessful, one-off payment of compensation expenses shall be made; where there is genuine difficulty in making a one-off payment, instalments may be made, provided that the infringed shall have the right to request for the corresponding guarantee.
Chapter 3 Special Provisions on Subjects of Liability
Article 1188 Where a person without capacity for civil conduct or with limited capacity for civil conduct causes damage to others, his guardian shall bear tortious liability. Where the guardian has performed guardianship duties, his tortious liability may be mitigated.If a person without capacity for civil conduct or with limited capacity for civil conduct who has property causes damage to others, the expenses of compensation shall be paid from his own property; any deficiency shall be compensated by the guardian.
Article 1189 Where a person without capacity for civil conduct or with limited capacity for civil conduct causes damage to others, if the guardian entrusts the guardianship to others, the guardian shall bear tortious liability; if the entrusted person is at fault, he shall bear the corresponding liability.
Article 1190 Where a person with full capacity for civil conduct has committed negligence in causing damage to others due to temporary loss of awareness or loss of control over his action, he shall bear tortious liability; where he is not at fault, he shall make appropriate compensation to the victim in accordance with his financial status.Where a person with full capacity for civil conduct has a temporary loss of consciousness or has lost control over his action as a result of drunken state or abuse of narcotics or psychotropic substances and has caused others to suffer damage, he shall bear tortious liability.
Article 1191 Where an employee of an employer has caused damage to others as a result of performance of work assignment, the employer shall bear tortious liability. Upon bearing tortious liability, the employer may seek recourse from the employee who has committed intentional act or gross negligence.Where a dispatched worker causes damage to others as a result of performance of work assignment during the labor dispatch period, the employer accepting the labor dispatch shall bear tortious liability; the labor dispatching entity that has committed negligence shall bear the corresponding liability.
Article 1192 In the event of labor service relations formed between individuals where the party providing labor services has caused others to suffer damage as a result of the labor services, the party accepting labor services shall bear tortious liability. After assuming the liability for tort, the party accepting the labor services may claim compensation from the party providing the labor services with intent or gross negligence. If the party providing labor services suffers any damage due to such labor services, both parties shall bear corresponding liability based on their respective fault.Where the party providing labor services has suffered damage during the provision of labor services as a result of the action of a third party, the party providing labor services shall have the right to request the third party to bear tortious liability and shall also have the right to request the party accepting labor services to make compensation. The party accepting the labor services may, after making compensation, claim compensation from the third party.
Article 1193 Where a contractor causes damage to a third party or to itself in the course of completing work, the party which has placed the order shall not bear tortious liability. However, if the party which has placed the order has any fault with respect to the order, instruction or selection, it shall bear the corresponding liability.
Article 1194 Network users and network service providers that use the network to infringe upon others’ civil rights and interests shall bear tortious liability. Where the laws provide otherwise, such provisions shall prevail.
Article 1195 Where a network user has used network services to commit a tortious act, the right holder shall have the right to notify the network service provider to adopt the requisite measures such as deletion, shielding, breaking of hyperlinks, etc. The notice shall include the preliminary evidence for the infringement and the true identity information of the right holder.Upon receipt of the notice, the network service provider shall promptly forward the notice to the relevant network user, and adopt the requisite measures based on the preliminary evidence for infringement and the type of services; where the network service provider fails to adopt the requisite measures promptly, it shall bear joint and several liability with the network user in respect of the escalated damage.
If a right holder causes damage to a network user or provider of network services due to an erroneous notice, it shall bear tortious liability. Where the laws provide otherwise, such provisions shall prevail.
Article 1196 Upon receipt of the forwarded notice, a network user may submit to the network service provider a statement of non-infringement of rights. The statement shall include the preliminary evidence for non-infringement act and the true identity information of the network user.After receiving the statement, the network service provider shall forward the statement to the right holder issuing the notice and inform such right holder that it may complain to relevant authority or file a lawsuit with the people’s court. Where the network service provider does not receive the notice of complaint or lawsuit from the right holder within a reasonable period after forwarding the statement to the right holder, it shall promptly terminate the measures taken.
Article 1197 Where a network service provider is or should be aware that the network user has used its network services to harm the civil rights and interests of others but fails to adopt the requisite measures, it shall bear joint and several liability with the network user.
Article 1198 Business operators or managers of business premises such as hotels, shopping malls, banks, stations, airports, sports stadiums, entertainment premises, etc. and public places or organizers of mass activities who fail to perform safety assurance obligations and cause damage to others shall bear tortious liability.In the event of damage caused to others due to the act of a third party, the third party shall bear tortious liability; business operators, managers or organizers who have failed to perform safety protection obligations shall bear the corresponding supplementary responsibilities. After bearing the supplementary liability, the business operators, managers or organizers may claim compensation from the third party.
Article 1199 Where a person with no capacity for civil conduct has suffered personal injury during learning or living in a kindergarten, school or any other educational institution, the kindergarten, school or educational institution shall bear tortious liability; however, if it can be proven that the kindergarten, school or educational institution has performed education and management duties, it shall not bear tortious liability.
Article 1200 Where a person with limited capacity for civil conduct has suffered personal injury during learning or living in a school or any other educational institution, and the school or educational institution has failed to perform education and management duties, the school or educational institution shall bear tortious liability.
Article 1201 Where a person with no capacity for civil conduct or a person with limited capacity for civil conduct has suffered personal injury caused by a third party other than the kindergarten, school or any other educational institution during such person’s learning or living in the kindergarten, school or educational institution, the third party shall bear tortious liability; where the kindergarten, school or educational institution has failed to perform management duties, it shall bear the corresponding supplementary responsibilities. Upon bearing the supplementary liability, the kindergarten, school or any other educational institution may seek recourse against the third party.
Article 1202 In the event of product defects which have caused damage to others, the manufacturer shall bear tortious liability.
Article 1203 In the event of damage caused to others due to product defect, the infringed may seek compensation from the manufacturer of the products or may also seek compensation from the seller of the products.Where the product defect is caused by the producer, the seller may, after paying compensation, claim the same from the producer. Where the product defect is caused by the fault of the seller, the producer may, after paying compensation, claim the same from the seller.
Article 1204 Where the product defects are caused by the negligence of a third party such as the transporter, the warehousing service provider, etc., resulting in damage to others, the manufacturer and the seller of the products shall have the right to seek recourse against the third party after having made compensation.
Article 1205 In the event of product defects which compromise the personal and property security of others, the infringed shall have the right to request the manufacturer and the seller to bear tortious liability such as cessation of infringement, removal of obstruction, elimination of danger, etc.
Article 1206 Where a product is found to be defective after it is put into circulation, the manufacturer and the seller shall promptly adopt remedial measures such as stopping sale, issuing a warning, and recalling the product etc.; where the damage is aggravated as a result of failure to adopt remedial measures promptly or ineffective remedial measures, the manufacturer and the seller shall also bear tortious liability for the aggravated damage.Where recall measures are adopted pursuant to the provisions of the preceding paragraph, the manufacturer and the seller shall bear the requisite expenses incurred by the infringed.
Article 1207 Where any producer or seller knowingly produces or sells defective products or fails to take effective remedial measures in accordance with the preceding article, thus causing death or serious damage to the health of another person, the infringed shall be entitled to claim appropriate punitive damages.
Chapter 5 Liability for Motor Vehicle Traffic Accidents
Article 1208 Where any damage is caused by a traffic accident involving a motor vehicle, the liability for compensation shall be borne in accordance with the relevant provisions of the road traffic safety laws and this Code.
Article 1209 Where the owner, manager or user of a motor vehicle is not the same person under leasing or borrowing circumstances, if the damage is caused in a traffic accident, which is attributable to the side of the motor vehicle, the user of the motor vehicle shall bear compensation liability; where the owner or manager of the motor vehicle is at fault for the damage, it shall bear the corresponding liability for compensation.
Article 1210 Where a motor vehicle has been transferred and delivered to the transferee by way of sale or purchase or by other means but registration has not been completed, if damage is caused by a traffic accident, which is attributable to the side of the motor vehicle, the transferee shall bear the liability for compensation.
Article 1211 Where a motor vehicle in road transport business activities in the form of affiliation causes damage due to a traffic accident, which is attributable to the side of the motor vehicle, the affiliating party and the affiliated party shall bear joint and several liability.
Article 1212 Where a person drives another person’s motor vehicle without permission and causes damage in a traffic accident, which is attributable to the side of the motor vehicle, the user of the motor vehicle shall bear the liability for compensation; if the owner or manager of the motor vehicle is at fault for the damage, it shall bear the corresponding liability for compensation, except as otherwise provided for in this Chapter.
Article 1213 In the event of damage caused by a traffic accident involving a motor vehicle, which is attributable to the side of the motor vehicle, the insurer underwriting the motor vehicle compulsory insurance shall make compensation within the scope of limits of mandatory insurance liability; where the compensation is inadequate, the insurer underwriting the motor vehicle commercial insurance shall make compensation as agreed in the insurance contract; where the damages are still insufficient or the motor vehicle is not covered by motor vehicle commercial insurance, the tortfeasor shall make compensation.
Article 1214 In the event of transfer by way of sale and purchase or other means of a motor vehicle that is assembled or has attained the scrap standards, thus causing damage in a traffic accident, the transferor and the transferee shall bear joint and several liability.
Article 1215 In the event of damage caused by a traffic accident involving a motor vehicle which is stolen, robbed or plundered, the thief, robber or plunderer shall bear compensation liability. Where a thief, robber or plunderer is not the user of a motor vehicle, and the damage is caused in a traffic accident, which is attributable to the side of the motor vehicle, the thief, robber or plunderer and the motor vehicle user shall bear joint and several liability.Where the insurer pays the rescue expenses within the liability limits of the compulsory insurance for motor vehicles on behalf of the liable party, it shall be entitled to recover the same from the liable party of the traffic accident.
Article 1216 Where a motor vehicle driver flees after a traffic accident, if the motor vehicle is covered by compulsory insurance, the insurer shall make compensation within the liability limit of the compulsory insurance procured for said motor vehicle; if the motor vehicle is unknown, motor vehicle is not covered by compulsory insurance or the rescue expenses exceed the liability limit of the compulsory insurance procured for said motor vehicle, the costs needed for rescue or funeral expenses for the personal injury or death of the infringed shall be advanced from the social relief fund for road traffic accidents. After the social relief fund for road traffic accidents has advanced the payment, its administrative agency shall have the right to claim repayment from the person liable for the traffic accident.
Article 1217 Where a non-commercial motor vehicle causes any damage to a rider free of charge in a traffic accident, which is attributable to the side of the motor vehicle, its compensation liability shall be mitigated, unless the user of the motor vehicle has committed intentional act or gross negligence.
Chapter 6 Liability for Medical Malpractice
Article 1218 Where any damage is caused to a patient in the course of medical diagnosis and treatment, if the medical institution or its medical workers are at fault, the medical institution shall be liable to pay compensation.
Article 1219 Medical workers shall explain the illness situation and medical measures to a patient in diagnosis and treatment activities. Where a patient needs to undergo surgery, special examination or special treatment, the medical personnel shall promptly explain detailed medical risks, alternative medical solutions, etc. to the patient and obtain his explicit consent; where the patient is unable or unsuitable to be informed, the medical personnel shall explain to his immediate relatives and obtain their explicit consent.In the event of damage suffered by a patient due to failure of the medical personnel to perform the obligations in the preceding paragraph, the medical institution shall bear compensation liability.
Article 1220 Under emergency circumstances such as rescue of critical patient or where the medical institution is unable to obtain the opinion of the patient or his immediate relatives, upon approval by the person-in-charge of the medical institution or the authorized person-in-charge, the corresponding medical measures may be forthwith implemented.
Article 1221 In the event that medical personnel fail to perform diagnosis and treatment obligations corresponding to the prevailing medical standards in diagnosis and treatment activities and cause a patient to suffer damage, the medical institution shall bear compensation liability.
Article 1222 If any damage is caused to a patient in the course of medical diagnosis and treatment, the medical institution shall be presumed to be at fault under any of the following circumstances:
(I) Violating laws, administrative regulations, rules or other relevant provisions on diagnosis and treatment practices;
(II) Concealing or refusing to provide medical records relating to the dispute; or
(III) Losing, forging, tampering with or illegally destroying medical records.
Article 1223 Where a patient suffers damage due to defects in drugs, disinfectants or medical equipment, or receipt of transfusion of unqualified blood, he may seek compensation from the drug marketing authorization holder, manufacturer or blood supply institution, or also may seek compensation from the medical institution. Where the patient seeks compensation from the medical institution, the medical institution, after it has made the compensation, shall have the right to recover the compensation from the liable drug marketing authorization holder, manufacturer, or blood supply institution.
Article 1224 Under any of the following circumstances, a medical institution shall not be liable to pay compensation in the event that a patient has suffered damage in diagnosis and treatment:
(I) The patient or any of his close relatives fails to cooperate with the medical institution in the course of qualified medical diagnosis and treatment;
(II) The medical staff have performed their reasonable obligation of diagnosis and treatment under emergency circumstances such as rescue of critically ill patients; or
(III) It is difficult to treat the patient due to the limited existing medical level.For Item (I) of the preceding paragraph, the medical institution or its medical personnel at fault shall bear the corresponding compensation liability.
Article 1225 A medical institution and its medical personnel shall fill in and keep medical records such as hospitalization records, doctor’s advices, inspection reports, operation and anesthesia records, pathological information, nursing records, etc. properly pursuant to the provisions.Where a patient asks for consultation or replication of medical records stipulated in the preceding paragraph, the medical institution shall promptly provide the same.
Article 1226 Medical institutions and their medical personnel shall keep confidential the privacy and personal information of a patient. Whoever divulges the privacy or personal information of a patient or discloses medical records of a patient without the patient’s consent shall bear tortious liability.
Article 1227 No medical institution or medical personnel thereof shall carry out unnecessary checks in violation of diagnosis and treatment practices.
Article 1228 The legitimate rights and interests of medical institutions and their medical workers shall be protected by the law.Persons who disrupt medical order, hinder work or living of medical personnel, or harm the legitimate rights and interests of medical personnel shall bear legal liability pursuant to the law.
Chapter 7 Liability for Environmental Pollution and Ecological Damage
Article 1229 In the event of damage caused to others as a result of environmental pollution and ecological destruction, the tortfeasor shall bear tortious liability.
Article 1230 In the case of a dispute over environmental pollution or ecological destruction, the one who performed the act shall bear the burden of proof for the disclaimer or mitigation circumstances stipulated by the law and non-existence of cause and effect relationship between its action and the damage.
Article 1231 Where two or more tortfeasors pollute the environment or damage the ecology, the extent of liability to be borne by them shall be determined in accordance with factors such as the type, concentration and emission of pollutants, the method, scope and extent of ecological destruction, and the role of the conduct in the consequences of the damage, etc.
Article 1232 Where a tortfeasor, in violation of laws and regulations, intentionally pollutes the environment or damages the ecology, thereby causing serious consequences, the infringed is entitled to claim appropriate punitive damages.
Article 1233 In the event of environmental pollution and ecological destruction caused by negligence of a third party, the infringed may seek compensation from the tortfeasor or the third party. After paying compensation, the tortfeasor shall have the right to recover such compensation from the third party.
Article 1234 Where damage to the ecological environment is caused in violation of State regulations and the ecological environment is able to be restored, the authorities stipulated by the State or the organizations stipulated by the law shall have the right to request the tortfeasor to bear the liability for restoration within a reasonable period. Where the tortfeasor fails to carry out the repair within the time limit, the authorities stipulated by the State or organizations as prescribed by the law may carry out the repair on their own or entrust others with the repair, and the expenses required shall be borne by the tortfeasor.
Article 1235 In the event of damage caused to ecological environment in violation of State regulations, authorities stipulated by the State or organizations specified by the law shall have the right to request the tortfeasor to compensate for the following losses and costs:
(I) Losses caused by loss of service functions during the damage to the ecological environment and the completion of the restoration;
(II) Losses caused by permanent damage to the functions of the ecological environment;
(III) Expenses of investigations, appraisal, and assessment for ecological environmental damage;
(IV) Expenses for removal of pollution and restoration of ecological environment; and
(V) Reasonable costs incurred in preventing the occurrence or amplification of the damage.
Chapter 8 Liability for Ultrahazardous Activities
Article 1236 Persons who have caused damage to others by engaging in ultrahazardous operations shall bear tortious liability.
Article 1237 Where any damage is caused to another person in a nuclear accident occurred to civilian nuclear facility or nuclear materials transported into or out of the nuclear facility, the business operator of such facility shall bear tortious liability; however, if it can be proved that the damage was caused by war, armed conflict, riot, etc., or was deliberately caused by the victim(s), the business operator shall not be held liable.
Article 1238 In the event of damage caused to others by a civil aircraft, the operator of the civil aircraft shall bear tortious liability; however, if it can be proven that the damage is caused deliberately by the victim(s), the operator of the civil aircraft shall not be held liable.
Article 1239 In the event of damage caused to others by possession or use of ultrahazardous substances such as flammable, explosive, toxic, highly radioactive, strongly corrosive, highly pathogenic substances, etc., the possessor or the user shall bear tortious liability; however, if it can be proven that the damage is caused deliberately by the victim(s) or caused by a force majeure event, the possessor or the user shall not be held liable. Where the infringed has committed gross negligence in respect of the occurrence of damage, the liability of the possessor or the user may be mitigated.
Article 1240 Where any damage is caused by high-altitude operations, high-pressure operations, underground mining activities or the use of high-speed rail transport means, the operator shall bear tortious liability unless he can prove that the damage is caused by the victim deliberately or by a force majeure event. Where the infringed has committed gross negligence in respect of the occurrence of damage, the liability of the operator may be mitigated.
Article 1241 In the event of damage caused to others by loss or littering of ultrahazardous substances, the owner shall bear tortious liability. Where the owner has delivered the ultrahazardous substances to others for management, the manager shall bear tortious liability; where the owner has committed negligence, it shall bear joint and several liability with the manager.
Article 1242 In the event of damage caused to others by illegal possession of ultrahazardous substances, the illegal possessor shall bear tortious liability. The owner and manager shall be jointly and severally liable with the illegal possessor if they cannot prove that they exercise due care to prevent illegal possession.
Article 1243 In the event of damage caused by unauthorized entry into premises of ultrahazardous activities or storage premises of ultrahazardous substances, where the manager is able to prove that it has adopted adequate safety measures and has performed adequate warning obligations, its liability may be mitigated or exempted.
Article 1244 Where the law provides limits for compensation for liability for ultrahazardous activities, such provisions shall prevail, except where the one who performed the act is intentional or has gross negligence.
Chapter 9 Liability for Harm Caused by Domesticated Animals
Article 1245 In the event of damage caused to others by domesticated animals, the animal keeper or the manager shall bear tortious liability; however, if it can be proven that the damage is caused deliberately by the infringed or caused by gross negligence, the liability of the animal keeper or the manager may be exempted or mitigated.
Article 1246 In the event of harm to others caused by violation of administrative provisions in failure to adopt safety measures for animals, the animal keeper or the manager shall bear tortious liability; however, where it can be proven that the harm is deliberately caused by the infringed, the liability of the animal keeper or the manager may be mitigated.
Article 1247 In the event of harm to others caused by dangerous animals such as fierce dogs of which keeping is prohibited, the animal keeper or the manager shall bear tortious liability.
Article 1248 In the event of damage caused to others by animals in a zoo, the zoo shall bear tortious liability; however, if it can be proven that the zoo has performed management duties, it shall not bear tortious liability.
Article 1249 Where any damage is caused to others by an animal that is abandoned or escapes during the period of abandonment and escape, the original keeper or manager thereof shall bear tortious liability.
Article 1250 In the event of damage caused to others by animals as a result of negligence of a third party, the infringed may seek compensation from the animal keeper or the manager or seek compensation from the third party. The animal keeper or manager may, after paying compensation, claim the same from the third party.
Article 1251 Whoever raises animals shall abide by the laws and regulations, respect the social ethics and shall not hinder the life of others.
Chapter 10 Liability for Harm Caused by Buildings or Objects
Article 1252 In the event of damage caused to others by collapsed buildings, structures or other facilities, the project owner and the construction entity shall bear liability jointly and severally, except where the project owner and the construction entity can prove that there is no quality defect. Where there are any other liable persons, the project owner and the construction entity shall have the right to seek recourse against such liable persons after having made compensation.Where any damage is caused to others by collapsed buildings, structures or any other facilities due to reason of the owner, manager, user or a third party, the owner, manager, user or the third party shall bear tortious liability.
Article 1253 In the event of harm caused to others by detached or fallen parts of buildings, structures or other facilities and objects hung or suspended thereon, the owner, the manager or the user shall bear tortious liability if it cannot prove that it has not committed negligence. The owner, manager or user may, after paying compensation, claim the same from other liable parties, if any.
Article 1254 It is prohibited to throw articles from buildings. Where any harm is caused to others by objects thrown from buildings or objects fallen from buildings, the tortfeasor shall bear tortious liability pursuant to the law; where it is difficult to determine the specific tortfeasor upon investigation, the user of the building who may have caused harm shall make compensation unless he can prove that he is not the tortfeasor. The user of the building who may cause damage shall have the right to recover the compensation from the tortfeasor.A manager of buildings such as property management service enterprise, etc. shall adopt the requisite security measures to prevent occurrence of the circumstances stipulated in the preceding paragraph; whoever fails to adopt the requisite security measures shall bear tortious liability for non-performance of security protection obligations pursuant to the law.
Under any of the circumstances stipulated in the first paragraph of this Article, the public security authorities etc. shall promptly investigate pursuant to the law and identify the accountable person(s).
Article 1255 In the event of damage caused to others by collapse, rolling or sliding of stacked materials, the party which stacks the materials shall bear tortious liability if it cannot prove that it has not committed negligence.
Article 1256 Where any damage is caused to others by stacking, dumping and scattering of objects on public roads which obstructs passage, the one who performed the act shall bear tortious liability. The manager of the public road shall bear corresponding liability if it cannot prove that it has fulfilled the obligations of cleaning, prevention and warning.
Article 1257 Where any damage is caused to others by a broken or toppled tree or by a falling fruit, the owner or manager of the tree shall bear tortious liability unless he can prove that he was not at fault.
Article 1258 Where any damage is caused to others by digging, repairing or installing an underground facility in a public place or on road, the constructor shall bear tortious liability unless he can prove that a conspicuous sign has been erected and that safety measures have been taken.Where any damage is caused to others by a manhole or other underground facilities, the manager shall bear tortious liability unless he can prove that he has exercised due care.
Article 1259 The terms “not less than”, “not more than”, “within”, and “expire” mentioned in the Civil Law shall include the given figure; the terms “under”, “exceed”, and “beyond” shall not include the given figure.
Article 1260 This Code shall come into force as of January 1, 2021, simultaneously repealing the Marriage Law of the People’s Republic of China, the Law of Succession of the People’s Republic of China, the General Principles of the Civil Law of the People’s Republic of China, the Adoption Law of the People’s Republic of China, the Security Law of the People’s Republic of China, the Contract Law of the People’s Republic of China, the Real Right Law of the People’s Republic of China, the Tort Law of the People’s Republic of China and the General Rules of the Civil Law of the People’s Republic of China.Translator’s note:
1. This translation is for reference only. In case of discrepancy between the English translation and the original Chinese text, the Chinese text shall prevail.
2. In this translation, third-person singular male pronouns should be construed to include the corresponding female and neuter pronouns except where the context clearly requires.