PRC Contract Law

Article 2: For the purposes of this Law, the term “contracts” refers to agreements by which natural persons, legal persons and/or other organizations, as equal parties, establish, modify or terminate relationships of civil rights and obligations.

Agreements concerning such civil status matters as marriage, adoption, guardianship, etc. are governed by other laws.

Article 3: Contracting parties have equal legal status, and one party may not impose his will upon the other party.

Article 4: Parties enjoy the legal right to voluntarily conclude contracts, and no work unit or individual may illegally intervene therein.

Article 5: The parties shall abide by the principle of fairness in determining the rights and obligations of the parties.

Article 6: The parties shall abide by the principle of good faith in exercising their rights and performing their obligations.

Article 7: When concluding and performing contracts, the parties shall comply with the laws and administrative regulations and respect public morals, and they may not disturb the social or economic order or harm the public interest.

Article 8: Legally formed contracts are legally binding on the parties. The parties shall perform their respective obligations as agreed, and no party may modify or terminate the contract on his own authority.

Legally formed contracts are protected by law.

PART TWO: FORMATION OF CONTRACTS

Article 9: When concluding contracts, the parties shall have the appropriate capacities for civil rights and for civil acts.

A party may legally entrust an agent to conclude the contract on his behalf.

Article 10: The parties may conclude their contract in writing, orally or in another form.

If a law or administrative regulation stipulates that it be in writing, it shall be in writing. If the parties agree that it be in writing, it shall be in writing.

Article 11: The term “in writing” refers to a form which is capable of tangibly representing its content, such as written instruments, letters and electrically or electronically transmitted documents (including telegrams, telexes, facsimiles, electronic data interchange and e-mail), etc.

Article 12: The particulars of a contract shall be agreed upon by the parties. In general, such particulars shall include the following terms:

(1) the names and domiciles of the parties;

(2) the subject matter;

(3) the quantities;

(4) the quality;

(5) the price or remuneration;

(6) the time limit for, and place and method of, performance;

(7) liability for breach of contract; and

(8) the method of dispute resolution.

In concluding a contract, the parties may refer to the model texts for various types of contract.

Article 13: The parties shall conclude their contract by the method of offer and acceptance.

Article 14: An offer is a party's declaration of his intent to conclude a contract with another party. The declaration shall comply with the following provisions:

(1) its content shall be specific and definite; and

(2) it shall indicate that the offeror will be bound by it upon its acceptance by the offeree.

Article 15: An invitation to offer is a party's declaration of his intent to have another party make him an offer. Delivered price lists, auction announcements, announcements of an invitation to tender, share prospectuses, commercial advertisements, etc. are invitations to offer.

Commercial advertisements whose contents comply with the requirements for offers are deemed to be offers.

Article 16: An offer becomes effective when it reaches the offeree.

If a contract is concluded by using the electrically or electronically transmitted document method, and the addressee designates a specific system to receive the electrically or electronically transmitted document, the document is deemed to have reached the offeree when it enters the designated system. If no specific system is designated, the document is deemed to have reached the offeree at its first entry into any of the offeree's systems.

Article 17: An offer may be withdrawn. The notification of the withdrawal of the offer shall reach the offeree before or at the same time as the offer.

Article 18: An offer may be revoked. The notice of revocation of the offer shall reach the offeree before he has dispatched an acceptance.

Article 19: An offer may not be revoked if:

(1) the offeror has clearly indicated, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or

(2) the offeree had reason to believe that the offer was irrevocable and has already made preparations to perform the contract.

Article 20: An offer becomes void if:

(1) a rejection of the offer reaches the offeror;

(2) the offeror lawfully revokes the offer;

(3) the fixed time for acceptance expires without acceptance by the offeree; or

(4) the offeree materially alters the particulars of the offer.

Article 21: An acceptance is the offeree's declaration of his intent to assent to an offer.

Article 22: An acceptance shall be manifested by means of notification, unless usage of trade permits that acceptance be manifested by performing an act or the offer indicates that acceptance may be manifested by performing an act.

Article 23: An acceptance shall reach the offeror within the time fixed in the offer.

If no time for acceptance is fixed in the offer, the acceptance shall reach the offeror by the time specified below:

(1) if the offer is made to a person who is present, the acceptance shall be made promptly, unless otherwise agreed by the parties;

(2) if the offer is made to a person who is not present, the acceptance shall reach the offeror within a reasonable period of time.

Article 24: If an offer is made by letter or telegram, the period of time for acceptance begins to run from the date shown on the letter or the date on which the telegram was handed in for dispatch. If there is no date shown on the letter, the period of time for acceptance begins to run from the date shown on the letter's postmark. If the offer is made by telephone, facsimile or other means of instantaneous communication, the period of time for acceptance begins to run from the moment that the offer reaches the offeree.

Article 25: A contract is formed when the acceptance becomes effective.

Article 26: An acceptance notice becomes effective when it reaches the offeror. If the acceptance does not require notification, it becomes effective at the moment of performance of the act indicating acceptance according to usage of trade or as required by the offer.

If a contract is concluded in the form of an electrically or electronically transmitted document, the time of arrival of the acceptance is governed by the provisions of the second paragraph of Article 16 of this Law.

Article 27: An acceptance may be withdrawn. The notification of the withdrawal of the acceptance shall reach the offeror before or at the same time as the notification of acceptance.

Article 28: If the offeree's acceptance is dispatched after the period of time fixed for acceptance, it constitutes a new offer unless the offeror notifies the offeree in a timely manner that the acceptance is effective.

Article 29: If the offeree's acceptance is dispatched within the period of time fixed for acceptance and under normal circumstances would have reached the offeror in a timely manner, but, as a consequence of other factors, reaches the offeror after the period of time for acceptance, the acceptance is effective unless the offeror notifies the offeree in a timely manner that he does not accept the acceptance due to its late arrival.

Article 30: The particulars of the acceptance shall be consistent with the particulars of the offer. If the offeree makes material modifications to the particulars of the offer, it constitutes a new offer. Modifications to the subject matter of the contract, quantities, quality, price or remuneration, time limit for performance, place or method of performance, liability for breach of contract or method of dispute resolution constitute material modifications to the particulars of the offer.

Article 31: If the acceptance makes non-material modifications to the particulars of the offer, the acceptance is effective and the particulars of the contract are the particulars of the offer, unless the offeror expresses his objection to the modifications in a timely manner or the offer indicates that the acceptance may not make any modifications to the particulars.

Article 32: If the parties conclude their contract in the form of a written instrument, the contract is formed when the parties sign or seal the instrument.

Article 33: If the parties conclude their contract in the form of a letter or an electrically or electronically transmitted document, etc., they may require the execution of a letter of confirmation before the contract is formed, in which case the contract is formed when the letter of confirmation is executed.

Article 34: The place where the acceptance becomes effective is the place of formation of the contract.

If the contract is concluded in the form of an electrically or electronically transmitted document, the principal place of business of the addressee is the place of formation of the contract; if the addressee does not have a principal place of business, his habitual residence is the place of formation of the contract. If the parties have agreed otherwise, their agreement shall govern.

Article 35: If the parties conclude their contract in the form of a written instrument, the place where the parties sign or seal it is the place of formation of the contract.

Article 36: If laws or administrative regulations stipulate or the parties have agreed that their contract be concluded in writing but the parties did not do so, a contract is nevertheless formed if one of the parties has already performed his main obligations and the other party accepts the performance.

Article 37: If a contract is to be concluded in the form of a written instrument but one party has already performed his main obligations before the signing or sealing of that instrument, a contract is formed if the other party accepts the performance.

Article 38: When the State, in light of its requirements, imposes mandatory tasks or State procurement tasks, the contracts between the legal persons or other organizations concerned shall be concluded in accordance with the rights and obligations stipulated in the relevant laws and administrative regulations.

Article 39: When a contract is concluded using standard clauses, the party providing the standard clauses shall abide by the principle of fairness when determining the rights and obligations of the parties, and shall, in a reasonable manner, draw the attention of the other party to clauses which exempt or limit his liability and, if so requested by the other party, explain such clauses.

Standard clauses are clauses which a party formulated in advance for repeated use, and which he did not negotiate with the other party when concluding the contract.

Article 40: A standard clause is void if it involves any of the circumstances stipulated in Articles 52 and 53 of this Law, or if it exempts the party providing it from liability, increases the liability of the other party or deprives the other party of a major right.

Article 41: If a dispute arises over the understanding of a standard clause, the clause shall be interpreted in accordance with the usual understanding of such a clause. If there are two or more interpretations of a standard clause, the clause shall be interpreted in a manner that does not favour the party that provided the said clause. If there is an inconsistency between a standard clause and a non-standard clause, the non-standard clause shall prevail.

Article 42: A party which causes loss to the other party is liable for damages if during the course of concluding the contract he:

(1) negotiated in bad faith under the pretext of concluding a contract;

(2) deliberately concealed an important fact relevant to the conclusion of the contract or provided false information; or

(3) engaged in another act counter to the principle of good faith.

Article 43: Trade secrets learned by a party during the course of concluding a contract may not be disclosed or improperly used, regardless of whether the contract is formed or not. If a party causes loss to the other party through the disclosure or improper use of such trade secrets, he is liable for damages.

PART THREE: VALIDITY OF CONTRACTS

Article 44: A legally formed contract is effective from its formation.

If laws or administrative regulations provide that procedures such as approval and/or registration be carried out before a contract enters into effect, such provisions shall govern.

Article 45: The parties may agree to attach conditions to the effectiveness of the contract. Contracts with conditions precedent become effective upon fulfillment of those conditions. Contracts with conditions subsequent become void upon fulfillment of those conditions.

If a party improperly and for his own benefit obstructs the fulfillment of a condition, the condition is deemed to have been fulfilled. If a party improperly and for his own benefit facilitates the fulfillment of a condition, the condition is deemed not to have been fulfilled.

Article 46: The parties may agree to attach a time limit to the effectiveness of the contract. A contract with an attached time limit for its entry into effect enters into effect upon the expiration of such time limit. A contract with an attached time limit for termination becomes void upon the expiration of such time limit.

Article 47: If a person with restricted capacity for civil acts concludes a contract, such contract is effective after it is ratified by his statutory agent. However, contracts under which such person merely acquires a benefit or which are compatible with that person's age, intellectual capacity or mental health do not require ratification by his statutory agent.

The opposite party may demand that the statutory agent ratify the contract within one month. If the statutory agent fails to indicate a decision, he is deemed to have refused ratification. The bona fide opposite party has the right to rescind the contract prior to its being ratified. Such rescission shall be made in the form of a notification.

Article 48: If a contract is concluded in the name of a principal by a person who has no power of agency, who exceeds his power of agency, or whose power of agency has expired, and the principal does not ratify it, it is not binding on the principal and liability for it shall be borne by the said person who concluded it.

The opposite party may demand that the principal ratify the contract within one month. If the principal fails to indicate a decision, he is deemed to have refused ratification. The bona fide opposite party has the right to rescind the contract prior to its being ratified. Such rescission shall be made in the form of a notification.

Article 49: If a contract is concluded in the name of a principal by a person who has no power of agency, who exceeds his power of agency, or whose power of agency has expired, and the opposite party has reason to believe that the person with whom he concludes the contract has power of agency, then such act of agency is valid.

Article 50: If the legal representative or a responsible person of a legal person or another organization acts ultra vires when concluding a contract, the act of representation is valid unless the other party knew or ought to have known that the contract was concluded ultra vires.

Article 51: If a person with no right of disposition disposes of another person's property, the contract is valid if it is ratified by the person who does have such right or if the person without the right of disposition obtains such right after conclusion of the contract.

Article 52: A contract is void if:

(1) a party uses fraud or coercion to conclude a contract, thereby harming the interests of the State;

(2) it is a malicious conspiracy to harm the interests of the State, a collective or a third party;

(3) it conceals an illegal objective by giving it a legal form;

(4) it harms the public interest; or

(5) it violates mandatory provisions of laws or administrative regulations.

Article 53: Exemption clauses in a contract are void if:

(1) they exempt a party from liability for bodily harm caused to the other party; or

(2) they exempt a party from liability for property losses caused to the other party either willfully or as a result of gross negligence.

Article 54: A party has the right to petition a people's court or an arbitral institution to modify or rescind a contract if:

(1) it was concluded as a result of a major mistake; or

(2) it was clearly unconscionable at the time of conclusion.

If a party used fraud or coercion or took advantage of the other party's vulnerability to cause him to conclude a contract which was contrary to his true intention, the injured party has the right to petition a people's court or an arbitral institution to modify or rescind the contract.

The people's court or arbitral institution may not rescind the contract if the party petitioned to have it modified.

Article 55: The right of rescission is extinguished if:

(1) the party with the right of rescission fails to exercise such right within one year of the date on which he learned or ought to have learned of the cause for rescission; or

(2) the party with the right of rescission expressly states or through his conduct indicates his waiver of such right after learning of the cause for rescission.

Article 56: A void or rescinded contract has no legally binding force ab initio. If a contract is partially void and the validity of the other part is unaffected thereby, such other part remains valid.

Article 57: The invalidity, rescission or termination of a contract does not affect the validity of independently existing clauses in the contract which concern the method of dispute resolution.

Article 58: Property obtained by virtue of a void or rescinded contract shall be returned. If it is impossible or unnecessary to return it, the property shall be evaluated in terms of money and compensation made accordingly. The party at fault shall compensate the other party for the resultant loss. If both parties are at fault, each shall bear his corresponding liability.

Article 59: Property obtained as a result of a malicious conspiracy between the parties to damage the interests of the State, a collective or a third party, shall pass to the State or be returned to the collective or the third party.

PART FOUR: PERFORMANCE OF CONTRACTS

Article 60: The parties shall fully perform their obligations as agreed.

The parties shall perform such obligations as giving notice, providing assistance and maintaining confidentiality, etc. in accordance with the nature and the objective of the contract, and usage of trade, while adhering to the principle of good faith.

Article 61: After a contract enters into effect the parties may agree to supplement such particulars as quality, price or remuneration, place of performance, etc. which were not stipulated or were not explicitly stipulated in the original contract. If no supplementary agreement can be reached, the particulars shall be determined in accordance with the relevant clauses of the contract or usage of trade.

Article 62: If relevant particulars stipulated by the parties in their contract are not explicit and not determinable pursuant to Article 61 of this Law, the following provisions apply:

(1) If the contract is not explicit as to the quality requirements, performance shall be in accordance with State or industry standards. If there are no State or industry standards, performance shall be in accordance with customary standards or such specific standards as are consistent with the objective of the contract.

(2) If the contract is not explicit as to the price or remuneration, performance shall be in accordance with the market price prevailing in the place of performance at the time the contract was concluded. If the law requires that government set prices or government guideline prices be used, performance shall be in accordance with such requirements.

(3) If the contract is not explicit as to the place of performance, and the object of the prestation is money, performance shall occur at the place where the party receiving the money is located. If immovable property is to be delivered, performance shall occur at the place where the immovable property is located. For other subject matters, performance shall occur at the place where the party performing the obligation is located.

(4) If the contract is not explicit as to the time limit for performance, performance may be carried out by the obligor at any time; the obligee may also demand performance at any time, provided, however, that he accords the other party the necessary preparation time.

(5) If the contract is not explicit as to the method of performance, performance shall be made by a method conducive to the achievement of the objective of the contract.

(6) If the contract is not explicit as to which party shall bear the costs of performance, they shall be borne by the party performing the obligation.

Article 63: If a government fixed price or a government guideline price is used, and such price is adjusted during the time limit for delivery stipulated in the contract, the price shall be calculated in accordance with the price prevailing at the time of delivery. If the subject matter is not delivered within the time limit and the price rises, the original price shall be used; if the price drops, the new price shall be used. If delivery is not taken or payment not made within the time limit and the price rises, the new price shall be used; if the price drops, the original price shall be used.

Article 64: If the parties have agreed that the obligor's obligation shall be performed for the benefit of a third party and the obligor fails to do so or performs the obligation in a way other than agreed upon, the obligor is liable to the obligee for breach of contract.

Article 65: If the parties have agreed that the obligation towards the obligee shall be performed by a third party and the third party fails to do so or performs the obligation in a way other than agreed upon, the obligor is liable to the obligee for breach of contract.

Article 66: If each party has an obligation towards the other and no sequence for the performance of those obligations was agreed upon, the obligations shall be performed concurrently. A party may refuse the other party's demand for performance, if the other party has not yet performed his obligation. If a party performs his obligation in a way other than agreed upon, the other party has the right to refuse his demand for corresponding performance.

Article 67: If each party has an obligation towards the other and a sequence for the performance of those obligations was agreed upon but the party which was to perform his obligation first fails to do so, the other party has the right to refuse his demand for performance. If the party which was to perform his obligation first performs his obligation in a way other than agreed upon, the party which was to perform his obligation last has the right to refuse his demand for corresponding performance.

Article 68: The party which is to perform his obligation first may suspend performance if he has conclusive evidence that:

(1) the other party's business circumstances have significantly deteriorated;

(2) the other party has transferred assets and/or surreptitiously withdrawn funds in order to evade his obligation;

(3) the other party has lost his goodwill; or

(4) there are other circumstances which have led or may lead to the other party's losing his ability to perform his obligation.

If a party suspends performance without conclusive evidence of the above, he is liable for breach of contract.

Article 69: If a party suspends performance in accordance with the provisions of Article 68 of this Law, he shall notify the other party thereof in a timely manner. If the other party provides adequate security, performance shall be resumed. After suspension of performance, the party which has suspended performance may terminate the contract if the other party does not recover his ability to perform his obligation and fails to provide adequate security within a reasonable period of time.

Article 70: If the obligee fails to notify the obligor of his division, merger or change of domicile, thus causing the latter difficulties in performing his obligation, the obligor may suspend performance or lodge the subject matter.

Article 71: The obligee may refuse early performance by the obligor of his obligation, unless such early performance does not prejudice the interests of the obligee.

Additional costs incurred by the obligee as a result of the obligor's early performance of his obligation shall be borne by the obligor.

Article 72: The obligee may refuse partial performance by the obligor of his obligation, unless such partial performance does not prejudice the interests of the obligee.

Additional costs incurred by the obligee as a result of the obligor's partial performance of his obligation shall be borne by the obligor.

Article 73: If the obligor neglects to exercise his own matured claim, thereby causing injury to the obligee, the obligee may petition a people's court to be subrogated in his own name to the claim of the obligor, unless such claim is personal to the obligor.

The scope of exercise of the right of subrogation shall be limited to the scope of the claim of the obligee. The necessary costs incurred by the obligee in exercising his right of subrogation shall be borne by the obligor.

Article 74: If the obligor waives his own matured claim or assigns property without consideration and thereby causes injury to the obligee, the obligee may petition a people's court to annul such act of the obligor. If the obligor assigns property at a price which obviously is unreasonably low, thereby causing injury to the obligee, and the assignee is aware of such circumstances, the obligee may also petition a people's court to annul such act of the obligor.

The scope of the exercise of the right of annulment is limited to the scope of the claim of the obligee. The necessary costs incurred by the obligee in exercising his right of annulment shall be borne by the obligor.

Article 75: The right of annulment shall be exercised within one year of the date on which the obligee learned or ought to have learned of the cause for annulment. The right of annulment is extinguished if not exercised within five years of the date on which the obligor's act occurred.

Article 76: After contracts have entered into effect, the parties may not refuse to perform their contractual obligations by reason of a change in their names or a change in their legal representatives, responsible persons or handling persons.

PART FIVE: MODIFICATION AND ASSIGNMENT OF CONTRACTS

Article 77: Upon reaching a consensus through consultations, the parties may amend their contract.

If laws or administrative regulations provide that procedures such as approval and/or registration shall be carried out when amending a contract, such provisions shall govern.

Article 78: If the content of the parties' agreed amendment to their contract is not explicit, no amendment is deemed to have been made.

Article 79: The obligee may assign all or part of his rights under the contract to a third party unless:

(1) the nature of the contract does not permit their assignment;

(2) the parties have agreed that they may not be assigned; or

(3) the law provides that they may not be assigned.

Article 80: When the obligee assigns his rights he shall notify the obligor. Without notification, such assignment is not binding on the obligor.

The notification of assignment of the obligee's rights may not be revoked, except with the consent of the assignee.

Article 81: When the obligee assigns his rights, the assignee also obtains the incidental rights concomitant with the claim, unless such incidental rights are personal to the obligee.

Article 82: After receipt of notification of the assignment of the claim, the obligor may raise against the assignee the defences which he had against the assignor.

Article 83: When the obligor receives the notification of the assignment of the claim, he may set off against the assignee a claim which he has against the assignor and which will mature before or at the same time as the assigned claim.

Article 84: The obligor's transfer to a third party of all or part of his contractual obligation is subject to the consent of the obligee.

Article 85: When the obligor transfers his obligations, the new obligor may raise the defences against the obligee which were available to the original obligor.

Article 86: When the obligor transfers his obligations, the new obligor shall bear the incidental obligations concomitant with the principal obligation, unless such incidental obligations are personal to the original obligor.

Article 87: If laws or administrative regulations provide that procedures such as approval and/or registration shall be carried out when assigning rights or transferring obligations, such provisions shall govern.

Article 88: A party may, with the consent of the other party, assign the whole of his contractual rights and obligations to a third party.

Article 89: When a party assigns the whole of his rights and obligations, Article 79, Articles 81 to 83 and Articles 85 to 87 of this Law shall apply.

Article 90: If a party to a contract is merged after the conclusion of the contract, the contractual rights shall be exercised and the contractual obligations performed by the legal person or other organization surviving the merger. If a party to a contract is divided after the conclusion of the contract, the legal persons or other organizations surviving the division are joint and several obligors and joint and several obligees in respect of the contractual rights and obligations, unless otherwise agreed by the obligor and the obligee.

PART SIX: DISCHARGE OF CONTRACTUAL RIGHTS AND OBLIGATIONS

Article 91: The contractual rights and obligations are discharged when:

(1) the obligation has been performed as agreed;

(2) the contract is terminated by a party;

(3) the obligations are mutually offset;

(4) the obligor lodges the subject matter in accordance with the law;

(5) the obligee releases the obligor from his obligation;

(6) the claim and the obligation become vested in the same person; or

(7) other discharge circumstances stipulated in the law or agreed upon by the parties arise.

Article 92: After the rights and obligations under the contract have been discharged, the parties shall perform such obligations as giving notice, providing assistance and maintaining confidentiality, etc. in accordance with usage of trade and adhering to the principle of good faith.

Article 93: The parties may terminate their contract upon reaching a consensus through consultations.

The parties may agree upon conditions under which a party is entitled to terminate the contract. If a condition for termination of the contract is fulfilled, the party with the right of termination may terminate the contract.

Article 94: A party may terminate the contract if:

(1) an event of force majeure makes the objective of the contract unachievable;

(2) before expiration of the time limit for performance, the other party expressly states or through his conduct indicates that he will not perform his main obligations;

(3) the other party has delayed the performance of his main obligations, and still fails to perform them within a reasonable period of time after having been reminded;

(4) the other party has delayed the performance of an obligation or committed another breach of contract which makes the objective of the contract unachievable; or

(5) other circumstances stipulated in the law arise.

Article 95: If the law stipulates or the parties have agreed upon a time limit for exercising the right of termination, and the time limit expires without a party exercising such right, the right is extinguished.

If the law does not stipulate or the parties have not agreed upon a time limit for exercising the right of termination, and after reminder by the other party such right is not exercised within a reasonable period of time, the right is extinguished.

Article 96: If a party wishes to terminate the contract in accordance with the second paragraph of Article 93 or Article 94 of this Law, he shall notify the other party. The contract is terminated upon the notice of termination reaching the other party. If the other party objects to the termination, he may petition a people's court or an arbitral institution to confirm the validity of the termination.

If laws or administrative regulations provide that procedures such as approval and/or registration shall be carried out when terminating a contract, such provisions shall govern.

Article 97: After a contract has been terminated, any executory portion is discharged. As concerns the performed portion, a party may, depending on the status of performance and the nature of the contract, demand a return to the status quo ante or resort to other remedies and has the right to claim damages.

Article 98: The discharge of the rights and obligations under a contract does not affect the effectiveness of the settlement and clearance clauses of the contract.

Article 99: If each party owes a matured obligation to the other, and the subject matters of their obligations are of the same type and quality, either party may offset his obligation against that of the other party, unless the law or the nature of the contract does not permit such setoff.

If a party wishes to effect a setoff, he shall notify the other party. The notification enters into effect upon reaching the other party. The setoff may not be made subject to any condition or time limit.

Article 100: If each party owes an obligation to the other, but the subject matters of their obligations are not of the same type or quality, they may still offset their obligations after reaching a consensus through consultations.

Article 101: The obligor may lodge the subject matter if the performance of his obligation is made difficult by any of the following circumstances:

(1) the obligee refuses to take delivery without a justifiable reason;

(2) the whereabouts of the obligee are unknown;

(3) the obligee has died without designating an heir or has lost the capacity for civil acts without designating a guardian; or

(4) other circumstances stipulated in the law.

If the subject matter is not suited to being lodged or the cost of lodgement would be excessively high, the obligor may auction or sell it off according to law and lodge the proceeds.

Article 102: After the subject matter is lodged, the obligor shall notify the obligee, or the obligee's heir or guardian in a timely manner, unless the whereabouts of the obligee are unknown.

Article 103: After the subject matter is lodged, the risks of damage and loss shall be borne by the obligee. The fruits produced by the subject matter while it is lodged belong to the obligee. The costs of lodgement shall be borne by the obligee.

Article 104: The obligee may take delivery of the object lodged at any time. However, if the obligee owes a matured obligation to the obligor, the lodgement office shall, as required by the obligor, refuse to release the object lodged to the obligee until the obligee has performed his obligation or provided security.

The obligee's right to take delivery of the object lodged is extinguished if not exercised within five years of the date of lodgement, in which case ownership of the object lodged passes to the State after the costs of lodgement have been deducted.

Article 105: If the obligee partially or completely releases the obligor from his obligation, the contractual rights and obligations are partially or completely discharged.

Article 106: If the claim and the obligation become vested in the same person, the contractual rights and obligations are discharged, except for those which involve the interests of a third party.

PART SEVEN: LIABILITY FOR BREACH OF CONTRACT

Article 107: If a party fails to perform his contractual obligations or performs his contractual obligations in a way other than agreed upon, he shall bear liability for breach of contract by continuing performance, remedying the failure to perform or the non-conforming performance, or paying damages, etc.

Article 108: If a party expressly states or through his conduct indicates that he will not perform his contractual obligations, the other party may hold him liable for breach of contract before the time limit for performance has expired.

Article 109: If a party fails to pay the price or remuneration, the other party may demand that he pay the same.

Article 110: If a party fails to perform a non-money obligation or performs a non-money obligation in a way other than agreed upon, the other party may demand performance unless:

(1) performance is impossible in law or in fact;

(2) the subject matter of the obligation is not suited to specific performance or the cost of performance would be excessively high; or

(3) the obligee failed to demand performance within a reasonable period of time.

Article 111: If the quality is not as stipulated, liability for breach of contract shall be borne as stipulated by the parties. If the contract makes no provision for breach of contract or such provisions are not explicit and the liability is not determinable pursuant to Article 61 of this Law, the injured party may reasonably elect to demand that the other party bear liability for breach of contract by carrying out repairs, replacement, redoing, return of goods, or reduction of price or remuneration, etc., depending on the nature of the subject matter and the extent of the loss.

Article 112: If a party fails to perform his contractual obligations or performs his contractual obligations in a way other than agreed upon and, after such party has performed his obligations or remedied the failure to perform or the non-conforming performance, the other party has suffered other loss, the first-mentioned party shall compensate therefor.

Article 113: If a party fails to perform his contractual obligations or performs his contractual obligations in a way other than agreed upon, thereby causing loss to the other party, the measure of damages shall be equal to the loss incurred as a result of the breach of contract, including the benefits which could have been obtained after performance of the contract. However, such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract as a possible consequence of the breach of contract.

If a business operator practices fraud while providing goods or services to a consumer, he is liable for damages in accordance with the provisions of the PRC Protection of the Rights and Interests of Consumers Law.

Article 114: The parties may stipulate that the party in breach shall pay the other party a definite measure of liquidated damages, depending on the circumstances of the breach, or they may stipulate a method for calculating the measure of damages arising from the breach.

If the liquidated damages stipulated are lower than the loss incurred, a party may petition a people's court or an arbitral institution to increase the amount. If the liquidated damages stipulated grossly exceed the loss incurred, a party may petition a people's court or an arbitral institution to reduce the amount appropriately.

If the parties have stipulated liquidated damages for late performance, the party in breach shall nevertheless perform his obligation after paying the liquidated damages.

Article 115: The parties may stipulate that one party shall pay the other party a deposit as security for the claim in accordance with the PRC Security Law. After the obligor has performed his obligation, the deposit shall be offset against the price or recovered. If the party paying the deposit fails to perform the obligation agreed upon, he has no right to claim a refund of the deposit. If the party receiving the deposit fails to perform the obligation agreed upon, he shall refund twice the amount of the deposit.

Article 116: If the parties have stipulated both liquidated damages and a deposit and one of the parties breaches the contract, the other party may elect to apply either the liquidated damages clause or the deposit clause.

Article 117: If the contract cannot be performed due to an event of force majeure, liability is partially or wholly exempted depending on the effect of the event of force majeure, unless the law provides otherwise. An event of force majeure occurring after a party has defaulted on his performance does not exempt him from liability.

For the purposes of this Law, the term “force majeure” refers to objective circumstances which cannot be foreseen, avoided and overcome.

Article 118: If a party is unable to perform the contract as a consequence of force majeure, he shall notify the other party in a timely manner in order to mitigate the loss potentially incurred by that party, and shall provide proof within a reasonable period of time.

Article 119: After a party breaches the contract, the other party shall take appropriate measures to prevent amplification of the loss. If the loss is amplified as a result of the said other party's failure to prevent its amplification, the said other party may not demand compensation for the amplified portion of the loss.

The reasonable expenses paid by a party in preventing amplification of the loss shall be borne by the party in breach.

Article 120: If both parties breach the contract, each party shall bear its corresponding liability.

Article 121: If a party breaches the contract due to reasons attributable to a third party, the party in breach is liable to the other party for breach of contract. Disputes between a party to the contract and a third party shall be resolved in accordance with the law or the agreement between those parties.

Article 122: If a party's breach of contract results in injury to the personal or property rights and interests of the other party, the injured party has the right to elect to hold the party in breach liable for breach of contract in accordance with this Law or to hold him liable for tort in accordance with other laws.

PART EIGHT: MISCELLANEOUS STIPULATIONS

Article 123: If other laws make other provisions concerning a contract, those provisions shall govern.

Article 124: If no express provision for a particular contract is made in the Special Provisions of this Law or in other laws, the General Provisions of this Law apply, and reference may be made to the Special Provisions of this Law or the provisions of any other law which most closely correspond to that contract.

Article 125: If a dispute arises between the parties concerning the understanding of a clause of the contract, they shall determine the true intention of that clause by making reference to the words and sentences used in the contract, the relevant clauses of the contract, the objective of the contract, usage of trade and the principle of good faith.

If a contract is drawn up in two or more languages and it is agreed that all versions are equally authentic, the corresponding words and sentences in all versions are presumed to have the same meaning. If the words and sentences of different language versions are not consistent with each other, they shall be interpreted in light of the objective of the contract.

Article 126: The parties to a contract with a foreign element may choose the law to apply to the handling of disputes, unless otherwise provided by law. If the parties to a contract with a foreign element have not made a choice, the law of the state with the closest connection to the contract applies.

In the case of Sino-foreign equity joint venture contracts, Sino-foreign cooperative joint venture contracts and contracts for the Sino-foreign cooperative exploration and exploitation of natural resources performed within the boundaries of the People's Republic of China, the law of the People's Republic of China applies.

Article 127: Administrative authorities for industry and commerce and other relevant administrative authorities are, within their respective jurisdictions, in charge of carrying out supervision and handling illegal acts whereby a contract is used to harm the interests of the State and/or the public, in accordance with the provisions of laws and administrative regulations. If such act constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.

Article 128: The parties may resolve their disputes through settlement or conciliation.

If the parties are not willing to resolve a dispute through settlement or conciliation, or settlement or conciliation fails, application may be made to an arbitral institution for arbitration on the basis of an arbitration agreement. Parties to a contract with a foreign element may apply to a Chinese arbitral institution or another arbitral institution for arbitration on the basis of their arbitration agreement. If the parties have not concluded an arbitration agreement or their arbitration agreement is invalid, a suit may be filed in a people's court. The parties shall perform any judgment, arbitral award or settlement agreement which has become legally effective. If a party refuses to perform the same, the other party may petition a people's court for enforcement.

Article 129: The time limit for filing a suit or applying for arbitration in disputes arising from contracts for the international sale and purchase of goods or contracts for the import and export of technology is four years, counting from the date when the party knew or ought to have known that his rights were infringed. The time limits for filing a suit or applying for arbitration in disputes arising from other types of contracts are as provided for in the relevant laws.

SPECIAL PROVISIONS

PART NINE: SALES AND PURCHASE CONTRACTS

Article 130: A sales and purchase contract is a contract by which the seller agrees to transfer ownership of the subject matter to the buyer, and the buyer agrees to pay the price therefor.

Article 131: In addition to the particulars set forth in Article 12 of this Law, a sales and purchase contract may contain terms concerning the method of packaging, the standard and method of inspection, the method of settlement, the language and validity of the contract, etc.

Article 132: The seller must be the owner or have the right to dispose of the subject matter of the sale.

If laws or administrative regulations prohibit or restrict the assignment of the subject matter, such provisions shall govern.

Article 133: Ownership of the subject matter passes on the delivery thereof, unless the law provides otherwise or the parties have agreed otherwise.

Article 134: The parties may stipulate in the contract that ownership of the subject matter vests in the seller until the buyer has performed his obligation to pay the price or other obligations.

Article 135: The seller shall perform the obligation of delivering to the buyer the subject matter or the documents for taking delivery of the subject matter, and the obligation of transferring ownership of the subject matter.

Article 136: In addition to the documents for taking delivery of the subject matter, the seller shall deliver to the buyer relevant documents and information in accordance with the agreement between the parties or usage of trade.

Article 137: If the subject matter of the sale is computer software etc. containing intellectual property, the intellectual property in the subject matter does not belong to the buyer, unless the law provides otherwise or the parties have agreed otherwise.

Article 138: The seller shall deliver the subject matter according to the stipulated time. If the parties have fixed a period of time for delivery, the seller may make delivery at any time during that period.

Article 139: If the parties have not stipulated a time for delivery of the subject matter or such time has not been stipulated explicitly, Article 61 and Item (4) of Article 62 of this Law apply.

Article 140: If the subject matter was already in the possession of the purchaser prior to the conclusion of the contract, the time of the contract's entry into effect is the time of delivery.

Article 141: The seller shall deliver the subject matter at the stipulated place.

If the parties have not stipulated a place of delivery or such place has not been stipulated explicitly, and the place of delivery is not determinable pursuant to Article 61 of this Law, the following provisions shall apply:

(1) if the subject matter requires carriage, the seller shall deliver the subject matter to the first carrier for transmission to the buyer;

(2) if the subject matter does not require carriage, and at the time of the conclusion of the contract the buyer and the seller knew that the subject matter was at a particular place, the seller shall deliver the subject matter at that place; if the buyer and the seller did not know that the subject matter was at a particular place, the subject matter shall be delivered at the place where the seller had his place of business at the time of conclusion of the contract.

Article 142: The risks of damage and loss of the subject matter are borne by the seller prior to delivery and by the buyer after delivery, unless the law provides otherwise or the parties have agreed otherwise.

Article 143: If the subject matter cannot be delivered according to the stipulated time due to reasons attributable to the buyer, the risks of damage and loss of the subject matter shall be borne by the buyer from the date of breach of the provision stipulating the time.

Article 144: The risks of damage and loss of the subject matter handed over to a carrier for carriage and sold in transit by the seller are borne by the buyer as from the time of formation of the contract, unless the parties have agreed otherwise.

Article 145: If the parties have not stipulated a place of delivery or such place has not been stipulated explicitly, and the subject matter requires carriage pursuant to Item (1) of the second paragraph of Article 141 of this Law, the risks of damage and loss of the subject matter are borne by the buyer after the seller has delivered the same to the first carrier.

Article 146: If the seller has placed the subject matter in the place of delivery as stipulated by the parties or pursuant to Item (2) of the second paragraph of Article 141 of this Law, and the buyer breaches the relevant stipulation by failing to take delivery, the risks of damage and loss of the subject matter are borne by the buyer as from the date of breach of the relevant stipulation.

Article 147: If, in accordance with the contract, the seller has not delivered the documents and information relating to the subject matter, such non-delivery does not affect the passage of the risks of damage and loss of the subject matter.

Article 148: If the objective of the contract cannot be achieved because the quality of the subject matter does not conform to the quality requirements, the buyer may refuse to accept the subject matter or may terminate the contract. If the buyer refuses to accept the subject matter or terminates the contract, the risks of damage and loss of the subject matter are borne by the seller.

Article 149: The buyer's assumption of the risks of damage and loss of the subject matter does not affect his right to hold the seller liable for breach of contract if the latter performs his obligation in a way other than agreed upon.

Article 150: The seller has an obligation to warrant that the subject matter delivered is free from any third party right against the buyer, unless the law provides otherwise.

Article 151: The seller does not have the obligation provided for in Article 150 of this Law if, at the time of conclusion of the contract, the buyer knew or ought to have known that the subject matter sold was subject to a third party right.

Article 152: The buyer may suspend payment of the corresponding price if he has conclusive evidence to prove that a third party may assert a right in respect of the subject matter, unless the seller provides adequate security.

Article 153: The seller shall deliver the subject matter in accordance with the stipulated quality requirements. If the seller provides a description of the quality of the subject matter, the subject matter delivered shall conform to the quality requirements contained in such description.

Article 154: If the parties have not stipulated the quality requirements for the subject matter or such quality requirements have not been stipulated explicitly, and the requirements are not determinable pursuant to Article 61 of this Law, Item (1) of Article 62 of this Law applies.

Article 155: The buyer may hold the seller liable for breach of contract pursuant to Article 111 of this Law if the quality of the subject matter delivered by the seller does not conform to the quality requirements.

Article 156: The seller shall deliver the subject matter packaged in the stipulated manner. If the parties have not stipulated the manner of packaging or such manner has not been stipulated explicitly, and the manner of packaging is not determinable pursuant to Article 61 of this Law, the subject matter shall be packaged in the customary manner or, where there is no such manner, in a manner adequate to protect the subject matter.

Article 157: Upon his receipt of the subject matter, the buyer shall inspect the same within the stipulated period of time for inspection or, if no such period of time has been stipulated, in a timely manner.

Article 158: If the parties have stipulated a period of time for inspection, the buyer shall notify the seller within such period of any lack of conformity of the quantity or quality of the subject matter. If the buyer neglects to give such notice, the quantity or quality of the subject matter is deemed to conform to the stipulations.

If the parties have not stipulated a period of time for inspection, the buyer shall notify the seller within a reasonable period of time after he has discovered or ought to have discovered the lack of conformity of the quantity or quality of the subject matter. If the buyer fails to notify the seller within a reasonable period of time or within two years of the date of receipt of the subject matter, the quantity or quality of the subject matter is deemed to conform to the stipulations; however, if there is a quality guarantee period in respect of the subject matter, such quality guarantee period rather than the said two-year period applies.

If the seller knew or ought to have known that the subject matter provided did not conform to the stipulations, the buyer is not subject to the time periods for notification mentioned in the preceding two paragraphs.

Article 159: The buyer shall pay the price according to the amount stipulated. If the price has not been stipulated or the price stipulations are not explicit, Article 61 and Item (2) of Article 62 of this Law apply.

Article 160: The buyer shall pay the price at the place stipulated. If the place of payment has not been stipulated or the stipulations concerning the place of payment are not explicit, and the place of payment is not determinable pursuant to Article 61 of this Law, the buyer shall make payment at the seller's place of business. However, if the payment is to be made against the delivery of the subject matter or the documents for taking delivery of the subject matter, payment shall be made at the place where the delivery takes place.

Article 161: The buyer shall pay the price at the time stipulated. If the time for payment has not been stipulated or the stipulations concerning the time for payment are not explicit, and the time for payment is not determinable pursuant to Article 61 of this Law, the buyer shall make payment at the same time as he receives the subject matter or the documents for taking delivery of the subject matter.

Article 162: If the seller delivers the subject matter in a quantity greater than the quantity stipulated, the buyer may take delivery or refuse to take delivery of the excess quantity. If the buyer takes delivery of the excess quantity, he shall pay for it at the contract price. If the buyer refuses to take delivery of the excess quantity, he shall notify the seller in a timely manner.

Article 163: The fruits produced by the subject matter prior to its delivery belong to the seller. The fruits produced by the subject matter after its delivery belong to the buyer.

Article 164: Termination of a contract on account of a lack of conformity of the principal object of the subject matter extends to the accessories. Termination of a contract on account of a lack of conformity of an accessory of the subject matter does not extend to the principal object.

Article 165: If the subject matter consists of several objects and one of those objects does not conform to the stipulations, the buyer may terminate the contract only in respect of such object. However, if the separation of such object from the others manifestly impairs the value of the subject matter, the contract may be terminated by either party with respect to all the objects.

Article 166: If the seller delivers the subject matter by instalments, and if the seller fails to deliver one of such instalments or delivers one of such instalments in a way other than agreed upon, thus making it impossible to achieve the contract's objective in respect of that instalment, the contract may be terminated by the buyer with respect to that instalment.

If the seller fails to deliver one of the installments or delivers one of the installments in a way other than agreed upon, and thereby makes it impossible to achieve the objective of the contract in respect of future deliveries, the contract may be terminated by the buyer with respect to such instalment and each future instalment.

If the contract is terminated by the buyer with respect to one of the instalments of the subject matter, and such instalment and the other instalments are interdependent, the contract may be terminated by the buyer with respect to the deliveries already made and the future deliveries.

Article 167: If the buyer is to make payment by instalments and the amount by which he is in default has reached one-fifth of the total price, the seller may demand that the buyer pay the whole price or may terminate the contract.

If the seller terminates the contract, he may demand that the buyer pay a fee for the use of the subject matter.

Article 168: The parties to a sale by sample shall seal the sample and may describe the quality of the sample. The subject matter delivered by the seller shall be the same as the sample and its described quality.

Article 169: If the buyer in a sale by sample was not aware of hidden defects in the sample, the quality of the subject matter delivered by the seller shall comply with the normal standards for objects of that kind, even if the subject matter delivered is the same as the sample.

Article 170: The parties to a sale on approval may stipulate a period of time for approval of the subject matter. If the parties have not stipulated a period of time for approval or such period has not been stipulated explicitly, and the period is not determinable pursuant to Article 61 of this Law, the period shall be determined by the seller.

Article 171: The buyer in a sale on approval may purchase or refuse to purchase the subject matter during the period for approval. Upon the expiration of the period for approval, if the buyer has remained silent as to the purchase of the subject matter, he is deemed to have purchased it.

Article 172: In the case of a sale by tender, the rights and obligations of the parties and the procedures for the invitation and submission of tenders, etc. are governed by the relevant laws and administrative regulations.

Article 173: In the case of a sale by auction, the rights and obligations of the parties and the auction procedures, etc. are governed by the relevant laws and administrative regulations.

Article 174: If the law contains provisions for other contracts concluded for consideration, such provisions shall govern. If the law does not contain such provisions, reference shall be made to the relevant provisions in respect of sales and purchase contracts.

Article 175: If the parties agree to an exchange transaction whereby ownership of the subject matters is transferred, reference shall be made to the relevant provisions in respect of sales and purchase contracts.

PART TEN: CONTRACTS FOR THE SUPPLY AND CONSUMPTION OF ELECTRICITY, WATER, GAS AND HEAT

Article 176: A contract for the supply and consumption of electricity is a contract by which the electricity supplier agrees to supply electricity to an electricity consumer and the electricity consumer agrees to pay electricity charges.

Article 177: A contract for the supply and consumption of electricity shall include terms such as the method, quality and time of electricity supply, the volume, place and nature of electricity consumption, the metering method, the electricity tariff and method of settling the electricity charges, the responsibility for maintenance of the electricity supply and consumption facilities, etc.

Article 178: The place of performance of a contract for the supply and consumption of electricity shall be that agreed upon by the parties. If the parties have not stipulated the place of performance or such place has not been stipulated explicitly, the place of performance shall be the point marking the boundary between each party's property rights to the electricity supply facilities.

Article 179: The electricity supplier shall safely supply power in accordance with State-stipulated electricity quality standards and as agreed by the parties. If the electricity supplier fails to safely supply power in accordance with State-stipulated electricity quality standards and as agreed by the parties, resulting in losses for the electricity consumer, the electricity supplier is liable for damages.

Article 180: If the electricity supplier needs to interrupt electricity supplies due to reasons such as a scheduled or non-scheduled overhaul of electric supply facilities, restriction of electricity supply according to law or illegal use of electricity by the consumer, etc., he shall notify the electricity consumer in advance in accordance with relevant State regulations. If the electricity supplier fails to notify the electricity consumer in advance of the interruption of electricity supply, resulting in losses for the electricity consumer, the electricity supplier is liable for damages.

Article 181: If a power outage occurs due to a natural disaster or other such reason, the electricity supplier shall effect emergency repairs in a timely manner in accordance with relevant State regulations. If the electricity supplier fails to effect emergency repairs in a timely manner, resulting in losses for the electricity consumer, the electricity supplier is liable for damages.

Article 182: The electricity consumer shall pay the electricity charges in a timely manner in accordance with relevant State regulations and as agreed by the parties. If the electricity consumer fails to pay the electricity charges on time, he shall pay liquidated damages as agreed. If the electricity consumer fails to pay the electricity charges and liquidated damages within a reasonable period of time after being reminded to do so, the electricity supplier may suspend electricity supplies in accordance with the procedures stipulated in State regulations.

Article 183: The electricity consumer shall safely consume electricity in accordance with relevant State regulations and as agreed by the parties. If the electricity consumer fails to safely consume electricity in accordance with relevant State regulations and as agreed by the parties, resulting in losses for the electricity supplier, the electricity consumer is liable for damages.

Article 184: With respect to contracts for the supply and consumption of water, gas and heat, reference shall be made to the relevant provisions concerning contracts for the supply and consumption of electricity.

PART ELEVEN: GIFT CONTRACTS

Article 185: A gift contract is a contract by which a donor agrees to give his own property to a donee without consideration and the donee expresses his acceptance of the gift.

Article 186: The donor may revoke his gift before the rights in the gifted property have passed.

The provisions of the preceding paragraph apply neither to gift contracts concluded for the public good or in compliance with a moral duty, such as disaster or poverty relief contracts, nor to notarized gift contracts.

Article 187: If the law requires that procedures such as registration, etc. be carried out in respect of the gifted property, the relevant procedures shall be carried out.

Article 188: If the donor under a gift contract concluded for the public good or in compliance with a moral duty, such as a disaster or poverty relief contract, or the donor under a notarized gift contract fails to deliver the gifted property, the donee may demand delivery.

Article 189: If the gifted property is damaged or lost as a result of willful conduct or gross negligence on the part of the donor, the donor is liable for damages.

Article 190: A gift may be made subject to an obligation.

If a gift is made subject to an obligation, the donee shall perform his obligation as agreed.

Article 191: The donor is not liable for defects in the gifted property. If the gift is subject to an obligation and the gifted property is defective, the donor has the same liability as a seller to the extent of the said obligation.

If the donor willfully conceals a defect in the gifted property or warrants that the gifted property is free from defects, he is liable for damages if the donee suffers loss as a result thereof.

Article 192: The donor may revoke his gift if:

(1) the donee is guilty of serious misconduct towards the donor or a close family member of the donor;

(2) the donee has an obligation to maintain the donor but has failed to do so; or

(3) the donee has failed to perform his obligations under the gift contract.

The donor shall exercise his right of revocation within one year of the date on which he knew or ought to have known of the cause for revocation.

Article 193: The heir or statutory agent of the donor may revoke the gift if the donor has died or lost his capacity for civil acts as a result of an illegal act on the part of the donee.

The heir or statutory agent of the donor shall exercise his right of revocation within six months of the date on which he knew or ought to have known of the cause for revocation.

Article 194: If the person with the right of revocation revokes the gift, he may demand the return of the gifted property by the donee.

Article 195: The donor may be released from his gift obligations if a marked deterioration in his financial situation has a serious impact on his production and business operations or his family life.

PART TWELVE: LOAN CONTRACTS

Article 196: A loan contract is a contract by which a borrower takes out a loan from a lender, and agrees to repay the loan upon maturity and pay interest thereon.

Article 197: A loan contract shall be in writing, unless the loan is between natural persons who have agreed otherwise.

A loan contract shall include terms such as the type, currency, purpose, amount, interest rate and term of the loan, the method of repayment, etc.

Article 198: When concluding a loan contract, the lender may demand that the borrower provide security. The securing of loans shall be carried out in accordance with the PRC Security Law.

Article 199: When concluding a loan contract, the borrower shall provide truthful information on his business activities and financial situation relating to the loan, as requested by the lender.

Article 200: The interest on the loan may not be deducted in advance from the principal. If the interest is deducted in advance from the principal, repayment shall be made and interest calculated according to the actual amount of the loan.

Article 201: If the lender fails to provide the loan on the agreed date and/or in the agreed amount, thereby causing loss to the borrower, he shall compensate for the loss.

If the borrower fails to collect the loan on the agreed date and/or in the agreed amount, he shall pay interest according to the agreed date and/or amount.

Article 202: The lender may, as agreed by the parties, examine and supervise the use of the loan. The borrower shall regularly provide the lender with information such as relevant financial and accounting statements, etc., as agreed by the parties,

Article 203: If the borrower fails to use the loan for the agreed purpose, the lender may cease to disburse the loan proceeds, and may call in the loan early or terminate the contract.

Article 204: The interest rate on loans granted by financial institutions engaged in lending business shall be determined according to the maximum and minimum limits set by the People's Bank of China for the rate of loan interest.

Article 205: The borrower shall pay interest according to the stipulated period of time. If the parties have not stipulated a period for payment of interest or such period has not been stipulated explicitly, and the period is not determinable pursuant to Article 61 of this Law, then, if the loan is for less than one year, the interest shall be paid in a lump sum at the time of repayment of the loan; if the loan is for one year or more, interest shall be paid on each anniversary of the loan and, if the remainder of the period is less than one year, interest shall be paid at the time of repayment of the loan.

Article 206: The borrower shall repay the loan within the stipulated term. If the parties have not stipulated a term for payment or such period has not been stipulated explicitly, and the term is not determinable pursuant to Article 61 of this Law, the borrower may repay the loan at any time and the lender may demand that the borrower repay the loan within a reasonable period of time.

Article 207: If the borrower fails to repay the loan within the stipulated term, he shall pay default interest as agreed by the parties or specified by the State.

Article 208: If the borrower prepays the loan, interest shall be calculated over the period for which he has actually borrowed the funds, unless the parties have agreed otherwise.

Article 209: The borrower may apply to the lender for an extension of the loan term prior to the expiration thereof. The term may be extended if the lender so agrees.

Article 210: Loan contracts between natural persons shall become effective at the time when the lender makes the loan available.

Article 211: If a loan contract between natural persons makes no provision for interest or such provisions are not explicit, no interest is deemed to be payable.

If a loan contract between natural persons makes provisions for interest, the interest rate may not be contrary to State regulations restricting the rate of loan interest.

PART THIRTEEN: LEASE CONTRACTS

Article 212: A lease contract is a contract by which a lessor agrees to deliver an object to a lessee for him to use or collect fruits from, and the lessee agrees to pay rent therefor.

Article 213: A lease contract shall include terms such as the name and quantity of the leased object, the purpose for which the leased object will be used, the term of the lease, the rent and its payment term and method, the maintenance and repair of the leased object, etc.

Article 214: The term of a lease may not exceed 20 years. If it exceeds 20 years, the excess portion of the term shall be void.

The parties may renew the lease contract upon expiration of the lease, but the new lease term agreed upon may not be longer than 20 years from the date of renewal.

Article 215: Lease contracts involving a lease term of six months or more shall be in writing. If such lease contract is not in writing, the lease is deemed to be indefinite.

Article 216: The lessor shall deliver the leased object to the lessee as agreed and keep it in a condition fit for the stipulated use during the lease term.

Article 217: The lessee shall use the leased object in the manner stipulated. If the contract makes no provision for the manner of use or such provisions are not explicit, and the manner of use is not determinable pursuant to Article 61 of this Law, the leased object shall be used in a manner which is in accordance with its nature.

Article 218: The lessee shall not be liable for damages in respect of wear and tear resulting from his use of the leased object in the stipulated manner or in a manner which is in accordance with its nature.

Article 219: If the lessee fails to use the leased object in the stipulated manner or in a manner which is in accordance with its nature, thereby causing damage to the leased object, the lessor may terminate the contract and claim damages.

Article 220: The obligation to maintain and repair the leased object shall be performed by the lessor, unless the parties have agreed otherwise.

Article 221: When the leased object requires maintenance or repairs, the lessee may demand that the lessor carry out maintenance or repairs within a reasonable period of time. If the lessor fails to perform his obligation of maintenance and repair, the lessee may carry out the maintenance or repairs himself, at the expense of the lessor. If the lessee's use of the leased object is affected by the maintenance or repair thereof, the rent shall be appropriately reduced or the lease term appropriately extended.

Article 222: The lessee shall take due care of the leased object. The lessee is liable for damages if the leased object is damaged or lost as a result of a lack of due care on the part of the lessee.

Article 223: Subject to the consent of the lessor, the lessee may make improvements or additions to the leased object.

If the lessee makes improvements or additions to the leased object without the consent of the lessor, the lessor may demand that the lessee restore the leased object to its original state or that he pay damages.

Article 224: Subject to the consent of the lessor, the lessee may sublease the leased object to a third party. If the lessee subleases the leased object, the lease contract between the lessor and the lessee remains valid, and the lessee shall compensate for the loss arising from damage of the leased object caused by the third party.

The lessor may terminate the contract if the leased object is subleased by the lessee without the consent of the lessor.

Article 225: The fruits received during the lease term from the possession or use of the leased object belong to the lessee, unless the parties have agreed otherwise.

Article 226: The lessee shall pay the rent in accordance with the stipulated period of time. If the parties have not stipulated a period for payment of rent or such period has not been stipulated explicitly, and the period is not determinable pursuant to Article 61 of this Law, then, if the lease term is for less than one year, the rent shall be paid at the end of the lease period; if the lease is for one year or more, rent shall be paid on each anniversary of the lease and, if the remainder of the period is less than one year, rent shall be paid at the expiration of the lease period.

Article 227: If the lessee fails to pay or delays his payment of the rent without a justifiable reason, the lessor may demand that he pay the rent within a reasonable period of time. The lessor may terminate the contract if the lessee has failed to pay the rent by the expiration of such period of time.

Article 228: If the lessee cannot use the object leased or receive the fruits produced by it due to a claim of rights by a third party, the lessee may demand that the rent be reduced or not pay rent.

If a third party claims a right, the lessee shall notify the lessor in a timely manner.

Article 229: The validity of the lease contract is not affected by a change in ownership of the leased object during the lease period.

Article 230: If the lessor of premises wishes to sell the same, he shall notify the lessee within a reasonable period of time prior to the sale and the lessee has a preemptive right of purchase of the premises on the same conditions.

Article 231: If part or all of the leased object is damaged or lost for reasons not attributable to the lessee, the lessee may demand that the rent be reduced or not pay rent. The lessee may terminate the contract if the damage or loss of part or all of the leased object makes the objective of the contract unachievable.

Article 232: If the parties have not stipulated a lease term or such term has not been stipulated explicitly, and the term is not determinable pursuant to Article 61 of this Law, the lease is deemed to be indefinite. In such case, either party may terminate the contract at any time, provided that if the contract is terminated by the lessor, he shall notify the lessee a reasonable time in advance.

Article 233: If the leased object is a hazard to the safety or health of the lessee, the lessee may terminate the contract at any time even if he knew at the time of conclusion of the contract that the quality of the leased object was not up-to-standard.

Article 234: If the lessee of premises dies during the lease period, the persons who were living on the premises with the lessee may lease the premises in accordance with the original lease contract.

Article 235: The lessee shall return the leased object upon expiration of the lease. The leased object shall be returned in the state it should be in following use of the leased object in the stipulated manner or in a manner which is in accordance with its nature.

Article 236: If the lessee continues to use the leased object after expiration of the lease and the lessor does not raise any objection thereto, the original lease contract remains valid, but the lease term will be indefinite.

PART FOURTEEN: LEASE-FINANCE CONTRACTS

Article 237: A lease-finance contract is a contract by which a lessor, based on a lessee's selections in respect of the seller and the leased object, agrees to purchase an object from the seller and make it available to the lessee for his use, and the lessee agrees to pay rent therefor.

Article 238: A lease-finance contract shall include terms such as the name, quantity, specifications, technical performance and inspection method of the leased object, the lease term, the composition, payment term, payment method and currency of the rent, the ownership of the leased object upon expiration of the lease, etc.

Lease-finance contracts shall be in writing.

Article 239: The lessor shall conclude a sales and purchase contract based on the lessee's selections in respect of the seller and the leased object, and the seller shall deliver the subject matter to the lessee as agreed. The lessee has the rights of a buyer in respect of his taking delivery of the subject matter.

Article 240: The lessor, the seller and the lessee may agree that the right to claim damages for failure by the seller to perform his obligations under the sales and purchase contract be exercised by the lessee. If the right to claim damages is exercised by the lessee, the lessor shall assist him therein.

Article 241: Without the consent of the lessee, the lessor may not modify lessee-related particulars of the sales and purchase contract which he has concluded based on the lessee's selections in respect of the seller and the leased object.

Article 242: Ownership of the leased object vests in the lessor. If the lessee becomes bankrupt, the leased object does not become part of the property available in the bankruptcy.

Article 243: Unless the parties have agreed otherwise, the rent under the lease-finance contract shall be determined according to most or all of the cost of purchase of the leased object as well as a reasonable profit of the lessor.

Article 244: If the leased object fails to meet the requirements stipulated by the parties or is not fit for the purpose for which it is to be used, the lessor is not liable therefor, unless the lessee decided on the leased object in reliance on the technical ability of the lessor or the lessor interfered in the selection of the leased object.

Article 245: The lessor shall warrant that the lessee may possess and use the leased object.

Article 246: The lessor is not liable for injury to the body or damage to the property of a third party caused by the leased object while in the possession of the lessee.

Article 247: The lessee shall take due care of the leased object and use it properly.

The obligation to maintain and repair the leased object while in the possession of the lessee shall be performed by the lessee.

Article 248: The lessee shall pay rent as agreed by the parties. If the lessee fails to pay the rent within a reasonable period of time after having been reminded by the lessor, the lessor may demand payment of the entire amount of the rent; alternatively, the lessor may terminate the contract and repossess the leased object.

Article 249: If the parties have stipulated that ownership of the leased object shall pass to the lessee upon expiration of the lease, and the lessee has already paid most of the rent but is unable to pay the balance, and if the lessor terminates the contract and repossesses the leased object on those grounds, the lessee may demand a partial refund if the value of the leased object repossessed exceeds the rent and any other expenses owed by the lessee.

Article 250: The lessor and the lessee may stipulate in which party ownership of the leased object shall vest upon expiration of the lease. If they have not stipulated in which party ownership shall vest upon expiration or the same has not been stipulated explicitly, and it is not determinable pursuant to Article 61 of this Law, ownership of the leased object shall vest in the lessor.

PART FIFTEEN: CONTRACTS FOR WORK

Article 251: A contract for work is a contract by which a contractor agrees to complete work according to a customer's requirements and deliver the work product, and the customer agrees to pay remuneration therefor.

The types of work that may be contracted for include processing, making objects to order, making repairs, duplication, testing, inspection, etc.

Article 252: A contract for work shall include terms such as the subject matter contracted for, the quantity and quality, the remuneration, the contracting method, the supply of materials, the term for performance, the acceptance standards and methods, etc.

Article 253: The contractor shall complete the main portion of the work with his own equipment, technology and labour, unless the parties have agreed otherwise.

If the contractor passes the main portion of the work contracted for to a third party for completion, he is liable to the customer for the work product completed by such third party. If the contractor does so without having obtained the consent of the customer, the customer may terminate the contract.

Article 254: The contractor may pass the ancillary portion of the work contracted for to a third party for completion. If the contractor does so, he is liable to the customer for the work product completed by the third party.

Article 255: If the materials are to be supplied by the contractor, the materials to be used shall be selected by the contractor as agreed and be subject to inspection by the customer.

Article 256: If the materials are to be supplied by the customer, he shall do so as agreed. The contractor shall inspect the materials supplied by the customer in a timely manner. If he discovers that they do not conform with the requirements agreed upon, he shall notify the customer in a timely manner to replace them, to supplement them or to adopt another remedy.

The contractor may not replace the materials supplied by the customer without the customer's permission and may not replace parts or components which do not need repair.

Article 257: If the contractor discovers that the drawings or the technical requirements supplied by the customer are unreasonable, he shall notify the customer in a timely manner. If the contractor incurs loss because the customer neglects to respond or another such reason, the customer shall compensate for the loss.

Article 258: If the contractor incurs loss because the customer changes the requirements for the contracted work while it is in progress, the customer shall compensate for the loss.

Article 259: If the contracted work requires his assistance, the customer has an obligation to assist.

If the contracted work cannot be completed because the customer fails to perform his obligation to assist, the contractor may demand that the customer perform his obligation within a reasonable period of time and may appropriately extend the time limit for his own performance of the contract. If at the expiration of the time period the customer has still failed to perform his obligation, the contractor may terminate the contract.

Article 260: During the course of the work, the contractor is subject to the necessary supervision and inspection by the customer. The customer's supervision and inspection may not hinder the contractor's normal work.

Article 261: At the completion of the work the contractor shall deliver the work product to the customer and hand over the necessary technical information and relevant quality certification. The customer shall inspect the work product prior to acceptance.

Article 262: If the work product delivered by the contractor fails to meet the quality requirements, the customer may demand that the contractor assume liability for breach of contract by effecting repairs, redoing the work, reducing the remuneration, compensating for the loss, etc.

Article 263: The customer shall pay the remuneration within the stipulated period of time. If the parties have not stipulated a period for payment of the remuneration or such period has not been stipulated explicitly, and the period is not determinable pursuant to Article 61 of this Law, the customer shall pay the remuneration at the time the contractor delivers the work product. If the work product is delivered in parts, the customer shall pay accordingly.

Article 264: If the customer fails to pay the remuneration, materials expenses or other such moneys to the contractor, the contractor has a lien on the completed work product, unless the parties have agreed otherwise.

Article 265: The contractor shall take due care of the materials supplied by the customer and the completed work product, and is liable for damages if the same are damaged or lost as a result of a lack of due care on the part of the contractor.

Article 266: The contractor shall maintain confidentiality as required by the customer, and may not retain reproductions or technical information without the permission of the customer.

Article 267: Joint contractors bear joint and several liability to the customer, unless the parties have agreed otherwise.

Article 268: The customer may terminate the work contract at any time, but is liable for damages if the contractor suffers loss as a result thereof.

PART SIXTEEN: CONSTRUCTION PROJECT CONTRACTS

Article 269: A construction project contract is a contract by which a contractor agrees to construct a project and an employer agrees to pay the price therefor.

Construction project contracts include contracts for project surveying, design and construction.

Article 270: Construction project contracts shall be in writing.

Article 271: Invitations for and submissions of tenders shall be conducted in an open, fair and impartial manner in accordance with the provisions of the relevant laws.

Article 272: The employer may conclude a construction project contract with a general contractor, or conclude individual survey, design and construction contracts with the surveyor, designer and builder respectively. The employer may not parcel out to several contractors a construction project which should be completed by one contractor.

Subject to the consent of the employer, the general contractor or the survey, design or building contractor may subcontract the completion of part of the work contracted by him to a third party. The third party and the general contractor, or the third party and the survey, design or building contractor, are jointly and severally liable to the employer for the work product completed by the third party. A contractor may not assign the entire construction project contracted by him to a third party or, in the guise of subcontracting, break up the entire construction project contracted by him and subsequently contract out the parts to third parties.

It is forbidden for a contractor to subcontract the project to work units which do not possess the appropriate qualifications. It is forbidden for a subcontractor to further subcontract the project he has contracted for. The contractor must himself complete the construction of the main structure of the construction project.

Article 273: Contracts for major State construction projects shall be concluded in accordance with State-stipulated procedures and the State-approved investment plan, feasibility study and other such documents.

Article 274: A survey or design contract shall include terms such as the time limit for submitting the relevant basic information and documentation (including the budget estimate), quality requirement, costs, other conditions for the rendering of assistance, etc.

Article 275: A construction contract shall include terms such as the scope of the project, the construction period, the times for the commencement and completion of works to be delivered in the interim, project quality, project cost, the time limit for delivering technical information, the responsibility for the supply of materials and equipment, the allocation of construction moneys and settlement of accounts, acceptance upon completion, the scope and term of the quality warranty, mutual assistance between the parties, etc.

Article 276: If the construction project is subject to supervision, the employer shall conclude in writing an entrustment of supervision contract with a supervisor. The employer's and supervisor's rights and obligations and their legal liability shall be in accordance with the provisions of this Law concerning mandate contracts and other relevant laws and administrative regulations.

Article 277: The employer may inspect the progress and quality of work at any time, provided that the same does not hinder the normal work of the contractor.

Article 278: The contractor shall notify the employer to inspect concealed works before they are concealed. If the employer fails to inspect the same in a timely manner, the contractor may appropriately extend the project period and is entitled to claim damages for work stoppages, work delays, etc.

Article 279: After completion of the construction project, the employer shall conduct acceptance inspection in a timely manner based on the construction drawings and written explanations thereof, the construction acceptance specifications promulgated by the State and the quality inspection standards. The employer shall pay the price agreed upon for and take delivery of the construction project if it passes the acceptance inspection.

The completed construction project may only be delivered for use after passing the acceptance inspection. The completed construction project may not be delivered for use if it has not undergone acceptance inspection or failed such inspection.

Article 280: If the employer suffers loss because the survey or design quality does not comply with the requirements or because the construction period is extended as a result of a delay in submission of the survey or design documents, the surveyor or designer shall continue to complete the survey or design in compliance with the requirements, reduce or waive the survey or design fee and compensate for the loss.

Article 281: If the quality of the construction project does not comply with the stipulated quality due to reasons attributable to the builder, the employer is entitled to demand that the builder make repairs, redo the work or make alterations without consideration and within a reasonable period of time. If delivery is delayed due to the effecting of repairs, redoing of the work or making of alterations, the builder is liable for breach of contract.

Article 282: If injury to a person or property occurs within the reasonable period of use of the construction project due to reasons attributable to the contractor, the contractor is liable for damages.

Article 283: If the employer fails to supply the raw materials, equipment, site, funds or technical information at the time agreed upon or in accordance with the requirements agreed upon, the contractor may appropriately extend the project period and is entitled to claim damages for work stoppages, work delays, etc.

Article 284: If a project in progress is suspended or delayed due to reasons attributable to the employer, the employer shall take measures to make up for or mitigate the loss and compensate the contractor for the loss and actual expenses incurred as a result of work stoppages, work delays, diversion of shipments, redeployment of machinery and equipment, having materials and structural components lie idle, etc.

Article 285: If the survey or design has to be redone or suspended or the design has to be revised because the employer modifies the plan, provides inaccurate information or fails to provide the requisite survey or design work conditions on time, the employer shall increase his payment of costs in accordance with the actual amount of work performed by the surveyor or designer.

Article 286: If the employer fails to pay the price as agreed, the contractor may demand that the employer pay within a reasonable period of time. If the employer has not paid the price after the expiration of the time period, the contractor may reach an agreement with him to convert the project into its monetary value or he may apply to a people's court to have the project auctioned off according to law, unless, in light of the nature of the construction project, it is not suited to being converted into its monetary value or auctioned off. The price for the construction project shall be paid on a priority basis from the proceeds of the conversion into its monetary value or the auction.

Article 287: Matters not provided for in this Part are governed by the relevant provisions for contracts for work.

PART SEVENTEEN: CONTRACTS OF CARRIAGE

Section One: General Stipulations

Article 288: A contract of carriage is a contract for carriage of a passenger or goods by a carrier from the place of departure to the agreed place, and payment of a fare or freight therefor by the passenger, consignor or consignee.

Article 289: A common carrier may not refuse normal and reasonable requests for carriage made by passengers or consignors.

Article 290: The carrier shall safely carry the passenger or goods to the agreed place within the agreed period of time or a reasonable period of time.

Article 291: The carrier shall carry the passenger or goods to the agreed place via the agreed or usual route.

Article 292: The passenger, consignor or consignee shall pay the fare or freight. If the carrier carries the passenger or goods via a route other than the agreed or usual route and therefore increases the fare or freight, the passenger, consignor or consignee may refuse to pay the amount added to the fare or freight.

Section Two: Contracts for the Carriage of Passengers

Article 293: A contract for the carriage of passengers is formed at the time of delivery of the passenger ticket by the carrier to the passenger, unless the parties have agreed otherwise or have a different usage of trade.

Article 294: A passenger shall hold a valid passenger ticket when travelling on the means of transportation. If a passenger travels on the means of transportation without a valid ticket, beyond the distance for which he holds a ticket, in a class higher than that for which he holds a ticket or with a ticket that has become void, he shall make up the fare and the carrier may charge an additional fare in accordance with regulations. If the passenger fails to pay the fare, the carrier may refuse to carry him.

Article 295: If a passenger is unable to board the means of transportation at the time noted on the passenger ticket for reasons attributable to himself, he shall carry out the procedures for return of the ticket and refund of the fare or the procedures for change of the journey within the agreed period of time. If he carries out such procedures beyond the agreed period of time, the carrier shall not be required to refund the fare and shall no longer be bound to carry the passenger.

Article 296: During the journey, the carry-on luggage of the passenger shall be within the agreed limits. Carry-on luggage which exceeds the agreed limits shall be checked.

Article 297: The passenger may not carry with him or in his luggage dangerous goods which are flammable, explosive, toxic, corrosive or radioactive or which may are a hazard to the safety of the persons or property on the means of transportation, or other prohibited articles.

If a passenger violates the preceding paragraph, the carrier may unload or destroy the prohibited articles or turn them over to the relevant authorities. If the passenger insists on carrying the prohibited articles, the carrier shall refuse to carry him.

Article 298: The carrier shall inform the passenger in a timely manner of any major event which prevents normal carriage and of points to be noted in connection with transportation safety.

Article 299: The carrier shall carry the passenger according to the time and voyage number noted on the passenger ticket. If the carrier delays such carriage, he shall, at the option of the passenger, arrange an alternative voyage or refund the fare.

Article 300: If the carrier unilaterally changes the means of transportation, thereby reducing the standard of service, he shall, at the option of the passenger, either cancel the ticket and refund the fare or charge a lower fare. If such change leads to an increase in the standard of service, the carrier shall not charge an additional fare.

Article 301: During the journey, the carrier shall make best efforts to assist passengers who are acutely ill, in labour or in danger.

Article 302: The carrier is liable for damages in the event of injury to or death of the passenger during the journey, unless the injury or death was brought about by the passenger's own health or the carrier proves that the injury or death was caused willfully by the passenger or resulted from gross negligence on the part of the passenger.

The provisions of the preceding paragraph apply to passengers whom regulations exempt from the requirement to hold tickets, passengers with discounted or complimentary tickets and passengers whom the carrier permits to board without tickets.

Article 303: If articles carried by the passenger himself are damaged or lost on the journey through the carrier's fault, the carrier is liable for damages.

If luggage checked by the passenger is damaged or lost, the relevant provisions concerning carriage of goods apply.

Section Three: Contracts for the Carriage of Goods

Article 304: When a consignor arranges for the carriage of goods, he shall accurately state to the carrier such necessary information concerning carriage of the goods as the name of the consignee of the goods or the fact that the goods are consigned to order, as well as the name, nature, weight and quantity of the goods and the place of delivery, etc.

The consignor is liable for damages if the carrier suffers loss as a result of the consignor's inaccurate or inadequate declaration of the necessary information.

Article 305: If the carriage of goods is subject to examination and approval procedures or inspection procedures, etc., the consignor shall deliver to the carrier the documents evidencing the completion of such procedures.

Article 306: The consignor shall package the goods in the stipulated manner. If the parties have not stipulated the manner of packaging or such manner has not been stipulated explicitly, Article 156 of this Law applies.

If the consignor violates the preceding paragraph, the carrier may refuse to carry the goods.

Article 307: If the consignor consigns dangerous goods which are flammable, explosive, toxic, corrosive or radioactive, etc., he shall properly package the same, and mark and label the same as dangerous goods, in accordance with State regulations on the transportation of dangerous goods, and shall deliver to the carrier written information on the name and nature of the goods and on the safety precautions to be taken in respect of the goods.

If the consignor violates the preceding paragraph, the carrier may refuse to carry the goods; alternatively, the carrier may take appropriate measures to prevent loss, in which case the expenses arising therefrom shall be borne by the consignor.

Article 308: Before the carrier delivers the goods to the consignee, the consignor may instruct the carrier to suspend carriage, return the goods, change the place of destination or deliver the goods to another consignee, but he shall compensate the carrier for the loss suffered as a result thereof.

Article 309: When the goods carried have arrived at the place of destination, the carrier shall notify the consignee (if known to him) in a timely manner, and the consignee shall take delivery in a timely manner. If the consignee fails to take delivery within the time limit therefor, he shall pay the carrier custody fees etc.

Article 310: When taking delivery, the consignee shall inspect the goods within the stipulated period of time. If no period of time for inspection has been stipulated or such period has not been stipulated explicitly, and the period is not determinable pursuant to Article 61 of this Law, the consignee shall inspect the goods within a reasonable period of time. Failure by the consignee to raise any objections as to the quantity of the goods or damage to the goods, etc. within the stipulated period of time or within a reasonable period of time is prima facie evidence of delivery by the carrier of the goods as described in the document of transport.

Article 311: The carrier is liable for damages in respect of damage to or loss of the goods in the course of carriage, unless he proves that the same was caused by force majeure, the nature of the goods themselves, reasonable wear and tear or the fault of the consignor or the consignee.

Article 312: The measure of damages in respect of damage to or loss of the goods shall be that stipulated by the parties, if any. If the parties have not stipulated the measure of damages or the measure of damages has not been stipulated explicitly, and the same is not determinable pursuant to Article 61 of this Law, the measure of damages shall be calculated according to the market price of the goods prevailing at their place of arrival at the time when they are or should have been delivered. If laws or administrative regulations contain different provisions in respect of the method of calculation of the measure of damages or a limit on the measure of damages, such provisions apply.

Article 313: In the case of unimodal transportation by two or more carriers, the carrier that concludes the contract with the consignor shall be liable for the entire transit. If damage occurs during one particular leg of the carriage, the carrier that signed the contract with the consignor and the carrier for the leg in question bear joint and several liability.

Article 314: If the goods are lost in the course of carriage due to force majeure and no freight has been collected, the carrier may not demand payment of the freight. If freight has been collected, the consignor may claim a refund thereof.

Article 315: If the consignor or the consignee fails to pay freight, the custody fee and/or other carriage charges, the carrier has a lien on a corresponding portion of the goods carried, unless the parties have agreed otherwise.

Article 316: If the consignee is unknown or refuses to take delivery without a justifiable reason, the carrier may lodge the goods pursuant to Article 101 of this Law

Section Four: Multimodal Transport Contracts

Article 317: A multimodal transport operator is responsible for performing or procuring the performance of a multimodal transport contract, and has the rights and obligations of a carrier for the entire transit.

Article 318: The multimodal transport operator may agree with the participating carriers for each leg on mutual responsibilities in respect of the carriage for each leg under the multimodal transport contract. However, such agreement does not affect the multimodal transport operator's obligations in respect of the entire transit.

Article 319: When the multimodal transport operator receives the goods handed over by a consignor, he shall issue a multimodal transport document which, at the option of the consignor, shall be in either negotiable or non-negotiable form.

Article 320: If the multimodal transport operator suffers loss as a result of fault on the part of the consignor when he consigned the goods, the consignor is liable for damages even if the multimodal transport document has been transferred by him.

Article 321: If damage to or loss of the goods occurs during one particular leg of the multimodal transport, the liability for damages and the limit of liability of the multimodal transport operator is governed by the relevant law regulating the mode of transport for the leg in question. If it cannot be determined during which leg of the transport the damage to or loss of the goods occurred, liability for damages shall be borne in accordance with the provisions of this Part.

PART EIGHTEEN: TECHNOLOGY CONTRACTS

Section One: General Stipulations

Article 322: A technology contract is a contract which establishes the mutual rights and obligations of the parties in respect of technology development, transfer, consultancy or service.

Article 323: The conclusion of a technology contract shall promote scientific and technological progress and accelerate the conversion, practical application and dissemination of scientific and technological achievements.

Article 324: The particulars of a technology contract shall be agreed upon by the parties, and shall generally include the following terms:

(1) the name of the project;

(2) the particulars, scope and requirements of the subject matter;

(3) the plan, schedule, time limit, place, area and method of performance;

(4) the preservation of the confidentiality of technical information and materials;

(5) the allocation of responsibility for risk;

(6) the ownership of the technological achievement and method of sharing the gains therefrom;

(7) the acceptance standards and method;

(8) the price, remuneration or use fee and its method of payment;

(9) the method of calculating liquidated damages or compensatory damages;

(10) the method of dispute resolution; and

(11) the definitions of terms and phrases.

Technical background information, feasibility studies, technical evaluation reports, project task descriptions and plans, technical standards, technical specifications, original design and process documents and other technical documentation relevant to the performance of the contract may be made integral parts of the contract if the parties so agree.

If the technology contract involves a patent, it shall specify the name of the invention or creation, the patent applicant and the patentee, the application date, the application number, the patent number and the term of validity of the patent.

Article 325: The payment method of the price, remuneration or use fee under the technology contract shall be agreed upon by the parties. They may adopt the method where the total amount is calculated once and paid in a lump sum, the method where the total amount is calculated once and paid in instalments or the method where payment is made in the form of royalties or in the form of royalties with an additional up-front fee.

If the parties agree to adopt the royalty method, the royalty may be calculated on the basis of the price of the product, the output value or profit added as a result of the working of the patent or use of the technological secret, a certain percentage of the sales of the product, or such other method as the parties may agree upon. The royalty rate may be a fixed rate, a progressive rate increasing each year or a progressive rate decreasing each year.

If the parties agree to adopt the royalty method, the parties shall stipulate in their contract a method for examining the relevant accounts.

Article 326: If the rights to use and transfer an occupational technological achievement belong to a legal person or another organization, such legal person or other organization may conclude a technology contract in respect of that achievement. The legal person or other organization shall allocate a certain percentage of the gains obtained from the use or transfer of the occupational technological achievement as a reward or remuneration to the individual who accomplished the achievement. If the legal person or other organization concludes a technology contract to transfer the occupational technological achievement, the individual who accomplished the said achievement has a preemptive right to be transferred the achievement on the same conditions.

Occupational technological achievements are technological achievements which are accomplished during the course of performing work duties assigned by a legal person or another organization or which are chiefly accomplished by utilizing the material and technological resources of a legal person or another organization.

Article 327: The rights to use and transfer a non-occupational technological achievement belong to the individual who accomplished it, and that individual may conclude a technology contract in respect of that achievement.

Article 328: An individual who has accomplished a technological achievement is entitled to identify himself in documents concerning the achievement as the person who accomplished it and to obtain honorary certificates and rewards for the achievement.

Article 329: A technology contract that illegally monopolizes technology, impedes technological progress or infringes the technological achievements of others is void.

Section Two: Technology Development Contracts

Article 330: A technology development contract is a contract concluded between the parties in respect of the research and development of a new technology, new product, new process or new material, and of its system.

Technology development contracts include entrusted development contracts and cooperative development contracts.

Technology development contracts shall be in writing.

With respect to contracts concerning the conversion of a scientific or technological achievement with industrial application value, reference shall be made to the provisions governing technology development contracts.

Article 331: The entrusting party to an entrusted development contract shall pay the research and development funds and remuneration, provide technical information and primary data, fulfill his assistance duties and accept the results of the research and development, all as stipulated in the contract.

Article 332: The research and development party to an entrusted development contract shall formulate and implement the research and development plan as agreed; expend the research and development funds in a reasonable manner; and complete the research and development work on schedule, deliver the results of the research and development work and provide the relevant technical information and necessary technical guidance to aid the entrusting party in mastering the said results.

Article 333: If the entrusting party's breach of a contractual stipulation results in the standstill, delay or failure of the research and development work, he is liable for breach of contract.

Article 334: If the research and development party's breach of a contractual stipulation results in the standstill, delay or failure of the research and development work, he is liable for breach of contract.

Article 335: The parties to a cooperative development contract shall make their investment (including the investment of technology), participate in the research and development work in accordance with their allocated tasks, and assist and cooperate with each other in the research and development work, all as stipulated in the contract.

Article 336: If the breach of a contractual stipulation by a party to a cooperative development contract results in the standstill, delay or failure of the research and development work, he is liable for breach of contract.

Article 337: A party may terminate the technology development contract if another person publishes the technology which is the subject matter of the contract, rendering the performance of the contract meaningless.

Article 338: The parties shall stipulate which of them bears the responsibility for the risk of failure or partial failure of the research and development effort resulting from insurmountable technological difficulties encountered in the course of performing the technology development contract. If the parties have not stipulated which of them bears the responsibility for such risk or such responsibility has not been stipulated explicitly, and it is not determinable pursuant to Article 61 of this Law, the responsibility for the risk shall be reasonably apportioned between the parties.

If one of the parties discovers circumstances as stipulated above which may lead to the total or partial failure of the research and development effort, he shall notify the other party and take appropriate measures to mitigate the loss in a timely manner. If he fails to notify the other party and take appropriate measures in a timely manner, resulting in amplification of the loss, he is liable for the amplified portion of the loss.

Article 339: The patent application right for an invention or creation accomplished pursuant to an entrusted development contract vests in the research and development party, unless the parties have agreed otherwise. If the research and development party obtains the patent rights, the entrusting party may work such patent free of charge.

If the research and development party transfers the patent application right, the entrusting party has a preemptive right to be transferred such right on the same conditions.

Article 340: The patent application right for an invention or creation accomplished pursuant to a cooperative development contract is a joint right of the cooperating parties, unless the parties have agreed otherwise. If a party transfers its joint right to apply for a patent, the other parties have a preemptive right to be transferred such right on the same conditions.

If one of the parties to a cooperative development contract 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. If the applicant obtains the patent rights, the party that waived its patent application right may work such patent free of charge.

If one of the parties to a cooperative development contract does not agree to the application for a patent, the other party or parties may not apply for a patent.

Article 341: The rights to use and transfer technological secrets resulting from an entrusted development effort or a cooperative development effort, and the method of distributing the benefits derived from such secrets, shall be agreed upon by the parties. If the parties have not stipulated the same or the same has not been stipulated explicitly, and the same is not determinable pursuant to Article 61 of this Law, all the parties have the right to use and transfer such secrets. However, the research and development party to an entrusted development contract may not transfer the results of his research and development to a third party prior to delivering them to the entrusting party.

Section Three: Technology Transfer Contracts

Article 342: Technology transfer contracts include contracts for the transfer of patent rights, the transfer of patent application rights, the transfer of technological secrets and the licensing of patents.

Technology transfer contracts shall be in writing.

Article 343: A technology transfer contract may stipulate the scope of the working of the patent or the use of the technological secret by the transferor and the transferee, but it may not restrict technological competition or technological development.

Article 344: A patent licensing contract is only valid during the life of the patent rights. A patentee may not conclude a patent licensing contract with another person in respect of his patent after such patent has expired or been invalidated.

Article 345: The transferor under a patent licensing contract shall license the working of the patent to the transferee, deliver the technical information relating to the working of the patent and provide the necessary technical guidance, all as stipulated in the contract.

Article 346: The transferee under a patent licensing contract shall work the patent as agreed. He may not sublicense the patent to any third party other than those to which the contract permits him to do so, and shall pay a use fee as agreed.

Article 347: The transferor under a technological secret transfer contract shall provide technical information and technical guidance, warrant the utility and reliability of the technology and be bound to maintain its confidentiality, all as stipulated in the contract.

Article 348: The transferee under a technological secret transfer contract shall use the technology, pay the use fee and be bound to maintain confidentiality as stipulated in the contract.

Article 349: The transferor under a technology transfer contract shall warrant that he is the lawful owner of the technology he is supplying and that such technology is complete, error-free, effective and capable of achieving the stipulated purpose.

Article 350: The transferee under a technology transfer contract shall maintain the confidentiality of the non-published confidential portion of the technology supplied by the transferor to the extent and for the period of time agreed upon.

Article 351: If the transferor does not transfer the technology as agreed, he shall refund part or all of the use fee and assume liability for breach of contract. If in working the patent or using the technological secret he exceeds the scope agreed upon, or if he licenses the patent or the technological secret to a third party without permission and thereby breaches the contract, he shall cease breaching the contract and assume liability for such breach. If he violates the confidentiality obligations agreed upon, he is liable for breach of contract.

Article 352: If the transferee fails to pay the use fee as agreed, he shall make up the fee and pay liquidated damages as agreed. If he fails to make up the use fee or pay the liquidated damages, he shall cease working the patent or using the technological secret, return the technical information and assume liability for breach of contract. If in working the patent or using the technological secret he exceeds the scope agreed upon, or if he licenses the patent or the technological secret to a third party without the consent of the transferor, he shall cease breaching the contract and assume liability for such breach. If he violates the confidentiality obligations agreed upon, he is liable for breach of contract.

Article 353: If in working the patent or using the technological secret as agreed the transferee infringes the lawful rights and interests of another person, the liability therefor shall be assumed by the transferor, unless the parties have agreed otherwise.

Article 354: In accordance with the principle of mutual benefit, the parties may agree in their technology transfer contract upon a method of sharing the technological achievement resulting from subsequent improvements of the patent worked or technological secret used. If the parties have not stipulated such method or such method has not been stipulated explicitly, and the method is not determinable pursuant to Article 61 of this Law, the other parties are not entitled to share the technological achievement resulting from subsequent improvements made by one party.

Article 355: If laws or administrative regulations make other provisions for technology import and export contracts, patent contracts or patent application contracts, such provisions shall govern.

Section Four: Technical Consultancy Contracts and Technical Service Contracts

Article 356: Technical consultancy contracts include contracts for the provision of feasibility studies, technological projections, specialized technological investigations or analysis and evaluation reports, etc. in respect of specific technology items.

The term “technical service contracts” means contracts by which one party agrees to use its technical expertise to solve a specific technical problem for the other party. The term does not include construction project contracts or contracts for work.

Article 357: The entrusting party to a technical consultancy contract shall elucidate the issue for which consultancy is sought, provide the technical background materials and related technical information and data, accept the entrusted party's work product and pay remuneration, all as stipulated in the contract.

Article 358: The entrusted party to a technical consultancy contract shall complete the consultancy report or answer the questions within the time limit agreed upon. The consultancy report submitted by him shall meet the requirements agreed upon.

Article 359: If the entrusting party to a technical consultancy contract fails to supply the necessary information and data as agreed, thereby affecting the progress and quality of the work, or if he fails to accept the work product or accepts it after the time limit therefor, he may not claim a refund of the remuneration paid and shall pay any outstanding remuneration.

If the entrusted party to a technology consultancy contract fails to submit the consultancy report on time or submits a report which fails to meet the requirements agreed upon, he shall assume liability for breach of contract by reducing or forgoing his remuneration, etc.

Where the consultancy report and opinion submitted by the entrusted party to a technology consultancy contract meet the requirements agreed upon, loss resulting from decisions made by the entrusting party on the basis thereof shall be borne by the entrusting party, unless the parties have agreed otherwise.

Article 360: The entrusting party to a technical service contract shall provide the work conditions, fulfill his cooperation duties, accept the work product and pay the remuneration, all as stipulated in the contract.

Article 361: The entrusted party to a technical service contract shall completely render the service items, resolve the technical problem, warrant the quality of his work and impart the know-how for resolving the technical problem, all as stipulated in the contract.

Article 362: If the entrusting party to a technical service contract fails to perform his contractual obligations or performs his contractual obligations in a way other than agreed upon, thereby affecting the progress and quality of the work, or if he fails to accept the work product or accepts it after the time limit therefor, he may not claim a refund of the remuneration paid and shall pay any outstanding remuneration.

If the entrusted party to a technology service contract fails to complete the service work as agreed in the contract, he shall assume liability for breach of contract by forgoing his remuneration, etc.

Article 363: If during the course of performing a technical consultancy contract or technical service contract the entrusted party accomplished a new technological achievement using the technical information and the work resources supplied by the entrusting party, such achievement belongs to the entrusted party. If the entrusting party accomplishes a new technological achievement using the entrusted party's work product, such achievement belongs to the entrusting party. If the parties have agreed otherwise, their agreement shall govern.

Article 364: If laws or administrative regulations make other provisions for technical intermediary contracts or technical training contracts, such provisions shall govern.

PART NINETEEN: DEPOSIT CONTRACTS

Article 365: A deposit contract is a contract for custody by a depositary of an object delivered by a depositor, and the return of such object by the depositary.

Article 366: The depositor shall pay the depositary a custody fee as stipulated.

If the parties have not stipulated a custody fee or such fee has not been stipulated explicitly, and the fee is not determinable pursuant to Article 61 of this Law, the deposit is gratuitous.

Article 367: The deposit contract is formed at the time of delivery of the object deposited, unless the parties have agreed otherwise.

Article 368: When the depositor delivers the object to the depositary, the depositary shall hand over a deposit receipt, except in the case of a different usage of trade.

Article 369: The depositary shall take due care of the object deposited.

The parties may agree on the place and/or way of custody. The depositary may not change the place and/or way of deposit on his own authority, except in an emergency or for purposes of protecting the interests of the depositor.

Article 370: If the object delivered by the depositor is defective or if its nature requires the adoption of special safekeeping measures, the depositor shall inform the depositary of the relevant circumstances. If failure on the part of the depositor to so inform the depositary leads to damage of the object deposited, the depositary is not liable for damages; if the depositary suffers loss as a result of such failure, the depositor is liable for damages unless the depositary knew or ought to have known of the relevant circumstances but failed to remedy the same.

Article 371: The depositary may not pass on the object deposited to the custody of a third party, unless the parties have agreed otherwise.

If the depositary passes on the object deposited to the custody of a third party in violation of the preceding paragraph, thereby causing the deposited object to be damaged, the depositary is liable for damages.

Article 372: The depositary may not use or permit third parties to use the object deposited, unless the parties have agreed otherwise.

Article 373: If a third party asserts a right over the object deposited, the depositary shall perform his obligation to return the object to the depositor, unless the object deposited is legally made the subject of an order for preservation or enforcement.

If the third party institutes an action against the depositary or applies for attachment of the object deposited, the depositary shall notify the depositor in a timely manner.

Article 374: The depositary is liable for damages if the object deposited is damaged or lost while in his custody due to a lack of due care on his part, unless the deposit is gratuitous and the depositary proves the absence of gross negligence on his part.

Article 375: If the deposit consists of money, negotiable securities or other valuables, the depositor shall declare the same to the depositary, whereupon the depositary shall inspect the valuables prior to acceptance or seal them. If the depositor has failed to make such declaration, the depositary may, after the valuables are damaged or lost, compensate therefor as if the valuables were ordinary objects.

Article 376: The depositor may collect the object deposited at any time.

If the parties have not stipulated the period of custody or such period has not been stipulated explicitly, the depositary may at any time demand that the depositor collect the object deposited. If the parties have stipulated the period of custody, the depositary may not demand that the depositor collect the object deposited early, unless he has special reason to do so.

Article 377: The depositary shall return the original object and the fruits produced by it to the depositor upon the expiration of the period of custody or early collection by the depositor.

Article 378: If the depositary has taken custody of money, he may return money in the same currency and amount. If he has taken custody of other fungibles, he may return goods of the same type and quality and in the same quantity, as agreed by the parties.

Article 379: In the case of a deposit contract for consideration, the depositor shall pay a custody fee to the depositary according to the stipulated period of time.

If the parties have not stipulated a period for payment of the custody fee or such period has not been stipulated explicitly, and the period is not determinable pursuant to Article 61 of this Law, the fee shall be paid at the time of collection of the object deposited.

Article 380: If the depositor fails to pay the custody fee and/or other fees as agreed, the depositary has a lien on the object deposited, unless the parties have agreed otherwise.

PART TWENTY: WAREHOUSING CONTRACTS

Article 381: A warehousing contract is a contract for storage of goods by a warehouseman of goods delivered by a bailor, and payment of warehousing charges by the bailor.

Article 382: A warehousing contract becomes effective upon its formation.

Article 383: If the goods to be stored are dangerous goods such as flammable, explosive, toxic, corrosive or radioactive goods or if they are perishable, the bailor shall specify the nature of the goods and provide relevant information.

If the bailor violates the preceding paragraph, the warehouseman may refuse to warehouse the goods; alternatively, the warehouseman may take appropriate measures to prevent loss, in which case the expenses arising therefrom shall be borne by the bailor.

A warehouseman who stores dangerous goods such as flammable, explosive, toxic, corrosive or radioactive goods shall have the corresponding safekeeping facilities.

Article 384: Goods entering the warehouse shall be inspected by the warehouseman prior to acceptance, as agreed by the parties. The warehouseman shall notify the bailor in a timely manner if during such inspection he discovers any non-conformity between the goods entering the warehouse and the stipulations of the contract. If any non-conformity between the type, quantity or quality of the stored goods and the stipulations of the contract occurs after the goods have been inspected and accepted by the warehouseman, the warehouseman is liable for damages.

Article 385: The warehouseman shall issue a warehouse receipt when the bailor delivers the goods for storage.

Article 386: The warehouse receipt shall be signed or sealed by the warehouseman and include the following particulars:

(1) the name and domicile of the bailor;

(2) the type, quantity, quality, packaging and number of packages of, and the markings on, the stored goods;

(3) the standards for wear and tear of the stored goods;

(4) the storage site;

(5) the period of storage;

(6) the warehousing charges;

(7) the insured amount, period of insurance coverage and name of the insurer, if the stored goods have been insured; and

(8) the name of the person who issued the receipt and the place and date of issue.

Article 387: The warehouse receipt is the voucher for collection of the stored goods. The right to collect the stored goods may be assigned by means of endorsement of the warehouse receipt by the bailor or the holder of the receipt, and subsequent signing or sealing of the receipt by the warehouseman.

Article 388: At the request of the bailor or the holder of the warehouse receipt, the warehouseman shall permit the same to examine or take a sample from the stored goods.

Article 389: The warehouseman shall notify the bailor or the holder of the warehouse receipt in a timely manner if he discovers that the goods stored in the warehouse have deteriorated or sustained other damage.

Article 390: If the warehouseman discovers that goods stored in the warehouse have deteriorated or sustained other damage and jeopardize the safety and normal safekeeping of other stored goods, he shall demand that the bailor or the holder of the warehouse receipt dispose of the stored goods as necessary. If such circumstances constitute an emergency, the warehouseman may dispose of the stored goods as necessary, but shall subsequently notify the bailor or the holder of the warehouse receipt of such circumstances in a timely manner.

Article 391: If the parties have not stipulated the period of storage or such period has not been stipulated explicitly, the bailor or the holder of the warehouse receipt may collect the stored goods at any time; the warehouseman may also demand at any time that the bailor or the holder of the warehouse receipt collect the stored goods, provided, however, that he accords such person the necessary preparation time.

Article 392: Upon expiration of the period of storage, the bailor or the holder of the warehouse receipt shall collect the stored goods on the strength of the warehouse receipt. If the bailor or the holder of the warehouse receipt collects the stored goods after expiration of the period of storage, additional storage charges shall be imposed. If the bailor or the holder of the warehouse receipt collects the stored goods prior to expiration of the period of storage, the warehousing charges shall not be reduced.

Article 393: If the bailor or the holder of the warehouse receipt fails to collect the stored goods upon expiration of the period of storage, the warehouseman may demand that he collect the stored goods within a reasonable period of time. If the stored goods have not been collected by the expiration of such period of time, the warehouseman may lodge the same.

Article 394: The warehouseman is liable for damages if the stored goods are damaged or lost during storage due to a lack of due care on his part.

The warehouseman is not liable for damages if the stored goods are damaged or lost due to their own nature, non-conformity of their packaging with the stipulations of the contract or storage beyond their use-by date.

Article 395: Matters not provided for not in this Part are governed by the relevant provisions for deposit contracts.

PART TWENTY ONE: MANDATE CONTRACTS

Article 396: A mandate contract is a contract by which a mandator and a mandatary agree that the mandatary will handle a matter of the mandator.

Article 397: The mandator may specifically entrust the mandatary with handling one matter or a number of matters, or generally entrust the mandatary with handling all of his affairs.

Article 398: The mandator shall pay in advance the expenses for handling the entrusted matter(s). The mandator shall reimburse the mandatary for the necessary expenses advanced in the course of handling the entrusted matter(s) and pay interest thereon.

Article 399: The mandatary shall handle the entrusted matter(s) in accordance with the instructions of the mandator. If there is a need to deviate from the mandator's instructions, the mandatary shall obtain the mandator's consent. If the situation is urgent and making contact with the mandator difficult, the mandatary shall duly handle the entrusted matter(s) and subsequently report the situation to the mandator in a timely manner.

Article 400: The mandatary shall handle the entrusted matter(s) personally. With the consent of the mandator, the mandatary may transfer the mandate. If the mandator has consented to transfer of the mandate, he may address his instructions regarding the entrusted matter(s) directly to the third party transferee of the mandate, and the mandatary is liable only for the selection and appointment of the third party and his own instructions to that party. If the mandator has not consented to transfer of the mandate, the mandatary is liable for the acts of the third party transferee of the mandate, unless an emergency made it necessary for the mandatary to transfer the mandate in order to safeguard the rights and interests of the mandator.

Article 401: The mandatary shall report on his handling of the entrusted matter(s), as required by the mandator. When the mandate contract terminates, the mandatary shall report the result of his handling of the entrusted matter(s).

Article 402: If the mandatary concludes a contract with a third party in his own name and within the scope of authority delegated by the mandator, and, at the time of concluding the contract, the third party is aware of the agency relationship between the mandatary and the mandator, the contract directly binds the mandator and the third party, unless there is conclusive evidence that the said contract binds only the mandatary and the third party.

Article 403: Where the mandatary concludes a contract with a third party in his own name and, at the time of concluding the contract, the third party is not aware of the agency relationship between the mandatary and the mandator, if the mandatary fails to perform his obligation towards the mandator due to reasons attributable to the third party, the mandatary shall disclose the third party to the mandator and the mandator may on those grounds exercise the rights of the mandatary against the third party, unless the third party would not have entered into the contract with the mandatary if at the time of its conclusion he had known that the mandatary's principal was the mandator in question.

If the mandatary fails to perform his obligation towards the third party due to reasons attributable to the mandator, the mandatary shall disclose the mandator to the third party and the third party has an option on those grounds to claim against either the mandatary or the mandator. However, once selected, the third party may not change the person against whom he claims.

If the mandator exercises the rights of the mandatary against the third party, the third party may set up against the mandator the defences which he has against the mandatary. If the third party opts to claim against the mandator, the mandator may set up against the third party the defences which he has against the mandatary as well as the defences which the mandatary has against the third party.

Article 404: The mandatary shall hand over to the mandator property obtained in handling the entrusted matter(s).

Article 405: The mandator shall pay remuneration to the mandatary if the mandatary completes the entrusted matter(s). If the mandate contract is terminated or the entrusted matter(s) cannot be completed due to reasons not attributable to the mandatary, the mandator shall pay appropriate remuneration to the mandatary. If the parties have agreed otherwise, their agreement shall govern.

Article 406: If the mandate is for consideration, the mandator may claim compensation for loss suffered by him due to the fault of the mandatary. If the mandate is gratuitous, the mandator may claim compensation for loss suffered by him due to willful conduct or gross negligence on the part of the mandatary.

If the mandatary exceeds his authority, thereby causing the mandator to suffer loss, he shall compensate for the loss.

Article 407: If the mandatary suffers loss during his handling of the entrusted matter(s) for reasons not attributable to himself, he may claim compensation therefor from the mandator.

Article 408: Subject to the consent of the mandatary, the mandator may entrust the handling of the matter(s) to a person other than the mandatary. If the mandatary suffers loss at a result thereof, he may claim compensation therefor from the mandator.

Article 409: If two or more mandataries are jointly handling the entrusted matter(s), they are jointly and severally liable to the mandator.

Article 410: The mandate contract may be terminated by the mandator or the mandatary at any time. If a party's termination of the contract causes the other party to suffer loss, the terminating party shall compensate therefor, unless the reason for the termination is not attributable to the terminating party.

Article 411: The mandate contract is terminated by the death, loss of capacity for civil acts or bankruptcy of the mandator or the mandatary, unless the parties have agreed otherwise or termination would be inappropriate given the nature of the entrusted matter(s).

Article 412: If the interests of the mandator would be prejudiced by the termination of the mandate contract arising from the death, loss of capacity for civil acts or bankruptcy of the mandator, the mandatary shall continue to handle the entrusted matter(s) until the same are taken over by the heir, statutory agent or liquidation organization of the mandator.

Article 413: If the mandate contract terminates as a result of the death, loss of capacity for civil acts or bankruptcy of the mandatary, the heir, statutory agent or liquidation organization of the mandatary shall notify the mandator in a timely manner. If the interests of the mandator would be prejudiced by such termination of the mandate contract, the heir, statutory agent or liquidation organization of the mandatary shall take the necessary steps until the mandator has dealt with the consequences of the termination.

PART TWENTY-TWO: COMMISSION AGENCY CONTRACTS

Article 414: A commission agency contract is a contract by which a commission agent agrees to engage in trading activities in his own name for a principal, and the principal agrees to pay remuneration therefor.

Article 415: The expenses paid by the commission agent in the course of handling the commissioned matter(s) shall be borne by the principal, unless the parties have agreed otherwise.

Article 416: If the commission agent has possession of commissioned goods, he shall take due care thereof.

Article 417: If the commissioned goods are defective or will easily perish or deteriorate at the time they are delivered to the commission agent, the commission agent may dispose thereof, subject to the consent of the principal; if the commission agent is unable to make timely contact with the principal, he may dispose of the goods in a reasonable manner.

Article 418: Sale by the commission agent at a price lower than that set by the principal or purchase by the commission agent at a price higher than that set by the principal shall be subject to the consent of the principal. If the principal has not given his consent to such sale or purchase but the difference in price is made up by the commission agent, the sale or purchase is effective vis-à-vis the principal.

If the commission agent sells at a higher price or purchases at a lower price than that designated by the principal, his remuneration may be increased as stipulated by the parties. If the parties have not stipulated such matter or such matter has not been stipulated explicitly, and the matter is not determinable pursuant to Article 61 of this Law, the benefit belongs to the principal.

If the principal has given special instructions in respect of the price, the commission agent may not deviate therefrom when concluding sales or purchases.

Article 419: If the commission agent sells or purchases merchandise the price of which is determined by the market, he himself may be the buyer or the seller, unless the principal has expressed a contrary intention.

If the commission agent is the buyer or the seller in a transaction as described in the preceding paragraph, he may still claim remuneration from the principal.

Article 420: Commissioned goods purchased by the commission agent as agreed by the parties shall be taken delivery of by the principal in a timely manner. If the principal refuses to take delivery of such goods without a justifiable reason after having been reminded by the agent, the agent may lodge the goods pursuant to Article 101 of this Law.

Where the commissioned goods cannot be sold or the principal withdraws them from sale, the commission agent may lodge the goods pursuant to Article 101 of this Law if the principal fails to take back or dispose of the goods after having been reminded to do so by the commission agent.

Article 421: If the commission agent concludes a contract with a third party, he directly acquires rights and incurs obligations thereunder.

If the third party fails to perform his obligations, thereby causing injury to the principal, the commission agent is liable for damages, unless the agent and the principal have agreed otherwise.

Article 422: If the agent completes all or part of the commissioned matter(s), the principal shall pay corresponding remuneration to the commission agent. If the principal fails to pay the remuneration within the time limit therefor, the commission agent has a lien on the commissioned goods, unless the parties have agreed otherwise.

Article 423: Matters not provided for in this Part are governed by the relevant provisions for mandate contracts.

PART TWENTY-THREE: BROKERAGE CONTRACTS

Article 424: A brokerage contract is a contract by which a broker agrees to inform a client of the opportunity to conclude a contract or to provide a client with intermediary services for the conclusion of a contract, and the client agrees to pay remuneration therefor.

Article 425: The broker shall truthfully report to his client on the matters concerning the conclusion of the contract.

If the broker willfully conceals important facts or provides false information in connection with the conclusion of the contract, thereby harming the interests of his client, he may not claim remuneration and is liable for damages.

Article 426: If the broker has facilitated the formation of the contract, the client shall pay remuneration to the broker as stipulated. If such remuneration has not been stipulated or the remuneration stipulations are not explicit, and the same is not determinable pursuant to Article 61 of this Law, a reasonable amount of remuneration shall be determined according to the service rendered by the broker. If the formation of the contract was facilitated by the intermediary services provided by the broker for the conclusion of the contract, the broker's remuneration shall be borne equally by the parties to such contract.

If the formation of the contract was facilitated by the broker, the expenses for the brokerage activities shall be borne by the broker.

Article 427: If the broker has not facilitated the formation of the contract, he may not claim remuneration, but he may claim reimbursement from his client for the necessary expenses disbursed in the course of the brokerage activities.

SUPPLEMENTARY PROVISIONS

Article 428: This Law shall be implemented as of 1 October 1999. ThePRC Economic Contract Law, the PRC Foreign Economic Contract Law and the PRC Technology Contract Law shall be repealed on the same date.