BIZCHINA / Company laws
Contract Law of the People's Republic of China
Updated: 2006-04-17 10:00
Article 111 If the quality fails to satisfy the terms of the contract,
the breach of contract damages shall be borne according to the terms of
the contract agreed upon by the parties. If 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 61 of this Law, the damaged party may, in light of the character
of the object and the degree of losses, reasonably choose to request the
other party to bear the liabilities for the breach of contract such as
repairing, substituting the goods, or reducing the price or remuneration.
Article 112 Where one party to a contract fails to perform the contract
obligations or its performance fails to satisfy the terms of the
contract, the party shall, after performing its obligations or taking
remedial measures, compensate for the losses, if the other party suffers
from other losses.
Article 113 Where one party to a contract fails to perform the contract
obligations or its performance fails to satisfy the terms of the contract
and causes losses to the other party, the amount of compensation for
losses shall be equal to the losses caused by the breach of contract,
including the interests receivable after 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 service shall be liable for paying compensation for
damages in accordance with the Law of the People's Republic of China on
the Protection of Consumer Rights and Interests.
Article 114 The parties to a contract may agree that one party shall,
when violating the contract, pay breach of contract damages of certain
amount in light of the breach, or may agree upon the calculating method
of compensation for losses resulting from the breach of contract.
If the agreed breach of contract damages are lower than the losses
caused, any party may request the people's court or an arbitration
institution to increase it; if it is excessively higher than the losses
caused, any party may request the people's court or an arbitration
institution to make an appropriate reduction.
If the parties to a contract agree upon breach of contract damages in
respect to the delay in performance, the party in breach shall perform
the debt obligations after paying the breach of contract damages.
Article 115 The parties to a contract may, according to the Guaranty Law
of the People's Republic of China, agree that one party pays a deposit to
the other party as the guaranty for the creditor's rights. After the debt
obligations are performed by the obligor, the deposit shall be returned
or offset against the price. If the party that pays the deposit fails the
perform the agreed debt obligations, it shall have no right to reclaim
the deposit. If the party that receives the deposit fails to perform the
agreed debt obligations, it shall return twice the amount of the deposit.
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