中华人民共和国合同法 Contract Law of the People's Republic of China

(Adopted at the Second Session of the Ninth National People's Congress on March 15, 1999' Promulgated¹ by the Order NO. 15 of the President of the People's Republic of China on March 15, 1999 and effective as of October 1, 1999)
颁布日期：19990315 　实施日期：19991001 　颁布单位：全国人民代表大会

　　Contents

　　General Provisions

　　Chapter 1 General Principles

　　Chapter 2 Conclusion of Contracts

　　Chapter 3 Validity of Contracts

　　Chapter 4 Performance of Contracts

　　Chapter 5 Modification³ and Assignment of Contracts

　　Chapter 6 Termination of Contractual Rights and Obligations

　　Chapter 7 Liabilities for Breach⁴ of Contracts

　　Chapter 8 Other Provisions

　　Specific Provisions

　　Chapter 9 Sales Contracts

　　Chapter 10 Contracts for Supply of Power, Water, Gas or Heat

　　Chapter 11 Gift Contracts

　　Chapter 12 Contracts for Loans of Money

　　Chapter 13 Leasing Contracts

　　Chapter 14 Financial Leasing Contracts

　　Chapter 15 Contracts for Works

　　Chapter 16 Contracts for Construction Projects

　　Chapter 17 Transportation Contracts

　　Chapter 18 Technology Contracts

　　Chapter 19 Storage Contracts

　　Chapter 20 Warehousing Contracts

　　Chapter 21 Commission Contracts

　　Chapter 22 Contracts of Commission Agency

　　Chapter 23 Intermediation conrtacts

　　Supplementary⁶ Provisions

　　General Provisions

　　Chapter 1 General Principles

　　Article 1 This Law is enacted⁷ in order to protect the lawful⁸ rights and interests of the contracting parties, to maintain social and economic order, and to promote the process of socialist⁹ modernization¹⁰.

　　Article 2 A contract in this Law refers to an agreement among natural persons, legal persons or other organizations as equal parties for the establishment, modification of a relationship involving the civil rights and obligations of such entities¹¹.

　　Agreements concerning personal relationships such as marriage, adoption¹², guardianship¹⁴, etc. shall be governed by the provisions in other laws.

　　Article 3 Contracting parties shall have equal legal status, and no party may impose its will on the other party.

　　Article 4 The parties have the right to lawfully¹⁵ enter into a contract of their own free will in accordance with the law, and no unit or individual may illegally interfere¹⁷ therewith.

　　Article 5 The parties shall adhere to the principle of fairness in deciding their respective rights and obligations.

　　Article 6 The parties shall observe the principle of honesty and good faith in exercising their rights and performing their obligations.

　　Article 7 In concluding and performing a contract, the parties shall comply with the laws and administrative¹⁸ regulations, respect social ethics¹⁹, and shall not disrupt the social and economic order or impair²⁰ the public interests.

　　Article 8 A lawfully established contract shall be legally binding²¹ on the parties thereto, each of whom shall perform its own obligations in accordance with the terms of the contract, and no party shall unilaterally modify or terminate the contract.

　　The contract established according to law is protected by law.

　　Chapter 2 Conclusion of Contracts

　　Article 9 In entering into a contract, the parties shall have appropriate capacities for civil rights and civil acts.

　　A party may appoint an agent to enter into a contract on its behalf in accordance with the law.

　　Article 10 The parties may use written, oral or other forms in entering into a contract.

　　A contract shall be in written form if the laws or administrative regulations so provide. A contract shall be concluded in written form if the parties so agree.

　　Article 11 "Written form" refers to a form such as a written contractual agreement, letter, electronic data text(including a telegram, telex²², fax, electronic data exchange and e-mail)that can tangibly²³ express the contents contained therein.

　　Article 12 The contents of a contract shall be agreed upon by the parties, and shall generally contain the following clauses:

　　(1) titles or names and domiciles of the parties;

　　(2) subject matter;

　　(3) quantity;

　　(4) quality;

　　(5) price or remuneration;

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

　　(7) liability for breach of contract; and

　　(8) method to settle disputes.

　　The parties may conclude a contract by reference to a model text of each kind of contract.

　　Article 13 The parties shall conclude a contract in the form of an offer and an acceptance.

　　Article 14 An offer is an expression of an intent to enter into a contract with another person. Such expression of intent shall comply with the following:

　　(1) its contents shall be specific and definite;

　　(2) it indicates that the offeror will be bound by the expression of intent in case of acceptance by the offeree.

　　Article 15 An invitation for offer is an expression of an intent to invite other parties to make offers thereto. Mailed price lists, public notices of auction²⁴ and tender, prospectuses²⁵ and commercial advertisements, etc. are invitations for offer.

　　Where the contents of a commercial advertisement meet the requirements for an offer, it shall be regarded as an offer.

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

　　If a contract is concluded through data-telex, and a recipient²⁶ designates a specific system to receive the date-telex, the time when the data-telex enters such specific system shall be the time of arrival; if no specific system is appointed, the time when the data-telex first enters any of the recipient's systems shall be regarded as the time of arrival.

　　Article 17 An offer may be withdrawn²⁷. The withdrawal²⁸ notice shall reach the offeree before or at the same time when the offer arrives.

　　Article 18 An offer may be revoked³⁰. The revocation³¹ notice shall reach the offeree before it has dispatched a notice of acceptance.

　　Article 19 An offer may not be revoked, if

　　(1) the offeror indicates a fixed³² time for acceptance or otherwise explicitly³³ states that the offer is irrevocable; or

　　(2) the offeree has reasons to rely on the offer as being irrevocable and has made preparation for performing the contact.

　　Article 20 An offer shall lose efficacy under any of the following circumstances:

　　(1) the notice of rejection³⁴ reaches the offeror;

　　(2) the offeror revokes³⁵ the offer in accordance with the law;

　　(3) the offeree fails to dispatch an acceptance before the expiration³⁶ of the time limit for acceptance;

　　(4) the offeree makes substantial changes to the contents of the offer.

　　Article 21 An acceptance is the expression of an intention to by the offeree to assent³⁷ to the offer.

　　Article 22 The acceptance shall be made in the form of a notice, except where acceptance may be made by an act on the basis of customary business practice or as expressed in the offer.

　　Article 23 An acceptance shall reach the offeror within the time limit prescribed in the offer.

　　Where no time limit is prescribed in the offer, the acceptance shall reach the offeror in accordance with the following provisions:

　　(1) if the offer is made in dialogues, the acceptance shall be made immediately unless otherwise agreed upon by the parties;

　　(2) If the offer is made in forms other than a dialogue, the acceptance shall reach the offeror within a reasonable period of time.

　　Article 24 Where an offer is made by letter or telegram, the time limit for acceptance shall accrue³⁹ from the date shown in the letter or from the date on which the telegram is handed in for dispatch. If no such date is shown in the letter, it shall accrue from the postmark date on the envelope. Where an offer is made by means of instantaneous communication, such as telephone or facsimile, etc. the time limit for acceptance shall accrue from the moment that the offer reaches the offeree.

　　Article 25 A contract is established when the acceptance becomes effective.

　　Article 26 An acceptance becomes effective when its notice reaches the offeror. If notice of acceptance is not required, the acceptance shall become effective when an act of acceptance is performed in accordance with transaction practices or as required in the offer.

　　Where a contract is concluded in the form of date-telex, the time of arrival of an acceptance shall be governed by the provisions of Paragraph 2, Article 16 of this Law.

　　Article 27 An acceptance may be withdrawn, but a notice of withdrawal shall reach the offeror before or at the same time when the notice of acceptance reaches the offeror.

　　Article 28 Where an offeree makes an acceptance beyond the time limit for acceptance, the acceptance shall be a new offer except that the offeror promptly⁴⁰ informs the offeree of the effectiveness of the said acceptance.

　　Article 29 If the offeree dispatched the acceptance within the time limit specified⁴¹ for acceptance, and under normal circumstances the acceptance would have reached the offeror in due time, but due to other reasons the acceptance reaches the offeror after the time limit for acceptance has expired, such acceptance shall be effective, unless the offeror notifies the offeree in a timely manner that it does not accept the acceptance due to the failure of the acceptance to arrive within the time limit.

　　Article 30 The contents of an acceptance shall comply with those of the offer. If the offeree substantially modifies the contents of the offer, it shall constitute a new offer. The modification relating to the subject matter, quality, quantity, price or remuneration, time or place or method of performance, liabilities for breach of contract and method of dispute resolution, etc. shall constitute the substantial modification of an offer.

　　Article 31 If the acceptance does not substantially modifies the contents of the offer, it shall be effective, and the contents of the contract shall be subject to those of the acceptance, except as rejected promptly by the offeror or indicated in the offer that an acceptance may not modify the offer at all.

　　Article 32 Where the parties conclude a contract in written form, the contract is established when it is signed or sealed by the parties.

　　Article 33 Where the parties conclude the contract in the form of letters or data-telex, etc., one party may request to sign a letter of confirmation⁴² before the conclusion of the contract. The contract shall be established at the time when the letter of confirmation is signed.

　　Article 34 The place of effectiveness of an acceptance shall be the place of the establishment of the contract.

　　If the contract is concluded in the form of data-telex, the main business place of the recipient shall be the place of establishment. If the recipient does not have a main business place, its habitual⁴³ residence shall be considered to be the place of establishment. Where the parties agree otherwise, such agreement shall apply.

　　Article 35 Where the parties conclude a contract in written form, the place where both parties sign or affix⁴⁴ their seals on the contract shall be the place of establishment.

　　Article 36 Where a contract is to be concluded in written form as required by relevant laws and administrative regulations or as agreed by the parties, and the parties failed to conclude the contract in written form, but one party has performed the principal obligation and the other party has accepted it, the contract is established.

　　Article 37 Where a contract is to be concluded in written form, if one party has performed its principal obligation and the other party has accepted it before signing or sealing of the contract, the contract is established.

　　Article 38 Where the State has issued a mandatory⁴⁵ plan or a State purchasing order based on necessity, the relevant legal persons and the other organizations shall conclude a contract between them in accordance with the rights and obligations as stipulated⁴⁷ by the relevant laws and administrative regulations.

　　Article 39 Where standard terms are adopted in concluding a contract, the party supplying the standard terms shall define the rights and obligations between the parties abiding⁴⁸ by the principle of fairness, and shall inform the other party to note the exclusion⁴⁹ or restriction⁵⁰ of its liabilities in a reasonable way, and shall explain the standard terms upon request by the other party.

　　Standard terms are clauses that are prepared in advance for general and repeated use by one party, and which are not negotiated with the other party when the contract in concluded.

　　Article 40 When standard terms are under the circumstances stipulated in Articles 52 and 53 of this Law, or the party which supplies the standard terms exempts⁵¹ itself from its liabilities, increases the liabilities of the other party, and deprives the material rights of the other party, the terms shall be invalid⁵².

　　Article 41 If a dispute over the understanding of the standard terms occurs, it shall be interpreted in accordance with common understanding. Where there are two or more kinds of interpretation⁵³, an interpretation unfavorable to the party supplying the standard terms shall prevail. Where the standard terms are inconsistent with non-standard terms, the latter shall prevail.

　　Article 42 The party shall be liable for damage if it is under one of the following circumstances in concluding a contract and thus causing losses to the other party:

　　(1) pretending to conclude a contract, and negotiating in bad faith;

　　(2) deliberately⁵⁴ concealing⁵⁵ important facts relating to the conclusion of the contract or providing false information;

　　(3) performing other acts which violate the principle of good faith.

　　Article 43 A trade secret the parties learn in concluding a contract shall not be disclosed or improperly⁵⁷ used, no matter the contract is established or not. If the party discloses or improperly uses such trade secret and thus causing loss to the other party, it shall be liable for damages.

　　Chapter 3 Validity of Contracts

　　Article 44 The contract established according to law becomes effective upon its establishment.

　　With regard to contracts that are subject to approval or registration⁵⁸ as stipulated by relevant laws or administrative regulations, the provisions thereof shall be followed.

　　Article 45 The parties may agree on that the effectiveness of a contract be subject to certain conditions. A contract whose effectiveness is subject to certain conditions shall become effective when such conditions are accomplished⁵⁹. The contract with dissolving conditions shall become invalid when such conditions are satisfied.

　　If a party improperly prevent the satisfaction of a condition for its own interests, the condition shall be regarded as having been accomplished. If a party improperly facilitates the satisfaction of a condition, such condition shall be regarded as not to have been satisfied.

　　Article 46 The parties may agree on a conditional⁶⁰ time period as to the effectiveness of the contract. A contract subject to an effective time period shall come into force when the period expires. A contract with termination time period shall become invalid when the period expires.

　　Article 47 A contract concluded by a person with limited civil capacity of conduct shall be effective after being ratified⁶¹ afterwards by the person's statutory agent, but a pure profit-making contract or a contract concluded which is appropriate to the person's age, intelligence or mental health conditions need not be ratified by the person's statutory agent.

　　The counterpart may urge the statutory agent to ratify⁶² the contract within one month. It shall be regarded as a refusal of ratification⁶³ that the statutory agent does not make any expression. A bona fide counterpart has the right to withdraw it before the contract is ratified. The withdrawal shall be made by means of notice.

　　Article 48 A contract concluded by an actor who as no power of agency, who oversteps the power of agency, or whose power of agency has expired and yet concludes it on behalf of the principal, shall have no legally binding force on the principal without ratification by the principal, and the actor shall be held liable.

　　The counterpart may urge the principal to ratify it within one month. It shall be regarded as a refusal of ratification that the principal does not make any expression. A bona fide counterpart has the right to withdraw it before the contract is ratified. The withdrawal shall be made by means of notice.

　　Article 49 If an actor has no power of agency, oversteps the power of agency, or the power of agency has expired and yet concludes a contract in the principal's name, and the counterpart has reasons to trust that the actor has the power of agency, the act of agency shall be effective.

　　Article 50 Where a statutory representative or a responsible person of a legal person or other organization oversteps his/her power and concludes a contract, the representative act shall be effective except that the counterpart knows or ought to know that he/she is overstepping his/her powers.

　　Article 51 Where a person having no right to disposal of property disposes of other persons' properties, and the principal ratifies⁶⁴ the act afterwards or the person without power of disposal has obtained the power after concluding a contract, the contract shall be valid².

　　Article 52 A contract shall be null and void under any of the following circumstances:

　　(1) a contract is concluded through the use of fraud or coercion⁶⁵ by one party to damage the interests of the State;

　　(2) malicious⁶⁶ collusion is conducted to damage the interests of the State, a collective or a third party;

　　(3) an illegitimate purpose is concealed⁶⁸ under the guise⁶⁹ of legitimate⁶⁷ acts;

　　(4) damaging the public interests;

　　(5) violating the compulsory⁷⁰ provisions of laws and administrative regulations.

　　Article 53 The following exception clauses in a contract shall be null and void:

　　(1) those that cause personal injury to the other party;

　　(2) those that cause property damages to the other party as result of deliberate intent or gross negligence⁷¹.

　　Article 54 A party shall have the right to request the people's court or an arbitration⁷² institution to modify or revoke²⁹ the following contracts:

　　(1) those concluded as a result of significant misconception;

　　(2) those that are obviously unfair at the time when concluding the contract.

　　If a contract is concluded by one party against the other party's true intentions through the use of fraud, coercion, or exploitation of the other party's unfavorable position, the injured party shall have the right to request the people's court or an arbitration institution to modify or revoke it.

　　Where a party requests for modification, the people's court or the arbitration institution may not revoke the contract.

　　Article 55 The right to revoke a contract shall extinguish under any of the following circumstances:

　　(1) a party having the right to revoke the contract fails to exercise the right within one year from the day that it knows or ought to know the revoking⁷³ causes;

　　(2) a party having the right to revoke the contract explicitly expresses or conducts an act to waive⁷⁴ the right after it knows the revoking causes.

　　Article 56 A contract that is null and void or revoked shall have no legally binding force ever from the very beginning. If part of a contract is null and void without affecting the validity of the other parts, the other parts shall still be valid.

　　Article 57 If a contract is null and void, revoked or terminated, it shall not affect the validity of the dispute settlement clause which is independently existing in the contract.

　　Article 58 The property acquired as a result of a contract shall be returned after the contract is confirmed to be null and void or has been revoked; where the property can not be returned or the return is unnecessary, it shall be reimbursed⁷⁵ at its estimated price. The party at fault shall compensate⁷⁶ the other party for losses incurred⁷⁷ as a result therefrom. If both parties are fault, each party shall respectively be liable.

　　Article 59 If the parties have maliciously⁷⁸ conducted collusion to damage the interests of the State, a collective or a third party, the property thus acquired shall be turned over to the State or returned to the collective or the third party.

　　Chapter 4 Performance of Contracts

　　Article 60 Each party shall fully¹⁶ perform its own obligations as agreed upon.

　　The parties shall abide⁷⁹ by the principle of good faith, and perform obligations of notification, assistance, and confidentiality⁸¹, etc. in accordance with the nature and purpose of the contract and the transaction practice.

　　Article 61 Where, after the contract becomes effective, there is no agreement in the contract between the parties on such contents as quality, price or remuneration, or place of performance etc., or such agreement is ambiguous, the parties may agree upon supplementary terms through consultation⁸²; if a supplementary agreement cannot be reached, such terms shall be determined⁸³ in accordance with the relevant provisions of the contract or the transaction practices.

　　Article 62 Where certain contents agreed upon by the parties in the contract are ambiguous and cannot be determined in accordance with the provisions in Article 61 of this Law, the following provisions shall be applied⁸⁴:

　　(1)if quality requirement is not clear, performance shall be in accordance with the state standard or industry standard; absent any state or industry standard, performance shall be in accordance with the customary standard or any particular standard consistent with the purpose of the contract;

　　(2)if price or remuneration is not clear, performance shall be in accordance with the prevailing⁸⁵ market price at the place of performance at the time the contract was concluded, and if adoption of a price commissioned by the government or based on government issued pricing guidelines is required by law, such requirement applies;

　　(3)where the place of performance is not clear, if the obligation is payment of money, performance shall be at the place where the payee is located; if the obligation is delivery of immovable property, performance shall be at the place where the immovable property is located; for any other subject matter, performance shall be effected at the place of location of the party fulfilling the obligations.

　　(4)if the time of performance is not clear, the obligor may perform, and the obligee⁸⁷ may require performance, at any time, provided that the other party shall be given the time required for preparation;

　　(5)if the method of performance is not clear, performance shall be rendered in a manner which is conducive⁸⁸ to realizing the purpose of the contract;

　　(6)if the responsibility for the expenses of performance is not clear, the party fulfilling the obligations shall bear the expenses.

　　Article 63 Where the government-fixed price or government-directed price is followed in a contract, if the said price is readjusted within the time limit for delivery as stipulated in the contract, the payment shall be calculated according to the price at the time of delivery. Where a party delays in delivering the subject matter, the original price shall be adopted if the price rises; and the new price shall be adopted if the price falls. Where a party delays in taking delivery of the subject matter or making payment, the new price shall be adopted if the price rises, and the original price shall be adopted if the price falls.

　　Article 64 Where the parties agree that the obligor shall perform the obligations to a third party, and the obligor fails to perform its obligations to such third party or its performance of the obligations is not in conformity⁸⁹ with the agreement, the obligor shall be liable to the obligee for breach of contract.

　　Article 65 Where the parties agree that a third party performs the obligations to the obligee, and the third party fails to perform the obligations or the performance is not in conformity with the agreement, the obligor shall be liable to the obligee for breach of contract.

　　Article 66 Where both parties have obligations toward one another and there is no order of priority in respect of the performance of obligations, the parties shall perform the obligations simultaneously⁹⁰. Each party has the right to reject any demand by the other party for performance prior to the performance by the other party. If the performance of the obligations of the party who is to perform first is not in conformity with the agreement, the party who is perform later has the right to reject the other party's demand for corresponding performance.

　　Article 67 Where both parties have obligations toward each other and there is an order of priority in respect of the performance, and the party who is to perform first fails to perform, the party who is to perform later has the right to reject the other party's demand for performance. If the performance of the obligations of the party who is to perform first is not in conformity with the agreement, the party who is to perform later has the right to reject the other party's demand for corresponding performance.

　　Article 68 The party required to perform first may suspend its performance if it has conclusive⁹¹ evidence showing that the other party is under any of the following circumstances:

　　(1)its business has seriously deteriorated⁹²;

　　(2)it has engaged in transfer of assets or withdrawal of funds for the purpose of evading⁹³ debts;

　　(3)it has lost its business creditworthiness;

　　(4)it is in any other circumstance which will or may cause it to lose its ability to perform.

　　Where a party suspends performance without conclusive evidence, it shall be liable for breach of contract.

　　Article 69 If a party suspends its performance in accordance with the provisions of Article 68 of this Law, it shall timely notify the other party. If the other party provides appropriate assurance for its performance, the party shall resume performance. After performance was suspended, if the other party fails to regain⁹⁴ its ability to perform and fails to provide appropriate assurance within a reasonable time, the suspending party may terminate the contract.

　　Article 70 Where the obligee fails to notify the obligor of its separation, merger⁹⁵, or change of the domicile, thereby⁹⁶ making it difficult for the obligor to perform its obligations, the obligor may suspend its performance or escrow the subject matter.

　　Article 71 The obligee may reject the obligor's advance performance of its obligations, except that the advance performance does not harm the obligee's interests.

　　Any additional expense incurred by the obligee due to the obligor's advance performance of its obligations shall be borne by the obligor.

　　Article 72 An obligee may reject the obligor's partial performance, except that the partial performance of its obligations does not harm the obligee's interests.

　　Any additional expense incurred by the obligee due to the obligor's partial performance of its obligations shall be borne by the obligor.

　　Article 73 Where the obligor is remiss⁹⁷ in exercising its due creditor's right, thereby harming the obligee's interests, the obligee may petition the People's Court for subrogation in its own name, except that the creditor's right exclusively belongs to the obligor.

　　The extent to which the subrogation rights can be exercised is limited to the obligee's rights. The expenses necessary for the obligee to exercise such subrogation rights shall be borne by the obligor.

　　Article 74 Where the obligor waives⁹⁸ its creditor's right against a third party that is due or assigns its property without reward, thereby harming the obligee's interests, the obligee may petition the People's Court for cancellation⁹⁹ of the obligor's act. Where the obligor assigns its property at a low price which is manifestly unreasonable¹⁰⁰, thereby harming the obligee's interests, and the assignee is aware of the situation, the obligee may also petition the People's Court for cancellation of the obligor's act.

　　The extent to which the right to cancel can be exercised is limited to the rights of the obligee. The expenses necessary for the obligee to exercise the right to cancel shall be borne by the obligor.

　　Article 75 The right to cancel shall be exercised within one year form the date the obligee knows or should have known of the matter for cancellation. Such right to cancel shall lapse¹⁰¹ if the obligee fails to exercise such rights within five years from the date of the occurrence of such act.

　　Article 76 Once a contract becomes effective, a party may not refuse to perform its obligations thereunder due to a change in its name, or its legal representative, the person in charge, or the person handling the contract.

　　Chapter 5 Modification and Assignment of Contracts

　　Article 77 A contract may be modified if the parties reach a consensus¹⁰² through consultation.

　　If the laws or administrative regulations so provide, approval and registration procedures for such modification shall be gone through in accordance with such provisions.

　　Article 78 Where an agreement by the parties on the contents of a modification is ambiguous, the contract shall be presumed as not having been modified.

　　Article 79 The obligee may assign its rights under a contract, in whole or in part, to a third party, except under the following circumstances:

　　(1)such rights may not be assigned in light of the nature of the contract;

　　(2)such rights may not be assigned according to the agreement between the parties;

　　(3)such rights may not be assigned according to the provisions of the laws.

　　Article 80 Where the obligee assigns its rights, it shall notify the obligor. Such assignment will have no effect on the obligor without notice thereof.

　　A notice by the obligee to assign its rights shall not be revoked, unless such revocation is consented to by the assignee.

　　Article 81 Where the obligee assigns its right, the assignee shall acquire the collateral¹⁰³ rights related to the principal rights, except that the collateral rights exclusively belong to the obligee.

　　Article 82 Upon receipt of the notice of assignment of rights, the obligor may assert against the assignee any defenses it has against the assignor.

　　Article 83 Upon receipt by the obligor of the notice of assignment of rights, the obligor shall have vested rights against the assignor, and if the rights of the obligor vest prior to or at the same time as the assigned rights, the obligor may claim an offset¹⁰⁵ against the assignee.

　　Article 84 Where the obligor delegates its obligations under a contract in whole or in part to a third party, such delegation¹⁰⁶ shall be subject to the consent of the obligee.

　　Article 85 Where the obligor delegates its obligation, the new obligor may exercise any defense¹⁰⁴ that the original obligor had against the obligee.

　　Article 86 Where the obligor delegates its obligation, the new obligor shall assume the incidental obligations related to the main obligations, except that the obligations exclusively belong to the original obligor.

　　Article 87 Where the laws or administrative regulations stipulate⁴⁶ that the assignment of rights or transfer of obligations shall undergo approval or registration procedures, such provisions shall be followed.

　　Article 88 Upon the consent of the other party, one party may transfer its rights together with its obligations under contract to a third party.

　　Article 89 Where the rights and obligations are transferred together, the provisions in Articles 79, Articles 81 to 83, and Articles 85 to 87 of this Law shall be applied.

　　Article 90 Where a party is merged¹⁰⁷ after the contract has been concluded, the legal person or other organization established after the merger shall exercise the rights and obligations thereunder. Unless otherwise agreed upon by the obligor and obligee, the legal persons or other organizations that exist after the division shall jointly¹⁰⁹ enjoy the rights and jointly assume the obligations under the contract.

　　Chapter 6 Termination of Contractual Rights and Obligations

　　Article 91 The rights and obligations under a contract shall be terminated under any of the following circumstances:

　　(1) the obligations have been performed as agreed upon;

　　(2) the contract has been rescinded¹¹⁰;

　　(3) the obligations have been offset against each other;

　　(4) the obligor has escrowed the subject matter accordance with the law;

　　(5) the obligee has released the obligor of its obligation;

　　(6) the rights and obligations have vested in one party;

　　(7)any other circumstances for termination as stipulated by the laws or agreed upon by the parties.

　　Article 92 After the termination of the rights and obligations under the contract, the parties shall observe the principal of honesty and good faith and perform the obligations of notification, assistance and confidentiality, etc. in accordance with relevant transaction practices.

　　Article 93 The parties may terminate a contract if they reach a consensus through consultation.

　　The parties may agree upon conditions under which either party may terminate the contract. Upon satisfaction of the conditions, the party who has the right to terminate may terminate the contract.

　　Article 94 The parties to a contract may terminate the contract under any of the following circumstances:

　　(1) it is rendered impossible to achieve the purpose of contract due to an event of force majeure;

　　(2) prior to the expiration of the period of performance, the other party expressly states, or indicates through its conduct, that it will not perform its main obligation;

　　(3) the other party delayed performance of its main obligation after such performance has been demand, and fails to perform within a reasonable period;

　　(4) the other party delays performance of its obligations, or breaches¹¹¹ the contract in some other manner, rendering¹¹² it impossible to achieve the purpose of the contract;

　　(5) other circumstance as provided by law.

　　Article 95 Where the laws stipulates¹¹³ or the parties agreed upon the time limit to exercise the right to terminate the contract, and no party exercises it when the time limit expires, the said right shall be extinguished.

　　Where neither the law stipulates nor the parties make an agreement upon the time limit to exercise the right to terminate the contract, and no party exercise it within a reasonable time period after being urged, the said right shall be extinguished.

　　Article 96 A party demanding termination of a contract in accordance with the provisions of Paragraph 2 of Article 93 and Article 94 of this Law shall notify the other party. The contract shall be terminated upon the receipt of the notice by the other party. If the other party objects to such termination, it may petition the People's Court or an arbitration institution to adjudicate the validity of the termination of the contract.

　　Where the laws and administrative regulations so provide, the approval and registration procedures for the termination of the contract shall be gone through in accordance with such laws and regulations.

　　Article 97 After the termination of a contract, performance shall cease if the contract has not been performed; if the contract has been performed, a party may, in accordance with the circumstances of performance or the nature of the contract, demand the other party to restore such party to its original state or adopt other remedial measures, and such party shall have the right to demand compensation for damages.

　　Article 98 The termination of rights and obligations under a contact shall not affect the validity of clauses that related to the final settlement of accounts and winding-up.

　　Article 99 Where the parties are liable to one another for obligations that are due, and if the type and nature of the subject matter of such obligations are the same, any party may offset its own obligation against the obligation of the other party, except unless such offset is not allowed according to the laws and regulations or cannot be made given the nature of the contract.

　　The party who claims such offset shall notify the other party. The notice shall become effective when it reaches the other party. The offset shall not be subject to any condition or time limit.

　　Article 100 Where the parties have obligations towards one another, and the type and nature of such obligations are different, the obligations may also be offset upon consensus between the parties after consultation.

　　Article 101 The obligor may escrow the subject matter under any of the following circumstances which render performance of the obligations difficult:,

　　(1) the obligee refuses to accept them without justified¹¹⁴ reasons;

　　(2) the whereabouts of the obligee are unknown;

　　(3) the obligee is deceased and the successor has not been determined, or the obligee has lost civil capacity and a guardian¹³ has not been appointed;

　　(4) other circumstance as provided for in the laws.

　　Where the subject matter is not fit for escrow, or the cost of escrow is excessively high, the obligor may auction or sell the subject matter according to law, and escrow the proceeds therefrom.

　　Article 102 Unless the whereabouts of the obligee are unknown, the obligee shall notify the obligee, or the successor or guardian of the obligor immediately after the subject matter has been placed in escrow.

　　Article 103 Once the subject matter has been placed in escrow, the risk of damage to, destruction or loss of the subject matter shall be borne by the obligee. The obligee shall be entitled to any fruits of the subject matter during the escrow period. Escrow expenses shall be borne by the obligee.

　　Article 104 The obligee may claim the subject matter in escrow at any time, except that if the obligee has any due obligations toward the obligor, prior to the obligee's performance of its obligations or the obligee's provision of security for its performance, the escrow institution shall, at the request of the obligor, refuse the obligee's claim of the escrowed subject matter.

　　The right of the obligee to reclaim¹¹⁵ the subject matter in escrow shall lapse if it is not exercised within five years form the date the subject matter is placed in escrow, and the escrowed subject matter shall revert¹¹⁶ to the national treasury¹¹⁷ after the deduction¹¹⁸ of the escrow costs.

　　Article 105 Where an obligee releases the obligor of its own obligations, in whole or in part, the rights and obligations under the contract shall terminate in whole or in part.

　　Article 106 If the rights and obligations under a contract vest in one party, such rights and obligations thereunder shall terminate, unless they involve the interests of a third party.

　　Chapter 7 Liabilities for Breach of Contracts

　　Article 107 If a party fails to perform its obligations under a contract, or its performance fails to satisfy the terms of the contract, it shall bear the liabilities for breach of contract such as to continue to perform its obligations, to take remedial measures, or to compensate for losses.

　　Article 108 Where one party express explicitly or indicates by its conduct that it will not perform its obligations under a contract, the other party may demand it to bear the liability for the breach of contract before the expiry of the performance period.

　　Article 109 If a party fails to pay the price or remuneration, the other party may request it to make the payment.

　　Article 110 Where a party fails to perform the non-monetary¹¹⁹ obligations or its performance of non- monetary obligations fails to satisfy the terms of the contract, the other party may request it to perform it except under any of the following circumstances:

　　(1) it is unable to be performed in law or in fact;

　　(2) the subject matter of the obligation is unfit for compulsory performance or the performance expenses are excessively high;

　　(3) the obligee does not require performance within a reasonable time.

　　Article 111 Where the quality fails to satisfy the agreement, the breach of contract damages shall be borne in the manner as agreed upon by the parties. Where there is no agreement in the contract on the liability for breach of contract or such agreement is unclear, nor can it be determined in accordance with the provisions of Article 61of this Law, the damaged party may, in light of the nature of the subject matter and the degree of loss, reasonably choose to request the other party to bear the liabilities for the breach of contract such as repairing, substituting, reworking, returning the goods, or reducing the price or remuneration.

　　Article 112 Where a party fails to perform its obligations under the contract or its performance fails to conform to the agreement, and the other party still suffers from other damages after the performance of the obligations or adoption of remedial measures, such party shall compensate the other party for such damages.

　　Article 113 Where a party fails to perform its obligations under the contract or its performance fails to conform to the agreement and cause losses to the other party, the amount of compensation for losses shall be equal to the losses caused by the breach of contract, including the interests receivable after the performance of the contract, provided not exceeding the probable losses caused by the breach of contract which has been foreseen or ought to be foreseen when the party in breach concludes the contract.

　　The business operator who commits default activities in providing to the consumer any goods or services shall be liable for paying compensation for damages in accordance with the Law of the People's Republic of China on Protection of Consumer Rights and Interests.

　　Article 114 The parties may agree that if one party breaches the contract, it shall pay a certain sum of liquidated¹²¹ damages to the other party in light of the circumstances of the breach, and may also agree on a method for the calculation of the amount of compensation for the damages incurred as a result of the breach.

　　Where the amount of liquidated damages agreed upon is lower than the damages incurred, a party may petition the People's Court or an arbitration institution to make an increase; where the amount of liquidated damages agreed upon are significantly higher than the damages incurred, a party may petition the People's Court or an arbitration institution to make an appropriate reduction.

　　Where the parties agree upon breach of contract damages in respect to the delay in performance, the party in breach shall perform the obligations after paying the breach of contract damages.

　　Article 115 The parties may agree that a party pay a deposit to the other party as a guaranty for the obligation in accordance with the Security Law of the People's Republic of China. Upon the obligor has performed its obligation, the deposit shall be offset against the price or refunded¹²³ to the obligor. If the party paying the deposit fails to perform its obligations under the contract, such party has no right to demand for the return of the deposit; where the party accepting the deposit fails to perform its obligations under the contract, such party shall refund¹²² twice the value of the deposit.

　　Article 116 If the parties agree on both liquidated damages and a deposit, and one party is in breach, the other party may choose to apply either the provisions for liquidated damages or that for the deposit.

　　Article 117 A party who is unable to perform a contract due to force majeure is exempted¹²⁴ from liability in part or in whole in light of the impact of the event of force majeure, except otherwise provided by law. Where an event of force majeure occurs after the party's delay in performance, it is not exempted from such liability.

　　For purposes of this Law, force majeure means any objective circumstances which are unforeseeable, unavoidable and insurmountable.

　　Article 118 If a party is unable to perform a contract due to an event of force majeure, it shall timely notify the other party so as to mitigate¹²⁵ the losses that may be caused to the other party, and shall provide evidence of such event of force majeure within a reasonable period.

　　Article 119 Where a party breached¹²⁶ the contract, the other party shall take the appropriate measures to prevent the losses from increasing; where the other party's failure to take appropriate measures results in additional losses, it cannot demand compensation for the additional losses.

　　Any reasonable expense incurred by the other party in preventing additional losses shall be borne by the party in breach.

　　Article 120 If both parties breach a contract, each party shall bear its own respective liabilities.

　　Article 121 Where a party's breach is attributable to a third party, it shall nevertheless be liable to the other party for breach. Any dispute between the party and such third party shall be resolved in accordance with the law or the agreement between the parties.

　　Article 122 Where the breach of contract by one party infringes¹²⁷ upon the other party's personal or property rights, the aggrieved¹²⁸ party is entitled to choose to claim the assumption by the violating and infringing¹²⁹ 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 infringement¹³⁰ according to other laws.

　　Chapter 8 Other Provisions

　　Article 123 Where other laws provide otherwise in respect of a contract, such provisions shall prevail.

　　Article 124 Where there are no explicitly provisions in the Specific Provisions of this Law or in any other law concerning a certain contract, the provisions in the General Provisions of this Law shall be applied, and reference may be made to the provisions in the Specific Provisions of this Law or in any other law that most closely relate to such contract.

　　Article 125 If any disputes arise between the parties over the understanding of any clause of the contract, the true meaning thereof shall be determined according to the words and sentences used in the contract, the relevant provisions in the contract, the purpose of the contract, the transaction practices and the principle of good faith.

　　Where a contract is concluded in two or more languages and it is agreed that all versions are equally authentic¹³¹, the words and sentences in each version are construed¹³² to have the same meaning. In case of any discrepancy¹³³ in the words or sentences used in the different language versions, they shall be interpreted in light of the purpose of the contract.

　　Article 126 Parties to a foreign-related contract may select the applicable law for resolution of a contractual dispute, except as otherwise provided by law. Where parties to the foreign-related contract fails to select the applicable law, the contract shall be governed by the law of the country with the closest connection thereto.

　　For a Sino-foreign equity¹³⁴ joint¹⁰⁸ venture enterprise contract, Sino-foreign cooperative joint venture contract, or a contract for Sino-foreign joint exploration and development of natural resources which is performed within the territory of the People's Republic of China, the law of the People's Republic of China shall be applied.

　　Article 127 Within the scope of their respective duties, the administrative department of industry and commerce and other relevant departments shall, in accordance with the relevant laws and administrative regulations, be responsible for monitoring and dealing¹³⁵ with any illegal acts which, by taking advantage of contracts, harm the interests of the State or the interests of the public and society; where such an act constitutes a crime, criminal liability shall be investigated in accordance with the law.

　　Article 128 The parties may resolve a contractual dispute through settlement or mediation⁵.

　　Where the parties do not wish to, or are unable to, resolve such dispute through settlement or mediation, the dispute may be submitted to the relevant arbitration institution for arbitration in accordance with the arbitration agreement between the parties. Parties to a foreign-related contract may apply to a Chinese arbitration institution or another arbitration institution for arbitration. Where the parties did not conclude an arbitration agreement, or the arbitration agreement is invalid, either party may bring a suit to the People's Court. The parties shall perform the judgments¹³⁶, arbitration awards or mediation agreements which have taken legal effect; if a party refuses to perform, the other party may request the People's Court for enforcement.

　　Article 129 For a dispute arising from a contract for the international sale of goods or a technology import or export contract, the time limit for bringing a suit or applying for arbitration is four years, calculating from the date on which the party knows or ought to know the infringement on its rights. For a dispute arising from any other type of contract, the time limit for bringing a suit or applying for arbitration shall be governed by the relevant law.

　　Specific Provisions

　　Chapter 9 Sales Contracts

　　Article 130 A sales contract is a contract whereby the seller transfers the ownership of a subject matter to the buyer, and the buyer pays the price for it.

　　Article 131 In addition to the terms set forth¹³⁷ in Article 12 of this Law, a sales contract may also contain such clauses as package manner, inspection¹³⁸ standards and method, method of settlement and clearance¹³⁹, language adopted in the contract and its authenticity¹⁴⁰.

　　Article 132 The subject matter to be sold shall be owned by the seller or of that the seller shall have the right to dispose.

　　Where the transfer of a subject matter is prohibited or restricted by laws or administrative regulation, such provision shall be applied.

　　Article 133 The ownership of a subject matter shall be transferred upon the delivery of the object, except as otherwise stipulated by law or agreed upon by the parties.

　　Article 134 The parties to a sales contract may agree that the ownership shall belong to the seller if the buyer fails to pay the price or perform other obligations.

　　Article 135 The seller shall perform the obligations of delivering to the buyer the subject matter or handing over the documents for the buyer to take possession of the subject matter and of transferring the ownership thereto.

　　Article 136 In addition to the document for taking possession, the seller shall deliver to the buyer the relevant documents and materials in accordance with the agreement or transaction practices.

　　Article 137 In a sale of any subject matter which contains intellectual property such as computer software, etc., the intellectual property in the subject matter does not belong to the buyer, except as otherwise provided by law or agreed upon by the parties.

　　Article 138 The seller shall deliver the subject matter by the time limit agreed upon. Where a time period for delivery is agreed upon, the seller may deliver at any time within the said time period.

　　Article 139 Where the time limit for delivery of the subject matter is not agreed upon between the parties or the agreement is not clear, the provisions of Article 61 and Item 4 of Article 62 shall be applied.

　　Article 140 Where a subject matter has been possessed¹⁴¹ by the buyer prior to the conclusion of the contract, the delivery time shall be the time when the contract becomes effective.

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

　　Where there is no agreement between the parties as to the place to deliver the subject matter or such agreement is not clear, nor can it be determined according to the provisions of Article 61 of this Law, the following provisions shall be applied:

　　(1) if the subject matter needs carriage, the seller shall deliver the subject matter to the first carrier so as to hand it over to the buyer;

　　(2) if the subject matter does not need carriage, and the seller and buyer know the place of the subject matter when concluding the contract, the seller shall deliver the subject matter at such place; if the place is unknown, the subject matter shall be delivered at the business place of the seller when concluding the contract.

　　Article 142 The risk of damage to or loss of a subject matter shall be borne by the seller prior to the delivery of the subject matter and by the buyer after delivery, except as otherwise stipulated by law or agreed upon by the parties.

　　Article 143 Where a subject matter cannot be delivered at the agreed time limit due to any reasons attributable to the buyer, the buyer shall bear the risk of damage to or loss of the subject matter as of the date it breaches the agreement.

　　Article 144 Where the seller sells a subject matter delivered to a carrier for carriage and is in transit¹⁴², unless otherwise agreed upon by the parties, the risk of damage to or missing of the subject matter shall be borne by the buyer as of the time of establishment of the contract.

　　Article 145 Where there is no agreement between the parties as to the place of delivery or such agreement is not clearly, and the subject matter needs carriage according to the provisions of Item 1 of Paragraph 2 of Article 141 of this Law, the risk of damage to or missing of the subject matter shall be borne by the buyer after the seller has delivered the subject matter to the first carrier.

　　Article 146 Where the seller has placed the subject matter at the place of delivery in accordance with the agreement or in accordance with the provisions of Item 2 of Paragraph 2 of Article 141 of this Law, while the buyer fails to take delivery in breach of the agreement, the risk of damage to or missing of the subject matter shall be borne by the buyer as of the date of breach of the agreement.

　　Article 147 The failure of the seller to deliver the documents and materials relating to the subject matter as agreed upon shall not affect the passing of the risk of damage to or missing of the subject matter.

　　Article 148 Where the quality of the subject matter does not conform to the quality requirements, making it impossible to achieve the purpose of the contract, the buyer may refuse to accept the subject matter or may terminate the contract. If the buyer refuses to accept the subject matter or terminate the contract, the risk of damage to or missing of the subject matter shall be borne by the seller.

　　Article 149 Where the risk of damage to or missing of the subject matter is borne by the buyer, the buyer's right to demand the seller to bear liability for breach of contract because the seller's performance of its obligations is not in conformity with the agreement shall not be affected¹⁴³.

　　Article 150 Unless otherwise provided by law, the seller shall have the obligation to warrant that no third party shall exercise against the buyer any rights with respect to the delivered subject matter.

　　Article 151 Where the buyer knows or ought to know, at the time of conclusion of the contract, that a third party has rights on the subject matter to be sold, the seller does not assume the obligation prescribed in Article 150 of this Law.

　　Article 152 Where the buyer has conclusive evidence to demonstrate that a third party may claim rights on the subject matter, it may suspend to pay the corresponding price, except where the seller provides a appropriate guaranty.

　　Article 153 The seller shall deliver the subject matter in compliance¹⁴⁴ with the agreed quality requirements. Where the seller gives the quality specifications¹⁴⁵ for the subject matter, the subject matter delivered shall comply with the quality requirements set forth therein.

　　Article 154 Where the quality requirements for the subject matter is not agreed between parties or such agreement is not clear, nor can it be determined according to the provisions of Article 61 of this Law, the provisions of Item 1 of Article 62 of this Law shall be applied.

　　Article 155 If the subject matter delivered by the seller fails to comply with the quality requirements, the buyer may demand the seller to bear liability for breach of contract in accordance with Article 111 of this Law.

　　Article 156 The seller shall deliver the subject matter packed in the agreed manner. Where there is no agreement on package manner in the contract or the agreement is not clear, nor can it be determined according to the provisions of Article 61 of this Law, the subject matter shall be packed in a general manner, and if no general manner, a package manner enough to protect the subject matter shall be adopted.

　　Article 157 Upon receipt of the subject matter, the buyer shall inspect it within the agreed inspection period. Where no inspection period is agreed, the buyer shall timely inspect the subject matter.

　　Article 158 Where the parties have agreed upon an inspection period, the buyer shall notify the seller of any non-compliance in quantity or quality of the subject matter within such inspection period. Where the buyer delayed in notifying the seller, the quantity or quality of the subject matter is deemed to comply with the contract.

　　Where no inspection period is agreed, the buyer shall notify the seller within a reasonable period, commencing on the date when the buyer discovered or should have discovered the quantity or quality non-compliance. If the buyer fails to notify within a reasonable period or fails to notify within 2 years, commencing on the date when it received the subject matter, the quantity or quality of the subject matter is deemed to comply with the contract, except that if there is a warranty¹⁴⁶ period in respect of the subject matter, the warranty period applies and supersedes¹⁴⁷ such two year period.

　　Where the seller knows or ought to know the non-compliance of the subject matter, the buyer is not subject to the time limits for notification prescribed in the preceding two paragraphs.

　　Article 159 The buyer shall pay the price in the agreed amount. Where the price is not agreed or the agreement is not clear, the provisions of Article 61 and Item 2 of Article 62 shall be applied.

　　Article 160 The buyer shall pay the price at the agreed place. Where the place of payment is not agreed or the agreement is not clear, nor can it be determined according to the provisions of Article 61 of this Law, the buyer shall make payment at the seller's place of business, provided that if the parties agreed that payment shall be conditional upon delivery of the subject matter or the document for taking delivery thereof, payment shall be made at the place where the subject matter, or the document for taking delivery thereof, is delivered.

　　Article 161 The buyer shall pay the price at the agreed time. Where the time for payment is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this Law, the buyer shall make payment at the same time it receives the subject matter or the document for taking delivery thereof.

　　Article 162 Where the seller delivers the subject matter in a quantity greater than that agreed in the contract, the buyer may accept or reject the excess quantity. Where the buyer accepts the excess quantity, it shall pay the price based on the contract rate; where the buyer rejects the excess quantity, it shall timely notify the seller.

　　Article 163 The fruits of the subject matter belong to the seller if accrued¹⁴⁸ before delivery, and to the buyer if accrued after delivery.

　　Article 164 Where a contract is terminated due to non-compliance of any main component¹⁴⁹ of the subject matter, the effect of termination extends to the ancillary¹⁵⁰ components¹⁵¹. Where the contract is terminated due to non-compliance of any ancillary component of the subject matter, the effect of termination does not extend to the main components.cle 165 Where the subject matter comprises of a number of components, one of which does not comply with the contract, the buyer may terminate the portion of the contract in respect of such component, provided that if severance¹⁵² of such component with the other components will significantly diminish the value of the subject matter, the party may terminate the contract in respect of such number of components.

　　Article 166 Where the seller is to deliver the subject matter in installments¹⁵⁴, if the seller fails to deliver one installment¹⁵³ of the subject matter or the delivery fails to satisfy the terms of the contract so that the said installment cannot realize the contract purpose, the buyer may terminate the portion of the contract in respect thereof.

　　If the seller fails to deliver one installment of the subject matter or the delivery fails to satisfy the terms of the contract so that the delivery of the subsequent installments of subject matter can not realize the contract purpose, the buyer may terminate the portion of the contract in respect of such installment as well as any subsequent installment.

　　If the buyer is to terminate the portion of the contract in respect of a particular installment which is interdependent with all other installments, it may terminate the contract in respect of all delivered and undelivered installments.

　　Article 167 In a sale by installment payment, where the buyer fails to make payments as they became due, if the delinquent¹⁵⁵ amount has reached one fifth of the total price, the seller may require payment of the full price from the buyer or terminate the contract. If the seller terminates the contract, it may require the buyer to pay a fee for its use of the subject matter.

　　Article 168 In a sale by sample, the parties shall place the sample under seal, and may specify¹⁵⁶ the quality of the sample. The subject matter delivered by the seller shall comply with the sample as well as the quality specifications.

　　Article 169 In a sale by sample, if the buyer is not aware of a latent defect in the sample, the subject matter delivered by the seller shall nevertheless comply with the normal quality standard for a like item, even though the subject matter delivered complies with the sample.

　　Article 170 In a sale by trial, the parties may agree the trial period. Where a trial period is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this Law, it shall be determined by the seller.

　　Article 171 In a sale by trial, the buyer may either purchase or reject the subject matter during the trial period. At the end of the trial period, the buyer is deemed to have made the purchase if it fails to demonstrate its intent to purchase or reject the subject matter.

　　Article 172 In a sale by tender, matters such as the rights and obligations of the parties and the tendering procedure, etc. are governed by the relevant laws and administrative regulations.

　　Article 173 In a sale by auction, matters such as the rights and obligations of the parties and the auctioning¹⁵⁷ procedure, etc. are governed by the relevant laws and administrative regulations.

　　Article 174 If there are provisions in the law for other non-gratuitous contracts, such provisions shall apply; in the absence of such provisions, reference shall be made to the relevant provision on sales contract.

　　Article 175 Where the parties agree on a barter¹⁵⁸ transaction involving transfer of title to the subject matters, such transaction shall be governed by reference to the relevant provisions on sales contracts.

　　Chapter 10 Contracts for Supply of Power, Water, Gas, Or Heat

　　Article 176 A power supply contract is a contract whereby the power supplier supplies power to the power customer, and the power consumer pay an electricity fee.

　　Article 177 The contents of a power supply contract include terms such as the method, quality, and time of power supply, and the capacity, location and nature of power use, and the metering method, electricity rate, the method of settlement of electricity fees, and the responsibility for maintenance of the power supply and use facilities, etc……

　　Article 178 The place of performance of a power supply contract shall be the place agreed upon by the parties, and if there is no agreement or the agreement is not clear, the place of performance shall be the boundary where ownership of the power supply facilities is divided.

　　Article 179 The power supplier shall supply power in a safe manner in accordance with the standards for power supply stipulated by the State and with the terms of the contract. Where the power supplier fails to supply power in a safe manner in accordance with the standards for power supply stipulated by the State and with the terms of the contract, thereby causing losses to the power customer, it shall be liable for damages.

　　Article 180 Where the power supplier needs to suspend the power supply due to reasons such as planned maintenance or provisional inspection and repair of the power supply facilities, legally restriction on power, or illegal use of power by the power customer, etc., it shall notify the power customer in advance in accordance with the relevant provisions of the State. Where the power supplier suspends power supply without notifying the power customer in advance, thereby causing losses to the power customer, it shall be liable for damages.

　　Article 181 Where the power supply is suspended due to a natural disaster or other causes, the power supplier shall make prompt repairs in accordance with the relevant provisions of the State. Where the power supplier fails to make prompt repair, thereby causing loss to the power customer, it shall be liable for damages.

　　Article 182 The power customer shall timely pay the electricity fees in accordance with the relevant provisions of the State and with the terms of the contract. Where the power customer delays in paying the electricity fees, it shall pay breach of contract damages in accordance with the contract. Where the power customer fails to pay the electricity fees and breach of contract damages within a reasonable time limit after receiving demand for payment, the power supplier may shut off the power supply in accordance with the procedure prescribed by the state.

　　Article 183 The power customer shall use power in a safe manner in accordance with the relevant provisions of the State and with the terms of the contract. Where the power customer fails to use power in a safe manner in accordance with the relevant provisions of the State and with the terms of the contract, thereby causing losses to the power supplier, it shall be liable for damages.

　　Article 184 A contract for the supply of water, gas or heat shall be governed by reference to the relevant provisions on power supply contracts.

　　Chapter 11 Gift Contracts

　　Article 185 A gift contract is a contract whereby the donor¹⁵⁹ conveys his property to the donee gratuitously¹⁶⁰ and the donee expresses his acceptance of the gift.

　　Article 186 Prior to the transfer of rights to the gift property, the donor may revoke the gift.

　　The provisions of the preceding paragraph does not apply to any gift contract the nature of which serves the public interests or fulfills¹⁶¹ a moral obligation, such as disaster relief, poverty relief, etc., or any gift contract which has been notarized.

　　Article 187 Where conveyance¹⁶² of the gifted property is subject to such procedures as registration according to law, the relevant procedures shall be carried out.

　　Article 188 In the case of a gift contract the nature of which serves the public interests or fulfills a moral obligation, such as disaster relief, poverty relief, etc., or a gift contract which has been notarized, if the donor fails to deliver the gift property, the donee may require delivery.

　　Article 189 Where the gifted property is damaged or lost due to any intentional¹⁶³ misconduct or gross negligence of the donor, he shall be liable for damages.

　　Article 190 A gift may be conditioned on an obligation.

　　Where the gift is conditioned on an obligation, the donee shall perform his obligations in accordance with the contract.

　　Article 191 The donor is not liable for any defect in the gifted property. Where the gift is conditioned on an obligation, and the gifted property is defective¹⁶⁴, the donor has the same warranty obligations as a seller to the extent of the prescribed obligations.

　　Where the donor intentionally¹⁶⁵ omits to inform the donee of the defect or warranted the absence of any defect, thereby causing losses to the donee, he shall be liable for damages.

　　Article 192 Where the donee is in any of the following circumstances, the donor may revoke the gift:

　　(1)seriously harming the donor or any immediate³⁸ family member thereof;

　　(2) failing to perform support obligations owed to the donor;

　　(3) failing to perform the obligations under the gift contract.

　　The donor shall exercise its revocation right within one year after he knows, or ought to know, the cause for revocation.

　　Article 193 Where the donor is deceased or incapacitated due to the donee's illegal act, his heir or legal agent may revoke the gift.

　　The heir or legal agent of the donor shall exercise the right of revocation within six months after he knows, or ought to know, the cause for revocation.

　　Article 194 Upon revocation of the gift, the person with the revocation right may claim restitution¹⁶⁶ of the gifted property from the donee.

　　Article 195 If the donor's economic situation is deteriorated significantly, thereby seriously impacting on his business operation or family life, he may no longer perform the gift obligations.

　　Chapter 12 Contracts for Loan of Money

　　Article 196 A contract for loan of money is a contract whereby the borrower borrows a sum of money from the lender, and repays the borrowed money with interest thereon when it becomes due.

　　Article 197 A contract for loan of money shall be in writing, except where the loan is between natural persons who have agreed otherwise.

　　The contents of a contract for loan of money include the terms such as the loan's type, currency, purpose, amount, interest rate, term and method of repayment¹⁶⁷, etc.

　　Article 198 In entering into a contract for loan of money, the lender may require the borrower to provide a guaranty. The guaranty shall conform to the provisions of the Security Law of the People's Republic of China.

　　Article 199 In entering into a contract for loan of money, the borrower shall provide true information concerning its business operation and financial condition in connection with the loan as required by the lender.

　　Article 200 No interest shall be deducted¹⁶⁸ from the principal in advance. Where any interest amount is deducted from the principal in advance, the repayment of principal and calculation of interest shall be based on the actual amount borrowed.

　　Article 201 Where the lender fails to make the loan amount available on the agreed date and in the agreed amount, thereby causing losses to the borrower, it shall pay damages.

　　Where the borrower fails to draw down on the agreed date and in the agreed amount, it shall nevertheless pay the interest on the agreed date and in the agreed amount.

　　Article 202 The lender may examine and monitor the application of the proceeds in accordance with the contract. The borrower shall periodically provide the lender with materials such as related financial and accounting¹⁶⁹ reports, etc. in accordance with the contract.

　　Article 203 Where the borrower fails to use the proceeds for the prescribed purpose, the lender may withhold¹⁷⁰ funding, call the loan, or terminate the contract.

　　Article 204 The interest rate on the loan provided by a financial institution engaged in lending operation shall be determined between the minimum and maximum rates fixed by the People's Bank of China.

　　Article 205 The borrower shall pay the interest at the agreed time. Where the time of interest payment is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this Law, if the loan term is less than one year, the interest shall be paid together with the principal at the time of repayment; if the loan term is one year or longer, the interest shall be paid at the end of each annual period, and where the remaining period is less than one year, the interest shall be paid together with the principal at the time of repayment.

　　Article 206 The borrower shall repay the principal at the agreed time. Where the time of repayment is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this Law, the borrower may repay at any time; and the lender may demand repayment from the borrower within a reasonable time limit.

　　Article 207 Where the borrower fails to repay the loan at the agreed time, it shall pay delayed repayment interest in accordance with the contract or the relevant provisions of the State.

　　Article 208 Where the borrower prepays the loan, unless otherwise agreed by the parties, the interest shall be calculated based on the actual period of loan.

　　Article 209 The borrower may apply to the lender for extension of the loan term before its maturity¹⁷¹. Upon consent by the lender, the loan term may be extended.

　　Article 210 A contract for loan of money between natural persons becomes effective at the time the lender makes the loan amount available.

　　Article 211 Under a contract for loan of money between natural persons, if payment of interest is not agreed or the agreement is not clear, the loan is deemed interest free.

　　Under a contract for loan of money between natural persons, the interest rate on the loan may not contravene¹⁷² the relevant provisions of the State concerning limit on loan interest rate.

　　Chapter 13 Leasing Contracts

　　Article 212 A leasing contract is a contract whereby the lessor delivers to the lessee¹⁷³ the lease item for it to use or accrue benefit from, and the lessee pays the rent.

　　Article 213 The contents of a leasing contract include terms such as the name, quantity and purpose of the lease item, lease term, amount of rent, time and method of rent payment, as well as maintenance and repair of the lease item, etc.

　　Article 214 The lease term may not exceed twenty years. If the lease term exceeds twenty years, the portion of the lease term beyond the initial twenty year period is invalid.

　　At the end of the lease term, the parties may renew the lease, provided that the renewed term may not exceed twenty years commencing on the date of renewal¹⁷⁴.

　　Article 215 Where the lease term is six months or longer, the lease shall be in writing. If the parties fail to adopt a writing form, the lease is deemed a non-term lease.

　　Article 216 The lessor shall deliver the lease item to the lessee in accordance with the contract and shall, during the lease term, keep the lease item fit for the agreed purpose.

　　Article 217 The lessee shall use the lease item in the agreed manner. Where the manner of use of the lease item is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61of this Law, the lease item shall be used in a manner consistent with its nature.

　　Article 218 Where the lessee uses the lease item in the agreed manner or in a manner consistent with its nature, thereby causing wear and tear to the lease item, it is not liable for damages.

　　Article 219 Where the lessee fails to use the lease item in the agreed manner or in a manner consistent with its nature, thereby causing damage to it, the lessor may terminate the contract and claim damages.

　　Article 220 The lessor shall perform the obligations of maintenance and repair of the lease item, except otherwise agreed by the parties.

　　Article 221 Where the lease item needs maintenance or repair, the lessee may require the lessor to perform maintenance or repair within a reasonable time limit.

　　If the lessor fails to fulfill⁸⁶ its obligations of maintenance or repair, the lessee may maintain or repair the lease item on its own at the lessor's expense. Where the lessee's use of the lease item is impaired¹⁷⁵ due to maintenance or repair thereof, the rent shall be reduced or the lease term shall be extended accordingly.

　　Article 222 The lessee shall keep the lease item with due care and shall be liable for damages if the lease item is damaged or lost due to improper⁵⁶ care.

　　Article 223 Subject to consent of the lessor, the lessee may make improvement on or addition to the lease item.

　　If the lessee makes improvement on or addition to the lease item without consent of the lessor, the lessor may require the lessee to restore the lease item to its original condition or claim compensation for the losses.

　　Article 224 Subject to consent of the lessor, the lessee may sublease the lease item to a third party. Where the lessee subleases the lease item, the leasing contract between the lessee and the lessor remains¹⁷⁶ valid, and if the third party causes damage to the lease item, the lessee shall compensate for the losses.

　　Where the lessee subleases the lease item without the consent of the lessor, the lessor may terminate the contract.

　　Article 225 During the lease term, any benefit accrued from the possession or use of the lease item belongs to the lessee, except otherwise agreed by the parties.

　　Article 226 The lessee shall pay the rent at the agreed time. Where the time of payment is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this Law, the rent shall be paid at the end of the lease term if it is less than one year; if the lease term is one year or longer, the rent shall be paid at the end of each annual period, and where the remaining period is less than one year, the rent shall be paid at the end of the lease term.

　　Article 227 Where the lessee fails to pay or delays in paying the rent without any reason, the lessor may require the lessee to pay the rent within a reasonable time limit. If the lessee fails to pay the rent at the end of such time limit, the lessor may terminate the contract.

　　Article 228 If due to any claim by a third party, the lessee is unable to use or accrue benefit from the lease item, the lessee may require reduction in rent or refuse to pay rent.

　　In case of any claim by a third party, the lessee shall timely notify the lessor.

　　Article 229 Any change of ownership to the lease item does not affect the validity of the leasing contract.

　　Article 230 Where the lessor is to sell a dwelling¹⁷⁷ unit under a lease, it shall give the lessee a notice within a reasonable time limit before the sale, and the lessee has the right of first refusal under the same conditions.

　　Article 231 Where the lease item is damaged or lost in part or in whole due to any reason not attributable to the lessee, the lessee may require reduction in rent or refuse to pay rent; where the purpose of the contract can not be achieved due to damage to or loss of the lease item in part or in whole, the lessee may terminate the contract.

　　Article 232 Where the term of a lease is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this Law, such lease is deemed a non-term lease. Either party may terminate the contract at any time, provided that the lessor shall give the lessee a reasonable advance notice before it terminates the contract.

　　Article 233 Where the lease item endangers the safety or health of the lessee, the lessee may terminate the contract at any time even if the lessee knows the lease item does not meet the quality requirements when concluding the contract.

　　Article 234 Where the lessee is deceased during the term of a dwelling unit lease, the person jointly living in the unit with the lessee while the lessee is alive may continue leasing it on the terms of the original leasing contract.

　　Article 235 The lessee shall return the lease item at the end of the lease term. The returned lease item shall be in a condition resulting from its use in the agreed manner or in a manner consistent with its nature.

　　Article 236 Upon expiration of the lease term, if the lessee continues to use the lease item without objection by the lessor, the original leasing contract remains effective, provided that it becomes a non-term lease.

　　Chapter 14 Financial Leasing Contracts

　　Article 237 A financial leasing contract is a contract whereby the lessor, upon purchase of the lessee-selected lease item from a lessee-selected seller, provides the lease item to the lessee for its use, and the lessee pays the rent.

　　Article 238 The contents of a financial leasing contract include terms such as the name, quantity, specifications, technical performance, and method of inspection of the lease item, the lease term, the rental¹⁷⁸ components and the time, method and currency of payment, as well as the ownership of the lease item at the end of the lease term, etc.

　　A financial leasing contract shall be concluded in writing.

　　Article 239 Under the sales contract concluded by the lessor according to the lessee's selection of the seller and the lease item, the seller shall deliver the subject matter to the lessee in accordance with the contract, and the lessee enjoys the rights of the buyer in respect of taking delivery of the subject matter.

　　Article 240 The lessor, the seller and the lessee may agree that any claim arising from the seller's failure in the performance of its obligations under the sales contract will be made by the lessee. Where the lessee makes such a claim, the lessor shall provide assistance.

　　Article 241 Without the consent of the lessee, the lessor may not amend¹⁷⁹ any lessee-related term in the sales contract concluded by it according to the lessee's selection of the seller and the lease item.

　　Article 242 The lessor shall be entitled to the ownership of the lease item. In case the lessee goes bankruptcy¹⁸⁰, the lease item is not part of its bankruptcy assets.

　　Article 243 Unless otherwise agreed by the parties, the rent under a financial leasing contract shall be determined based on the major portion of or full costs of purchasing the lease item and the lessor's reasonable profit.

　　Article 244 Where the lease item does not comply with the contract or is not fit for the intended purpose, the lessor is not liable, except where the lessee relies on the skills of the lessor in selecting the lease item or the lessor interferes¹⁸¹ with the selection thereof.

　　Article 245 The lessor shall give warranty in respect of the lessee's possession and use of the lease item.

　　Article 246 If in the possession of the lessee, the lease item causes personal injury or property damage to a third party, the lessor is not liable.

　　Article 247 The lessee shall keep and use the lease item with due care. While in possession of the lease item, the lessee shall perform the obligations of maintenance and repair thereof.

　　Article 248 The lessee shall pay the rent in accordance with the contract. Where the lessee fails to pay the rent within a reasonable time limit after receiving the demand for payment from the lessor, the lessor may require payment of the full rent; or it may terminate the contract and take back the lease item.

　　Article 249 Where the parties agree that the lease item shall belong to the lessee at the expiry of the lease term, the lessee has paid the majority of the rent but is unable to pay the remaining rent, and the lessor terminates the contract for this reason and takes back the lease item, if the value of the lease item taken back exceeds the rent and other expenses which the lessee owes to the lessor, the lessee may request the lessor to return a certain part.

　　Article 250 The lessor and the lessee may agree on the ownership of the lease item at the expiry of the lease term. Where ownership of the lease item is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this Law, the ownership of the lease item shall belong to the lessor.

　　Chapter 15 Contracts for Work

　　Article 251 A contract for work is a contract whereby the contractor¹⁸² shall, in light of the requirements of the ordering party, complete certain work and deliver the results therefrom, and the ordering party pays the remuneration therefor.

　　Work includes processing, ordering, repairing, duplicating, testing, inspecting, etc……

　　Article 252 The contents of a contract for work shall contain such clauses as the subject matter, quantity, quality, remuneration, method of the work, supply of materials, term of performance, standards and method of inspection.

　　Article 253 The contractor shall use its own equipment, skills and labor¹⁸³ to complete the main part of the work, except as otherwise agreed upon by the parties.

　　Where the contractor assigns the contracted work to a third party for completion, the contractor shall be responsible to the ordering party in respect of the work results completed by the ordering party. Where the assignment is not approved by the ordering party, the ordering party may terminate the contract.

　　Article 254 The contractor may assign some ancillary work contracted to a third party for completion. Where the contractor assigns some ancillary work to a third party for completion, the contractor hall be responsible to the ordering party for the work result completed by a third party.

　　Article 255 Where the contractor is to supply the materials, the contractor shall select the materials in accordance with the contract and shall make such materials available for inspection by the ordering party.

　　Article 256 Where the ordering party is to supply the materials, it shall supply the materials in accordance with the contract. The contractor shall timely inspect the materials supplied by the ordering party, and if it discovers that they do not conform to the agreement in the contract, it shall timely notify the ordering party to replace them or supply what is lacking or take other remedial measures.

　　The contractor may not replace the materials supplied by the ordering party without authorization¹⁸⁴, and may not replace any components which do not need to be repaired.

　　Article 257 Where the contractor discovers that the drawings or technical requirements provided by the ordering party are unreasonable, it shall timely notify the ordering party. Where any losses are caused to the contractor due to the indolent reply of the ordering party and other reasons, the ordering party shall be liable for making compensation.

　　Article 258 Where the ordering party changes its requirements for the contracted work while the work is under way, thereby causing losses to the contractor, the ordering party shall be liable for making compensation.

　　Article 259 Where the performance of the contracted work requires assistance of the ordering party, the ordering party shall have the obligation to provide assistance. Where the contracted work is unable to be completed due to the ordering party's failure in fulfilling its obligation of assistance, the contractor may urge the ordering party to perform its obligation within a reasonable time limit and may extend the term of its performance; where the ordering party fails to perform such obligation within the time limit, the contractor may terminate the contract.

　　Article 260 In the period of working, the contractor shall accept the necessary supervision¹⁸⁵ over and inspection of the work by the ordering party. The ordering party may not obstruct¹⁸⁶ the normal work of the contractor with the supervision and inspection.

　　Article 261 Upon the completion of the contracted work, the contractor shall deliver the work results to the ordering party and shall submit necessary technical materials and the relevant quality certificate. The ordering party shall conduct acceptance inspection of the work results.

　　Article 262 Where the work results delivered by the contractor fail to meet the quality requirements, the ordering party may request the contractor to bear the liabilities for the breach of contract by way of repairing, remaking, reducing remuneration, or making compensation.

　　Article 263 The ordering party shall pay the remuneration at the agreed time limit. Where the time limit of payment is not agreed or the agreement is not clear, nor can it be determined in accordance with Article 61 of this Law, the ordering party shall pay it at the time when the contractor delivers the work results; where the work results are partially¹⁸⁷ delivered, the ordering party shall make payment accordingly.

　　Article 264 Where the ordering party fails to pay the remuneration or cost for the materials, etc. to the contractor, the contractor is entitled to lien¹⁸⁸ upon the work results, except as otherwise agreed upon by the parties.

　　Article 265 The contractor shall keep the materials supplied by the ordering party and the completed work results with due care, and shall be liable for damages in case of any damage or losses due to improper care.

　　Article 266 The contractor shall keep the relevant information confidential⁸⁰ as required by the ordering party, and may not retain any replica¹⁸⁹ or technical material without permission of the ordering party.

　　Article 267 Joint contractors¹⁹⁰ are jointly and severally liable to the ordering party, except as otherwise agreed upon by the parties.

　　Article 268 The ordering party may terminate the contract at any time, but it shall bear the liability for making compensation for losses, if the contractor suffers losses therefrom.

　　Chapter 16 Contracts for Construction Projects

　　Article 269 A contract for construction project is a contract whereby the contractor performs project construction, and the developer pays the price.

　　Contracts for construction projects include contracts for survey, design, and construction.

　　Article 270 A contract for construction project shall be in written form.

　　Article 271 Tendering for a construction project shall be conducted in an open, fair and impartial¹⁹¹ manner in accordance with the relevant laws.

　　Article 272 The developer may enter into a contract for construction project with a prime contractor, or enter into contracts for survey, design, and construction with the surveyor, designer, and constructor respectively.

　　The developer may not divide a construction project which should be completed by one contractor into several parts and contract them out to several contractors.

　　Subject to consent by the developer, the prime contractor or the contractor for survey, design, or construction may delegate part of the contracted work to a third party. The third party and the prime contractor or the contractor for survey, design, or construction shall be jointly and severally liable to the developer in respect of the work product completed by such third party. The contractor may not assign in whole to any third party the contracted construction project, or divide the whole contracted construction project into several parts and separately assign each part to a third party under the guise of sub-contracting.

　　The contractor is prohibited from sub-contracting any part of the project to an entity¹⁹² not appropriately qualified¹⁹³. A sub-contractor is prohibited from further sub-contracting its contracted work. The main structure of the construction project must be constructed by the contractor itself.

　　Article 273 A contract for a major state construction project shall be concluded in accordance with the procedure prescribed by the state and in compliance with the state-approved documents such as the investment plan and feasibility studies report, etc.

　　Article 274 A contract for survey or design includes terms such as the time limit for submission¹⁹⁴ of the relevant basic information and documents (including budget estimate), the quality requirements, fees, and other conditions of cooperation, etc.

　　Article 275 A construction contract includes terms such as the scope of the project, the construction period, the time for commencement and completion of any work to be commissioned in the interim¹⁹⁵, the quality of the project, the cost of the project, the time for delivery of technical materials, the responsibilities for the supply of materials and equipment, the appropriation¹⁹⁶ of funds and settlement of account, inspection upon completion of the project, the scope and period of quality warranty, and cooperation between the parties, etc.

　　Article 276 Where the construction project is subject to supervision, the developer shall enter into an agency appointment contract for project supervision with a project supervisor¹⁹⁷ in writing. The rights, obligations and associated legal liabilities of the developer and supervisor shall be prescribed in accordance with the provisions hereof concerning agency appointment contracts and the provisions of other relevant laws and administrative regulations.

　　Article 277 Provided that the developer does not interfere with the normal operation of the contractor, it may inspect the progress and quality of the work at any time.

　　Article 278 In the case of concealed work, the contractor shall give the developer notice for inspection prior to concealment¹⁹⁸. Where the developer fails to timely conduct inspection, the contractor may extend the relevant project milestones¹⁹⁹, and is entitled to claim damages for work stoppage or work slowdown, etc.

　　Article 279 Upon completion of the construction project, the developer shall conduct acceptance inspection according to the construction drawings and specifications, and in accordance with the rules of construction inspection and quality inspection standard prescribed by the state. Once the construction project has passed the acceptance inspection, the developer shall pay the prescribed price and accept the construction project.

　　The completed construction project may be put into use only after it has passed the acceptance inspection; if the construction project has not been inspected or has failed the inspection, it may not be put into use.

　　Article 280 Where the developer sustains any loss from construction delay due to non-compliance of the survey or design or due to delayed delivery of the survey or design documents, the surveyor or the designer shall continue to improve the survey or design, reduce or forgo²⁰⁰ the survey fee or design fee, and pay damages.

　　Article 281 Where the construction project fails to meet the prescribed quality requirements due to any reason attributable to the constructor, the developer is entitled to require the constructor to repair, re-construct or make alteration²⁰¹ free of charge within a reasonable time. Where delivery of the project is delayed due to such repair, re-construction or alteration, the constructor shall be liable for breach of contract.

　　Article 282 Where the construction project caused personal injury and property damage during its reasonable usage period due to any reason attributable to the contractor, the contractor shall be liable for damages.

　　Article 283 Where the developer fails to provide raw materials, equipment, site, funds, or technical information at the prescribed time and in accordance with the contractual requirements, the contractor may extend the relevant project milestones, and is entitled to claim damages for work stoppage or slowdown, etc.

　　Article 284 If an ongoing²⁰² project is stopped or delayed due to any reason attributable to the developer, the developer shall take the appropriate measures to make up or mitigate the loss, and shall indemnify the contractor for its loss and out-of-pocket expenses arising from resulting work stoppage, slowdown, reshipment, re-dispatch of mechanical equipment, and excess inventory²⁰³ of materials and assemblies, etc.

　　Article 285 Where in the course of survey or design, any repeating work, work stoppage or change of design occurs due to the developer's change of plan, the incorrect information provided by it, or its failure to provide the working conditions necessary for the survey or design at the prescribed time, the developer shall increase the fees in light of the actual amount of work done by the surveyor or designer.

　　Article 286 If the developer failed to pay the price in accordance with the contract, the contractor may demand payment from the developer within a reasonable period. Where the developer fails to pay the price at the end of such period, the contractor may enter into an agreement with the developer to liquidate¹²⁰ the project, and may also petition the People's Court to auction the project in accordance with the law, unless such project is not fit for liquidation²⁰⁴ or auction in light of its nature.

　　The construction project price shall be paid in priority out of proceeds from the liquidation or auction of the project.

　　Article 287 A matter not provided for in this Chapter shall be governed by the relevant provision governing contracts of hired works.

　　Chapter 17 Transportation Contracts

　　Section One General Provisions

　　Article 288 A transportation contract is a contract whereby the carrier carries passengers or cargoes²⁰⁵ from the starting place of carriage to the agreed destination, and the passenger, consignor²⁰⁶ or consignee²⁰⁷ pays for the ticket-fare or freight.

　　Article 289 A carrier engaged in public transportation may not refuse the normal and reasonable carriage request of a passenger or consignor.

　　Article 290 The carrier shall safely carry the passengers or cargoes to the agreed destination within the agreed time or within a reasonable time.

　　Article 291 The carrier shall carry the passengers or cargoes to the agreed destination via the agreed route or the customary carriage route.

　　Article 292 A passenger, a consignor or a consignee shall pay the ticket-fare or freight. Where the carrier fails to carry the passengers or the cargoes via the agreed or customary carriage route, thereby increasing the ticket-fare or freight, the passenger, consignor or consignee may refuse to pay any increased portion thereof.

　　Section Two Passenger Transportation contracts

　　Article 293 A passenger transportation contract is established upon the carrier's delivery of the passenger ticket to the passenger, except as otherwise agreed upon by the parties or there are other transaction practices.

　　Article 294 The passenger shall board the means of transportation with a valid passenger ticket. If the passenger boards without a ticket, exceeds the distance paid for, takes a higher class or higher berth²⁰⁸ than booked, or boards with an invalid ticket, he shall make up the payment for an appropriate ticket, and the carrier may charge an additional payment in accordance with the relevant provisions. Where the passenger fails to pay the ticket-fare, the carrier may refuse to carry.

　　Article 295 Where the passenger is unable to board the means of transportation at the time stated on the passenger ticket due to any reason attributable to himself, he shall undergo the formalities for ticket cancellation and refund or for ticket modification within the agreed period. Where the passenger fails to do so within the time period, the carrier may refuse to refund the ticket-fare, and no longer bear the obligation of carriage.

　　Article 296 In the course of carriage, the passenger's carry-on luggage shall be within the agreed limit of quantity. Where the luggage exceeds the agreed limit of quantity, the additional luggage shall be checked in.

　　Article 297 The passenger may not bring with him or pack in the luggage such dangerous articles as are flammable, explosive, toxic²⁰⁹, corrosive²¹⁰, or radioactive as well as those that might endanger the safety of life and property on board the means of transportation or other contraband²¹¹ articles.

　　Where the passenger violates the provisions of the preceding paragraph, the carrier may unload, destroy or turn over to the relevant authority the contraband articles. Where the passenger insists on carrying in person or placing in his luggage the contraband articles, the carrier shall refuse to carry.

　　Article 298 The carrier shall timely inform the passenger of any major causes hindering the normal carriage and the matters which shall be noted²¹² for purpose of safety carriage.

　　Article 299 The carrier shall carry the passenger according to the time and the carriage schedule stated on the passenger ticket. Where the carrier delays in carriage, it shall, upon request by the passenger, either arrange the passenger to take other flights or numbers or refund the ticket-fare.

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