Chinese contract law
In its structure, Chinese contract law is similar to the German. Contracts come into existence through offer and acceptance. Different from Anglo-American law, there are no rules of consideration in contract law. However, according to prevailing opinion, China does not recognize a formal "Abstraktionsprinzip” as in German law.
The principle of Freedom of Contract is generally speaking respected. Especially in the case of contracts with foreign connections, the parties are free to choose the governing law. Special contract laws, which were quite common in the early phase of the Chinese economic reform and opening-up, are now practically only relevant to JV contracts.
In practice, most Chinese contracts are rather short and with incomplete details. But this can also be different, especially in cross-border transactions. The use of general terms and conditions (GTC) is possible, but in fact rather unusual.
However, should the use of GTC be desired in China, it should be noted that the Chinese contract law provides for stricter restrictions and controls on GTC than German law. Furthermore, China has so far lacked detailed legal regulations and court decisions on the application of GTC, in particular for conflicting GTC.
Furthermore, under the Chinese contract law, GTC are only incorporated into the binding contract if the GTC provider respects the principle of equity and informs the other party in a reasonable manner of the terms that exclude or limit its liability. At the request of the other party, the provider must explain the clause in question. It is definitely advisable to send the GTC in writing before concluding the contract and to obtain a written confirmation of receipt.
Based on above observations, we recommend negotiating individual contractual terms with Chinese business partners.
Our consulting services concerning contract law include:
- Drafting and negotiation of all types of contracts