BIZCHINA / Company laws

Contract Law of the People's Republic of China

Updated: 2006-04-17 10:00

Article 116 Where the parties to a contract agree on both breach of contract damages and a deposit, when one party violates the contract, the other party may choose to apply the breach of contract damages clause or the deposit clause.

Article 117 In case that a contract is not able to be performed because of force majeure, the liabilities shall be exempted in part or wholly in light of the effects of force majeure, except as otherwise stipulated by law. If the force majeure occurs after one party has delayed in performance, the liability may not be exempted.

Force majeure as referred to in this Law means the objective circumstances that are unforeseeable, unavoidable and insurmountable.

Article 118 One party to a contact that is not able to perform the contract because of force majeure shall make a notice to the other party promptly so as to reduce the probable losses to the other party and provide evidence within a reasonable time limit.

Article 119 After one party violates a contract, the other party shall take proper measures to prevent from the enlargement of losses; if the other party fails to take proper measures so that the losses are enlarged, it may not claim any compensation as to the enlarged losses.

The reasonable expenses paid by the party to prevent from the enlargement of losses shall be borne by the party in breach.

Article 120 In case that both parties violate a contract, they shall bear the liabilities respectively.

Article 121 One party that violates the contract because of a third party shall be liable for the breach of contract to the other party.

The disputes between the said party and the third party shall be settled according to law or their agreement.

Article 122 In case that the breach of contract by one party infringes upon the other party's personal or property rights, the aggrieved party shall be entitled to choose to claim the assumption by the violating and infringing party of liabilities for breach of contract according to this Law, or to claim the assumption by the violating and infringing party of liabilities for infringement according to other laws.


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