Where the consignor violates the provisions of the preceding paragraph, the carrier may refuse the transport, or may also take appropriate measures to prevent losses, and expenses thus incurred shall be borne by the consignor.
Article 308 Before the carrier delivers the goods to the consignee, the consignor may ask the carrier to stop the transportation, return the goods, change the place of destination, or deliver the goods to another consignee. However, the consignor shall compensate for the losses thus caused to the carrier.
Article 309 When the goods are transported to the place of destination and the carrier knows the consignee, the carrier shall promptly notify the consignee, and the consignee shall promptly take delivery of the goods. If the consignee delays in taking delivery of the goods, the consignee shall pay storage and other fees to the carrier.
Article 310 When taking delivery of the goods, the consignee shall inspect the goods within the contracted time limit. If the time limit for inspection of the goods is not stipulated or is not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the consignee shall inspect the goods within a reasonable period of time. If the consignee does not voice any complaint about the quantity, damage or loss of the goods within the stipulated time limit or within a reasonable period of time, the silence shall be deemed as a preliminary evidence that the carrier has delivered the goods in accordance with the transport documents.
Article 311 The carrier shall hold the liability for any damage or loss of goods occurring in the course of transport. However, if the carrier proves that the damage or the loss of the goods is caused by force majeure, the natural property of the goods or reasonable wear and tear, or is caused by the negligence of the consignor or the consignee, the carrier shall not hold the liability for damages.
Article 312 If the parties have agreed on the amount of compensation for damage or loss of the goods, their agreement shall apply; if the amount of compensation is not stipulated or not clearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the amount shall be calculated at the market price of the place of delivery when the goods are delivered or ought to be delivered. If laws and administrative regulations stipulate otherwise concerning the calculation method of the compensation amount and the limit of the compensation amount, such stipulations shall govern.
Article 313 If two or more carriers engage in a connected transport of the same mode, the carrier which concludes the contract with the consignor shall be responsible for the entire process of transport. If a loss occurs at one transportation section, the carrier which concludes the contract with the consignor and the carrier in the said section shall bear joint and several liabilities.
Article 314 In the event that goods are lost in the course of transport due to force majeure, if the freight has not yet been collected, the carrier may not demand the payment of the freight; if the freight has already been collected, the consignor may ask for a refund.
Article 315 If the consignor or consignee does not pay freight, storage fees and other fees of transportation, the carrier has the right of lien on the goods transported, unless the parties stipulate otherwise.
Article 316 If the consignee is unknown or the consignee refuses to take delivery of the goods without justifiable reasons, the carrier may have the goods deposited in accordance with the provisions of Article 101 of this Law.
Section IV Multi-modal Transport Contracts
Article 317 The operator of multi-modal transport is responsible for fulfilling or organizing the fulfillment of a multi-modal transport contract, enjoy the rights of a carrier and assume its obligations throughout the entire transport process.
Article 318 The operator of multi-modal transport may stipulate with the carriers of the different sections of the multi-modal transport on their respective responsibility for transport in each section under the multi-modal transport contract. However, such stipulations shall not affect the obligations of the operator for the entire transport process.
Article 319 The operator of multi-modal transport shall, when receiving the goods consigned for transport by the consignor, issue multi-modal transport documents. At the request of the consignor, the multi-modal transport documents may be transferable or non-transferable.
Article 320 If losses are caused to the operator of multi-modal transport due to the fault of the consignor at the time of consigning the goods for transport, even if the consignor has transferred its multi-modal transport documents, the consignor shall still hold the liability for losses.
Article 321 If damage or loss of goods occurs in one section of the multi-modal transport, the provisions of related laws regulating the transport modes of the section shall apply to the liability for damages and its limits to be held by the operator of multi-modal transport. If it is impossible to determine in which section of transport such damage or loss has occurred, the liability for damages shall be governed by the provisions of this Chapter.
Chapter XVIII Technology Contracts
Section I Common Provisions
Article 322 A technology contract is a contract made by the parties to define their rights and obligations for technology development, transfer, consultation or service.
Article 323 The making of a technology contract shall be conducive to the advance of science and technology, and shall accelerate the transformation, application and dissemination of the results achieved in science and technology.
Article 324 The contents of a technology contract shall be stipulated by the parties, and generally, shall contain the following clauses:
(1) name of the project;
(2) contents, scope and requirements of the targeted matter;
(3) plan, schedule, period, place, area and manner of performance;
(4) confidentiality of technical information and materials;
(5) sharing of risk liabilities;
(6) ownership over technological results and proceeds distribution method;
(7) criteria and method of the inspection for acceptance;
(8) price, remuneration or royalty and methods of payment thereof;
(9) calculation method of penalty for breach of contract or compensation for losses;
(10) method for dispute settlement; and
(11) definition of technical terms and expressions.
Materials such as technical background, feasibility studies and technical evaluation reports, project task paper and plans, technical standards, technical norms, original design and technique documents, as well as other technical documents which are relevant to the performance of the contract may, as agreed upon by the parties, constitute component parts of the contract,
If a technology contract involves any patent, it shall indicate the designation of the invention or creation, the applicant and the patentee, the date of application, application number, patent number and duration of the patent rights.
Article 325 The methods of payment for prices, remuneration and royalty in a technology contract shall be stipulated by the parties, and they may adopt the methods of overall computation and lump payment or overall computation and installment payment, and may also adopt the method of percentage-deduction payment or such payment plus an anticipated initial payment.
When the percentage-deduction payment is agreed upon, such payment may be calculated at a specific percentage of the price of the product, of the newly-increased output value and profits attained from the application of patents and exploitation of technological know-how, or of the sales revenue of the product, and may also be computed according to the other methods agreed upon. The percentage of such payment may be a fixed percentage, or an annual progressively increased or decreased percentage.
When payment by deducting a percentage is agreed upon, the parties shall specify in the contract the method for checking and consulting the relevant accounting books.
Article 326 If the right to use or transfer of a service-related technological result belongs to a legal person or any other organization, the legal person or that organization may conclude a technology contract on the said service-related technological result. The legal person and or that organization shall deduct a certain percentage of the proceeds from using and transferring the service-related technological result so as to give rewards or remuneration to the person(s) achieving the service-related technological result. When the legal person or that organization concludes a technology contract to transfer the service-related technological result, the person(s) achieving the service-related technological result shall have the priority to acquire the transfer on equal conditions.
"Service-related technological result" refers to a technological result achieved in the performance of a task assigned by the legal person or any other organization, or achieved primarily by making use of the materials and technical conditions of the legal person or any other organization.
Article 327 The right of use or transfer of a non-service-related technological result belongs to the person(s) achieving the result, and the person(s) achieving the non-service-related technological result may conclude a technology contract on that result.
Article 328 The person achieving a technological result has the right to indicate on the documents relevant to the technological result that he is the person achieving the result, as well as the right to obtain certificates of honor and rewards.
Article 329 Any technology contract that illegally monopolies technologies, impedes technological progress or infringe upon technological results of others is null and void.
Section II Technological Development Contracts
Article 330 A technological development contract is a contract made by the parties concerning the research and development of any new technology, new product, new technique or new material, as well as the system thereof.
Technological development contracts include commissioned development contracts and cooperative development contracts.
Technological development contracts shall be in written form.
Contracts concluded by the parties on the application and transformation of any technological result with a value for industrial use shall be made with reference to the provisions for the technological development contracts.
Article 331 The client of a commissioned development contract shall pay funds for research and development and remuneration as contracted, provide technical materials and firsthand data, complete all cooperative work and accept the results of the research and development.
Article 332 The researcher-developer of a commissioned development contract shall work out and implement research and development plan in accordance with the contract, rationally use the research and development funds, complete the research and development work as scheduled, deliver the results of research and development, and provide related technical materials and necessary technical instructions so as to help the client to master the research and development results.
Article 333 Where the client violates the contract and causes thus the standstill, delay or failure of the research and development work, the client shall bear the liability for breach of contract.
Article 334 Where the researcher-developer violates the contract and causes thus the standstill, delay or failure of the research and development work, the researcher-developer shall bear the liability for breach of contract.
Article 335 The parties to a cooperative development contract shall make investments as contracted, including investment in the form of technology, participate in the research and development work divided into them respectively, and cooperate and coordinate in the research and development.
Article 336 Where either party to a cooperative development contract violates the contract and causes thus the standstill, delay or failure of the research and development work, the party in question shall bear the liability for breach of contract.
Article 337 Where the technology stipulated as the targeted matter of a technology development contract is revealed to the public by others, rendering thus the performance of the contract meaningless, the parties may dissolve the contract.
Article 338 Where insurmountable technical difficulties arising in the performance of a technology development contract lead to the total or partial failure of the research and development, the risk liability shall be stipulated by the parties. If the risk liability is not stipulated or not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the parties shall reasonably share the liability.
Where either party finds, as specified in the preceding paragraph, that a situation may cause the total or partial failure of the research and development, the party shall promptly notify the other party and take appropriate measures to minimize the loss. Where the party fails to promptly inform and take appropriate measures and causes thus the aggravation of the loss, the party in question shall be liable for the aggravated part of the loss.
Article 339 For any invention or creation achieved through the commissioned development, the right to apply for patents belongs to the researcher-developer, unless the parties stipulate otherwise. If the researcher-developer obtains the patent right, the client may exploit the patent free of charge.
If the researcher-developer transfers its right of application for patent, the client enjoys the priority to acquire the transfer on equal conditions.
Article 340 For any invention and creation achieved through the cooperative development, the right of application for patent belongs jointly to all parties to the cooperative development, unless the parties stipulate otherwise. If one of the parties transfers its joint right of application for patent, any other party enjoys the priority to acquire the transfer on equal conditions.
If a party to a cooperative development waivers its joint right of application for patent, any or all of the other parties to the cooperative development may make exclusive or joint application. If the patent right is obtained by the applicant(s), the party that has waived its right of application may exploit the patent free of charge.
If one party to a cooperative development does not agree to apply for patent, the other party or parties may not apply therefor.
Article 341 The right to use, the right to transfer and the method of proceeds distribution of the secret technological results achieved through the commissioned development or cooperative development shall be stipulated by the parties. If they are not stipulated or are not clearly stipulated, nor can they be determined pursuant to the provisions of Article 61 of this Law, all the parties concerned shall enjoy the rights to use and to transfer. However, the researcher-developer of a commissioned development may not transfer the research and development results to a third party before their delivery to the client.
Section III Technological Transfer Contracts
Article 342 Technological transfer contracts include contracts for the transfer of patent right, transfer of the right to apply for patent, transfer of technological know-how and license for exploitation of patents.
Technological transfer contracts shall be in written form.
Article 343 A technological transfer contract may stipulate the scope for the transferor and transferee to exploit the patent or to use the technological know-how, but may not restrict technological competition and technological development.
Article 344 A patent exploitation license contract shall be valid only within the period of continued existence of the patent. If the valid duration of the patent right expires or the patent right is declared invalid, the patentee may not conclude a patent exploitation license contract relating to that patent with others.
Article 345 The transferor in a patent exploitation license contract shall, as contracted, permit the license transferee to exploit the patent, deliver technical materials related to patent exploitation and provide necessary technical guidance.
Article 346 The license transferee in a patent exploitation license contract shall exploit the patent as contracted and may not allow a third party outside the contract to exploit the patent; and shall pay royalties as contracted.
Article 347 The transferor in a technical know-how transfer contract shall, as contracted, provide technical materials, give technical guidance, guarantee the practical applicability and reliability of the technology, and maintain confidentiality.
Article 348 The transferee in a technical know-how transfer contract shall, as contracted, utilize the technology, pay royalties, and maintain confidentiality.
Article 349 The transferor in a technological transfer contract shall guarantee its legitimate ownership over the technology provided and guarantee the technology provided to be complete, errorless, effective, and capable of attaining the contracted goal.
Article 350 The transferee in a technological transfer contract shall, in accordance with the contracted scope and period of time, maintain confidentiality regarding the parts of the technology provided by the transferor and not yet been disclosed to the public.
Article 351 The transferor that fails to transfer the technology as contracted shall refund the royalties in part or in full and bear the liability for breach of contract. The party that exploits a patent or utilizes technical know-how beyond the contracted scope, or allows an unauthorized third party to exploit the patent or utilize the technical know-how in violation of the contract shall stop its contract-breaching acts and bear the liability for breach of contract. The party that violates the contracted obligation of maintaining confidentiality shall bear the liability for breach of contract.
Article 352 The transferee that fails to pay royalties as contracted shall make up the payment of royalties and pay a penalty for breach of contract as contracted, and, if failing to make up the payment of royalties and pay the penalty, shall stop its exploitation of the patent or utilization of the technical know-how, return the technical materials and bear the liability for breach of contract. The transferee that exploits the patent or utilizes the technical know-how in excess of the contracted scope or allows a third party, without the consent of the transferor, to exploit the patent or to utilize the technical know-how shall stop its contract-breaching acts and bear liability for breach of contract. The transferee that violates its contracted obligation of maintaining confidentiality shall bear the liability for breach of contract.
Article 353 Where the exploitation of the patent or utilization of the technical know-how by the transferee as contracted infringes upon the legitimate rights and interests of others, the liability therefor shall be borne by the transferor, unless the parties stipulate otherwise.
Article 354 The parties to a technological transfer contract may, in accordance with the principle of mutual benefit, stipulate the method for sharing any subsequently improved technological result obtained from the patent exploitation or utilization of the technical know-how. Where such method is not stipulated or not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the subsequently improved technological result achieved by one party may not be shared by any of the other parties.
Article 355 Where laws and administrative regulations stipulate otherwise on contracts for technology import and export or on contracts for patents and patent applications, the relevant provisions thereof shall govern.
Section IV Technical Consultation Contracts and Technical Service Contracts
Article 356 "Technical consultation contracts" include contracts for providing reports concerning a specific technological project on such subjects as feasibility study, technical projection, special technological investigations, and analysis and evaluation.
A "technical service contract" refers to a contract whereby one party uses its technical knowledge to solve specific technical problems for the other party, while not embracing the construction project contract and the work contract.
Article 357 The client to a technical consultation contract shall, as contracted, state the issues for consultation, provide background technical information and related technical materials and data, and accept the work results of the agent and pay remuneration.
Article 358 The agent to a technical consultation contract shall complete the consultation report or solve the problems within the contracted time limit, and the consultation report submitted shall meet the stipulated requirements.
Article 359 If the client to a technical consultation contract fails to provide necessary materials and data as contracted and thus affects the progress and quality of the work, or the client fails to accept the work results or delays the acceptance, the paid remuneration may not be reimbursed, while the unpaid remuneration shall be paid.
The agent to a technical consultation contract that fails to submit the consultation report as scheduled or submits a report failing to meet the contracted requirements shall bear the liability for breach of contract in form of reduction or waiver of its remuneration.
Any losses caused by the decision made by the client to a technical consultation contract according to the agent's consultation report and advice that meet the contracted requirements shall be borne by the client, unless the parties stipulate otherwise.
Article 360 The client to a technical service contract shall, as contracted, provide working conditions, accomplish cooperative work, accept the results of the work and pay remuneration.
Article 361 The agent to a technical service contract shall, as contracted, complete the service items, solve technical problems, guarantee the quality of the work, and impart the knowledge for solving technical problems.
Article 362 Where the client to a technical service contract fails to perform its contracted obligations or performs its obligations in a manner inconsistent with the contracted requirements, thus affecting the progress and quality of the work, or fails to accept the work results or delays its acceptance, the paid remuneration may not be reimbursed, while the unpaid remuneration shall be paid.
The agent to a technical service contract that fails to complete the service work as contracted shall bear the liability for breach of contract in the form of waiver of its remuneration, and etc.
Article 363 In the course of the performance of a technical consultation contract or a technical service contract, new technological results achieved by the agent with technical materials and working conditions provided by the client shall belong to the agent. New technological results achieved by the client on the basis of the work results of the agent shall belong to the client. If the parties have agreed otherwise, their agreement shall govern.
Article 364 Where laws and administrative regulations stipulate otherwise on technology brokerage contracts and technical training contracts, the relevant provisions thereof shall govern.
Chapter XIX Contracts of Deposit
Article 365 A "contract of deposit" is a contract whereby the depository safekeeps the articles delivered by the depositor and returns the said article.
Article 366 The depositor shall pay the deposit fee to the depository as contracted.
If the deposit fee is not stipulated or is not clearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the deposit shall be gratis.
Article 367 A contract of deposit shall be executed upon delivery of the deposited article unless the parties stipulate otherwise.
Article 368 Where the depositor delivers the deposited article to the depository, the latter shall issue a deposit certificate, unless there are other trade practices.
Article 369 The depository shall properly safekeep the article.
The parties may stipulate the place and method of safekeeping. Except in case of emergency or in the interests of the depositor, the place and method for safekeeping may not be changed unilaterally.
Article 370 If the article delivered for safekeeping by a depositor has defects or needs by nature special safekeeping measures, the depositor shall notify the depository about the relevant information. Where the depositor fails to give information resulting thus in loss or damage to the article, the depository shall not hold the liability for damages; if the depository suffers a loss therefrom, the depositor shall be liable for the loss unless the depository is aware or ought to be aware of the situation but fails to take remedial measures.
Article 371 The depository may not transfer the article to a third party for deposit, unless the parties stipulate otherwise.
A depository that violates the provisions of the preceding paragraph, transfers the article to a third party for deposit, and thus causes damage or loss to the article shall hold the liability for damages.
Article 372 The depository may not use nor permit a third party to use the deposited article, unless the parties stipulate otherwise.
Article 373 Where a third party claims rights over the deposited articles, the depository shall perform the obligation of returning the article to the depositor, except that the deposited article is put under preservation or execution according to law.
Where a third party initiates an action against the depository or applies for the distraint of the deposited article, the depository shall promptly notify the depositor.
Article 374 Where damage or loss of the deposited article is caused within the period of safekeeping due to improper safekeeping by the depository, the depository shall hold the liability for damages. However, if the deposit is non-gratis and the depository can prove itself free from any gross negligence, the depository shall not hold the liability for damages.
Article 375 The depositor shall declare to the depository where currencies, negotiable securities or other valuable objects are deposited, and the depository shall accept them after check or seal them. Where the said deposited article is damaged or lost in the absence of a declaration from the depositor, the depository may make a compensation at a rate for general articles.
Article 376 The depositor may collect its deposited article at any time.
Where the deposit period is not stipulated or unclearly stipulated by the parties, the depository may, at any time, ask the depositor to collect the deposited article; where the deposit period is stipulated, the depository may not ask the depositor to collect the deposited article ahead of time without a particular reason.
Article 377 When the deposit period expires or the depositor collects the deposited article ahead of schedule, the depository shall return the article together with its accrued interest to the depositor.
Article 378 Where a depository safekeeps currencies, the depository may return the same kind of currencies in same amount. Where other replaceable articles are deposited, the depository may return them in same kind, same quality and same quantity according to the contract.
Article 379 Under a contract for non-gratuitous deposit, the depositor shall pay a deposit fee to the depository at a contracted time.
Where the time limit for payment is not stipulated or is not clearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the payment shall be made at the time of collecting the deposited article.
Article 380 If the depositor fails to pay the deposit fee and other charges, the depository has the right of lien on the deposited article, unless the parties stipulate otherwise.
Chapter XX Warehousing Contracts
Article 381 A warehousing contract is a contract whereby the depository stores the goods delivered by the depositor and the depositor pays the warehousing fee.
Article 382 A warehousing contract becomes valid when it is executed.
Article 383 Where dangerous goods such as inflammable, explosive, toxic, corrosive and radioactive or perishable articles are to be warehoused, the depositor shall state the nature of the said goods or articles and provide relevant information and materials.
If the depositor violates the provisions of the preceding paragraph, the depository may refuse to accept the goods for warehousing, or may take appropriate measures to avoid the occurrence of losses, and the expenses thus incurred shall be borne by the depositor.
The depository that warehouses dangerous goods such as inflammable, explosive, toxic, corrosive and radioactive materials shall have corresponding warehousing conditions.
Article 384 The depository shall check the goods as contracted before accepting the warehousing. If the depository finds during the check any inconsistency in the goods to be stored with the contract, the depository shall promptly notify the depositor. Where the warehoused goods are found, after being checked and accepted by the depository, not in conformity with the contract in terms of varieties, quantity or quality, the depository shall hold the liability for damages.
Article 385 Upon delivering of the goods by the depositor for storage, the depository shall issue a warehousing certificate.
Article 386 The depository shall sign or stamp the warehousing certificate. A warehousing certificate shall contain the following particulars:
1. designation or name and address of the depositor;
2. variety, quantity, quality, package, number of pieces and marks of the stored goods;
3. standards for damage and spoilage of the stored goods;
4. warehousing site;
5. warehousing period;
6. warehousing fee;
7. the insured amount, duration of insurance and designation of the insurance company if the goods to be stored have been insured; and
8. name of the issuer and the place and date of issuance.
Article 387 The warehousing certificate is the proof for collecting the stored goods. Where the depositor or the holder of the warehousing certificate endorses the certificate which is thus signed or stamped by the depository, the right to collect the stored goods may be transferred.
Article 388 The depository shall, at request of the depositor or the holder of the warehousing certificate, allow the depositor or the holder to examine the stored goods or to take samples.
Article 389 Where the depository finds that the warehoused goods deteriorate or suffer from other damages, the depository shall promptly inform the depositor or the holder of the warehousing certificate.
Article 390 Where the depository finds that the warehoused goods deteriorate or suffer from other damages, which endangers the safety and normal warehousing of other warehoused goods, it shall urge the depositor or the holder of the warehousing certificate to make necessary disposal. In case of emergency, the depository may make necessary disposal, but shall promptly notify the depositor or the holder of the warehousing certificate about the situation afterwards.
Article 391 If the warehousing period is not stipulated or is unclearly stipulated by the parties, the depositor or the holder of the warehousing certificate may collect at any time the warehoused goods, and the depository may also ask at any time the depositor to collect the warehoused goods but a reasonable period of time necessary for preparations shall be given.
Article 392 Where the warehousing period expires, the depositor or the holder of the warehousing certificate shall collect the stored goods on the strength of the warehousing certificate. If the depositor or the holder of the warehousing certificate delays in collecting the stored goods, extra warehousing fees shall be charged; if the goods are collected before the expiration, the warehousing fees shall not be reduced.
Article 393 Where the depositor or the holder of the warehousing certificate fails to collect the stored goods at expiration of the warehousing period, the depository may urge the depositor or the holder of the warehousing certificate to collect the goods within a reasonable period of time; if the depositor or the holder still fails to collect the goods beyond the reasonable period, the depository may have the stored goods deposited.
Article 394 If damages or losses caused to the stored goods are due to improper warehousing by the depository within the warehousing period, the depository shall hold the liability for damages.
If the deterioration or damage of the stored goods is due to the nature of the goods, the failure of their packaging to meet the requirements or the overrun of their valid storage period, the depository shall not be liable therefor.
Article 395 For matters not regulated by this Chapter, the relevant provisions on the contracts of deposit shall apply.
Chapter XXI Entrustment Contract
Article 396 An entrustment contract is a contract whereby the principal and the agent agree that the agent shall handle the affairs of the principal.
Article 397 The principal may specifically authorize the agent to handle one or several affairs, and may also generally authorize the agent to handle all affairs.
Article 398 The principal shall pay in advance the expenses for handling the entrusted affairs. If the agent pays for the principal necessary expenses in handling entrusted affairs, the principal shall repay the expenses as well as the interest accrued.
Article 399 The agent shall handle the entrusted affairs in accordance with the instructions of the principal. If it is necessary to modify the instructions of the principal, the modification shall be approved by the principal; if it is difficult to contact the principal in an emergency, the agent shall properly handle the entrusted affairs, and shall promptly inform the principal of the situation afterwards.
Article 400 The agent shall handle in person the entrusted affairs. With the consent of the principal, the agent may sub-entrust a third party. If the sub-entrustment obtains consent, the principal may directly instruct the third party sub-entrusted on an entrusted affair, and the agent shall only be liable for the choice of the third party and for the instructions given by the agent to the third party. If the sub-entrustment does not obtain consent, the agent shall be liable for any acts of the sub-entrusted third party, except in case of emergency, a sub-entrustment for agent to protect the interests of the principal.
Article 401 The agent shall, at the request of the principal, report on the situation of the entrusted affairs handled. Upon termination of the entrustment contract, the agent shall report the result of the entrusted affairs handled.
Article 402 Where the agent enters into a contract with a third party under the agent's name within the scope of authorization by the principal, and if the third party is aware of the proxy relationship between the agent and the principal, the said contract shall directly bind the principal and the third party, unless truthful evidence proves that the said contract binds only the agent and the third party.
Article 403 Under a contract concluded by the agent in the agent's name with a third party that is not aware of the proxy relationship between the agent and the principal, when the agent fails to perform obligations toward the principal because of the third party, the agent shall disclose the third party to the principal, and the principal may then exercise the rights of the agent vis-a-vis the third party, except that the third party is unwilling to enter into the contract if it is aware of the principal while making the contract with the agent.
Where the agent fails to perform obligations towards the third party because of the principal, the agent shall disclose the principal to the third party, and the third party may then choose either the agent or the principal as the counterpart to claim its rights. However, the third party may not change the counterpart once chosen.
Where the principal exercises the rights of the agent vis-a-vis the third party, the third party may address its plea against the agent to the principal. When the third party chooses the principal as the counterpart, the principal may address to the third party the principal's plea against the agent as well as the agent's plea against the third party.
Article 404 The agent shall hand over to the principal any property acquired in handling the entrusted affairs.
Article 405 When the agent has accomplished the entrusted affairs, the principal shall pay remuneration to the agent. If the entrustment contract is dissolved or the entrusted affairs can not be accomplished due to reasons not attributable to the agent, the principal shall pay corresponding remuneration to the agent. If the parties have stipulated otherwise, such stipulations shall govern.
Article 406 Under a non-gratuitous entrustment contract where any loss is caused to the principal due to negligence of the agent, the principal may demand compensation therefor. Under a gratuitous entrustment contract where any loss is caused to the principal due to deliberate intention or gross fault of the agent, the principal may demand compensation therefor.
Where the agent acts beyond the authorization and causes thus losses to the principal, the agent shall make compensation therefor.
Article 407 If the agent suffers a loss in handling the entrusted affairs not due to reasons attributable to the agent, compensation therefor may be demanded from the principal.
Article 408 The principal may, with consent of the agent, authorize a third party to handle entrusted affairs in addition to the agent. If a loss is thus caused to the agent, the agent may demand compensation therefor from the principal.
Article 409 If two or more agents jointly handle the entrusted affairs, they shall bear joint and several liabilities.
Article 410 The principal or the agent may dissolve the entrustment contract at any time. If the dissolution of the contract by a party causes losses to the other party, the dissolving party shall compensate for the losses, except for reasons not attributable to that party.
Article 411 An entrustment contract shall terminate when either the principal or the agent dies, loses capacity of civil conduct or goes bankrupt, except in the event that the parties stipulate otherwise or it is inappropriate to terminate the contract due to the nature of the entrusted affairs.
Article 412 Where the termination of an entrustment contract is resulted from the death, loss of capacity of civil conduct or bankruptcy of the principal and will impair the interests of the principal, the agent shall continue to handle the entrusted affairs till the heir, legal agent or liquidation organization of the principal takes over the entrusted affairs.
Article 413 If the death, loss of capacity of civil conduct or bankruptcy of the agent leads to the termination of an entrustment contract, the heir, the legal agent or the liquidation organization of the agent shall promptly inform the principal. If the termination of the entrustment contract will impair the interests of the principal, the heir, the legal agent or the liquidation organization of the agent shall take necessary measures before the principal makes arrangement to deal with the aftermath.
Chapter XXII Brokerage Contracts
Article 414 A brokerage contract is a contract whereby the broker in its own name engages in trade activities for the truster and the truster pays remuneration therefor.
Article 415 Expenses inflicted by the broker in handling the entrusted affairs shall be borne by the broker, unless the parties stipulate otherwise.
Article 416 If the broker possesses the commissioned articles, the broker shall properly safekeep the articles.
Article 417 If the commissioned articles have defects or are vulnerable to degeneration or deterioration at the time when they are delivered to the broker, the broker may, with the consent of the truster, dispose of the articles; if the broker is unable to make prompt contact with the truster, the broker may dispose of the articles in a proper manner.
Article 418 If a broker sells at a price lower than the price set by the truster or buys at a price higher than the price set by the truster, the broker shall obtain the consent of the truster. If a deal is made without the consent of the truster, the broker shall make up for the price difference and the said deal shall be effective for the truster.
If a broker sells at a price higher than the price set by the truster or buys at a price lower than the price set by the truster, remuneration may be increased as contracted. If the increase is not stipulated or is not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the benefits involved shall belong to the truster.
If the truster has given special instructions regarding price, the broker may not sell or buy contrary to the said instructions.
Article 419 If the broker buys or sells commodities at a market price, unless the truster indicates otherwise, the broker itself may serve as the buyer or the seller.
Despite the conditions stipulated in the preceding paragraph, the broker may still ask the truster to pay remuneration.
Article 420 If the broker buys a commissioned article pursuant to the contract, the truster shall accept the article in a timely manner. If, after being urged by the broker, the truster refuses to accept the article without a justifiable reason, the broker may have the commissioned article deposited in accordance with the provisions of Article 101 of this Law.
If a commissioned article cannot be sold or the truster withdraws the commissioned sale, and if the truster after being urged by the broker fails to retrieve or dispose of the said article, the broker may have the commissioned article deposited pursuant to the provisions of Article 101 of this Law.
Article 421 A broker that enters into a contract with a third party shall directly enjoy the rights and bear the responsibilities under that contract.
Where the third party fails to fulfill the contracted obligations and causes thus losses to the truster, the broker shall be liable therefor, unless the broker and the truster stipulate otherwise.
Article 422 Where the broker has accomplished the commissioned affairs in full or in part, the truster shall pay remuneration accordingly. If the truster fails to pay remuneration as scheduled, the broker shall enjoy the right of lien on the commissioned articles, unless the parties stipulate otherwise.
Article 423 For questions not regulated by this Chapter, the relevant provisions on entrustment contracts shall apply.
Chapter XXIII Intermediation Contracts
Article 424 An intermediation contract is a contract whereby the middleman reports to the truster the opportunity for making a contract or provides intermediating services for the making of a contract, and the truster pays remuneration therefor.
Article 425 The middleman shall truthfully report to the truster matters related to the making of a contract.
If the middleman intentionally conceals important facts in relation to the making of the contract or provides untrue information and thus impairs the interests of the truster, the middleman may not claim remuneration and shall hold the liability for damages.
Article 426 If the middleman contributes to the making of a contract, the truster shall pay remuneration as contracted. If the remuneration for the middleman is not stipulated or not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the remuneration shall be reasonably determined in accordance with the middleman's services. If the intermediating services provided by the middleman prompts the making of a contract, the parties to the said contract shall equally share the disbursement of the remuneration to the middleman.
In prompting the making of a contract, the expenses incurred in the intermediating activities shall be borne by the middleman.
Article 427 If the middleman fails to prompt the making of a contract, the middleman may not demand the payment of remuneration, but may ask the truster to pay the necessary expenses incurred in the intermediating activities.
Supplementary Provisions
Article 428 This Law shall go into effect as of October 1, 1999. The Economic Contract Law of the People's Republic of China, the Law of the People's Republic of China on Economic Contracts Involving Foreign Interest and the Law of the People's Republic of China on Technology Contracts shall be simultaneously annulled.