Contract Law of the People's Republic of China
Updated: 2006-04-17 10:00 Article 111 If the quality fails to satisfy the terms of the contract, the
breach of contract damages shall be borne according to the terms of the contract
agreed upon by the parties. If there is no agreement in the contract on the
liability for breach of contract or such agreement is unclear, nor can it be
determined in accordance with the provisions of Article 61 of this Law, the
damaged party may, in light of the character of the object and the degree of
losses, reasonably choose to request the other party to bear the liabilities for
the breach of contract such as repairing, substituting the goods, or reducing
the price or remuneration.
Article 112 Where one party to a contract fails to perform the contract
obligations or its performance fails to satisfy the terms of the contract, the
party shall, after performing its obligations or taking remedial measures,
compensate for the losses, if the other party suffers from other losses.
Article 113 Where one party to a contract fails to perform the contract
obligations or its performance fails to satisfy the terms of the contract and
causes losses to the other party, the amount of compensation for losses shall be
equal to the losses caused by the breach of contract, including the interests
receivable after performance of the contract, provided not exceeding the
probable losses caused by the breach of contract which has been foreseen or
ought to be foreseen when the party in breach concludes the contract.
The business operator who commits default activities in providing to the
consumer any goods or service shall be liable for paying compensation for
damages in accordance with the Law of the People's Republic of China on the
Protection of Consumer Rights and Interests.
Article 114 The parties to a contract may agree that one party shall, when
violating the contract, pay breach of contract damages of certain amount in
light of the breach, or may agree upon the calculating method of compensation
for losses resulting from the breach of contract.
If the agreed breach of contract damages are lower than the losses caused,
any party may request the people's court or an arbitration institution to
increase it; if it is excessively higher than the losses caused, any party may
request the people's court or an arbitration institution to make an appropriate
reduction.
If the parties to a contract agree upon breach of contract damages in respect
to the delay in performance, the party in breach shall perform the debt
obligations after paying the breach of contract damages.
Article 115 The parties to a contract may, according to the Guaranty Law of
the People's Republic of China, agree that one party pays a deposit to the other
party as the guaranty for the creditor's rights. After the debt obligations are
performed by the obligor, the deposit shall be returned or offset against the
price. If the party that pays the deposit fails the perform the agreed debt
obligations, it shall have no right to reclaim the deposit. If the party that
receives the deposit fails to perform the agreed debt obligations, it shall
return twice the amount of the deposit.
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