专业法律服务
Professional Solution
Where a lessee fails to use the leased object in a manner as agreed by the parties or in line with its nature, thus causing damage to the leased object, the lessor may rescind the contract and request for compensation.
A lessor shall perform the duty of maintaining the leased object, unless otherwise agreed by the parties.
Where a leased object needs to be maintained or repaired, the lessee may request the lessor to have it maintained and repaired within a reasonable period of time. Where the lessor fails to perform the obligation of maintenance or repair, the lessee may maintain or repair the leased object by himself and the expenses thus incurred shall be borne by the lessor. If the maintenance or repair of the leased object affects the lessee’s use of it, the rent shall be reduced or the term of the lease shall be extended accordingly.
Where a leased object needs to be maintained or repaired due to the lessee’s negligence, the lessor shall not bear the obligation of maintenance or repair as provided in the preceding paragraph.
A lessee shall properly keep the leased object and shall bear the liability for compensation if the leased object is destructed, damaged, or lost owing to his failing to properly keep it.
A lessee may, upon the lessor’s consent, improve the leased object or install additions thereto.
Where a lessee improves the leased object or install additions thereto without the consent of the lessor, the lessor may request the lessee to restore the leased object to its original status or to compensate for the losses.
Article 716
A lessee may, upon the lessor’s consent, sublease the leased object to a third person. The lease contract between the lessee and the lessor shall continue to be valid despite the sublease by the lessee, and if the third person causes loss to the leased object, the lessee shall bear the liability for compensation.
Where a lessee subleases the leased object without the consent of the lessor, the lessor may rescind the contract.
Where a lessee, upon consent of the lessor, subleases the leased object to a third person, if the term of the sublease exceeds the remaining term of the lessee, the sublease in the period in excess of the original term shall not be legally binding on the lessor unless otherwise agreed by the lessor and the lessee.
Where a lessor knows or should have known of the sublease made by a lessee but fails to raise any objection within six months, the lessor is deemed to have consented to the sublease.
Where a lessee defaults on payment of the rent, the sublessee may pay the rent in arrears and the liquidated damages for the lessee, unless the sublease contract is not legally binding on the lessor.
The rent and liquidated damages paid by the sublessee for the lessee may be used to offset the rent payable by the sublessee to the lessee. If the amount of rent and liquidated damages thus paid by the sublessee exceeds the rent, the sublessee has the right to indemnification against the lessee.
Any proceeds accrued from the possession or use of the leased object during the term of the lease shall belong to the lessee, unless otherwise provided by the parties.
A lessee shall pay the rent within the time limit in accordance with the agreement. Where there is no agreement between the parties on the time limit for paying the rent or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the rent shall be paid at the time the term of the lease expires if the term is less than one year, or at the end of each full year where the term is more than one year, provided that the rent shall be paid at the time the term of the lease expires if the remaining term is less than one year.
Where a lessee fails to pay the rent or delays a payment of the rent without just cause, the lessor may request the lessee to pay the rent within a reasonable period of time, and may rescind the contract if the lessee fails to pay the rent within such period of time.
Where a lessee is unable to use or to receive benefit from the leased object owing to a claim from a third person, the lessee may request for a reduction of or exemption from the rent.
Where a third person claims his right against the leased object, the lessee shall notify the lessor in a timely manner.
A lessor may rescind the contract under any of the following circumstances if the leased object cannot be used due to a reason not attributable to the lessee:
(1) the leased object is seized or detained by the judicial authority or administrative authority in accordance with law;
(2) there are disputes over the attribution of rights of the leased object; or
(3) the leased object violates mandatory provisions of laws and administrative regulations in respect of the conditions for use thereof.
A change in the ownership of a leased object during the period that a lessee possesses the leased object in accordance with the lease contract shall not affect the validity of the lease contract.
A lessor intending to sell a leased house shall notify the lessee within a reasonable period of time prior to the sale, and the lessee shall have the priority right to purchase the house under equivalent conditions, unless the person who is a co-owner by share exercises his priority right to purchase the house or if the lessor sells it to his close relatives.
Where a lessee fails to explicitly express his intention to purchase the house within fifteen days after the lessor has fulfilled his obligation of notification, the lessee shall be deemed to have waived such priority right.
Where a lessor authorizes an auctioneer to sell the leased house through auction, he shall notify the lessee five days prior to the auction. The lessee shall be deemed to have waived his priority right to purchase it if he fails to participate in the auction.
Where a lessor fails to notify the lessee or otherwise hinders the lessee from exercising his priority right to purchase the leased house, the lessee may request the lessor to bear the liability for compensation, except that the validity of the contract for sale of the leased house concluded between the lessor and a third person shall not be affected.
Article 729
Where a leased object is partially or wholly destructed, damaged, or lost for a cause not attributable to the lessee, the lessee may request a reduction or exemption of the rent; and the lessee may rescind the contract if the purpose of the contract is unable to be achieved owing to such destruction, damage, or loss.
Where there is no agreement between the parties on the term of the lease, or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the lease shall be deemed a lease with an indefinite term. Either party may rescind the contract at any time, provided that the other party shall be notified within a reasonable period of time in advance.
Where a leased object endangers a lessee's safety or health, the lessee may rescind the contract at any time, even if the lessee is clearly aware of the substandard quality of the leased object upon concluding the contract.
Where a lessee dies within the term of lease of a leased house, a person who lives with or the joint operator of the deceased may lease the house according to the original lease contract.
A lessee shall return the leased object upon expiration of the term of the lease. The leased object returned shall be maintained in its after-use state in accordance with the agreement or in line with its nature.
Where a lessee continues to use the leased object after the expiration of the term of the lease and the lessor has not raised any objection, the original lease contract shall continue to be valid, except that the lease term shall become unfixed.
Upon expiration of the lease, a lessee of the house has the priority right to lease it under equivalent conditions.
Chapter XV
A contract for financing lease is a contract under which a lessee selects a leased object and its seller, and a lessor purchases the leased object from the selected seller and provides it to the lessee for use, who pays the rent in return.
A contract for financing lease generally contains clauses specifying the name, quantity, specifications, technical performance, and inspection method of the leased object, the term of the lease, the composition of rent, the time limit, method, and currency for payment of the rent, the ownership over the leased object upon expiration of the term, and the like.
A contract for financing lease shall be made in writing.
A contract for financing lease concluded by the parties on a fictitious leased object is void.
Where the operation or use of a leased object requires administrative license in accordance with the provision of laws and administrative regulations, the failure of the lessor to obtain such administrative license does not affect the validity of the contract for financing lease.
Where a lessor concludes a sales contract based on a lessee’s selection of the seller and the leased object, the seller shall deliver the object to the lessee as agreed by the parties, and the lessee shall enjoy the rights of a buyer with regard to the object received.
A lessee may refuse to accept the subject matter delivered by the seller where a seller breaches his obligation of delivery of the subject matter to the lessee, and one of the following circumstances occurs:
(1) the subject matter is materially inconsistent with the agreement; or
(2) the seller fails to deliver the subject matter as agreed by the parties, and still fails to deliver it within a reasonable period of time after being demanded by the lessee or the lessor.
Where a lessee refuses to take delivery of the subject matter, he shall promptly notify the lessor.
The lessor, the seller, and the lessee may agree that, where the seller fails to perform the obligations under the sales contract, the lessee shall exercise the right to claim against the seller. Where the lessee exercises such a right, the lessor shall render assistance.
Article 742
A lessee5s exercise of the right to claim against the seller shall not affect his performance of the obligation to pay the rent. However, where a lessee has relied upon the lessor's expertise in selecting the leased object or the lessor has intervened with the selection of the leased object, the lessee may request reduction or exemption of the rent accordingly.
Where any of the following circumstances occurs, which causes the failure of the lessee to exercise the right to claim against the seller, the lessee has the right to request the lessor to bear corresponding liability:
(1) the lessor clearly knows that the leased object has quality defects but fails to notify the lessee; or
(2) when the lessee exercises the right to claim, the lessor fails to provide necessary assistance in a timely manner.
Where a right to claim against the seller may only be exercised by the lessor but the lessor fails to exercise such right owing to his indolent, thus causing loss to the lessee, the lessee has the right to request the lessor to bear the liability for compensation.
Where a lessor concludes a sales contract based on the lessee’s selection of the seller and the leased object, the lessor may not, without the consent of the lessee, modify the content of the contract related to the lessee.
The lessor’s ownership over the leased object shall, without being registered, not be asserted against a bona fide third person.
The rent under a contract for financing lease shall, unless otherwise agreed by the parties, be determined according to the whole or major part of the cost for purchasing the leased object plus reasonable profits to be gained by the lessor.
Where a leased object does not conform to the agreement or the purpose of its use, the lessor shall not bear any liability, unless the lessee has relied upon the lessor's expertise in selecting the leased object or the lessor has intervened with the selection of the leased object.
A lessor shall guarantee the possession and use of the leased object by the lessee.
A lessee has the right to request the lessor to bear the liability for compensation where the lessor falls under any of the following circumstances:
(1) taking back the leased object without just cause;
(2) obstructing or interfering with the possession and use of the leased object by the lessee without just cause;
(3) a third person claims a right over the leased object due to a reason attributable to the lessor; or
(4) the lessor otherwise improperly affects the possession and use of the leased object by the lessee.
Where a leased object causes any personal injury or property damage to a third person during the period it is under the lessee’s possession, the lessor shall not bear any liability.
A lessee shall properly maintain and use the leased object.
A lessee shall perform the obligation for the maintenance of the leased object during the period the leased object is under his possession.
Where the leased object is destructed, damaged, or lost during the period it is under the possession of the lessee, the lessor has the right to request the lessee to continue to pay the rent, unless otherwise provided by law or agreed by the parties.
A lessee shall pay the rent in accordance with the agreement. Where a lessee fails to pay the rent within a reasonable period of time after being demanded, the lessor may request full payment of the rent, or rescind the contract and take back the leased object.
Where a lessee transfers, mortgages, pledges, invests and contributes as share, or otherwise disposes of the leased object without the lessor’s consent, the lessor may rescind the contract for financing lease.
A lessor or a lessee may rescind the contract for financing lease under any of the following circumstances:
(1) the sales contract between the lessor and the seller is rescinded, determined as void or revoked, and the parties fail to conclude a sales contract anew;
(2) the leased object is destructed, damaged, or lost due to a reason not attributable to the parties, and it is impossible to repair the leased object or determine a substitute therefor; or
(3) the purpose of the contract for financing lease cannot be achieved owing to a reason attributable to the seller.
Where a contract for financing lease is rescinded because the sales contract is rescinded, invalidated, or revoked, if the seller and the leased object are selected by the lessee, the lessor has the right to request the lessee to compensate for the corresponding losses, unless the sales contract is rescinded, invalidated, or revoked owing to a reason attributable to the lessor.
Where the losses of the lessor have been recovered at the time the sales contract is rescinded, invalidated, or revoked, the lessee no longer bears liability for compensation.
Where a contract for financing lease is rescinded owing to a reason not attributable to the parties, such as an accidental destruction, damage, or loss of the leased object after it is delivered to the lessee, the lessor may request the lessee to make compensation based on the depreciation status of the leased object.
A lessor and a lessee may agree on the ownership over the leased object upon expiration of the term of the lease. Where there is no agreement between the parties on the ownership of the leased object or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the ownership of the leased object shall belong to the lessor.
Where the parties agree that the lessee shall have the ownership over the leased object upon expiration of the term of the lease, if the lessee has paid most of the rent but is unable to pay the remaining part, and the lessor has therefore rescineded the contract and taken back the leased object, the lessee may request the corresponding refund if the value of the leased object taken back exceeds the rent and other expenses in arrears.
Where the parties agree that the lessor shall have the ownership over the leased object upon expiration of the term of the lease, and the lessee is unable to return the leased object due to destruction, damage, or loss of the leased object, or because the leased object has attached to or been mixed with another thing, the lessor has the right to request the lessee to make reasonable compensation.
Where the parties agree that the lessee is only required to pay the lessor a symbolic price upon expiration of the term of the lease, the ownership of the leased object shall be deemed as belonging to the lessee after the lessee has fulfilled his obligation to pay the rent in accordance with the agreement.
Where a contract for financing lease is invalid and the parties have agreed on the ownership of the leased object under such a circumstance, such an agreement shall be followed. Where there is no agreement between the parties on the ownership of the leased object or the agreement is unclear, the leased object shall be returned to the lessor. However, where the contract becomes invalid owing to a reason attributable to the lessee, if the lessor does not request the return of the leased object or the return of the leased object will significantly reduce the usefulness thereof, the ownership of the leased object shall belong to the lessee, and the lessee shall make reasonable compensation to the lessor.
Chapter XVI
Factoring Contracts
A factoring contract is a contract under which a creditor of accounts receivable transfers the existing or after-acquired accounts receivable to a factor who provides services such as accommodation of funds, management or collection of the accounts receivable, guarantee for the payment of a debtor of the accounts receivable, and the like.
A factoring contract generally contains clauses specifying the business type, scope of service, term of service, information on the underlying transaction contract and the accounts receivable, the financing funds through factoring, the service remuneration, the methods of payment thereof, and the like.
A factoring contract shall be in writing.
Where a creditor and a debtor fabricate an account receivable as the object of transfer and then conclude a factoring contract on it with a factor, the debtor of the fabricated account receivable shall not assert a defense against the factor on the ground that the account receivable does not exist, unless the factor clearly knows such fabrication.
Where a factor notifies a debtor of an account receivable of the assignment of the account receivable, he shall disclose his identity as a factor and present necessary certifying documents.
Where, after a debtor of an account receivable receives the notice of assignment thereof, the creditor and the debtor of the account receivable agree to modify or terminate the underlying contract without just cause, which has an adverse impact on the factor, such modification or termination is not effective against the factor.
Article 766
Where the parties agree that the factoring is one with the right of recourse, the factor may claim against the creditor of the account receivable for refunding the principal and interest of the financing funds or redemption of the claim on the account receivable, or claim against the debtor of the account receivable. Where a factor claims against the debtor of the account receivable after deducting the principal and interest of the financing funds and the other relevant expenses, any balance shall be returned to the debtor of the account receivable.
Where the parties agree that the factoring is one without the right of recourse, the factor shall claim against the debtor of the account receivable, and the factor is not required to return to the creditor of the account receivable the amount in excess of the principal and interest of the financing funds and the other relevant expenses he has obtained.
Where a creditor of an account receivable concludes multiple factoring contracts with different factors so that the factors claim their rights against the same account receivable, the account receivable shall be obtained by the factor of a registered factoring contract in priority over the factors of unregistered factoring contracts, or, where all factoring contracts are registered, by the factors in an order according to the time of registration, or, where none of the factoring contracts have been registered, by the factor stated in the transfer notice which has reached the debtor of the account receivable first in time. Where none of the factoring contracts have been registered and no transfer notice has been sent, the account receivable shall be obtained by the factors on a pro rata basis on the amount of financing funds each has provided, or the service remuneration each is entitled to.
For matters not provided in this Chapter, the relevant provisions of Chapter Six of this Book on the assignment of claims shall be applied.
A work contract is a contract under which a contractor, in accordance with the requirements of a client, completes a work and delivers the work product to the client who pays remuneration in return.
A contracted work includes processing, manufacturing on order, repair, reproduction, testing, inspection, and the like.
A work contract generally contains clauses specifying the object, quantity, and quality of the work, remuneration of the work, the mode of the work, supply of materials, the period of performance, the standard and method of inspection, and the like.
The contractor shall complete the principal part of the work with his own equipment, technology, and labor force, unless otherwise agreed by the parties.
Where a contractor entrusts the major part of the contracted work with a third person, the contractor shall be accountable to his client concerning the work completed by the third person and the client may rescind the contract if he has not consented thereto.
A contractor may entrust the accesory part of his contracted work with a third person. Where a contractor entrusts an accessory part of the contracted work to a third person, the contractor shall be accountable to the client concerning the work product completed by the third person.
Where a contractor is to provide the materials, he shall select and use the materials in accordance with the agreement and accept the inspection of the client.
Where a client is to provide the materials, he shall provide the materials in accordance with the agreement. The contractor shall promptly inspect the materials provided by the client, and, if any inconformity is found, the contractor shall promptly request the client to make replacement, make up the shortage or take other remedial measures.
Without the consent of the client, a contractor may not change the materials provided by the client nor change the accessories and parts which do not need repair.
A contractor shall promptly notify the client if he finds that the drawings or technical requirements provided by the client are unreasonable. Where losses are caused to the contractor due to the client's failure to response or the like reasons, the client shall bear the liability for compensation.
Where, in the course of a contracted work, the client changes his requirements, thus causing loss to the contractor, the client shall bear liability for compensation.
Article 778
Where a contracted work requires assistance from the client, the client has the obligation to provide such assistance. Where the client fails to perform such obligation, thus making the completion of the contracted work impossible, the contractor may demand him to perform his obligation within a reasonable period of time, and may also extend the term of performance accordingly. If the client still fails to fulfill his obligation within the extend term, the contractor may rescind the contract.
A contractor shall accept necessary supervision and inspection of the client in the course of his work. The client may not disturb the normal work of the contractor by such supervision and inspection.
Upon completion of his work, a contractor shall deliver to the client the work product and provide the client with the necessary technical materials and related quality certificates. The client shall inspect the work product for acceptance.
Where the work product delivered by the contractor fails to meet the quality requirements, the client may, in a reasonable manner, request the contractor to bear default liability in forms of repair, reworking, remuneration reduction, or compensation for losses.
A client shall pay remuneration within the time limit agreed by the parties. Where there is no agreement between the parties on the time limit for paying remuneration or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the client shall make payment at the time of delivery of the work product; and where part of the work product is delivered, the client shall pay the corresponding remuneration.
Where a client fails to make such payments as remuneration or materials fees, the contractor has the right to retain the work product under lien or to refuse delivery, unless otherwise agreed by the parties.
A contractor shall properly keep the materials provided by the client and the completed work product, and shall bear the liability for compensation if such materials or the work product are destructed, damaged or lost owing to his inappropriate maintenance thereof.
A contractor shall keep confidential the relevant information in accordance with the requirements of the client and, without the latter's permission, may not retain copies or technical data thereof.
Co-contractors shall bear joint and several liabilities to the client, unless otherwise agreed by the parties.
The client may rescind the work contract at any time before the contractor completes his work, provided that he shall bear the liability for compensating any loss thus caused to the contractor.
Chapter XVIII
Contracts for Construction Project
A contract for construction project is a contract under which a contractor carries out the construction of a project and the contract-offering party pays the price in return.
Contracts for construction project consist of contracts for project prospecting, designing, and construction.
A contract for construction project shall be made in writing.
Bidding for a construction project shall be carried out in an open, fair, and impartial manner in accordance with the provisions of the relevant laws.
A contract-offering party may conclude a contract for construction project with a general contractor, or conclude separate contracts for prospecting, designing, and construction with the prospecting, designing, and construction parties respectively. A contract-offering party may not break up one construction project that should be completed by one contractor into several parts and offer them to several contractors.
A general contractor or a prospecting, designing or construction contractor may, upon consent by the contract-offering party, entrust part of the contracted work with a third person. The third person shall assume joint and several liability with the general contractor or the prospecting, engineering, or construction contractor to the contract-offering party on the work product of the third person. A contractor may not delegate the whole of the contracted construction project to a third person or break up the contracted construction project into several parts and delegate them separately to third persons in the name of subcontracting.
A contractor is prohibited from subcontracting the contracted project to any entity without the corresponding qualifications. A subcontractor is prohibited from re-subcontracting the contracted project. The main structure of the construction project must be completed by the contractor itself.
Contracts for major construction projects of the State shall be concluded in accordance with the procedures set forth by the State and such documents as investment plans and feasibility study reports approved by the State.
Where a contract for construction project is invalid but the construction project has passed the inspection for acceptance, the contractor may be compensated with reference to the project price agreed in the contract and based on the appraised price of the construction project.
Where a contract for construction project is invalid and the construction project fails to pass the inspection for acceptance, it shall be dealt with in accordance with the following provisions:
⑴ where the construction project after being repaired has passed the inspection for acceptance, the contract-offering party may request the contractor to bear the repairing costs; or
(2) where the construction project after being repaired still fails to pass the inspection for acceptance, the contractor has no right to request for payment with reference to the project price agreed in the contract or based on the appraised price of the construction project.
Where a contract-offering party is at fault for the loss caused by the substandard of the construction project, he shall bear corresponding liabilities.
A prospecting or designing contract generally contains clauses specifying the time limit for submission of documents relating to the basic materials and budget, quality requirements, expenses and other cooperative conditions, and the like.
A construction contract generally contains clauses specifying the project scope, the period for construction, the time of commencement and completion of the project to be delivered in midcourse, project quality, costs, delivery time of technical materials, the responsibility for the supply of materials and equipment, fund allocation and settlement, project inspection and acceptance upon its completion, range and period of quality warranty, cooperation, and the like.
For any construction project to which a superintendence system is applied, the contract-offering party shall conclude an entrustment contract of superintendence in writing with the entrusted superintendent. The rights and obligations as well as the legal liabilities of the contract-offering party and the superintendent shall be defined in accordance with the provisions on entrustment contracts of this Book as well as the relevant provisions of other laws and administrative regulations.
The contract-offering party may, without disturbing the normal operation of the contractor, inspect the progress and quality of the work at any time.
Prior to the concealment of a concealed project, the contractor shall notify the contract-offering party to inspect it. If the contract-offering party fails to conduct an inspection in a timely manner, the contractor may extend the period for the completion of the project accordingly, and may request compensation for losses caused by the work stoppage, the workers' forced idleness, and the like.
Upon completion of a construction project, the contract-offering party shall promptly undertake the inspection for acceptance in accordance with the construction drawings and descriptions, as well as the rules of inspection and acceptance of construction projects and the standards for quality inspection issued by the State. Where the project passes the inspection for acceptance, the contract-offering party shall pay the agreed price and take over the construction project.
A construction project may be delivered and put into use only after it has passed the inspection for acceptance upon completion. Without being inspected or failing to pass the inspection, the construction project may not be delivered or put into use.
Where losses are caused to a contract-offering party due to the fact that the prospecting or designing does not conform to the quality requirements or that the prospecting or designing documents are not submitted as scheduled, so that the period for construction is delayed, the prospecting or designing party shall continue on perfecting the prospecting or designing, reduce or waive the prospecting or designing fees, and make compensation for the losses.
Where the quality of a construction project fails to conform to the contract due to a reason attributable to the constructor, the contract-offering party has the right to request the constructor to repair, rework, or reconstruct the project without further charge within a reasonable period of time. If delivery is delayed because of the repair, reworking, reconstruction, the constructor shall bear default liability.
Where a construction project causes personal injury and property damage due to a reason attributable to the contractor within a reasonable period of use of the project, the contractor shall bear the liability for compensation.
Article 803
Where a contract-offering party fails to provide raw materials, equipment, premises, funds, or technical materials at the agreed time and pursuant to the agreed requirements, the contractor may extend the period of construction accordingly and has the right to request compensation for the losses caused by work stoppage, and workers' forced idleness, and the like.
If a construction project is stopped or suspended in midcourse due to a reason attributable to the contract-offering party, the contract-offering party shall take measures to make up for the loss or mitigate the loss, and compensate the contractor for any losses caused and actual expenses incurred by work stoppage, workers' forced idleness, back transportation, transfer of machinery equipment, the backlog of materials and structural components, and the like.
Where a contract-offering party alters his plan, provides inaccurate materials, or fails to provide necessary working conditions for prospecting or designing as scheduled, thus causing the redoing or stoppage of the prospecting or designing work, or the revision of the design, the contract-offering party shall pay additional fees according to the amount of work actually undertaken by the prospecting or designing party.
Where a contractor delegates or illegally subcontracts the construction project to others, the contract-offering party may rescind the contract.
Where the main construction materials, construction components and accessories, and equipment provided by the contract-offering party fail to conform to the mandatory standard, or the contract-offering party fails to perform his obligations to provide assistance, so that the contractor cannot undertake the construction work, if the contract-offering party still fails to perform the corresponding obligations within a reasonable period of time after being demanded, the contractor may rescind the contract.
Where, after the contract is rescinded, the quality of the completed construction project is found to be up to standard, the contract-offering party shall make corresponding payment for the construction project in accordance with the agreement. If the quality of the completed construction project is found to be substandard, the provisions of Article 793 of this Code shall be applied mutatis mutandis.
Where a contract-offering party fails to pay the price in accordance with the agreement, the contractor may demand the contract-offering party to make the payment within a reasonable period of time. Where the contract-offering party still fails to pay the price upon expiration of the said period, the contractor may negotiate with the contract-offering party to appraise the construction project to satisfy the obligation, or request the people's court to sell the project through auction in accordance with law, unless the construction project is by its nature unsuitable for appraisal or auction. The payment for the construction of the project shall be satisfied, in priority, from the proceeds obtained from the appraisal or auction of the said project.
For matters not provided in this Chapter, the relevant provisions on work contracts shall be applied.
Chapter XIX
Transport Contracts
A transport contract is a contract under which a carrier transports a passenger or goods from the place of dispatch to a destination agreed by the parties, and the passenger, consignor, or consignee pays the fare or the freight.
Article 810
A carrier engaging in public transport may not reject an ordinary and reasonable transport request made by a passenger or consignor.
Article 811
A carrier shall safely transport a passenger or goods to a destination as agreed within the agreed or a reasonable period of time.
A carrier shall transport a passenger or goods to a destination as agreed via an agreed or a usual transport route.
A passenger, consignor, or consignee shall pay the fare or the freight. If a carrier does not transport via an agreed route or the usual route, thus increasing the fare or the freight, the passenger, consignor, or consignee may refuse to pay the extra fare or
freight.
A passenger transport contract is formed at the time when the carrier issues a ticket to the passenger, unless otherwise provided by the parties or in accordance with the course of dealing.
A passenger shall get on board pursuant to the time, the number of runs or flights, and the seat number indicated in the valid ticket. Any passenger who boards without a ticket, beyond the paid distance, in a higher class, or with a discounted ticket while he is unqualified therefor shall pay or make up for the difference in the ticket price, and the carrier may charge an extra fare according to the regulations. Where a passenger refuses to pay the fare accordingly, the carrier may refuse to transport him.
Where a passenger under a real-name passenger transport contract loses his ticket, he may request the carrier to report the loss and reissue a ticket, and the carrier shall not re-collect ticket fees or other unreasonable expenses.
A passenger who is unable to get on board at the time indicated in the ticket due to his own reason shall, within the period of time agreed by the parties, undergo the procedures for refund or change of the ticket. If the passenger fails to undergo the refund or change procedures within the agreed period of time, the carrier may refuse to refund the ticket, and no longer has the transport obligation.
The carry-on baggages of a passenger shall conform to the quantity limit and category requirement in accordance with the agreement. A passenger who carries baggages in excess of the quantity limit or in violation of the requirements for the category shall have the baggage checked in.
A passenger may not carry with him or secretly carry in his baggage any inflammable, explosive, toxic, corrosive, or radioactive articles, any other dangerous articles that might endanger the safety of persons and property aboard, nor any contraband articles.
Where a passenger violates the provisions of the preceding paragraph, the carrier may unload or destroy the dangerous or contraband articles or deliver them to the relevant departments. Where a passenger insists on carrying with him the dangerous articles or the contraband articles or carrying them in his baggage, the carrier shall refuse to transport him.
A carrier shall strictly fulfill his obligation of safe transport and timely notify passengers about matters of attention for a safe transport. A passenger shall actively assist in and be cooperative with the carrier with regard to the reasonable arrangements made for safe transport.
A carrier shall transport passengers at the time and in the number of runs or flights and seat number indicated in the valid ticket. Under circumstances where the transport is delayed or rendered out of a normal state, the carrier shall inform and remind the passenger in a timely manner, take necessary measures for arrangement, and, upon passengers' requests, arrange them to take other numbers of runs or flights or refund their tickets. The carrier shall bear the liability for compensation for any loss thus caused to the passenger, unless such loss is not attributable to the carrier.
A carrier who unilaterally downgrades the service standard shall, upon passengers' requests, refund their tickets or reduce the fare. A carrier who upgrades the service standard shall not charge extra fare.
A carrier shall, in the course of transportation, spare no effort to rescue and help a passenger who suffers an emergent disease, commence childbirth, or otherwise in danger.
A carrier shall bear the liability for compensation arising from the injury or death of a passenger occurring in the course of transportation, unless the injury or death is a result of the passenger's own health condition, or the carrier can prove that the injury or death is caused by the passenger's intentional or grossly negligent act.
The provisions of the preceding paragraph shall apply to any passenger exempted from ticket in accordance with the regulations, holding a complimentary ticket, or permitted by the carrier to travel without a ticket.
Where an article that the passenger carries with him is destructed, damaged, or lost in the course of transportation, the carrier shall bear the liability for compensation, if the carrier is at fault.
Where the passengers' checked-in baggages are destructed, damaged, or lost, the relevant provisions on the freight transport shall be applied.
Section 3
A consignor, when consigning goods for transport, shall clearly declare to the carrier the information necessary for freight transport such as the name or entity name of the consignee or the consignee by order, as well as the name, nature, weight and quantity of the goods, and the place of delivery.
If a loss is caused to the carrier due to the consignor's untrue declaration or omission of substantial information, the consignor shall bear the liability for compensation.
Where a freight transport is subject to approval or inspection, the consignor shall submit to the carrier the documents showing the completion of the relevant formalities.
A consignor shall package the goods in a manner as agreed by the parties. Where there is no agreement by the parties on the packaging manner or the agreement is unclear, the provisions of Article 619 of this Code shall be applied.
Where a consignor violates the provisions of the preceding paragraph, the carrier may refuse to conduct the transportation.
Where a consignor consigns for transportation such dangerous goods as inflammable, explosive, toxic, corrosive or radioactive articles, the consignor shall, in accordance with the regulations of the State on the transport of dangerous goods, properly package the dangerous goods, affix warning signs and labels thereto, and submit to the carrier written documents concerning the name, nature, and precautionary measures relevant to the dangerous goods.
Where a consignor violates the provisions of the preceding paragraph, the carrier may refuse to conduct the transport, or take appropriate measures to prevent losses, and the expenses thus incurred shall be borne by the consignor.
Before a carrier delivers the goods to the consignee, the consignor may ask the carrier to stop transportation, return the goods, change the place of destination, or deliver the goods to another consignee, provided that the consignor shall compensate for the losses thus caused to the carrier. Article 830
After the goods are transported to the place of destination, the carrier shall promptly notify the consignee where the carrier knows who is the consignee, and the consignee shall promptly take delivery of the goods. Where the consignee delays in taking delivery of the goods, the consignee shall pay storage and other fees to the carrier.
Upon taking delivery of the goods, a consignee shall inspect the goods within the time limit as agreed by the parties. Where there is no agreement between the parties on the time limit for inspection of the goods or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the consignee shall inspect the goods within a reasonable period of time. Where the consignee does not raise any objection on the quantity, destruction, damage, or loss of the goods within the agreed time limit or 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.
A carrier shall bear the liability for compensation for any destruction, damage, or loss of the goods occurring in the course of transport, except that the carrier shall not bear the liability for compensation if the carrier proves that the destruction, damage, or loss of the goods is caused by force majeure, the inherent nature of the goods, or reasonable wear and tear, or is caused by the negligence of the consignor or the consignee.
The amount of compensation for the destruction, damage, or loss of the goods shall be in accordance with the agreement between the parties if there is such an agreement. Where the agreement on the amount of compensation is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the amount of compensation shall be calculated based on the market price of the goods at the place of delivery at the time when the goods are delivered or should have been delivered. If there are laws or administrative regulations providing otherwise concerning the calculation method and the limit of the compensation amount, such provisions shall be followed.
Where two or more carriers engage in a connected transport of the same mode, the carrier who concludes the contract with the consignor shall be responsible for the entire transport. If a loss occurs at one section of the transportation, the carrier who concludes the contract with the consignor and the carrier in the said section shall assume joint and several liability.
Where the goods are lost in the course of transport due to force majeure, unless otherwise provided by law, the carrier may not request the payment of the freight if the freight has not yet been collected, and the consignor may request for a refund if the freight has already been collected.
If a consignor or consignee fails to pay freight, storage fees, or other expenses, the carrier has the right to retain the goods under a lien, unless otherwise agreed by the parties.
Where a consignee is unknown or the consignee refuses to take delivery of the goods without just cause, the carrier may have the goods placed in escrow in accordance with law.
Multi-modal Transport Contracts
An operator of multi-modal transport is responsible for performing or organizing the performance of a multi-modal transport contract, enjoys the rights and assumes the obligations of a carrier throughout the entire transport.
An operator of multi-modal transport may agree with the carriers of the different sections of the multi-modal transport on their respective responsibilities for transport in each section under the multi-modal transport contract, provided that such an agreement shall not affect the obligations of the operator for the entire transport.
An operator of multi-modal transport shall, upon receipt of the goods consigned for transport by the consignor, issue multi-modal transport documents. The multi-modal transport documents may be negotiable or non-negotiable, as requested by the consignor.
Where losses are caused to an operator of multi-modal transport due to the fault of a consignor at the time of consigning the goods for transport, the consignor shall bear the liability for compensation even if the consignor has transferred the multi-modal transport documents.
Where destruction, damage, or loss of goods occurs in one section of the multi-modal transport, the provisions of the relevant laws regulating the transport modes of the section shall apply to the liability for compensation to be assumed by the operator of multi-modal transport and the limits of the liability. Where the section of transport in which such destruction, damage, or loss has occurred cannot be determined, liability for compensation shall be borne in accordance with the provisions of this Chapter.
Chapter XX
Technology Contracts
A technology contract is a contract concluded by the parties to clarify their rights and obligations for technology development, transfer, licensing, consultation or service.
The conclusion of a technology contract shall be conducive to the protection of intellectual property rights and the advance of science and technology, and shall promote the research and development, transformation, application, and dissemination of the achievements in science and technology.
A technology contract generally contains clauses specifying the name of the project, the content, scope, and requirements of the object, the plan, place, and manner of performance, the confidentiality of technological information and materials, the ownership over the technological achievements and the method of proceeds distribution, the criteria and method of the inspection for acceptance, interpretation of terminologies, and the like.
Materials such as technological background information, the feasibility studies and technological evaluation reports, the project task paper and plans, technology standards, technology norms, original design and technical documents, as well as other technical documents which are relevant to the performance of the contract may, as agreed by the parties, be component parts of the contract.
Where a technology contract involves a patent, it shall indicate the designation of the invention, the applicant and the patentee thereof, the date of application, the application number, the patent number, and duration of the patent rights.
The method of payment for the price, remuneration, or royalty shall be agreed by the parties in a technology contract, and the payment may be made in a lump-sum or by installment based on one-time calculation, or based on the method of commission payment or such payment plus an upfront fee.
Where the parties agree to adopt a method of commission payment, the commission may be drawn at a specific percentage from the price of the product, the newly-increased output value and profits attained from the exploitation of patents and the utilization of technological know-how, or the sales revenue of the product, or be calculated by other methods as agreed by the parties. The said percentage may be a fixed percentage, or one that increases or decreases year by year.
Where the parties agree to adopt commission payment, they may specify the method for examining the relevant accounting books.
Where a right to use or transfer a work for hire belongs to a legal person or an unincorporated organization, the legal person or unincorporated organization may conclude a technology contract on the work for hire. Where the legal person or unincorporated organization concludes a technology contract to transfer the work for hire, the creator of the work for hire has right in priority to acquire it on equivalent conditions.
A work for hire is a technological achievement that is accomplished as a result of performing the tasks assigned by a legal person or unincorporated organization or that is accomplished mainly by using the material and technological resources of the said legal person or unincorporated organization.
The right to use or transfer of a technological work product other than a work for hire belongs to its creator who may conclude a technology contract on such work product.
An individual person who has accomplished a technological work product has the right to indicate on the relevant documents of the technological work product that he is the creator thereof, and to receive certificate of honor and rewards.
A technology contract that illegally monopolies technologies or infringes upon others technological work product is invalid.
Technology Development Contracts
A technology development contract is a contract concluded by the parties concerning the research and development of a new technology, product, technique, variety, or material, as well as the system thereof.
Technology development contracts consist of commissioned development contracts and cooperative development contracts.
A technology development contract shall be in writing.
The relevant provisions on the technology development contracts shall be applied mutatis mutandis to a contract concluded by the parties on the application and transformation of a technological product with a value for practical use.
Article 852
A client of a commissioned development contract shall pay for the research and development fees and the remunerations in accordance with the agreement, provide technological materials, make proposals for research and development, complete his tasks in the cooperative work, and accept the work product of the research and development.
A researcher-developer of a commissioned development contract shall work out and implement a research and development plan in accordance with the contract, make reasonable use of the research and development funds, complete the research and development work as scheduled, deliver the work product of research and development, provide relevant technological materials and necessary technological guidance so as to help the client comprehend the work product of the research and development.
Where a party to a commissioned development contract defaults, thus causing the stoppage, delay, or failure of the research and development work, the party shall bear default liability.
The parties to a cooperative development contract shall make investments in a form agreed by the parties, including contribution of the technology in investment, participation in the research and development work by performing their respective duties, and cooperation in the research and development.
Article 856
Where a party to a cooperative development contract defaults, thus causing the stoppage, delay, or failure of the research and development work, the party shall bear default liability.
Where a technology which is the object of a technology development contract is revealed to the public by others, thus rendering the performance of the contract meaningless, the parties may rescind the contract.
The parties to a technology development contract shall agree on the allocation of risks of insurmountable technological difficulties arising in the performance of the contract which causes total or partial failure of the research and development. Where there is no such a agreement between the parties or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the parties shall share the risks in a reasonable way.
Where a party finds that a situation specified in the preceding paragraph exists which may cause total or partial failure of the research and development, he shall promptly notify the other party and take appropriate measures to mitigate the loss. Where he fails to promptly inform the other party and take appropriate measures so that the loss is aggravated, he shall be liable for the aggravated part of the loss.
Where an invention is accomplished through commissioned development, the right to apply for patent thereof belongs to the researcher-developer, unless otherwise provided by law or agreed by the parties. Where the researcher-developer has obtained the patent right, the client may exploit the patent in accordance with law.
Where a researcher-developer is to transfer his right to apply for a patent, the client has a priority right to acquire the right on equivalent conditions.
Where an invention is accomplished through cooperative development, the right to apply for patent jointly belongs to all parties to the cooperative development. Where one party is to transfer the part of the joint patent application right he owns, the other parties have a priority right to acquire the right on equivalent conditions, unless otherwise agreed by the parties.
Where a party to a cooperative development waives the part of patent application right he owns, unless otherwise agreed by the parties, the other party may make the application, or the other parties may jointly make the application, as the case may be. Where the applicant(s) acquires the patent right, the party who has waived his right may exploit the patent free of charge.
Where one party to a cooperative development does not agree to apply for patent, the other party or parties may not apply therefor.
Article 861
The right to use and the right to transfer a work product containing technological know-how accomplished through commissioned development or cooperative development, as well as the method for distributing the proceeds thereof, shall be agreed by the parties. Where there is no such an agreement between the parties or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, all the parties have the right to use and transfer the said work product, as long as no patent right has been granted on a same technological solution, except that a researcher-developer of a commissioned development may not transfer the work product to a third person before he delivers it to the client.
Technology Transfer Contracts and Technology Licensing Contracts
A technology transfer contract is a contract under which a lawful right holder of a technology assigns to another person the relevant rights in respect of a specific patent, application for a patent, or technological know-how.
A technology licensing contract is a contract under which a lawful right holder of a technology authorizes another person to exercise the relevant rights to apply and exploit a specific patent or technological know-how.
The agreement in a technology transfer contract or a technology licensing contract on the provision of special equipment and raw materials for application of technology or on the provision of the relevant technology consultation and technology service is a component part of the contract.
Article 863
Technology transfer contracts include the contracts for the transfer of patent right, the contracts for transfer of the right to apply for a patent, the contracts for transfer of technological know-how, and the like.
Technology licensing contracts include the patent exploitation licensing contracts, technological know-how licensing contracts, and the like.
Technology transfer contracts and technology licensing contracts shall be in writing.
A technology transfer contract or a technology licensing contract may specify the scope to exploit the patent or to use the technological know-how, but may not restrict competition or development of the technologies.
Article 865
A patent exploitation licensing contract is valid only within the period during which the patent is valid. Where the term of the patent right expires or the patent right is declared invalid, the patentee may not conclude a patent exploitation licensing contract relating to the said patent with another person.
A licensor in a patent exploitation licensing contract shall permit the licensee to exploit the patent, deliver the technological materials related to the patent exploitation, and provide necessary technological guidance in accordance with the agreement.
A licensee in a patent exploitation licensing contract shall exploit the patent in accordance with the agreement, may not allow a third person outside the contract to exploit the patent, and shall pay the agreed royalties.
A transferor in a technological know-how transfer contract or a licensor in a technological know-how licensing contract shall, in accordance with the agreement, provide technological materials, give technological guidance, guarantee the practical applicability and reliability of the technology, and perform confidentiality obligations.
The confidentiality obligations provided in the preceding paragraph shall not restrict the licensor from applying for a patent, unless otherwise agreed by the parties.
A transferee in a technological know-how transfer contract or a licensee in a technological know-how licensing contract shall, in accordance with the agreement, exploit the technology, pay the transfer fee and royalties, and perform confidentiality obligations.
A transferor in a technological transfer contract or a licensor in a technological know-how licensing contract shall guarantee that he is the lawful owner of the technology provided therein, and guarantee that the technology provided is complete, errorless, effective, and capable of achieving the goal as agreed by the parties.
A transferee in a technology transfer contract or a licensee in a technological know-how licensing contract shall, in accordance with the scope and time limit agreed by the parties, perform his confidentiality obligation regarding the part of the technology provided by the transferor or licensor that have not been disclosed to the public.
A licensor who fails to license the technology in accordance with the agreement shall refund the royalties in part or in full and bear default liability. A licensor who exploits a patent or technological know-how beyond the agreed scope, or, without authorization, allows a third person to exploit the patent or utilize the technological know-how in breach of the agreement shall stop his breaching act and bear default liability. He shall bear default liability if he breaches the confidentiality obligation as agreed.
Where a transferor is liable for breach of contract, the provisions of the preceding paragraph shall be applied mutatis mutandis.
A licensee who fails to pay royalties in accordance with the agreement shall make up for the payment of royalties and pay the liquidated damages. Where the licensee fails to do so, he shall stop exploitation of the patent or utilization of the technological know-how, return the technological materials, and bear default liability. Where a licensee who exploits the patent or utilizes the technological know-how beyond the agreed scope, or allows a third person, without authorization, to exploit the patent or to utilize the technological know-how, he shall stop his breaching acts and bear default liability. The licensee who breaches the confidentiality obligation as agreed shall bear default liability.
The provisions of the preceding paragraph shall be applied mutatis mutandis to a transferee who shall bear default liability.
Where the exploitation of a patent or utilization of a technological know-how by the transferee or the licensee in accordance with the agreement infringes upon the lawful rights and interests of another person, the liability therefor shall be borne by the transferor or the licensor, unless otherwise agreed by the parties.
The parties may, in compliance with the principle of mutual benefit, agree in the contract the method for sharing any subsequently improved technological product obtained in exploitation of the patent or utilization of the technological know-how. Where there is no agreement on such method or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the subsequently improved technological product made by one party may not be shared by any other party.
The relevant provisions of this Section shall be applied mutatis mutandis to the transfer and licensing of the exclusive rights to layout-designs of integrated circuits, rights to new plant varieties, computer software copyrights, and other intellectual property rights, and the like.
Where there are laws or administrative regulations providing otherwise on contracts for technology import and export, or on contracts for patents and application of patents, the relevant provisions shall be followed.
Technology Consultation Contracts and Technology Service
A technology consultation contract is a contract under which one party uses his technological knowledge to provide to the other party the feasibility study, technological forecast, special technological investigation, and analysis and evaluation report on a specific technological project.
A technology service contract is a contract under which one party uses his technological knowledge to solve specific technological problems for the other party. Technology service contracts does not include work contracts or construction project contracts.
A client in a technology consultation contract shall, in accordance with the agreement, clarify the issues for consultation, provide technological background information and the related materials, accept the work product of the entrusted person, and pay remuneration.
The entrusted person in a technology consultation contract shall complete the consultation report or resolve the issues within the agreed time limit, and the consultation report submitted shall meet the requirements as agreed by the parties.
Where a client in a technology consultation contract fails to provide the necessary materials in accordance with the agreement thus affecting the progress and quality of the work, or if the client fails to accept the work product or delays the acceptance, he may not request refund for the paid remuneration and shall pay any unpaid remuneration.
An entrusted person in a technology consultation contract who fails to submit the consultation report as scheduled or submits a report failing to meet the requirements as agreed by the parties shall bear default liability in form of reduction or waiver of its remuneration, and the like.
Where a client in a technology consultation contract makes a decision in reliance upon the entrusted person’s consultation report and advice that meet the requirements as agreed by the parties, any losses thus caused shall be borne by the client, unless otherwise agreed by the parties.
Article 882
A client in a technology service contract shall, in accordance with the agreement, provide working conditions, perform the cooperative work, accept the work product, and pay remuneration.
An entrusted person in a technology service contract shall, in accordance with the agreement, complete the services, solve the technological issues, guarantee the quality of the work, and impart the knowledge for solving the technological problems.
Where a client to a technology service contract fails to perform his contractual obligations or performs his obligations in a manner inconsistent with the contract, thus affecting the progress and quality of the work, or fails to accept the work product or delays the acceptance, he may not request for refund of the paid remuneration, and shall pay any unpaid remuneration.
An entrusted person in a technology service contract who fails to complete the service work in accordance with the agreement shall bear default liability in such form as waiver of his remuneration, and the like.
Unless otherwise agreed by the parties, in the course of performance of a technology consultation contract or a technology service contract, the new technological product made by the entrusted person with technological materials and working conditions provided by the client belongs to the entrusted person. The new technological products made by the client based on the work product of the entrusted person belongs to the client.
Where there is no agreement in a technology consultation contract or a technology service contract on the bearing of the necessary expenses for the entrusted person to carry out the normal work, or the agreement is unclear, the said expenses shall be borne by the entrusted person.
Where there are laws or administrative regulations providing otherwise on technology intermediary contracts and technology training contracts, the relevant provisions shall be followed.
Chapter XXI
Contracts for Custody of Property
Article 888
A contract for custody of property is a contract under which a custodian keeps the article delivered by a depositor and returns the said article.
Where a depositor conducts shopping, dining, lodging, or other activities in the custodian’s place and deposits an article at a designated area, the article is deemed to be placed in the custodian’s custody unless otherwise agreed by the parties or required by the course of dealing.
A depositor shall pay the safekeeping fee to the custodian in accordance with the agreement.
Where there is no agreement between the parties on the safekeeping fee or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the article is deemed to be placed in a gratuitous custody.
A contract for custody of property is formed upon delivery of the article to be kept under custody, unless otherwise agreed by the parties.
Where a depositor delivers to a custodian an article to be kept under his custody, the custodian shall issue a safekeeping certificate, unless otherwise required by the course of dealing.
A custodian shall properly keep the deposited article.
The parties may agree on the place and method of safekeeping. Except in case of emergency or in the interests of the depositor, the place and method of safekeeping may not be changed without the other party’s consent.
Where a depositor delivers to a custodian an article to be kept under custody that has defects or needs special safekeeping measures based on its nature, he shall inform the custodian of the relevant information. Where the depositor fails to do so thus causing damage to the deposited article, the custodian shall not bear the liability for compensation. Where the custodian suffers a loss therefrom, the depositor shall be liable for compensation unless the custodian knows or should have known the situation but fails to take remedial measures.
A custodian may not re-deposit an article under his custody to a third person for safekeeping, unless otherwise agreed by the parties.
A custodian who re-deposits the article under his custody to a third person for safekeeping in violation of the preceding paragraph thus causing damage to the article shall bear the liability for compensation.
A custodian may not use or permit a third person to use the article under his custody, unless otherwise agreed by the parties.
Where a third person claims against an article under a custodian’s custody, the custodian shall perform the obligation of returning the article to the depositor, unless the said article is put under preservation or enforcement in accordance with law.
Where a third person initiates an action against the custodian or applies for detention of the article under the latter’s custody, the custodian shall promptly notify the depositor.
Where an article under custody is destructed, damaged, or lost due to improper keeping by the custodian during the period the article is under his custody, the custodian shall bear the liability for compensation, except that a custodian who keeps the deposited article free of charge shall not bear the liability for compensation if he can prove that the destruction, damage, or loss is not caused by his intentional or grossly negligent act.
A depositor shall declare to the custodian if he deposits money, negotiable securities, or other valuable articles, and the custodian shall examine them for acception, or seal them; where the depositor fails to make such a declaration, if the said article is destructed, damaged, or lost, the custodian may make compensation based on a rate for ordinary articles.
A depositor may collect the article he deposited in custody at any time.
Where there is no agreement between the parties on the period for the custody or the agreement is unclear, the custodian may, at any time, request the depositor to collect the article under his custody. Where there is an agreement on the period for the custody, without special cause, the custodian may not request the depositor to collect the article before such period expires.
Upon expiration of the period for custody or where the depositor collects the article he deposits in custody before expiration of such period, the custodian shall return the article and the proceeds accrued thereof to the depositor.
Where money is deposited in custody, the custodian may return the money in the same currency and amount. Where other fungible goods are deposited in custody, the custodian may return the goods of the same kind, quality, and quantity in accordance with the agreement .
Under a contract for non-gratuitous custody, the depositor shall pay the safekeeping fee to the custodian at a time agreed by the parties.
Where there is no agreement between the parties on the time limit for payment of the safekeeping fee or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the payment shall be made at the time the article under custody is collected.
Where a depositor fails to pay the safekeeping fee or the other expenses, the custodian has the right to retain the article under custody under a lien, unless otherwise agreed by the parties.
Chapter XXII
Warehousing Contracts
A warehousing contract is a contract under which a warehouser stores the goods delivered by the depositor for which the depositor pays the warehousing fee.
A warehousing contract is formed when there is a consensus of expression of intent between the warehouser and the depositor.
Where dangerous goods such as inflammable, explosive, toxic, corrosive, radioactive, or perishable articles are to be stored, the depositor shall state the nature of the said goods and provide relevant information thereof.
Where a depositor violates the provisions of the preceding paragraph, the warehouser may refuse to accept the goods for storage, or take appropriate measures to avoid losses, and the expenses thus incurred shall be borne by the depositor.
A warehouser that stores dangerous goods such as inflammable, explosive, toxic, corrosive, and radioactive articles shall have the corresponding warehousing conditions.
Article 907
A warehouser shall examine the goods before accepting them in accordance with the agreement. Where a warehouse, upon examining the goods, finds that the goods to be stored are inconsistent with the agreement, he shall promptly notify the depositor. A warehouser shall bear the liability for compensation if, after he has examined and accepted the stored goods, the goods are not in conformity with the agreement in terms of the types, quantity, or quality.
Upon delivering of the goods for storage by a depositor, the warehouser shall issue a document such as a warehouse receipt or entry.
A warehouser shall sign or stamp on a warehouse receipt. A warehouse receipt shall contain the following particulars:
⑴ the name or designation and domicile of the depositor;
(2) the type, quantity, quality, package, the number of pieces, and marks of the stored goods;
(3) the standard for damage and spoilage of the stored goods;
(4) the warehousing site;
(5) the warehousing period;
(6) the warehousing fee;
(7) the insured amount, term of insurance, and the designation of the insurer if the goods to be stored have been insured; and
(8) the name of the issuer and the place and date of issuance.
A warehouse receipt is a proof for collecting the stored goods. Where a warehouse receipt is endorsed by the depositor or a holder of the receipt, and is signed or stamped by the warehouser, the right to collect the stored goods may be assigned to another person.
A warehouser shall, upon request of the depositor or the holder of the warehouse receipt, allow the depositor or the holder to examine the stored goods or to take samples thereof.
Where a warehouser finds that the stored goods deteriorate or suffer from other damages, the warehouser shall promptly notify the depositor or the holder of the warehouse receipt.
Article 913
Where a warehouser finds that the stored goods deteriorate or suffer from other damages, which endangers the safety and the normal warehousing of the other stored goods, he shall demand the depositor or the holder of the warehouse receipt to despose of the goods when necessary. In case of emergency, a warehouser may make necessary disposal, but afterwards shall promptly notify the depositor or the holder of the warehouse receipt about the situation.
Where there is no agreement between the parties on the warehousing period or the agreement is unclear, the depositor or the holder of the warehouse receipt may collect the stored goods at any time, and the warehouser may, at any time, request the depositor to collect the stored goods, provided that a reasonable period of time necessary for preparations shall be given.
Upon expiration of the warehousing period, the depositor or the holder of the warehouse receipt shall collect the stored goods by presenting the warehouse receipt, warehouse entry, or the like. Where the depositor or the holder of the warehouse receipt delays in collecting the stored goods, additional warehousing fees shall be charged; where the goods are collected before expiration of the warehousing period, the warehousing fees shall not be reduced.
Where a depositor or a holder of the warehouse receipt fails to collect the stored goods upon expiration of the warehousing period, the warehouser may demand the depositor or the holder of the warehouse receipt 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 warehouser may have the warehoused goods placed in escrow.
If within the warehousing period, the stored goods are destructed, damaged, or lost due to improper warehousing by the warehouser, the depository shall bear the liability for compensation.
Where the deterioration or damage of the stored goods is due to the inherent nature of the goods, or because the goods are not packaged in accordance with the agreement, or because they are stored beyond a valid storage period, the warehouser shall not be liable for compensation.
For matters not provided in this Chapter, the relevant provisions on the contracts for custody of property shall be applied.
Chapter XXIII
Entrustment Contracts
An entrustment contract is a contract under which a principal and an agent agree that the agent shall handle the matters for the principal.
A principal may specifically entrust an agent to handle one or several matters, and may also generally entrust an agent to handle all matter of his.
A principal shall pay in advance the expenses for handling the entrusted matter. Where an agent pays for the principal necessary expenses in handling an entrusted matter, the principal shall reimburse the expenses with interest.
An agent shall handle the entrusted matter in accordance with the instructions given by the principal. Where it is necessary to modify such instructions, the modification shall be consented to by the principal; where the situation is emergent and it is difficult to obtain the principal’s consent, the agent shall properly handle the entrusted matter, and shall, afterwards, promptly inform the principal of the situation.
An agent shall handle the entrusted matter in person. With the consent of the principal, an agent may sub-entrust it to a third person. Where the sub-entrustment is consented to or ratified by the principal, the principal may directly instruct the sub-entrusted third person on an entrusted matter, and the agent shall only be liable for the selection of the third person and for the instructions given by himself to the third person. If the sub-entrustment is not consented to or ratified by the principal, the agent shall be liable for an act done by the sub-entrusted third person, unless the sub-entrustment is for protecting the interests of the principal in case of emergency.
An agent shall, upon request of the principal, report on the situation of the entrusted matter. Upon termination of the entrustment contract, an agent shall report on the result of the entrusted matter.
Where an agent, acting within the scope of authority granted by the principal, concludes a contract with a third person in his own name, if the third person is aware of the agency relationship between the agent and the principal, the said contract shall directly bind the principal and the third person, unless there is definite evidence
establishing that the said contract binds only the agent and the third person.
Where a contract is concluded by an agent in his own name with a third person who is not aware of the agency relationship between the agent and the principal, if the agent fails to perform his obligations owed to the principal because of the third person, the agent shall disclose the third person to the principal, and the principal may then exercise the right of the agent against the third person, unless the third person would not have concluded the contract if he has been aware of the existence of the principal at the time of concluding the contract.
Where an agent fails to perform his obligations owed to a third person because of the principal, the agent shall disclose the principal to the third person, and the third person may then claim his rights against either the agent or the principal as a counterparty, except that he may not change the counterparty once he has made the selection.
Where a principal exercises the right of the agent against the third person, the third person may claim the defense he has against the agent against the principal. Where the third person elects the principal as the counterparty, the principal may claim against the third person the defense he has against the agent, as well as the agent's defense against the third person.
An agent shall hand over to the principal any property acquired in handling the entrusted matter.
When an agent has accomplished the entrusted matter, the principal shall pay remuneration to the agent in accordance with the agreement.
Where an entrustment contract is rescinded or the entrusted matter cannot be accomplished due to a cause not attributable to the agent, the principal shall pay corresponding remuneration to the agent, unless otherwise agreed by the parties.
Under a non-gratuitous entrustment contract, where losses are caused to the principal due to the agent’s fault, the principal may request compensation. Under a gratuitous entrustment contract, where losses are caused to the principal by the agent’s intentional act or by his gross negligence, the principal may request for compensation.
Where an agent acts beyond authorization thus causing losses to the principal, the agent shall make compensation.
Where an agent suffers a loss in handling the entrusted matter due to a cause not attributable to himself, he may request compensation from the principal.
Article 931
A principal may, with consent of the agent, authorize a third person other than the agent to handle the entrusted matter. If a loss is thus caused to the agent, the agent may request compensation from the principal.
Where two or more agents jointly handle an entrusted matter, they shall bear joint and several liabilities to the principal.
A principal or an agent may rescind the entrustment contract at any time. Where rescission of the contract by a party causes losses to the other party, the party rescinding a gratuitous entrustment contract shall compensate for the direct loss caused by the rescission at an improper time, and the party rescinding a non-gratuitous entrustment contract shall compensate for the direct loss and the expected profit obtainable if the contract has been performed, unless the loss is caused by a reason not attributable to the rescinding party.
An entrustment contract shall terminate where the principal dies or is terminated, or if the agent dies, loses capacity for performing civi juristic acts, or is terminated, unless otherwise agreed by the parties or it is inappropriate to terminate the contract based on the nature of the entrusted matter.
Where the termination of an entrustment contract which is resulted from the death, declared bankruptcy, or declared dissolution of the principal will harm the interests of the principal, the agent shall continue to handle the entrusted matter untill the heir, administrator of estate, or the liquidator of the principal takes it over.
Where an entrustment contract is terminated owing to the death, loss of capacity for performing civil juristic acts, declared bankruptcy or dissolution of the agent, the heir, administrator of estate, legal representative, or liquidator of the agent shall promptly notify the principal. Where the termination of the entrustment contract will harm the interests of the principal, the heir, administrator of estate, legal representative, or liquidator of the agent shall take necessary measures before the principal takes remedial measures.
Chapter XXIV
Contracts for Property Management Service
Article 937
A contract for property management service is a contract under which a property management service provider provides to the property owners with property management services within the service area, such as repair and maintenance of buildings and the auxiliary facilities thereof, the management and maintenance of the environmental hygiene, keeping the order, and like, and the property owners pay property management fees in return.
Property management service providers include property management service enterprises and other managers.
A property management service contract generally contains clauses specifying the contents of the services, the service quality, the rates and the collection methods of the service fee, the use of the maintenance funds, the management and use of the service premises, the term of service, the service handover, and the like.
A commitment of service made publicly by a property management service provider in favor of the property owners shall be a component part of the property management service contract.
A property management service contract shall be in writing.
A preliminary property management service contract concluded between a developer and a property management service provider in accordance with law, or a property management service contract concluded by an owners5 committee and a property management service provider selected and hired in the owners5 assembly in accordance with law are legally binding on the owners.
Where, prior to expiration of the service term as agreed in a preliminary contract for property management service concluded between a developer and a property management service provider in accordance with law, a contract for property management service concluded by the owners’ committee or the owners and a new property management service provider becomes effective, and the preliminary contract for property management service shall be terminated.
Where a property management service provider authorizes a specialized service entity or any other third person to handle some specialized services in the property management service area, the property management service provider shall be responsible to the owners in terms of the specialized services.
A property management service provider shall not delegate to a third person all the property management services it is obligated to provide, or divide the property management services and delegate each to a third person.
Article 942
A property management service provider shall, in accordance with the contract and the nature of the use of the property, properly repair, maintain, clean, grow plant, and manage the common space of the property management service area co-owned by the owners, maintain the basic order in the property management service area, and take reasonable measures to protect the owners5 personal and property safety.
For any violation of the relevant laws and regulations on public security, environmental protection, fire protection, and the like, in the property management service area, the property management service provider shall, in a timely manner, take reasonable measures to stop the violation, make a report to the competent departments, and render assistance in its handling.
A property management service provider shall, in a reasonable manner, regularly disclose to the owners and report to the owners’ assembly and the owners' committee on its services, the responsible personnel, the quality requirements, the items that a fee is charged, the rate of the fee, the performance of obligations, use of the maintenance funds, and the management and income generated from using the common space co-owned by the owners, and the like.
An owner shall pay property management fees to the property management service provider in accordance with the agreement. Where a property management service provider has provided services in accordance with the agreement and the relevant regulations, an owner shall not refuse to pay the property management fees on the ground that he has not accepted or need not accept the relevant property management service.
Where an owner fails to pay the property management fees within the agreed period in breach of the agreement, the property management service provider may demand his payment within a reasonable period of time; if the owner still fails to make payment within the said period, the property management service provider may initiate a legal action or apply for arbitration.
The property management service provider may not collect the property management fees by such means as shutting off power, water, heat, or gas.
Where an owner decorates or remodels the unit he owns in a building, he shall notify the property management service provider in advance, follow the reasonable rules provided by the property management service provider, and cooperate with the property management service provider in necessary onsite inspection.
If an owner transfers or leases the unit exclusively owned by him within a building, creates a right of habitation therein, or changes the use of the common space in accordance with law, he shall timely inform the property management service provider of the relevant situation.
Article 946
Where the owners jointly decide to dismiss the property management service provider in accordance with the statutory procedure, the contract for property management service may be rescinded. In such a case, the property management service provider shall be notified in writing 60 days in advance, unless otherwise agreed by the parties.
If rescission of the contract in accordance with the preceding paragraph causes loss to the property management service provider, the owners shall compensate for the loss, unless the loss is incurred by a cause not attributable to the owners.
Where the owners jointly decide to continue employing a property management service provider before expiration of the service term, they shall renew the contract with the original property management service provider before expiration of the term of the contract.
Before expiration of the service term, where a property management service provider does not consent to continued employment, it shall notify the owners or the owners' committee in writing 90 days before expiration of the term of the contract, unless otherwise agreed by the parties.
Where, upon expiration of the property management service term, the owners fail to make a decision in accordance with law to continue employing the original service provider or to employ another service provider, if the property management service provider continues to provide property management services, the original contract for property management service shall continue to be valid, except that it becomes one with an indefinite term.
Either party may rescind such a contract for property management service at any time, provided that the other party shall be notified in writing 60 days in advance.
Upon termination of a contract for property management service, the original property management service provider shall vacate the property management service area within the agreed time or a reasonable period of time, surrender the property service premises, the related facilities, and the relevant materials necessary for property management service, and the like, to the owners' committee, the owners who decide to exercise management themselves, or the person designated by them, cooperate with the new property management service provider in effectively conducting handover work, and truthfully disclose the information regarding the use and management of the property.
The original property management service provider who violates the provisions of the preceding paragraph shall not request the owners to pay the property management fee after the termination of the contract for property management service, and shall bear the liability for compensation if loss is caused to the owners.
Article 950
After a contract for property management service is terminated and before the handover to the new property management service provider selected by the owners or the owners' assembly or to the owners who decide to exercise management by themselves, the original property management service provider shall continue to provide property management services, and may request the owners to pay the property management fee during this period.
Chapter XXV
Brokerage Contracts
A brokerage contract is a contract under which a broker in his own name engages in trade activities for a client who pays remuneration in return.
The expenses incurred by a broker in handling the entrusted matters shall be borne by the broker, unless otherwise agreed by the parties.
Where a broker possesses the commissioned article, the broker shall properly keep it.
If the commissioned article has a defect at the time when they are delivered to a broker, or if it is perishable, the broker may dispose of the article upon his client’s consent; if the broker is unable to make prompt contact with the client, the broker may dispose of the article in a proper manner.
Where a broker sells an article at a price lower than the price set by the client, or buys an article at a price higher than the price set by the client, the broker shall obtain the consent of the client; where such a deal is made without the consent of the client and the broker makes up for the price difference, the said deal is binding on the client.
Where a broker sells an article at a price higher than the price set by the client or buys an article at a price lower than the price set by the client, remuneration may be increased in accordance with the agreement. Where there is no such an agreement or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the benefit shall belong to the client.
Where a client has given a special instruction on the price of an article, the broker may not sell or buy it contrary to the said instruction.
Where a broker buys or sells a commodity with a market price, unless otherwise indicated by the client, the broker himself may serve as a buyer or a seller.
Despite the situation provided in the preceding paragraph, the broker may still request the client to pay remuneration.
Where a broker buys a commissioned article in accordance with the contract, the client shall accept the article in a timely manner. Where, after being demanded by the broker, the client refuses to accept the article without just cause, the broker may have the commissioned article placed in escrow in accordance with law.
Where a commissioned article cannot be sold or the client withdraws from the commissioned sale, if the client, after being demanded by the broker, fails to take back or dispose of the said article, the broker may have the commissioned article placed in escrow in accordance with law.
A broker who concludes a contract with a third person shall directly enjoy the rights and assume the obligations under the said contract.
Where a third person fails to fulfill the contractual obligation thus causing losses to the client, the broker shall bear the liability for compensation, unless otherwise agreed by the broker and the client.
Where a broker has accomplished the entrusted matter in full or in part, the client shall pay remuneration accordingly. Where a client fails to pay remuneration as scheduled, the broker has the right to retain the commissioned article under a lien unless otherwise agreed by the parties.
For matters not provided in this Chapter, the relevant provisions on entrustment contracts shall be applied mutatis mutandis.
Chapter XXVI
Intermediary Contracts
Article 961
An intermediary contract is a contract under which a middleman reports to the client the opportunity for concluding a contract or provides intermediary services for the conclusion of a contract, for which the client pays remuneration.
The middleman shall truthfully report to the client matters related to the conclusion of the contract.
Where a middleman intentionally conceals important facts in relation to the conclusion of the contract or provides untrue information thereof, thus harming the interests of the client, he may not request for remuneration and shall bear the liability for compensation.
Where a middleman contributes to the conclusion of a contract, the client shall pay remuneration in accordance with the agreement. Where there is no agreement between the parties on the remuneration for the middleman or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the remuneration shall be reasonably determined in accordance with the middleman's services. Where the intermediary services provided by the middleman facilitates the conclusion of a contract, the parties to the said contract shall equally share the disbursement of the remuneration to the middleman.
In facilitating the conclusion of a contract, the expenses incurred in the intermediary activities shall be borne by the middleman.
Where a middleman fails to facilitate the conclusion of a contract, he may not request the payment of remuneration, but may request the client to pay for the necessary expenses incurred in the intermediary activities in accordance with the agreement.
Where a client, after accepting the services of the middleman, uses the trading opportunity or intermediary services provided by the middleman to bypass the middleman and directly concludes a contract with another person, the client shall pay remuneration to the middleman.
For matters not provided in this Chapter, the relevant provisions on entrustment contracts shall be applied mutatis mutandis.
Chapter XXVII
Partnership Contracts
A partnership contract is an agreement between two or more partners to share benefits and assume risks for a joint enterprise.
A partner shall fulfill his obligation to contribute capital in accordance with the method, amount, and time limit for payment in accordance with the agreement.
The capital contributions made by the partners and the proceeds thereof and other property acquired in accordance with law in the course of the partnership business are partnership property.
A partner may not request partition of the partnership property prior to the termination of the partnership contract.
A partner who makes a decision on the partnership businesses shall obtain unanimous consent of all the partners, unless otherwise agreed in the partnership contract.
The partnership businesses shall be jointly managed by all partners. One or more partners may be authorized to manage the partnership business in accordance with the partnership contract or the decision made by all partners; and the other partners shall cease to manage the partnership business, except that they have the right to supervise the management.
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