Contract Law of the People's Republic of China
Author:sipoIssuing Date:2008-01-24 13:28:30Source:sipo
The business operator who commits default activities in providing to the consumer any goods or service shall be liable for paying compensation for damages in accordance with the Law of the People's Republic of China on the Protection of Consumer Rights and Interests.
Article 114 The parties to a contract may agree that one party shall, when violating the contract, pay breach of contract damages of certain amount in light of the breach, or may agree upon the calculating method of compensation for losses resulting from the breach of contract.
If the agreed breach of contract damages are lower than the losses caused, any party may request the people's court or an arbitration institution to increase it; if it is excessively higher than the losses caused, any party may request the people's court or an arbitration institution to make an appropriate reduction.
If the parties to a contract agree upon breach of contract damages in respect to the delay in performance, the party in breach shall perform the debt obligations after paying the breach of contract damages.
Article 115 The parties to a contract may, according to the Guaranty Law of the People's Republic of China, agree that one party pays a deposit to the other party as the guaranty for the creditor's rights. After the debt obligations are performed by the obligor, the deposit shall be returned or offset against the price. If the party that pays the deposit fails the perform the agreed debt obligations, it shall have no right to reclaim the deposit. If the party that receives the deposit fails to perform the agreed debt obligations, it shall return twice the amount of the deposit.
Article 116 Where the parties to a contract agree on both breach of contract damages and a deposit, when one party violates the contract, the other party may choose to apply the breach of contract damages clause or the deposit clause.
Article 117 In case that a contract is not able to be performed because of force majeure, the liabilities shall be exempted in part or wholly in light of the effects of force majeure, except as otherwise stipulated by law. If the force majeure occurs after one party has delayed in performance, the liability may not be exempted.
Force majeure as referred to in this Law means the objective circumstances that are unforeseeable, unavoidable and insurmountable.
Article 118 One party to a contact that is not able to perform the contract because of force majeure shall make a notice to the other party promptly so as to reduce the probable losses to the other party and provide evidence within a reasonable time limit.
Article 119 After one party violates a contract, the other party shall take proper measures to prevent from the enlargement of losses; if the other party fails to take proper measures so that the losses are enlarged, it may not claim any compensation as to the enlarged losses.
The reasonable expenses paid by the party to prevent from the enlargement of losses shall be borne by the party in breach.
Article 120 In case that both parties violate a contract, they shall bear the liabilities respectively.
Article 121 One party that violates the contract because of a third party shall be liable for the breach of contract to the other party. The disputes between the said party and the third party shall be settled according to law or their agreement.
Article 122 In case that the breach of contract by one party infringes upon the other party's personal or property rights, the aggrieved party shall be entitled to choose to claim the assumption by the violating and infringing party of liabilities for breach of contract according to this Law, or to claim the assumption by the violating and infringing party of liabilities for infringement according to other laws.
Chapter 8 Miscellaneous Provisions
Article 123 If there are provisions as otherwise stipulated in respect to contracts in other laws, such provisions shall be followed.
Article 124 Any contract which is not addressed explicitly in the Specific Provisions of this Law or in other laws shall apply the provisions of the General Provisions of this Law or in other laws may be applied mutatis mutandis.
Article 125 With regard to disputes between the parties to a contract arising from the understanding of any clause of the contract, the true intention of such clause shall be determined according to the terms and expressions used in the contract, the contents of the relevant clauses of the contract, the purpose for concluding the contract, the transaction practices and the principle of good faith.
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