• Maritime Code of the People's Republic of China

    2012-11-29

    (Adopted at the 28th Meeting of the Standing Committee of the Seventh National People's Congress on November 7, 1992 and promulgated by Order No.64 of the President of the People's Republic of China on November 7, 1992)   Contents   Chapter I General Provisions   Chapter II Ships    Section 1 Ownership of Ships    Section 2 Mortgage of Ships    Section 3 Maritime Liens   Chapter III Crew    Section 1 Basic Principles    Section 2 The Master   Chapter IV Contract of Carriage of Goods by Sea    Section 1 Basic Principles    Section 2 Carrier's Responsibilities    Section 3 Shipper's Responsibilities    Section 4 Transport Documents    Section 5 Delivery of Goods    Section 6 Cancellation of Contract    Section 7 Special Provisions Regarding Voyage Charter Party    Section 8 Special Provisions Regarding Multimodal Transport Contract   Chapter V Contract of Carriage of Passengers by Sea   Chapter VI Charter Parties    Section 1 Basic Principles    Section 2 Time Charter Party    Section 3 Bareboat Charter Party   Chapter VII Contract of Sea Towage   Chapter VIII Collision of Ships   Chapter IX Salvage at Sea   Chapter X General Average   Chapter XI Limitation of Liability for Maritime Claims   Chapter XII Contract of Marine Insurance    Section 1 Basic Principles    Section 2 Conclusion, Termination and Assignment of Contract    Section 3 Obligations of the Insured    Section 4 Liability of the Insurer    Section 5 Loss of and Damage to the Subject Matter Insured and Abandonment    Section 6 Payment of Indemnity   Chapter XIII Limitation of Time   Chapter XIV Application of Law in Relation to Foreign-related Matters   Chapter XV Supplementary Provisions   Chapter I   General Provisions   Article 1 This Code is enacted with a view to regulating the relations arising from maritime transport and those pertaining to ships, to securing and protecting the legitimate rights and interests of the parties concerned, and to promoting the development of maritime transport, economy and trade.   Article 2 "Maritime transport" as referred to in this Code means the carriage of goods and passengers by sea, including the sea-river and river-sea direct transport.   The provisions concerning contracts of carriage of goods by sea as contained in Chapter IV of this Code shall not be applicable to the maritime transport of goods between the ports of the People's Republic of China.   Article 3 "Ship" as referred to in this Code means sea-going ships and other mobile units, but does not include ships or craft to be used for military or public service purposes, nor small ships of less than 20 tons gross tonnage.   The term "ship" as referred to in the preceding paragraph shall also include ship's apparel.   Article 4 Maritime transport and towage services between the ports of the People's Republic of China shall be undertaken by ships flying the national flag of the People's Republic of China, except as otherwise provided for by laws or administrative rules and regulations.   No foreign ships may engage in the maritime transport or towage services between the ports of the People's Republic of China unless permitted by the competent authorities of transport and communications under the State Council.   Article 5 Ships are allowed to sail under the national flag of the People's Republic of China after being registered, as required by law, and granted the nationality of the People's Republic of China.   Ships illegally flying the national flag of the People's Republic of China shall be prohibited and fined by the authorities concerned.   Article 6 All matters pertaining to maritime transport shall be administered by the competent authorities of transport and communications under the State Council. The specific measures governing such administration shall be worked out by such authorities and implemented after being submitted to and approved by the State Council.   Chapter II   Ships   Section 1   Ownership of Ships   Article 7 The ownership of a ship means the shipowner's rights to lawfully possess, utilize, profit from and dispose of the ship in his ownership.   Article 8 With respect to a State-owned ship operated by an enterprise owned by the whole people having a legal person status granted by the State, the provisions of this Code regarding the shipowner shall apply to that legal person.   Article 9 The acquisition, transference or extinction of the ownership of a ship shall be registered at the ship registration authorities; no acquisition, transference or extinction of the ship's ownership shall act against a third party unless registered.   The transference of the ownership of a ship shall be made by a contract in writing.   Article 10 Where a ship is jointly owned by two or more legal persons or individuals, the joint ownership thereof shall be registered at the ship registration authorities. The joint ownership of the ship shall not act against a third party unless registered.   Section 2   Mortgage of Ships   Article 11 The right of mortgage with respect to a ship is the right of preferred compensation enjoyed by the mortgagee of that ship from the proceeds of the auction sale made in accordance with law where and when the mortgagor fails to pay his debt to the mortgagee secured by the mortgage of that ship.   Article 12 The owner of a ship or those authorized thereby may establish the mortgage of the ship.   The mortgage of a ship shall be established by a contract in writing.   Article 13 The mortgage of a ship shall be established by registering the mortgage of the ship with the ship registration authorities jointly by the mortgagee and the mortgagor. No mortgage may act against a third party unless registered.   The main items for the registration of the mortgage of a ship shall be:   (1) Name or designation and address of the mortgagee and the name or designation and address of the mortgagor of the ship;   (2) Name and nationality of the mortgaged ship and the authorities that issued the certificate of ownership and the certificate number thereof;   (3) Amount of debt secured, the interest rate and the period for the repayment of the debt.   Information about the registration of mortgage of ships shall be accessible to the public for enquiry.   Article 14 Mortgage may be established on a ship under construction.   In registering the mortgage of a ship under construction, the building contract of the ship shall as well be submitted to the ship registration authorities.   Article 15 The mortgaged ship shall be insured by the mortgagor unless the contract provides otherwise. In case the ship is not insured, the mortgagee has the right to place the ship under insurance coverage and the mortgagor shall pay for the premium thereof.   Article 16 The establishment of mortgage by the joint owners of a ship shall, unless otherwise agreed upon among the joint owners, be subject to the agreement of those joint owners who have more than two thirds of the shares thereof.   The mortgage established by the joint owners of a ship shall not be affected by virtue of the division of ownership thereof.   Article 17 Once a mortgage is established on a ship, the ownership of the mortgaged ship shall not be transferred without the consent of the mortgagee.   Article 18 In case the mortgagee has transferred all or part of his right to debt secured by the mortgaged ship to another person, the mortgage shall be transferred accordingly.   Article 19 Two or more mortgages may be established on the same ship. The ranking of the mortgages shall be determined according to the dates of their respective registrations.   In case two or more mortgages are established, the mortgagees shall be paid out of the proceeds of the auction sale of the ship in the order of registration of their respective mortgages. The mortgages registered on the same date shall rank equally for payment.   Article 20 The mortgages shall be extinguished when the mortgaged ship is lost. With respect to the compensation paid from the insurance coverage on account of the loss of the ship, the mortgagee shall be entitled to enjoy priority in compensation over other creditors.   Section 3   Maritime Liens   Article 21 A maritime lien is the right of the claimant, subject to the provisions of Article 22 of this Code, to take priority in compensation against shipowners, bareboat charterers or ship operators with respect to the ship which gave rise to the said claim.   Article 22 The following maritime claims shall be entitled to maritime liens:   (1) Payment claims for wages, other remuneration, crew repatriation and social insurance costs made by the Master, crew members and other members of the complement in accordance with the relevant labour laws, administrative rules and regulations or labour contracts;   (2) Claims in respect of loss of life or personal injury occurred in the operation of the ship;   (3) Payment claims for ship's tonnage dues, pilotage dues, harbour dues and other port charges;   (4) Payment claims for salvage payment; and   (5) Compensation claims for loss of or damage to property resulting from tortious act in the course of the operation of the ship.   Compensation claims for oil pollution damage caused by a ship carrying more than 2,000 tons of oil in bulk as cargo that has a valid certificate attesting that the ship has oil pollution liability insurance coverage or other appropriate financial security are not within the scope of sub-paragraph(5) of the preceding paragraph.   Article 23 The maritime claims set out in paragraph 1 of Article 22 shall be satisfied in the order listed. However, any of the maritime claims set out in sub-paragraph(4) arising later than those under sub-paragraph (1) through (3) shall have priority over those under sub-paragraph (1) through (3).In case there are more than two maritime claims under sub-paragraphs (1),(2),(3) or (5) of paragraph 1 of Article 22, they shall be satisfied at the same time regardless of their respective occurrences; where they could not be paid in full, they shall be paid in proportion. Should there be more than two maritime claims under sub-paragraph (4), those arising later shall be satisfied first.   Article 24 The legal costs for enforcing the maritime liens, the expenses for preserving and selling the ship, the expenses for distribution of the proceeds of sale and other expenses incurred for the common interests of the claimants, shall be deducted and paid first from the proceeds of the auction sale of the ship.   Article 25 A maritime lien shall have priority over a possessory lien, and a possessory lien shall have priority over ship mortgage.   The possessory lien referred to in the preceding paragraph means the right of the ship builder or repairer to secure the building or repairing cost of the ship by means of detaining the ship in his possession when the other party to the contract fails in the performance thereof. The possessory lien shall be extinguished when the ship builder or repairer no longer possesses the ship he has built or repaired.   Article 26 Maritime liens shall not be extinguished by virtue of the transfer of the ownership of the ship, except those that have not been enforced within 60 days of a public notice on the transfer of the ownership of the ship made by a court at the request of the transferee when the transfer was effected.   Article 27 In case the maritime claims provided for in Article 22 of this Code are transferred, the maritime liens attached thereto shall be transferred accordingly.   Article 28 A maritime lien shall be enforced by the court by arresting the ship that gave rise to the said maritime lien.   Article 29 A maritime lien shall, except as provided for in Article 26 of this Code, be extinguished under one of the following circumstances:   (1) The maritime claim attached by a maritime lien has not been enforced within one year of the existence of such maritime lien;   (2) The ship in question has been the subject of a forced sale by the court; or   (3) The ship has been lost.   The period of one year specified in sub-paragraph (1) of the preceding paragraph shall not be suspended or interrupted.   Article 30 The provisions of this Section shall not affect the implementation of the limitation of liability for maritime claims provided for in Chapter Xl of this Code.   Chapter III   Crew   Section 1   Basic Principles   Article 31 The term "crew" means the entire complement of the ship, including the Master.   Article 32 The Master, deck officers, chief engineer, engineers, electrical engineer and radio operator must be those in possession of appropriate certificates of competency.   Article 33 Chinese "crew" engaged in international voyages must possess Seaman's Book and other relevant certificates issued by the harbour superintendency authorities of the People's Republic of China.   Article 34 In the absence of specific stipulations in this Code as regards the employment of the crew as well as their labour-related rights and obligations, the provisions of the relevant laws and administrative rules and regulations shall apply.   Section 2   The Master   Article 35 The Master shall be responsible for the management and navigation of the ship.   Orders given by the Master within the scope of his functions and powers must be carried out by other members of the crew, the passengers and all persons on board.   The Master shall take necessary measures to protect the ship and all persons on board, the documents, postal matters, the goods as well as other property carried.   Article 36 To ensure the safety of the ship and all persons on board, the Master shall be entitled to confine or take other necessary measures against those who have committed crimes or violated laws or regulations on board, and to guard against their concealment, destruction or forging of evidence.   The Master, having taken actions as referred to in the preceding paragraph of this Article, shall make a written report of the case, which shall bear the signature of the Master himself and those of two or more others on board, and shall be handed over, together with the offender, to the authorities concerned for disposition.   Article 37 The Master shall make entries in the log book of any occurrence of birth or death on board and shall issue a certificate to that effect in the presence of two witnesses. The death certificate shall be attached with a list of personal belongings of the deceased, and attestation shall be given by the Master to the will, if any, of the deceased. Both the death certificate and the will shall be taken into safe keeping by the Master and handed over to the family members of the deceased or the organizations concerned.   Article 38 Where a sea casualty has occurred to a ship and the life and property on board have thus been threatened, the Master shall, with crew members and other persons on board under his command, make best efforts to run to the rescue. Should the foundering and loss of the ship have become inevitable, the Master may decide to abandon the ship. However, such abandonment shall be reported to the shipowner for approval except in case of emergency.   Upon abandoning the ship, the Master must take all measures first to evacuate the passengers safely from the ship in an orderly way, then make arrangements for crew members to evacuate, while the Master shall be the last to evacuate. Before leaving the ship, the Master shall direct the crew members to do their utmost to rescue the deck log book, the engine log book, the oil record book, the radio log book, the charts, documents and papers used in the current voyage, as well as valuables, postal matters and cash money.   Article 39 The duty of the Master in the management and navigation of the ship shall not be absolved even with the presence of a pilot piloting the ship.   Article 40 Should death occur to the Master or the Master be unable to perform his duties for whatever reason, the deck officer with the highest rank shall act as the Master; before the ship sails from its next port of call, the shipowner shall appoint a new Master to take command.   Chapter IV   Contract of Carriage of Goods by Sea   Section 1   Basic Principles   Article 41 A contract of carriage of goods by sea is a contract under which the carrier, against payment of freight, undertakes to carry by sea the goods contracted for shipment by the shipper from one port to another.   Article 42 For the purposes of this Chapter:   (1) "Carrier" means the person by whom or in whose name a contract of carriage of goods by sea has been concluded with a shipper;   (2) "Actual carrier" means the person to whom the performance of carriage of goods, or of part of the carriage, has been entrusted by the carrier, and includes any other person to whom such performance has been entrusted under a sub-contract;   (3) "Shipper" means:   a) The person by whom or in whose name or on whose behalf a contract of carriage of goods by sea has been concluded with a carrier;   b) The person by whom or in whose name or on whose behalf the goods have been delivered to the carrier involved in the contract of carriage of goods by sea;   (4) "Consignee" means the person who is entitled to take delivery of the goods;   (5) "Goods" includes live animals and containers, pallets or similar articles of transport supplied by the shipper for consolidating the goods.   Article 43 The carrier or the shipper may demand confirmation of the contract of carriage of goods by sea in writing. However, voyage charter shall be done in writing. Telegrams, telexes and telefaxes have the effect of written documents.   Article 44 Any stipulation in a contract of carriage of goods by sea or a bill of lading or other similar documents evidencing such contract that derogates from the provisions of this Chapter shall be null and void. However, such nullity and voidness shall not affect the validity of other provisions of the contract or the bill of lading or other similar documents. A clause assigning the benefit of insurance of the goods in favour of the carrier or any similar clause shall be null and void.   Article 45 The provisions of Article 44 of this Code shall not prejudice the increase of duties and obligations by the carrier besides those set out in this Chapter.   Section 2   Carrier's Responsibilities   Article 46 The responsibilities of the carrier with regard to the goods carried in containers covers the entire period during which the carrier is in charge of the goods, starting from the time the carrier has taken over the goods at the port of loading, until the goods have been delivered at the port of discharge. The responsibility of the carrier with respect to non-containerized goods covers the period during which the carrier is in charge of the goods, starting from the time of loading of the goods onto the ship until the time the goods are discharged therefrom. During the period the carrier is in charge of the goods, the carrier shall be liable for the loss of or damage to the goods, except as otherwise provided for in this Section.   The provisions of the preceding paragraph shall not prevent the carrier from entering into any agreement concerning carrier's responsibilities with regard to non-containerized goods prior to loading onto and after discharging from the ship.   Article 47 The carrier shall, before and at the beginning of the voyage, exercise due diligence to make the ship seaworthy, properly man, equip and supply the ship and to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.   Article 48 The carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried.   Article 49 The carrier shall carry the goods to the port of discharge on the agreed or customary or geographically direct route.   Any deviation in saving or attempting to save life or property at sea or any reasonable deviation shall not be deemed to be an act deviating from the provisions of the preceding paragraph.   Article 50 Delay in delivery occurs when the goods have not been delivered at the designated port of discharge within the time expressly agreed upon.   The carrier shall be liable for the loss of or damage to the goods caused by delay in delivery due to the fault of the carrier, except those arising or resulting from causes for which the carrier is not liable as provided for in the relevant Articles of this Chapter.   The carrier shall be liable for the economic losses caused by delay in delivery of the goods due to the fault of the carrier, even if no loss of or damage to the goods had actually occurred, unless such economic losses had occurred from causes for which the carrier is not liable as provided for in the relevant Articles of this Chapter.   The person entitled to make a claim for the loss of goods may treat the goods as lost when the carrier has not delivered the goods within 60 days from the expiry of the time for delivery specified in paragraph 1 of this Article.   Article 51 The carrier shall not be liable for the loss of or damage to the goods occurred during the period of carrier's responsibility arising or resulting from any of the following causes:   (1) Fault of the Master, crew members, pilot or servant of the carrier in the navigation or management of the ship;   (2) Fire, unless caused by the actual fault of the carrier;   (3) Force majeure and perils, dangers and accidents of the sea or other navigable waters;   (4) War or armed conflict;   (5) Act of the government or competent authorities, quarantine restrictions or seizure under legal process;   (6) Strikes, stoppages or restraint of labour;   (7) Saving or attempting to save life or property at sea;   (8) Act of the shipper, owner of the goods or their agents;   (9) Nature or inherent vice of the goods;   (10) Inadequacy of packing or insufficiency or illegibility of marks;   (11) Latent defect of the ship not discoverable by due diligence; and   (12) Any other cause arising without the fault of the carrier or his servant or agent.   The carrier who is entitled to exoneration from the liability for compensation as provided for in the preceding paragraph shall, with the exception of the causes given in sub-paragraph (2), bear the burden of proof.   Article 52 The carrier shall not be liable for the loss of or damage to the live animals arising or resulting from the special risks inherent in the carriage thereof. However, the carrier shall be bound to prove that he has fulfilled the special requirements of the shipper with regard to the carriage of the live animals and that under the circumstances of the sea carriage, the loss or damage has occurred due to the special risks inherent therein.   Article 53 In case the carrier intends to ship the goods on deck, he shall come into an agreement with the shipper or comply with the custom of the trade or the relevant laws or administrative rules and regulations.   When the goods have been shipped on deck in accordance with the provisions of the preceding paragraph, the carrier shall not be liable for the loss of or damage to the goods caused by the special risks involved in such carriage.   If the carrier, in breach of the provisions of the first paragraph of this Article, has shipped the goods on deck and the goods have consequently suffered loss or damage, the carrier shall be liable therefore.   Article 54 Where loss or damage or delay in delivery has occurred from causes from which the carrier or his servant or agent is not entitled to exoneration from liability, together with another cause, the carrier shall be liable only to the extent that the loss, damage or delay in delivery is attributable to the causes from which the carrier is not entitled to exoneration from liability; however, the carrier shall bear the burden of proof with respect to the loss, damage or delay in delivery resulting from the other cause.   Article 55 The amount of indemnity for the loss of the goods shall be calculated on the basis of the actual value of the goods so lost, while that for the damage to the goods shall be calculated on the basis of the difference between the values of the goods before and after the damage, or on the basis of the expenses for the repair.   The actual value shall be the value of the goods at the time of shipment plus insurance and freight.   From the actual value referred to in the preceding paragraph, deduction shall be made, at the time of compensation, of the expenses that had been reduced or avoided as a result of the loss or damage occurred.   Article 56 The carrier's liability for the loss of or damage to the goods shall be limited to an amount equivalent to 666.67 Units of Account per package or other shipping unit, or 2 Units of Account per kilogramme of the gross weight of the goods lost or damaged, whichever is the higher, except where the nature and value of the goods had been declared by the shipper before shipment and inserted in the bill of lading, or where a higher amount than the amount of limitation of liability set out in this Article had been agreed upon between the carrier and the shipper.   Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or other shipping units enumerated in the bill of lading as packed in such article of transport shall be deemed to be the number of packages or shipping units. If not so enumerated, the goods in such article of transport shall be deemed to be one package or one shipping unit.   Where the article of transport is not owned or furnished by the carrier, such article of transport shall be deemed to be one package or one shipping unit.   Article 57 The liability of the carrier for the economic losses resulting from delay in delivery of the goods shall be limited to an amount equivalent to the freight payable for the goods so delayed. Where the loss of or damage to the goods has occurred concurrently with the delay in delivery thereof, the limitation of liability of the carrier shall be that as provided for in paragraph 1 of Article 56 of this Code.   Article 58 The defence and limitation of liability provided for in this Chapter shall apply to any legal action brought against the carrier with regard to the loss of or damage to or delay in delivery of the goods covered by the contract of carriage of goods by sea, whether the claimant is a party to the contract or whether the action is founded in contract or in tort.   The provisions of the preceding paragraph shall apply if the action referred to in the preceding paragraph is brought against the carrier's servant or agent, and the carrier's servant or agent proves that his action was within the scope of his employment or agency.   Article 59 The carrier shall not be entitled to the benefit of the limitation of liability provided for in Article 56 or 57 of this Code if it is proved that the loss, damage or delay in delivery of the goods resulted from an act or omission of the carrier done with the intent to cause such loss, damage or delay or recklessly and with knowledge that such loss, damage or delay would probably result.   The servant or agent of the carrier shall not be entitled to the benefit of limitation of liability provided for in article 56 or 57 of this Code, if it is proved that the loss, damage or delay in delivery resulted from an act or omission of the servant or agent of the carrier done with the intent to cause such loss, damage or delay or recklessly and with knowledge that such loss, damage or delay would probably result.   Article 60 Where the performance of the carriage or part thereof has been entrusted to an actual carrier, the carrier shall nevertheless remain responsible for the entire carriage according to the provisions of this Chapter. The carrier shall be responsible, in relation to the carriage performed by the actual carrier, for the act or omission of the actual carrier and of his servant or agent acting within the scope of his employment or agency.   Notwithstanding the provisions of the preceding paragraph, where a contract of carriage by sea provides explicitly that a specified part of the carriage covered by the said contract is to be performed by a named actual carrier other than the carrier, the contract may nevertheless provide that the carrier shall not be liable for the loss, damage or delay in delivery arising from an occurrence which takes place while the goods are in the charge of the actual carrier during such part of the carriage.   Article 61 The provisions with respect to the responsibility of the carrier contained in this Chapter shall be applicable to the actual carrier. Where an action is brought against the servant or agent of the actual carrier, the provisions contained in paragraph 2 of Article 58 and paragraph 2 of Article 59 of this Code shall apply.   Article 62 Any special agreement under which the carrier assumes obligations not provided for in this Chapter or waives rights conferred by this Chapter shall be binding upon the actual carrier when the actual carrier has agreed in writing to the contents thereof. The provisions of such special agreement shall be binding upon the carrier whether the actual carrier has agreed to the contents or not.   Article 63 Where both the carrier and the actual carrier are liable for compensation, they shall jointly and severally be liable within the scope of such liability.   Article 64 If claims for compensation have been separately made against the carrier, the actual carrier and their servants or agents with regard to the loss of or damage to the goods, the aggregate amount of compensation shall not be in excess of the limitation provided for in Article 56 of this Code.   Article 65 The provisions of Article 60 through 64 of this Code shall not affect the recourse between the carrier and the actual carrier.   Section 3   Shipper's Responsibilities   Article 66 The shipper shall have the goods properly packed and shall guarantee the accuracy of the description, mark, number of packages or pieces, weight or quantity of the goods at the time of shipment and shall indemnify the carrier against any loss resulting from inadequacy of packing or inaccuracies in the above-mentioned information.   The carrier's right to indemnification as provided for in the preceding paragraph shall not affect the obligation of the carrier under the contract of carriage of goods towards those other than the shipper.   Article 67 The shipper shall perform all necessary procedures at the port, customs, quarantine, inspection or other competent authorities with respect to the shipment of the goods and shall furnish to the carrier all relevant documents concerning the procedures the shipper has gone through. The shipper shall be liable for any damage to the interest of the carrier resulting from the inadequacy or inaccuracy or delay in delivery of such documents.   Article 68 At the time of shipment of dangerous goods, the shipper shall, in compliance with the regulations governing the carriage of such goods, have them properly packed, distinctly marked and labelled and notify the carrier in writing of their proper description, nature and the precautions to be taken. In case the shipper fails to notify the carrier or notified him inaccurately, the carrier may have such goods landed ,destroyed or rendered innocuous when and where circumstances so require, without compensation. The shipper shall be liable to the carrier for any loss, damage or expense resulting from such shipment.   Notwithstanding the carrier's knowledge of the nature of the dangerous goods and his consent to carry, he may still have such goods landed, destroyed or rendered innocuous, without compensation, when they become an actual danger to the ship, the crew and other persons on board or to other goods. However, the provisions of this paragraph shall not prejudice the contribution in general average, if any.   Article 69 The shipper shall pay the freight to the carrier as agreed.   The shipper and the carrier may reach an agreement that the freight shall be paid by the consignee. However, such an agreement shall be noted in the transport documents.   Article 70 The shipper shall not be liable for the loss sustained by the carrier or the actual carrier, or for the damage sustained by the ship, unless such loss or damage was caused by the fault of the shipper, his servant or agent.   The servant or agent of the shipper shall not be liable for the loss sustained by the carrier or the actual carrier, or for the damage sustained by the ship, unless the loss or damage was caused by the fault of the servant or agent of the shipper.   Section 4   Transport Documents   Article 71 A bill of lading is a document which serves as an evidence of the contract of carriage of goods by sea and the taking over or loading of the goods by the carrier, and based on which the carrier undertakes to deliver the goods against surrendering the same. A provision in the document stating that the goods are to be delivered to the order of a named person, or to order, or to bearer, constitutes such an undertaking.   Article 72 When the goods have been taken over by the carrier or have been loaded on board, the carrier shall, on demand of the shipper, issue to the shipper a bill of lading.   The bill of lading may be signed by a person authorized by the carrier. A bill of lading signed by the Master of the ship carrying the goods is deemed to have been signed on behalf of the carrier.   Article 73 A bill of lading shall contain the following particulars:   (1) Description of the goods, mark, number of packages or pieces, weight or quantity, and a statement, if applicable, as to the dangerous nature of the goods;   (2) Name and principal place of business of the carrier;   (3) Name of the ship;   (4) Name of the shipper;   (5) Name of the consignee;   (6) Port of loading and the date on which the goods were taken over by the carrier at the port of loading;   (7) Port of discharge;   (8) Place where the goods were taken over and the place where the goods are to be delivered in case of a multimodal transport bill of lading;   (9) Date and place of issue of the bill of lading and the number of originals issued;   (10) Payment of freight;   (11) Signature of the carrier or of a person acting on his behalf.   In a bill of lading, the lack of one or more particulars referred to in the preceding paragraph does not affect the function of the bill of lading as such, provided that it nevertheless meets the requirements set forth in Article 71 of this Code.   Article 74 If the carrier has issued, on demand of the shipper, a received-for-shipment bill of lading or other similar documents before the goods are loaded on board, the shipper may surrender the same to the carrier as against a shipped bill of lading when the goods have been loaded on board. The carrier may also note on the received-for-shipment bill of lading or other similar documents with the name of the carrying ship and the date of loading, and, when so noted, the received-for-shipment bill of lading or other similar documents shall be deemed to constitute a shipped bill of lading.   Article 75 If the bill of lading contains particulars concerning the description, mark, number of packages or pieces, weight or quantity of the goods with respect to which the carrier or the other person issuing the bill of lading on his behalf has   the knowledge or reasonable grounds to suspect that such particulars do not accurately represent the goods actually received, or, where a shipped bill of lading is issued, loaded, or if he has had no reasonable means of checking, the carrier or such other person may make a note in the bill of lading specifying those inaccuracies, the grounds for suspicion or the lack of reasonable means of checking.   Article 76 If the carrier or the other person issuing the bill of lading on his behalf made no note in the bill of lading regarding the apparent order and condition of the goods, the goods shall be deemed to be in apparent good order and condition.   Article 77 Except for the note made in accordance with the provisions of Article 75 of this Code, the bill of lading issued by the carrier or the other person acting on his behalf is prima facie evidence of the taking over or loading by the carrier   of the goods as described therein. Proof to the contrary by the carrier shall not be admissible if the bill of lading has been transferred to a third party, including a consignee, who has acted in good faith in reliance on the description of the goods contained therein.   Article 78 The relationship between the carrier and the holder of the bill of lading with respect to their rights and obligations shall be defined by the clauses of the bill of lading.   Neither the consignee nor the holder of the bill of lading shall be liable for the demurrage, dead freight and all other expenses in respect of loading occurred at the loading port unless the bill of lading clearly states that the aforesaid demurrage, dead freight and all other expenses shall be borne by the consignee and the holder of the bill of lading.   Article 79 The negotiability of a bill of lading shall be governed by the following provisions:   (1) A straight bill of lading is not negotiable;   (2) An order bill of lading may be negotiated with endorsement to order or endorsement in blank;   (3) A bearer bill of lading is negotiable without endorsement.   Article 80 Where a carrier has issued a document other than a bill of lading as an evidence of the receipt of the goods to be carried, such a document is prima facie evidence of the conclusion of the contract of carriage of goods by sea and the taking over by the carrier of the goods as described therein.   Such documents that are issued by the carrier shall not be negotiable.   Section 5   Delivery of Goods   Article 81 Unless notice of loss or damage is given in writing by the consignee to the carrier at the time of delivery of the goods by the carrier to the consignee, such delivery shall be deemed to be prima facie evidence of the delivery of the goods by the carrier as described in the transport documents and of the apparent good order and condition of such goods.   Where the loss of or damage to the goods is not apparent, the provisions of the preceding paragraph shall apply if the consignee has not given the notice in writing within 7 consecutive days from the next day of the delivery of the goods, or, in the case of containerized goods, within 15 days from the next day of the delivery thereof.   The notice in writing regarding the loss or damage need not be given if the state of the goods has, at the time of delivery, been the subject of a joint survey or inspection by the carrier and the consignee.   Article 82 The carrier shall not be liable for compensation if no notice on the economic losses resulting from delay in delivery of the goods has been received from the consignee within 60 consecutive days from the next day on which the goods had been delivered by the carrier to the consignee.   Article 83 The consignee may, before taking delivery of the goods at the port of destination, and the carrier may, before delivering the goods at the port of destination, request the cargo inspection agency to have the goods inspected. The party requesting such inspection shall bear the cost thereof but is entitled to recover the same from the party causing the damage.   Article 84 The carrier and the consignee shall mutually provide reasonable facilities for the survey and inspection stipulated in Articles 81 and 83 of this Code.   Article 85 Where the goods have been delivered by the actual carrier, the notice in writing given by the consignee to the actual carrier under Article 81 of this Code shall have the same effect as that given to the carrier, and that given to the carrier shall have the same effect as that given to the actual carrier.   Article 86 If the goods were not taken delivery of at the port of discharge or if the consignee has delayed or refused the taking delivery of the goods, the Master may discharge the goods into warehouses or other appropriate places, and any expenses or risks arising therefrom shall be borne by the consignee.   Article 87 If the freight, contribution in general average, demurrage to be paid to the carrier and other necessary charges paid by the carrier on behalf of the owner of the goods as well as other charges to be paid to the carrier have not been paid in full, nor has appropriate security been given, the carrier may have a lien, to a reasonable extent, on the goods.   Article 88 If the goods under lien in accordance with the provisions of Article 87 of this Code have not been taken delivery of within 60 days from the next day of the ship's arrival at the port of discharge, the carrier may apply to the court for an order on selling the goods by auction; where the goods are perishable or the expenses for keeping such goods would exceed their value, the carrier may apply for an earlier sale by auction.   The proceeds from the auction sale shall be used to pay off the expenses for the storage and auction sale of the goods, the freight and other related charges to be paid to the carrier. If the proceeds fall short of such expenses, the carrier is entitled to claim the difference from the shipper, whereas any amount in surplus shall be refunded to the shipper. If there is no way to make the refund and such surplus amount has not been claimed at the end of one full year after the auction sale, it shall go to the State Treasury.   Section 6   Cancellation of Contract   Article 89 The shipper may request the cancellation of the contract of carriage of goods by sea before the ship sails from the port of loading. However, except as otherwise provided for in the contract, the shipper shall in this case pay half of the agreed amount of freight; if the goods have already been loaded on board, the shipper shall bear the expenses for the loading and discharge and other related charges.   Article 90 Either the carrier or the shipper may request the cancellation of the contract and neither shall be liable to the other if, due to force majeure or other causes not attributable to the fault of the carrier or the shipper, the contract could not be performed prior to the ship's sailing from its port of loading. If the freight has already been paid, it shall be refunded to the shipper, and, if the goods have already been loaded on board, the loading/discharge expenses shall be borne by the shipper. If a bill of lading has already been issued, it shall be returned by the shipper to the carrier.   Article 91 If, due to force majeure or any other causes not attributable to the fault of the carrier or the shipper, the ship could not discharge its goods at the port of destination as provided for in the contract of carriage, unless the contract provides otherwise, the Master shall be entitled to discharge the goods at a safe port or place near the port of destination and the contract of carriage shall be deemed to have been fulfilled.   In deciding the discharge of the goods, the Master shall inform the shipper or the consignee and shall take the interests of the shipper or the consignee into consideration.   Section 7   Special Provisions Regarding Voyage Charter Party   Article 92 A voyage charter party is a charter party under which the shipowner charters out and the charterer charters in the whole or part of the ship's space for the carriage by sea of the intended goods from one port to another and the charterer pays the agreed amount of freight.   Article 93 A voyage charter party shall mainly contain, inter alia, name of the shipowner, name of the charterer, name and nationality of the ship, its bale or grain capacity, description of the goods to be loaded, port of loading, port of destination, laydays, time for loading and discharge, payment of freight, demurrage, dispatch and other relevant matters.   Article 94 The provisions in Article 47 and Article 49 of this Code shall apply to the shipowner under voyage charter party.   The other provisions in this Chapter regarding the rights and obligations of the parties to the contract shall apply to the shipowner and the charterer under voyage charter only in the absence of relevant provisions or in the absence of provisions differing therefrom in the voyage charter.   Article 95 Where the holder of the bill of lading is not the charterer in the case of a bill of lading issued under a voyage charter, the rights and obligations of the carrier and the holder of the bill of lading shall be governed by the clauses of the bill of lading. However, if the clauses of the voyage charter party are incorporated into the bill of lading, the relevant clauses of the voyage charter party shall apply.   Article 96 The shipowner shall provide the intended ship. The intended ship may be substituted with the consent of the charterer. However, if the ship substituted does not meet the requirements of the charter party, the charterer may reject the ship or cancel the charter. Should any damage or loss occur to the charterer as a result of the shipowner's failure in providing the intended ship due to his fault, the shipowner shall be liable for compensation.   Article 97 If the shipowner has failed to provide the ship within the laydays fixed in the charter, the charterer is entitled to cancel the charter party. However, if the shipowner had notified the charterer of the delay of the ship and the expected date of its arrival at the port of loading, the charterer shall notify the shipowner whether to cancel the charter within 48 hours of the receipt of the shipowner's notification.   Where the charterer has suffered losses as a result of the delay in providing the ship due to the fault of the shipowner, the shipowner shall be liable for compensation .   Article 98 Under a voyage charter, the time for loading and discharge and the way of calculation thereof, as well as the rate of demurrage that would incur after the expiration of the laytime and the rate of dispatch money to be paid as a result of the completion of loading or discharge ahead of schedule, shall be fixed by the shipowner and the charterer upon mutual agreement.   Article 99 The charterer may sublet the ship he chartered, but the rights and obligations under the head charter shall not be affected.   Article 100 The charterer shall provide the intended goods, but he may replace the goods with the consent of the shipowner. However, if the goods replaced are detrimental to the interests of the shipowner, the shipowner shall be entitled to reject such goods and cancel the charter.   Where the shipowner has suffered losses as a result of the failure of the charterer in providing the intended goods, the charterer shall be liable for compensation.   Article 101 The shipowner shall discharge the goods at the port of discharge specified in the charter party. Where the charter party contains a clause allowing the choice of the port of discharge by the charterer, the Master may choose one from among the agreed picked ports to discharge the goods, in case the charterer did not, as agreed in the charter, instruct in time as to the port chosen for discharging the goods. Where the charterer did not instruct in time as to the chosen port of discharge, as agreed in the charter, and the shipowner suffered losses thereby, the charterer shall be liable for compensation; where the charterer has suffered losses as a result of the shipowner's arbitrary choice of a port to discharge the goods, in disregard of the provisions in the relevant charter, the shipowner shall be liable for compensation.   Section 8   Special Provisions Regarding Multimodal Transport Contract   Article 102 A multimodal transport contract as referred to in this Code means a contract under which the multimodal transport operator undertakes to transport the goods, against the payment of freight for the entire transport, from the place where the goods were received in his charge to the destination and to deliver them to the consignee by two or more different modes of transport, one of which being sea carriage.   The multimodal transport operator as referred to in the preceding paragraph means the person who has entered into a multimodal transport contract with the shipper either by himself or by another person acting on his behalf.   Article 103 The responsibility of the multimodal transport operator with respect to the goods under multimodal transport contract covers the period from the time he takes the goods in his charge to the time of their delivery.   Article 104 The multimodal transport operator shall be responsible for the performance of the multimodal transport contract or the procurement of the performance therefore, and shall be responsible for the entire transport.   The multimodal transport operator may enter into separate contracts with the carriers of the different modes defining their responsibilities with regard to the different sections of the transport under the multimodal transport contracts. However, such separate contracts shall not affect the responsibility of the multimodal transport operator with respect to the entire transport.   Article 105 If loss of or damage to the goods has occurred in a certain section of the transport, the provisions of the relevant laws and regulations governing that specific section of the multimodal transport shall be applicable to matters concerning the liability of the multimodal transport operator and the limitation thereof.   Article 106 If the section of transport in which the loss of or damage to the goods occurred could not be ascertained, the multimodal transport operator shall be liable for compensation in accordance with the stipulations regarding the carrier's liability and the limitation thereof as set out in this Chapter.   Chapter V   Contract of Carriage of Passengers by Sea   Article 107 A contract of carriage of passengers by sea is a contract whereby the carrier undertakes to carry passengers and their luggage by sea from one port to another by ships suitable for that purpose against payment of fare by the passengers.   Article 108 For the purposes of this Chapter:   (1) "Carrier" means the person by whom or in whose name a contract of carriage of passengers by sea has been entered into with the passengers;   (2) "Actual carrier" means the person by whom the whole or part of the carriage of passengers has been performed as entrusted by the carrier, including those engaged in such carriage under a sub-contract.   (3) "Passenger" means a person carried under a contract of carriage of passengers by sea. With the consent of the carrier, a person supervising the carriage of goods aboard a ship covered by a contract of carriage of goods is regarded as a passenger;   (4) "Luggage" means any article or vehicle shipped by the carrier under the contract of carriage of passengers by sea, with the exception of live animals.   (5) "Cabin luggage" means the luggage which the passenger has in his cabin or is otherwise in his possession, custody or control.   Article 109 The provisions regarding the responsibilities of the carrier as contained in this Chapter shall be applicable to the actual carrier, and the provisions regarding the responsibilities of the servant or agent of the carrier as contained in this Chapter shall be applicable to the servant or agent of the actual carrier.   Article 110 The passage ticket serves as an evidence that a contract of carriage of passengers by sea has been entered into.   Article 111 The period of carriage for the carriage of passengers by sea commences from the time of embarkation of the passengers and terminates at the time of their disembarkation, including the period during which the passengers are transported by water from land to the ship or vice versa , if such cost of transport is included in the fare. However, the period of carriage does not include the time when the passengers are at a marine terminal or station or on a quay or in or on any other port installations.   The period of carriage for the cabin luggage of the passengers shall be the same as that stipulated in the preceding paragraph. The period of carriage for luggage other than the cabin luggage commences from the time when the carrier or his servant or agent receives it into his charge and terminates at the time when the carrier or his servant or agent redelivers it to the passengers.   Article 112 A passenger travelling without a ticket or taking a higher class berth than booked or going beyond the distance paid for shall pay for the fare or the excess fare as required by relevant regulations, and the carrier may, according to the relevant regulations, charge additional fare. Should any passenger refuse to pay, the Master is entitled to order him to disembark at a suitable place and the carrier has the right of recourse against him.   Article 113 No passenger may take on board or pack in their luggage contraband goods or any article of an inflammable, explosive, poisonous, corrosive or radioactive nature or other dangerous goods that would endanger the safety of life and property on board.   The carrier may have the contraband or dangerous goods brought on board by the passenger or packed in his luggage in breach of the provisions of the preceding paragraph discharged, destroyed or rendered innocuous at any time and at any place or sent over to the appropriate authorities, without being liable for compensation.   The passenger shall be liable for compensation if any loss or damage occurs as a result of his breach of the provisions of paragraph 1 of this Article.   Article 114 During the period of carriage of the passengers and their luggage as provided for in Article 111 of this Code, the carrier shall be liable for the death of or personal injury to passengers or the loss of or damage to their luggage resulting from accidents caused by the fault of the carrier or his servant or agent committed within the scope of his employment or agency.   The claimant shall bear the burden of proof regarding the fault of the carrier or his servant or agent, with the exception, however, of the circumstances specified in paragraphs 3 and 4 of this Article.   If the death of or personal injury to the passengers or loss of or damage to the passengers' cabin luggage occurred as a result of shipwreck, collision, stranding, explosion, ire or the defect of the ship, it shall be presumed that the carrier or his servant or agent has committed a fault, unless proof to the contrary has been given by the carrier or his servant or agent.   As to any loss of or damage to the luggage other than the passenger's cabin luggage, unless the carrier or his servant or agent proves to the contrary, it shall be presumed that the carrier or his servant or agent has committed a fault, no matter how the loss or damage was caused.   Article 115 If it is proved by the carrier that the death of or personal injury to the passenger or the loss of or damage to his luggage was caused by the fault of the passenger himself or the faults of the carrier and the passenger combined, the carrier's liability may be exonerated or appropriately mitigated.   If it is proved by the carrier that the death of or personal injury to the passenger or the loss of or damage to the passenger's luggage was intentionally caused by the passenger himself, or the death or personal injury was due to the health condition of his, the carrier shall not be liable therefore.   Article 116 The carrier shall not be liable for any loss of or damage to the monies, gold, silver, jewellery, negotiable securities or other valuables of the passengers.   If the passenger has entrusted the above-mentioned valuables to the safe-keeping of the carrier under an agreement for that purpose, the carrier shall be liable for compensation in accordance with the provisions of Article 117 of this Code. Where the limitation of liability agreed upon between the carrier and the passenger in writing is higher than that set out in Article 117 of this Code, the carrier shall make the compensation in accordance with that higher amount.   Article 117 Except the circumstances specified in paragraph 4 of this Article, the limitation of liability of the carrier under each carriage of passengers by sea shall be governed by the following:   (1) For death of or personal injury to the passenger: not exceeding 46,666 Units of Account per passenger;   (2) For loss of or damage to the passengers' cabin luggage: not exceeding 833 Units of Account per passenger;   (3) For loss of or damage to the passengers' vehicles including the luggage carried therein: not exceeding 3,333 Units of Account per vehicle;   (4) For loss of or damage to luggage other than those described in sub-paragraphs (2) and (3) above: not exceeding 1,200 Units of Account per passenger.   An agreement may be reached between the carrier and the passengers with respect to the deductibles applicable to the compensation for loss of or damage to the passengers' vehicles and luggage other than their vehicles. However, the deductible with respect to the loss of or damage to the passengers' vehicles shall not exceed 117 Units of Account per vehicle, whereas the deductible for the loss of or damage to the luggage other than the vehicle shall not exceed 13 Units of Account per piece of luggage per passenger. In calculating the amount of compensation for the loss of or damage to the passenger's vehicle or the luggage other than the vehicle, deduction shall be made of the agreed deductibles the carrier is entitled to.   A higher limitation of liability than that set out in sub-paragraph (1) above may be agreed upon between the carrier and the passenger in writing.   The limitation of liability of the carrier with respect to the carriage of passengers by sea between the ports of the People's Republic of China shall be fixed by the competent authorities of transport and communications under the State Council and implemented after its being submitted to and approved by the State Council.   Article 118 If it is proved that the death of or personal injury to the passenger or the loss of or damage to the passenger's luggage resulted from an act or omission of the carrier done with the intent to cause such loss or damage or recklessly and with knowledge that such death or personal injury or such loss or damage would probably result ,the carrier shall not invoke the provisions regarding the limitation of liability contained in Articles 116 and 117 of this Code.   If it is proved that the death of or personal injury to the passenger or the loss of or damage to the passenger's luggage resulted from an act or omission of the servant or agent of the carrier done with the intent to cause such loss or damage or recklessly and with knowledge that such death or personal injury or such loss or damage would probably result, the servant or agent of the carrier shall not invoke the provisions regarding the limitation of liability contained in Articles 116 and 117 of this Code.   Article 119 In case of apparent damage to the luggage, the passenger shall notify the carrier or his servant or agent in writing according to the following:   (1) Notice with respect to cabin luggage shall be made before or at the time of his embarkation;   (2) Notice regarding luggage other than cabin luggage shall be made before or at the time of redelivery thereof.   If the damage to the luggage is not apparent and it is difficult for the passenger to discover such damage at the time of his disembarkation or of the redelivery of the luggage, or if the luggage has been lost, the passenger shall notify the carrier or his servant or agent in writing within 15 days from the next day of disembarkation of the passenger or of the redelivery of the luggage.   If the passenger fails to send in the notice in writing in time in accordance with the provisions of sub-paragraphs (1) and (2) of this Article, it shall be presumed that the luggage has been received undamaged, unless proof to the contrary is made.   Where the luggage has been jointly surveyed or inspected by the passenger and the carrier at the time of redelivery thereof, the above-mentioned notice need not be given.   Article 120 With regard to the claims made to the carrier's servant or agent, such servant or agent shall be entitled to invoke the provisions regarding defence and limitation of liability contained in Articles 115,116 and 117 of this Code if such servant or agent proves that his act or omission was within the scope of his employment or agency.   Article 121 Where the performance of the carriage of passengers or part thereof has been entrusted by the carrier to an actual carrier, the carrier shall, as stipulated in this Chapter, remain liable for the entire carriage. Where the carriage is performed by the actual carrier, the carrier shall be liable for the act or omission of the actual carrier or the act or omission of his servant or agent within the scope of his employment or agency.   Article 122 Any special agreement under which the carrier assumes obligations not provided for in this Chapter or waives the rights conferred by this Chapter shall be binding upon the actual carrier where the actual carrier has expressly agreed in writing to the contents thereof. Such a special agreement shall be binding upon the carrier whether the actual carrier has agreed to its contents or not.   Article 123 Where both the carrier and the actual carrier are liable for compensation, they shall be liable jointly and severally within the scope of such liability.   Article 124 Where separate claims have been brought against the carrier, the actual carrier and their servants or agents with respect to the death of or personal injury to the passengers or the loss of or damage to their luggage, the aggregate amount of compensation shall not be in excess of the limitation prescribed in Article 117 of this Code.   Article 125 The provisions of Articles 121 through 124 of this Code shall not affect the right of recourse between the carrier and the actual carrier.   Article 126 Any of the following clauses contained in a contract of carriage of passengers by sea shall be null and void:   (1) Any clause that exonerates the statutory responsibility of the carrier in respect of the passenger;   (2) Any clause that reduces the limitation of liability of the carrier as contained in this Chapter;   (3) Any clause that contains provisions contrary to those of this Chapter concerning burden of proof; and   (4) Any clause that restricts the right of claim of the passenger.   The nullity and voidness of the clauses set out in the preceding paragraph shall not prejudice the validity of the other clauses of the contract.   Chapter VI   Charter Parties   Section 1   Basic Principles   Article 127 The provisions concerning the rights and obligations of the shipowner and the charterer in this Chapter shall apply only when there are no stipulations or no different stipulations in this regard in the charter party.   Article 128 Charter parties including time charter parties and bareboat charter parties shall be concluded in writing.   Section 2   Time Charter Party   Article 129 A time charter party is a contract under which the shipowner provides a designated manned ship to the charterer, and the charterer employs the ship during the contractual period for the agreed service against payment of hire.   Article 130 A time charter party mainly contains the name of the shipowner, the name of the charterer; the name, nationality, class, tonnage, capacity, speed and fuel consumption of the ship; the trading area; the agreed service, the contractual period, the time, place and conditions of delivery and redelivery of the ship; the hire and the way of its payment and other relevant matters.   Article 131 The shipowner shall deliver the ship within the time agreed upon in the charter party.   Where the shipowner acts against the provisions of the preceding paragraph, the charterer is entitled to cancel the charter. However, if the shipowner has notified the charterer of the anticipated delay in delivery and has given an estimated time of arrival of the ship at the port of delivery, the charterer shall notify the shipowner, within 48 hours of the receipt of such notice from the shipowner, of his decision whether to cancel the charter or not.   The shipowner shall be liable for the charterer's loss resulting from the delay in delivery of the ship due to the shipowner's fault.   Article 132 At the time of delivery, the shipowner shall exercise due diligence to make the ship seaworthy. The ship delivered shall be fit for the intended service.   Where the shipowner acts against the provisions in the preceding paragraph, the charterer shall be entitled to cancel the charter and claim any losses resulting therefrom.   Article 133 During the charter period, if the ship is found at variance with the seaworthiness or the other conditions agreed upon in the charter, the shipowner shall take all reasonable measures to have them restored as soon as possible.   Where the ship has not been operated normally for 24 consecutive hours due to its failure to maintain the seaworthiness or the other conditions as agreed upon, the charterer shall not pay the hire for the operating time so lost, unless such failure was caused by the charterer.   Article 134 The charterer shall guarantee that the ship shall be employed in the agreed maritime transport between the safe ports or places within the trading area agreed upon.   If the charterer acts against the provisions of the preceding paragraph, the shipowner is entitled to cancel the charter and claim any losses resulting therefrom.   Article 135 The charterer shall guarantee that the ship shall be employed to carry the lawful merchandise agreed.   Where the ship is to be employed by the charterer to carry live animals or dangerous goods, a prior consent of the shipowner is required.   The charterer shall be liable for any loss of the shipowner resulting from the charterer's violation of the provisions of paragraph 1 or paragraph 2 of this Article.   Article 136 The charterer shall be entitled to give the Master instructions with respect to the operation of the ship. However, such instructions shall not be inconsistent with the stipulations of the time charter.   Article 137 The charterer may sublet the ship under charter, but he shall notify the shipowner of the sublet in time. The rights and obligations agreed upon in the head charter shall not be affected by the sub-charter.   Article 138 Where the ownership of the ship under charter has been transferred by the shipowner, the rights and obligations agreed upon under the original charter shall not be affected. However, the shipowner shall inform the charterer thereof in time. After such transfer, the transferee and the charterer shall continue to perform the original charter.   Article 139 Should the ship be engaged in salvage operations during the charter period, the charterer shall be entitled to half of the amount of the payment for salvage operations after deducting therefrom the salvage expenses, compensation for damage, the portion due to crew members and other relevant costs.   Article 140 The charterer shall pay the hire as agreed upon in the charter. Where the charterer fails to pay the hire as agreed upon, the shipowner shall be entitled to cancel the charter party and claim any losses resulting therefrom.   Article 141 In case the charterer fails to pay the hire or other sums of money as agreed upon in the charter, the shipowner shall have a lien on the charterer's goods, other property on board and earnings from the sub-charter.   Article 142 When the charterer redelivers the ship to the shipowner, the ship shall be in the same good order and condition as it was at the time of delivery, fair wear and tear excepted.   Where, upon redelivery, the ship fails to remain in the same good order and condition as it was at the time of delivery, the charterer shall be responsible for rehabilitation or for compensation.   Article 143 If, on the basis of a reasonable calculation, a ship may be able to complete its last voyage at around the time of redelivery specified in the charter and probably thereafter, the charterer is entitled to continue to use the ship in order to complete that voyage even if its time of redelivery will be overdue. During the extended period, the charterer shall pay the hire at the rate fixed by the charter, and, if the current market rate of hire is higher than that specified in the charter, the charterer shall pay the hire at the current market rate.   Section 3   Bareboat Charter Party   Article 144 A bareboat charter party is a charter party under which the shipowner provides the charterer with an unmanned ship which the charterer shall possess, employ and operate within an agreed period and for which the charterer shall pay the shipowner the hire.   Article 145 A bareboat charter party mainly contains the name of the shipowner and the name of the charterer; the name, nationality, class, tonnage and capacity of the ship; the trading area, the employment of the ship and the charter period; the time, place and condition of delivery and redelivery; the survey, maintenance and repair of the ship; the hire and its payment; the insurance of the ship; the time and condition for the termination of the charter and other relevant matters.   Article 146 The shipowner shall deliver the ship and its certificates to the charterer at the port or place and time as stipulated in the charter party. At the time of delivery, the shipowner shall exercise due diligence to make the ship seaworthy. The ship delivered shall be fit for the agreed service.   Where the shipowner acts against the provisions of the preceding paragraph, the charterer shall be entitled to cancel the charter and claim any losses resulting therefrom.   Article 147 The charterer shall be responsible for the maintenance and repair of the ship during the bareboat charter period.   Article 148 During the bareboat charter period, the ship shall be insured, at the value agreed upon in the charter and in the way consented to by the shipowner, by the charterer at his expense.   Article 149 During the bareboat charter period, if the charterer's possession, employment or operation of the ship has affected the interests of the shipowner or caused any losses thereto, the charterer shall be liable for eliminating the harmful effect or compensating for the losses.   Should the ship be arrested due to any disputes over its ownership or debts owed by the shipowner, the shipowner shall guarantee that the interest of the charterer is not affected. The shipowner shall be liable for compensation for any losses suffered by the charterer thereby.   Article 150 During the bareboat charter period, the charterer shall not assign the rights and obligations stipulated in the charter or sublet the ship under bareboat charter without the shipowners's consent in writing.   Article 151 The shipowner shall not establish any mortgage of the ship during the bareboat charter period without the prior consent in writing by the charterer.   Where the shipowner acts against the provisions of the preceding paragraph and thereby causes losses to the charterer, the shipowner shall be liable for compensation.   Article 152 The charterer shall pay the hire as stipulated in the charter. In default of payment by the charterer for seven consecutive days or more after the time as agreed in the charter for such payment, the shipowner is entitled to cancel the charter without prejudice to any claim for the loss arising from the charterer's default.   Should the ship be lost or missing, payment of hire shall cease from the day when the ship was lost or last heard of. Any hire paid in advance shall be refunded in proportion.   Article 153 The provisions of Article 134, paragraph 1 of Article 135, Article 142 and Article 143 of this Code shall be applicable to bareboat charter parties.   Article 154 The ownership of a ship under bareboat charter containing a lease-purchase clause shall be transferred to the charterer when the charterer has paid off the lease-purchase price to the shipowner as stipulated in the charter.   Chapter VII   Contract of Sea Towage   Article 155 A contract of sea towage is a contract whereby the tugowner undertakes to tow an object by sea with a tug from one place to another and the tow party pays the towage.   The provisions of this Chapter shall not be applicable to the towage service rendered to ships within the port area.   Article 156 A contract of sea towage shall be made in writing. Its contents shall mainly include name and address of the tugowner, name and address of the tow party, name and main particulars of the tug and name and main particulars of the object to be towed, horse power of the tug, place of commencement of the towage and the destination, the date of commencement of the towage, towage price and the way of payment thereof, as well as other relevant matters.   Article 157 The tugowner shall, before and at the beginning of the towage, exercise due diligence to make the tug seaworthy and towworthy and to properly man the tug and equip it with gears and tow lines and to provide all other necessary supplies and appliances for the intended voyage.   The tow party shall, before and at the beginning of the towage, make all necessary preparations therefore and shall exercise due diligence to make the object to be towed towworthy and shall give a true account of the object to be towed and provide the certificate of towworthiness and other documents issued by the relevant survey and inspection organizations.   Article 158 If before the commencement of the towage service, due to force majeure or other causes not attributable to the fault of either party, the towage contract could not be performed, either party may cancel the contract and neither shall be liable to the other. In such event, the towage price that had already been paid shall be returned to the tow party by the tugowner, unless otherwise agreed upon in the towage contract.   Article 159 If after the commencement of the towage service, due to force majeure or other causes not attributable to the fault of either party, the towage contract could not be performed, either party may cancel the towage contract and neither shall be liable to the other.   Article 160 Where the object towed could not reach its destination due to force majeure or other causes not attributable to the fault of either party, unless the towage contract provides otherwise, the tugowner may deliver the object towed to the tow party or its agent at a place near the destination or at a safe port or an anchorage chosen by the Master of the tug, and the contract of towage shall be deemed to have been fulfilled.   Article 161 Where the tow party fails to pay the towage price or other reasonable expenses as agreed, the tugowner shall have a lien on the object towed.   Article 162 In the course of the sea towage, if the damage suffered by the tugowner or the tow party was caused by the fault of one of the parties, the party in fault shall be liable for compensation. If the damage was caused by the faults of both parties, both parties shall be liable for compensation in proportion to the extent of their respective faults.   Notwithstanding the provisions of the preceding paragraph, the tugowner shall not be liable if he proves that the damage suffered by the tow party is due to one of the following causes:   (1) Fault of the Master or other crew members of the tug or the pilot or other servants or agents of the tugowner in the navigation and management of the tug;   (2) Fault of the tug in saving or attempting to save life or property at sea.   The provisions of this Article shall only apply if and when there are no provisions or no different provisions in this regard in the sea towage contract.   Article 163 If death of or personal injury to a third party or damage to property thereof has occurred during the sea towage due to the fault of the tugowner or the tow party, the tugowner and the tow party shall be liable jointly and severally to that third party. Except as otherwise provided for in the towage contract, the party that has jointly and severally paid a compensation in an amount exceeding the proportion for which it is liable shall have the right of recourse against the other party.   Article 164 Where a tugowner towing a barge owned or operated by him to transport goods by sea from one port to another, it shall be deemed as an act of carriage of goods by sea.   Chapter VIII   Collision of Ships   Article 165 Collision of ships means an accident arising from the touching of ships at sea or in other navigable waters adjacent thereto.   Ships referred to in the preceding paragraph shall include those non-military or public service ships or craft that collide with the ships mentioned in Article 3 of this Code.   Article 166 After a collision, the Master of each of the ships in collision is bound, so far as he can do so without serious danger to his ship and persons on board to render assistance to the other ship and persons on board.   The Masters of each of the ships in collision is likewise bound so far as possible to make known to the other ship the name of his ship, its port of registry, port of departure and port of destination.   Article 167 Neither of the parties shall be liable to the other if the collision is caused by force majeure or other causes not attributable to the fault of either party or if the cause thereof is left in doubt.   Article 168 If the collision is caused by the fault of one of the ships, the one in fault shall be liable therefore.   Article 169 If the colliding ships are all in fault, each ship shall be liable in proportion to the extent of its fault; if the respective faults are equal in proportion or it is impossible to determine the extent of the proportion of the respective faults, the liability of the colliding ships shall be apportioned equally.   The ships in fault shall be liable for the damage to the ship, the goods and other property on board pursuant to the proportions prescribed in the preceding paragraph. Where damage is caused to the property of a third party, the liability for compensation of any of the colliding ships shall not exceed the proportion it shall bear.   If the ships in fault have caused loss of life or personal injury to a third party, they shall be jointly and severally liable therefore. If a ship has paid an amount of compensation in excess of the proportion prescribed in paragraph 1 of this Article, it shall have the right of recourse against the other ship(s) in fault.   Article 170 Where a ship has caused damage to another ship and persons, goods or other property on board that ship, either by the execution or non-execution of a maneuvre or by the non-observance of navigation regulations, even if no collision has actually occurred, the provisions of this Chapter shall apply.   Chapter IX   Salvage at Sea   Article 171 The provisions of this Chapter shall apply to salvage operations rendered at sea or any other navigable waters adjacent thereto to ships and other property in distress.   Article 172 For the purposes of this Chapter:   (1)"Ship" means any ship referred to in Article 3 of this Code and any other non-military, public service ship or craft that has been involved in a salvage operation therewith;   (2)"Property" means any property not permanently and intentionally attached to the shoreline and includes freight at risk;   (3) "Payment" means any reward, remuneration or compensation for salvage operations to be paid by the salved party to the salvor pursuant to the provisions of this Chapter.   Article 173 The provisions of this Chapter shall not apply to fixed or floating platforms or mobile offshore drilling units when such platforms or units are on location engaged in the exploration, exploitation or production of sea-bed mineral resources.   Article 174 Every Master is bound, so far as he can do so without serious danger to his ship and persons on board, to render assistance to any person in danger of being lost at sea.   Article 175 A contract for salvage operations at sea is concluded when an agreement has been reached between the salvor and the salved party regarding the salvage operations to be undertaken.   The Master of the ship in distress shall have the authority to conclude a contract for salvage operations on behalf of the shipowner. The Master of the ship in distress or its owner shall have the authority to conclude a contract for salvage operations on behalf of the owner of the property on board.   Article 176 The salvage contract may be modified by a judgment of the court which has entertained the suit brought by either party, or modified by an award of the arbitration organization to which the dispute has been submitted for arbitration upon the agreement of the parties, under any of the following circumstances:   (1) The contract has been entered into under undue influence or the influence of danger and its terms are obviously inequitable;   (2) The payment under the contract is in an excessive degree too large or too small for the services actually rendered.   Article 177 During the salvage operation, the salvor shall owe a duty to the salved party to:   (1) carry out the salvage operation with due care;   (2) exercise due care to prevent or minimize the pollution damage to the environment;   (3) seek the assistance of other salvors where reasonably necessary;   (4) accept the reasonable request of the salved party to seek the participation in the salvage operation of other salvors. However, if the request is not well-founded, the amount of payment due to the original salvor shall not be affected.   Article 178 During the salvage operation, the party salved is under an obligation to the salvor to:   (1) cooperate fully with the salvor;   (2) exercise due care to prevent or minimize the pollution damage to the environment;   (3) promptly accept the request of the salvor to take delivery of the ship or property salved when such ship or property has been brought to a place of safety.   Article 179 Where the salvage operations rendered to the distressed ship and other property have had a useful result, the salvor shall be entitled to a reward. Except as otherwise provided for by Article 182 of this Code or by other laws or the salvage contract, the salvor shall not be entitled to the payment if the salvage operations have had no useful result.   Article 180 The reward shall be fixed with a view to encouraging salvage operations, taking into full account the following criteria:   (1) Value of the ship and other property salved;   (2) Skill and efforts of the salvors in preventing or minimizing the pollution damage to the environment;   (3) Measure of success obtained by the salvors;   (4) Nature and extent of the danger;   (5) Skill and efforts of the salvors in salving the ship, other property and life;   (6) Time used and expenses and losses incurred by the salvors;   (7) Risk of liability and other risks run by the salvors or their equipment;   (8) Promptness of the salvage services rendered by the salvors;   (9) Availability and use of ships or other equipment intended for salvage operations;   (10) State of readiness and efficiency of the salvor's equipment and the value thereof.   The reward shall not exceed the value of the ship and other property salved.   Article 181 The salved value of the ship and other property means the assessed value of the ship and other property salved or the proceeds of the sale thereof, after deduction of the relevant taxes and customs dues, quarantine expenses, inspection charges as well as expenses incurred in connection with the discharge, storage, assessment of the value and the sale thereof.   The value prescribed in the preceding paragraph does not include the value of the salved personal belongings of the crew and that of the cabin luggage of the passengers.   Article 182 If the salvor has carried out the salvage operations in respect of a ship which by itself or its goods threatened pollution damage to the environment and has failed to earn a reward under Article 180 of this Code at least equivalent to the special compensation assessable in accordance with this Article, he shall be entitled to special compensation from the owner of that ship equivalent to his expenses as herein defined.   If the salvor has carried out the salvage operations prescribed in the preceding paragraph and has prevented or minimized pollution damage to the environment, the special compensation payable by the owner to the salvor under paragraph 1 of this Article may be increased by an amount up to a maximum of 30% of the expenses incurred by the salvor. The court which has entertained the suit or the arbitration organization may, if it deems fair and just and taking into consideration the provisions of paragraph 1 of Article 180 of this Code, render a judgment or an award further increasing the amount of such special compensation, but in no event shall the total increase be more than 100% of the expenses incurred by the salvor.   The salvor's expenses referred to in this Article means the salvor's out-of-pocket expenses reasonably incurred in the salvage operation and the reasonable expenses for the equipment and personnel actually used in the salvage operation. In determining the salvor's expenses, the provisions of sub-paragraphs (8), (9) and (10) of paragraph 1 of Article 180 of this Code shall be taken into consideration.   Under all circumstances, the total special compensation provided for in this Article shall be paid only if such compensation is greater than the reward recoverable by the salvor under Article 180 of this Code, and the amount to be paid shall be the difference between the special compensation and the reward.   If the salvor has been negligent and has thereby failed to prevent or minimize the pollution damage to the environment, the salvor may be totally or partly deprived of the right to the special compensation.   Nothing in this Article shall affect the right of recourse on the part of the shipowner against any other parties salved.   Article 183 The salvage reward shall be paid by the owners of the salved ship and other property in accordance with the respective proportions which the salved values of the ship and other property bear to the total salved value.   Article 184 The distribution of salvage reward among the salvors taking part in the same salvage operation shall be made by agreement among such salvors on the basis of the criteria set out in Article 180 of this Code; failing such agreement, the matter may be brought before the court hearing the case for judgment, or, upon the agreement of the parties, submitted to the arbitration organization for an award.   Article 185 The salvors of human life may not demand any remuneration from those whose lives are saved. However, salvors of human life are entitled to a fair share of the payment awarded to the salvor for salving the ship or other property or for preventing or minimizing the pollution damage to the environment.   Article 186 The following salvage operations shall not be entitled to remuneration:   (1) The salvage operation is carried out as a duty to normally perform a towage contract or other service contract, with the exception, however, of providing special services beyond the performance of the above said duty.   (2) The salvage operation is carried out in spite of the express and reasonable prohibition on the part of the Master of the ship in distress, the owner of the ship in question and the owner of the other property.   Article 187 Where the salvage operations have become necessary or more difficult due to the fault of the salvor or where the salvor has committed fraud or other dishonest conduct, the salvor shall be deprived of the whole or part of the payment payable to him.   Article 188 After the completion of the salvage operation, the party salved shall, at the request of the salvor, provide satisfactory security for salvage reward and other charges.   Without prejudice to the provisions of the preceding paragraph, the owner of the ship salved shall, before the release of the goods, make best endeavours to cause the owners of the property salved to provide satisfactory security for the share of the payment that they ought to bear.   Without the consent of the salvor, the ship or other property salved shall not be removed from the port or place at which they first arrived after the completion of the salvage operation, until satisfactory security has been provided with respect to the ship or other property salved, as demanded by the salvor.   Article 189 The court or the arbitration organization handling the salvor's claim for payment may, in light of the specific circumstances and under fair and just terms, decide or make an award ordering the party salved to pay on account an appropriate amount to the salvor.   On the basis of the payment on account made by the party salved in accordance with the provisions of the preceding paragraph, the security provided under Article 188 of this Code shall be reduced accordingly.   Article 190 If the party salved has neither made the payment nor provided satisfactory security for the ship and other property salved after 90 days of the salvage, the salvor may apply to the court for an order on forced sale by auction. With respect to the ship or the property salved that cannot be kept or cannot be properly kept, or the storage charge to be incurred may exceed its value, the salvor may apply for an earlier forced sale by auction.   The proceeds of the sale shall, after deduction of the expenses incurred for the storage and sale, be used for the payment in accordance with the provisions of this Code. The remainder, if any, shall be returned to the party salved, and, if there is no way to return the remainder or if the remainder has not been claimed after one year of the forced sale, it shall go to the State treasury. In case of any deficiency, the salvor has the right of recourse against the party salved.   Article 191 The provisions of this Chapter shall apply to the salvor's right to the payment for the salvage operations carried out between the ships of the same owner.   Article 192 With respect to the salvage operations performed or controlled by the relevant competent authorities of the State, the salvors shall be entitled to avail themselves of the rights and remedies provided for in this Chapter in respect of salvage operations.   Chapter X   General Average   Article 193 General average means the extraordinary sacrifice or expenditure intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the ship, goods or other property involved in a common maritime adventure.   Loss or damage sustained by the ship or goods through delay, whether on the voyage or subsequently, such as demurrage and loss of market as well as other indirect losses, shall not be admitted as general average.   Article 194 When a ship, after having been damaged in consequence of accident, sacrifice or other extraordinary circumstances, shall have entered a port or place of refuge or returned to its port or place of loading to effect repairs which are necessary for the safe prosecution of the voyage, then the port charges paid, the wages and maintenance of the crew incurred and the fuel and stores consumed during the extra period of detention in such port or place, as well as the loss or damage and charges arising from the discharge, storage, reloading and handling of the goods, fuel, stores and other property on board in order to have the repairs done shall be allowed as general average.   Article 195 Any extra expense incurred in place of another expense which would have been allowed as general average shall be deemed to be general average and so allowed, but the amount of such expense incurred shall not be in excess of the general average expense avoided.   Article 196 The onus of proof shall be upon the party claiming in general average to show that the loss or expense claimed is properly allowable as general average.   Article 197 Rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the adventure. However, this shall not prejudice any remedies or defences which may be open against or to that party in respect of such fault.   Article 198 The amounts of sacrifice of the ship, the goods and the freight shall be respectively determined as follows:   (1) The amount of sacrifice of the ship shall be calculated on the basis of the repair cost of the ship actually paid, from which any reasonable deduction in respect of "new for old" being made. Where the ship has not been repaired after the sacrifice, the amount of sacrifice thereof shall be calculated on the basis of the reasonable reduced value of ship after the general average sacrifice. Such amount shall not exceed the estimated cost of repair.   Where the ship is an actual total loss or where the cost of repair would exceed the value of the ship after the repair, the amount of sacrifice of the ship shall be calculated on the basis   of the estimated sound value of the ship, less the estimated cost of repair not allowable as general average, as well as the value of the ship after the damage.   (2) The amount of sacrifice of the goods already lost shall be calculated on the basis of the value of the goods at the time of shipment plus insurance and freight, from which the freight that need not be paid due to the sacrifice made being deducted. For the damaged goods that had already been sold before an agreement was reached on the extent of the damage sustained, the amount of sacrifice thereof shall be calculated on the basis of the difference between the value of the goods at the time of shipment plus insurance and freight, and the net proceeds of the goods so sold.   (3) The amount of sacrifice of the freight shall be calculated on the basis of the amount of loss of freight on account of the sacrifice of the goods, from which the operating expenses that ought to be paid in order to earn such freight but need not be paid because of the sacrifice shall be deducted.   Article 199 The contribution in general average shall be made in proportion to the contributory values of the respective beneficiaries.   The contributory value in general average by the ship, goods and freight shall be determined as follows:   (1) The contributory value of the ship shall be calculated on the basis of the sound value of the ship at the place where the voyage ends, from which any damage that does not come under general average sacrifice being deducted; alternately, the actual value of the ship at the place where the voyage ends, plus the amount of general average sacrifice.   (2) The contributory value of the goods shall be calculated on the basis of the value of the goods at the time of shipment plus insurance and freight, from which the damage that does not come under the general average sacrifice and the carrier's freight at risk being deducted. Where the goods had been sold before its arrival at the port of destination, its value for contribution shall be the net proceeds plus the amount of general average sacrifice.   Passenger's luggage and personal belongings shall not be included in the value for contribution.   (3) The Contributory value of freight shall be calculated on the basis of the amount of freight at the risk of the carrier and which the carrier is entitled to collect at the end of the voyage, less any expense incurred for the prosecution of the voyage after the general average, in order to earn the freight, plus the amount of general average sacrifice.   Article 200 Goods undeclared or wrongfully declared shall be liable for the contribution to general average, but the special sacrifice sustained by such goods shall not be allowed as general average.   Where the value of the goods has been improperly declared at a value below its actual value, the contribution to general average shall be made on the basis of their actual value and, where a general average sacrifice has occurred, the amount of sacrifice shall be calculated on the basis of the declared value.   Article 201 Interest shall be allowed on general average sacrifice and general average expenses paid on account. A commission shall be allowed for the general average expenses paid on account, except those for the wages and maintenance of the crew and fuel and store consumed.   Article 202 The contributing parties shall provide security for general average contribution at the request of the parties that have an interest therein.   Where the security has been provided in the form of cash deposits, such deposits shall be put in a bank by an average adjuster in the name of a trustee.   The provision, use and refund of the deposits shall be without prejudice to the ultimate liability of the contributing parties.   Article 203 The adjustment of general average shall be governed by the average adjustment rules agreed upon in the relevant contract. In the absence of such an agreement in the contract, the relevant provisions contained in this Chapter shall apply.   Chapter XI   Limitation of Liability for Maritime Claims   Article 204 Shipowners and salvors may limit their liability in accordance with the provisions of this Chapter for claims set out in Article 207 of this Code.   The shipowners referred to in the preceding paragraph shall include the charterer and the operator of a ship.   Article 205 If the claims set out in Article 207 of this Code are not made against shipowners or salvors themselves but against persons for whose act, neglect or default the shipowners or salvors are responsible, such persons may limit their liability in accordance with the provisions of this Chapter.   Article 206 Where the assured may limit his liability in accordance with the provisions of this Chapter, the insurer liable for the maritime claims shall be entitled to the limitation of liability under this Chapter to the same extent as the assured.   Article 207 Except as provided otherwise in Articles 208 and 209 of this Code, with respect to the following maritime claims, the person liable may limit his liability in accordance with the provisions of this Chapter, whatever the basis of liability may be:   (1) Claims in respect of loss of life or personal injury or loss of or damage to property including damage to harbour works, basins and waterways and aids to navigation occurring on board or in direct connection with the operation of the ship or with salvage operations, as well as consequential damages resulting therefrom;   (2) Claims in respect of loss resulting from delay in delivery in the carriage of goods by sea or from delay in the arrival of passengers or their luggage;   (3) Claims in respect of other loss resulting from infringement of rights other than contractual rights occurring in direct connection with the operation of the ship or salvage operations;   (4) Claims of a person other than the person liable in respect of measures taken to avert or minimize loss for which the person liable may limit his liability in accordance with the provisions of this Chapter, and further loss caused by such measures.   All the claims set out in the preceding paragraph, whatever the way they are lodged, may be entitled to limitation of liability. However, with respect to the remuneration set out in sub-paragraph (4) for which the person liable pays as agreed upon in the contract, in relation to the obligation for payment, the person liable may not invoke the provisions on limitation of liability of this Article.   Article 208 The provisions of this Chapter shall not be applicable to the following claims:   (1) Claims for salvage payment or contribution in general average;   (2) Claims for oil pollution damage under the International Convention on Civil Liability for Oil Pollution Damage to which the People's Republic of China is a party;   (3) Claims for nuclear damage under the International Convention on Limitation of Liability for Nuclear Damage to which the People's Republic of China is a party;   (4) Claims against the shipowner of a nuclear ship for nuclear damage;   (5) Claims by the servants of the shipowner or salvor, if under the law governing the contract of employment, the shipowner or salvor is not entitled to limit his liability or if he is by such law only permitted to limit his liability to an amount greater than that provided for in this Chapter.   Article 209 A person liable shall not be entitled to limit his liability in accordance with the provisions of this Chapter, if it is proved that the loss resulted from his act or omission done with the intent to cause such loss or recklessly and with knowledge that such loss would probably result.   Article 210 The limitation of liability for maritime claims, except as otherwise provided for in Article 211 of this Code, shall be calculated as follows:   (1) In respect of claims for loss of life or personal injury:   a) 333,000 Units of Account for a ship with a gross tonnage ranging from 300 to 500 tons;   b) For a ship with a gross tonnage in excess of 500 tons, the limitation under a) above shall be applicable to the first 500 tons and the following amounts in addition to that set out under a) shall be applicable to the gross tonnage in excess of 500 tons:   For each ton from 501 to 3,000 tons: 500 Units of Account;   For each ton from 3,001 to 30,000 tons: 333 Units of Account;   For each ton from 30,001 to 70,000 tons: 250 Units of Account;   For each ton in excess of 70,000 tons: 167 Units of Account;   (2) In respect of claims other than that for loss of life or personal injury:   a) 167,000 Units of Account for a ship with a gross tonnage ranging from 300 to 500 tons;   b) For a ship with a gross tonnage in excess of 500 tons, the limitation under a) above shall be applicable to the first 500 tons, and the following amounts in addition to that under a) shall be applicable to the part in excess of 500 tons:   For each ton from 501 to 30,000 tons: 167 Units of Account;   For each ton from 30,001 to 70,000 tons: 125 Units of Account;   For each ton in excess of 70,000 tons: 83 Units of Account.   (3) Where the amount calculated in accordance with sub-paragraph (1) above is insufficient for payment of claims for loss of life or personal injury set out therein in full, the amount calculated in accordance with sub-paragraph (2) shall be available for payment of the unpaid balance of claims under sub-paragraph (1), and such unpaid balance shall rank rateably with claims set out under sub-paragraph (2).   (4) However, without prejudice to the right of claims for loss of life or personal injury under sub-paragraph (3), claims in respect of damage to harbour works, basins and waterways and aids to navigation shall have priority over other claims under sub-paragraph (2).   (5) The limitation of liability for any salvor not operating from any ship or for any salvor operating solely on the ship to, or in respect of which, he is rendering salvage services, shall be calculated according to a gross tonnage of 1,500 tons.   The limitation of liability for ships with a gross tonnage not exceeding 300 tons and those engaging in transport services between the ports of the People's Republic of China as well as those for other coastal works shall be worked out by the competent authorities of transport and communications under the State Council and implemented after its being submitted to and approved by the State Council.   Article 211 In respect of claims for loss of life or personal injury to passengers carried by sea, the limitation of liability of the shipowner thereof shall be an amount of 46,666 Units of Account multiplied by the number of passengers which the ship is authorized to carry according to the ship's relevant certificate, but the maximum amount of compensation shall not exceed 25,000,000 Units of Account.   The limitation of liability for claims for loss of life or personal injury to passengers carried by sea between the ports of the People's Republic of China shall be worked out by the competent authorities of transport and communications under the State Council and implemented after its being submitted to and approved by the State Council.   Article 212 The limitation of liability under Articles 210 and 211 of this Code shall apply to the aggregate of all claims that may arise on any given occasion against shipowners and salvors themselves, and any person for whose act, neglect or fault the shipowners and the salvors are responsible.   Article 213 Any person liable claiming the limitation of liability under this Code may constitute a limitation fund with a court having jurisdiction. The fund shall be constituted in the sum of such an amount set out respectively in Articles 210 and 211, together with the interest thereon from the date of the occurrence giving rise to the liability until the date of the constitution of the fund.   Article 214 Where a limitation fund has been constituted by a person liable, any person having made a claim against the person liable may not exercise any right against any assets of the person liable. Where any ship or other property belonging to the person constituting the fund has been arrested or attached, or, where a security has been provided by such person, the court shall order without delay the release of the ship arrested or the property attached or the return of the security provided.   Article 215 Where a person entitled to limitation of liability under the provisions of this Chapter has a counter-claim against the claimant arising out of the same occurrence, their respective claims shall be set off against each other and the provisions of this Chapter shall only apply to the balance, if any.   Chapter XII   Contract of Marine Insurance   Section 1   Basic Principles   Article 216 A contract of marine insurance is a contract whereby the insurer undertakes, as agreed, to indemnify the loss to the subject matter insured and the liability of the insured caused by perils covered by the insurance against the payment of an insurance premium by the insured.   The covered perils referred to in the preceding paragraph mean any maritime perils agreed upon between the insurer and the insured, including perils occurring in inland rivers or on land which is related to a maritime adventure.   Article 217 A contract of marine insurance mainly includes:   (1) Name of the insurer;   (2) Name of the insured;   (3) Subject matter insured;   (4) Insured value;   (5) Insured amount;   (6) Perils insured against and perils excepted;   (7) Duration of insurance coverage;   (8) Insurance premium.   Article 218 The following items may come under the subject matter of marine insurance:   (1)Ship;   (2) Cargo;   (3) Income from the operation of the ship including freight, charter hire and passenger's fare;   (4) Expected profit on cargo;   (5) Crew's wages and other remuneration;   (6) Liabilities to a third person;   (7) Other property which may sustain loss from a maritime peril and the liability and expenses arising therefrom.   The insurer may reinsure the insurance of the subject matter enumerated in the preceding paragraph. Unless otherwise agreed in the contract, the original insured shall not be entitled to the benefit of the reinsurance.   Article 219 The insurable value of the subject matter insured shall be agreed upon between the insurer and the insured.   Where no insurable value has been agreed upon between the insurer and the insured, the insurable value shall be calculated as follows:   (1) The insurable value of the ship shall be the value of the ship at the time when the insurance liability commences, being the total value of the ship's hull, machinery, equipment, fuel, stores, gear, provisions and fresh water on board as well as the insurance premium;   (2) The insurable value of the cargo shall be the aggregate of the invoice value of the cargo or the actual value of the non-trade commodity at the place of shipment, plus freight and insurance premium when the insurance liability commences;   (3) The insurable value of the freight shall be the aggregate of the total amount of freight payable to the carrier and the insurance premium when the insurance liability commences;   (4) The insurable value of other subject matter insured shall be the aggregate of the actual value of the subject matter insured and the insurance premium when the insurance liability commences.   Article 220 The insured amount shall be agreed upon between the insurer and the insured. The insured amount shall not exceed the insured value. Where the insured amount exceeds the insured value, the portion in excess shall be null and void.   Section 2   Conclusion, Termination and Assignment of Contract   Article 221 A contract of marine insurance comes into being after the insured puts forth a proposal for insurance and the insurer agrees to accept the proposal and the insurer and the insured agree on the terms and conditions of the insurance. The insurer shall issue to the insured an insurance policy or other certificate of insurance in time, and the contents of the contract shall be contained therein.   Article 222 Before the contract is concluded, the insured shall truthfully inform the insurer of the material circumstances which the insured has knowledge of or ought to have knowledge of in his ordinary business practice and which may have a bearing on the insurer in deciding the premium or whether be agrees to insure or not.   The insured need not inform the insurer of the facts which the insurer has known of or the insurer ought to have knowledge of in his ordinary business practice if about which the insurer made no inquiry.   Article 223 Upon failure of the insured to truthfully inform the insurer of the material circumstances set forth in paragraph 1 of Article 222 of this Code due to his intentional act, the insurer has the right to terminate the contract without refunding the premium. The insurer shall not be liable for any loss arising from the perils insured against before the contract is terminated.   If, not due to the insured's intentional act, the insured did not truthfully inform the insurer of the material circumstances set out in paragraph 1 of Article 222 of this Code, the insurer has the right to terminate the contract or to demand a corresponding increase in the premium. In case the contract is terminated by the insurer, the insurer shall be liable for the loss arising from the perils insured against which occurred prior to the termination of the contract, except where the material circumstances uninformed or wrongly informed of have an impact on the occurrence of such perils.   Article 224 Where the insured was aware or ought to be aware that the subject matter insured had suffered a loss due to the incidence of a peril insured against when the contract was concluded, the insurer shall not be liable for indemnification but shall have the right to the premium. Where the insurer was aware or ought to be aware that the occurrence of a loss to the subject matter insured due to a peril insured against was impossible, the insured shall have the right to recover the premium paid.   Article 225 Where the insured concludes contracts with several insurers for the same subject matter insured and against the same risk, and the insured amount of the said subject matter insured thereby exceeds the insured value, then, unless otherwise agreed in the contract, the insured may demand indemnification from any of the insurers and the aggregate amount to be indemnified shall not exceed the loss value of the subject matter insured. The liability of each insurer shall be in proportion to that which the amount he insured bears to the total of the amounts insured by all insurers. Any insurer who has paid an indemnification in an amount greater than that for which he is liable, shall have the right of recourse against those who have not paid their indemnification in the amounts for which they are liable.   Article 226 Prior to the commencement of the insurance liability, the insured may demand the termination of the insurance contract but shall pay the handling fees to the insurer, and the insurer shall refund the premium.   Article 227 Unless otherwise agreed in the contract, neither the insurer nor the insured may terminate the contract after the commencement of the insurance liability.   Where the insurance contract provides that the contract may be terminated after the commencement of the liability, and the insured demands the termination of the contract, the insurer shall have the right to the premium payable from the day of the commencement of the insurance liability to the day of termination of the contract and refund the remaining portion. If it is the insurer who demands the termination of the contract, the unexpired premium from the day of the termination of the contract to the day of the expiration of the period of insurance shall be refunded to the insured.   Article 228 Notwithstanding the stipulations in Article 227 of this Code, the insured may not demand termination of the contract for cargo insurance and voyage insurance on ship after the commencement of the insurance liability.   Article 229 A contract of marine insurance for the carriage of goods by sea may be assigned by the insured by endorsement or otherwise, and the rights and obligations under the contract are assigned accordingly. The insured and the assignee shall be jointly and severally liable for the payment of the premium if such premium remains unpaid up to the time of the assignment of the contract.   Article 230 The consent of the insurer shall be obtained where the insurance contract is assigned in consequence of the transfer of the ownership of the ship insured. In the absence of such consent, the contract shall be terminated from the time of the transfer of the ownership of the ship. Where the transfer takes place during the voyage, the contract shall be terminated when the voyage ends.   Upon termination of the contract, the insurer shall refund the unexpired premium to the insured calculated from the day of the termination of the contract to the day of its expiration.   Article 231 The insured may conclude an open cover with the insurer for the goods to be shipped or received in batches within a given period. The open cover shall be evidenced by an open policy to be issued by the insurer.   Article 232 The insurer shall, at the request of the insured, issue insurance certificates separately for the cargo shipped in batches according to the open cover.   Where the contents of the insurance certificates issued by the insurer separately differ from those of the open policy, the insurance certificates issued separately shall prevail.   Article 233 The insured shall notify the insurer immediately on learning that the cargo insured under the open cover has been shipped or has arrived. The items to be notified of shall include the name of the carrying ship, the voyage, the value of the cargo and the insured amount.   Section 3   Obligation of the Insured   Article 234 Unless otherwise agreed in the insurance contract, the insured shall pay the premium immediately upon conclusion of the contract. The insurer may refuse to issue the insurance policy or other insurance certificate before the premium is paid by the insured.   Article 235 The insured shall notify the insurer in writing immediately where the insured has not complied with the warranties under the contract. The insurer may, upon receipt of the notice, terminate the contract or demand an amendment to the terms and conditions of the insurance coverage or an increase in the premium.   Article 236 Upon the occurrence of the peril insured against, the insured shall notify the insurer immediately and shall take necessary and reasonable measures to avoid or minimize the loss. Where special instructions for the adoption of reasonable measures to avoid or minimize the loss are received from the insurer, the insured shall act according to such instructions.   The insurer shall not be liable for the extended loss caused by the insured's breach of the provisions of the preceding paragraph.   Section 4   Liability of the Insurer   Article 237 The insurer shall indemnify the insured promptly after the loss from a peril insured against has occurred.   Article 238 The insurer's indemnification for the loss from the peril insured against shall be limited to the insured amount. Where the insured amount is lower than the insured value, the insurer shall indemnify in the proportion that the insured amount bears to the insured value.   Article 239 The insurer shall be liable for the loss to the subject matter insured arising from several perils insured against during the period of the insurance even though the aggregate of the amounts of loss exceeds the insured amount. However, the insurer shall only be liable for the total loss where the total loss occurs after the partial loss which has not been repaired.   Article 240 The insurer shall pay, in addition to the indemnification to be paid with regard to the subject matter insured, the necessary and reasonable expenses incurred by the insured for avoiding or minimizing the loss recoverable under the contract, the reasonable expenses for survey and assessment of the value for the purpose of ascertaining the nature and extent of the peril insured against and the expenses incurred for acting on the special instructions of the insurer.   The payment by the insurer of the expenses referred to in the preceding paragraph shall be limited to that equivalent to the insured amount.   Where the insured amount is lower than the insured value, the insurer shall be liable for the expenses referred to in this Article in the proportion that the insured amount bears to the insured value, unless the contract provides otherwise.   Article 241 Where the insured amount is lower than the value for contribution under the general average, the insurer shall be liable for the general average contribution in the proportion that the insured amount bears to the value for contribution.   Article 242 The insurer shall not be liable for the loss caused by the intentional act of the insured.   Article 243 Unless otherwise agreed in the insurance contract, the insurer shall not be liable for the loss of or damage to the insured cargo arising from any of the following causes:   (1) Delay in the voyage or in the delivery of cargo or change of market price;   (2) Fair wear and tear, inherent vice or nature of the cargo; and   (3) Improper packing.   Article 244 Unless otherwise agreed in the insurance contract, the insurer shall not be liable for the loss of or damage to the insured ship arising from any of the following causes:   (1) Unseaworthiness of the ship at the time of the commencement of the voyage, unless where under a time policy the insured has no knowledge thereof;   (2) Wear and tear or corrosion of the ship.   The provisions of this Article shall apply " mutatis mutandis" to the insurance of freight.   Section 5   Loss of or Damage to the Subject   Matter Insured and Abandonment   Article 245 Where after the occurrence of a peril insured against the subject matter insured is lost or is so seriously damaged that it is completely deprived of its original structure and usage or the insured is deprived of the possession thereof, it shall constitute an actual total loss.   Article 246 Where a ship's total loss is considered to be unavoidable after the occurrence of a peril insured against or the expenses necessary for avoiding the occurrence of an actual total loss would exceed the insured value, it shall constitute a constructive total loss.   Where an actual total loss is considered to be unavoidable after the cargo has suffered a peril insured against, or the expenses to be incurred for avoiding the total actual loss plus that for forwarding the cargo to its destination would exceed its insured value, it shall constitute a constructive total loss.   Article 247 Any loss other than an actual total loss or a constructive total loss is a partial loss.   Article 248 Where a ship fails to arrive at its destination within a reasonable time from the place where it was last heard of, unless the contract provides otherwise, if it remains unheard of upon the expiry of two months, it shall constitute missing. Such missing shall be deemed to be an actual total loss.   Article 249 Where the subject matter insured has become a constructive total loss and the insured demands indemnification from the insurer on the basis of a total loss, the subject matter insured shall be abandoned to the insurer. The insurer may accept the abandonment or choose not to, but shall inform the insured of his decision whether to accept the abandonment within a reasonable time.   The abandonment shall not be attached with any conditions. Once the abandonment is accepted by the insurer, it shall not be withdrawn.   Article 250 Where the insurer has accepted the abandonment, all rights and obligations relating to the property abandoned are transferred to the insurer.   Section 6   Payment of Indemnity   Article 251 After the occurrence of a peril insured against and before the payment of indemnity, the insurer may demand that the insured submit evidence and materials related to the ascertainment of the nature of the peril and the extent of the loss.   Article 252 Where the loss of or damage to the subject matter insured within the insurance coverage is caused by a third person, the right of the insured to demand compensation from the third person shall be subrogated to the insurer from the time the indemnity is paid.   The insured shall furnish the insurer with necessary documents and information that should come to his knowledge and shall endeavour to assist the insurer in pursuing recovery from the third person.   Article 253 Where the insured waives his right of claim against the third person without the consent of the insurer or the insurer is unable to exercise the right of recourse due to the fault of the insured, the insurer may make a corresponding reduction from the amount of indemnity.   Article 254 In effecting payment of indemnity to the insured, the insurer may make a corresponding reduction therefrom of the amount already paid by a third person to the insured.   Where the compensation obtained by the insurer from the third person exceeds the amount of indemnity paid by the insurer, the part in excess shall be returned to the insured.   Article 255 After the occurrence of a peril insured against, the insurer is entitled to waive his right to the subject matter insured and pay the insured the amount in full to relieve himself of the obligations under the contract.   In exercising the right prescribed in the preceding paragraph, the insurer shall notify the insured thereof within seven days from the day of the receipt of the notice from the insured regarding the indemnity. The insurer shall remain liable for the necessary and reasonable expenses paid by the insured for avoiding or minimizing the loss prior to his receipt of the said notice.   Article 256 Except as stipulated in Article 255 of this Code, where a total loss occurs to the subject matter insured and the full insured amount is paid, the insurer shall acquire the full right to the subject matter insured. In the case of under-insurance, the insurer shall acquire the right to the subject matter insured in the proportion that the insured amount bears to the insured value.   Chapter XIII   Limitation of Time   Article 257 The limitation period for claims against the carrier with regard to the carriage of goods by sea is one year, counting from the day on which the goods were delivered or should have been delivered by the carrier. Within the limitation period or after the expiration thereof, if the person allegedly liable has brought up a claim of recourse against a third person, that claim is time-barred at the expiration of 90 days, counting from the day on which the person claiming for the recourse settled the claim, or was served with a copy of the process by the court handling the claim against him.   The limitation period for claims against the carrier with regard to voyage charter party is two years, counting from the day on which the claimant knew or should have known that his right had been infringed.   Article 258 The limitation period for claims against the carrier with regard to the carriage of passengers by sea is two years, counting respectively as follows:   (1) Claims for personal injury: Counting from the day on which the passenger disembarked or should have disembarked;   (2) Claims for death of passengers that occurred during the period of carriage: Counting from the day on which the passenger should have disembarked; whereas those for the death of passengers that occurred after the disembarkation but resulted from an injury during the period of carriage by sea, counting from the day of the death of the passenger concerned, provided that this period does not exceed three years from the time of disembarkation.   (3) Claims for loss of or damage to the luggage: Counting from the day of disembarkation or the day on which the passenger should have disembarked.   Article 259 The limitation period for claims with regard to charter parties is two years, counting from the day on which the claimant knew or should have known that his right had been infringed.   Article 260 The limitation period for claims with regard to sea towage is one year, counting from the day on which the claimant knew or should have known that his right had been infringed.   Article 261 The limitation period for claims with regard to collision of ships is two years, counting from the day on which the collision occurred. The limitation period for claims with regard to the right of recourse as provided for in paragraph 3 of Article 169 of this Code is one year, counting from the day on which the parties concerned jointly and severally paid the amount of compensation for the damage occurred.   Article 262 The limitation period for claims with regard to salvage at sea is two years, counting from the day on which the salvage operation was completed.   Article 263 The limitation period for claims with regard to contribution in general average is one year, counting from the day on which the adjustment was finished.   Article 264 The limitation period for claims with regard to contracts of marine insurance is two years, counting from the day on which the peril insured against occurred.   Article 265 The limitation period for claims with regard to compensation for oil pollution damage from ships is three years, counting from the day on which the pollution damage occurred. However, in no case shall the limitation period exceed six years, counting from the day on which the accident causing the pollution occurred.   Article 266 Within the last six months of the limitation period if, on account of force majeure or other causes preventing the claims from being made, the limitation period shall be suspended. The counting of the limitation period shall be resumed when the cause of suspension no longer exists.   Article 267 The limitation of time shall be discontinued as a result of bringing an action or submitting the case for arbitration by the claimant or the admission to fulfill obligations by the person against whom the claim was brought up. However, the limitation of time shall not be discontinued if the claimant withdraws his action or his submission for arbitration, or his action has been rejected by a decision of the court.   Where the claimant makes a claim for the arrest of a ship, the limitation of time shall be discontinued from the day on which the claim is made.   The limitation period shall be counted anew from the time of discontinuance.   Chapter XIV   Application of Law in Relation   to Foreign-related Matters   Article 268 If any international treaty concluded or acceded to by the People's Republic of China contains provisions differing from those contained in this Code, the provisions of the relevant international treaty shall apply, unless the provisions are those on which the People's Republic of China has announced reservations.   International practice may be applied to matters for which neither the relevant laws of the People's Republic of China nor any international treaty concluded or acceded to by the People's Republic of China contain any relevant provisions   Article 269 The parties to a contract may choose the law applicable to such contract, unless the law provides otherwise. Where the parties to a contract have not made a choice, the law of the country having the closest connection with the contract shall apply.   Article 270 The law of the flag State of the ship shall apply to the acquisition, transfer and extinction of the ownership of the ship.   Article 271 The law of the flag State of the ship shall apply to the mortgage of the ship.   The law of the original country of registry of a ship shall apply to the mortgage of the ship if its mortgage is established before or during its bareboat charter period.   Article 272 The law of the place where the court hearing the case is located shall apply to matters pertaining to maritime liens.   Article 273 The law of the place where the infringing act is committed shall apply to claims for damages arising from collision of ships.   The law of the place where the court hearing the case is located shall apply to claims for damages arising from collision of ships on the high sea .   If the colliding ships belong to the same country, no matter where the collision occurs, the law of the flag State shall apply to claims against one another for damages arising from such collision.   Article 274 The law where the adjustment of general average is made shall apply to the adjustment of general average.   Article 275 The law of the place where the court hearing the case is located shall apply to the limitation of liability for maritime claims.   Article 276 The application of foreign laws or international practices pursuant to the provisions of this Chapter shall not jeopardize the public interests of the People's Republic of China.   Chapter XV   Supplementary Provisions   Article 277 The Unit of Account referred to in this Code is the Special Drawing Right as defined by the International Monetary Fund; the amount of the Chinese currency (RMB) in terms of the Special Drawing Right shall be that computed on the basis of the method of conversion established by the authorities in charge of foreign exchange control of this country on the date of the judgment by the court or the date of the award by the arbitration organization or the date mutually agreed upon by the parties.   Article 278 This Code shall come into force as of July 1, 1993.
  • Special Maritime Procedure Law of the People's Republic of China

    2012-11-29

    (Adopted at the 13th Meeting of the Standing Committee of the Ninth National People's Congress on December 25, 1999 and promulgated by Order No. 28 of the President of the People's Republic of China on December 25, 1999)   Contents   Chapter I General Principles   Chapter II Jurisdiction   Chapter III Preservation of Maritime Claims    Section 1 General Provisions    Section 2 Arrest and Auction of Ships    Section 3 Attachment and Auction of Cargo Carried by Ships   Chapter IV Maritime Injunction   Chapter V Preservation of Maritime Evidence   Chapter VI Maritime Security   Chapter VII Service   Chapter VIII Trial Procedures    Section 1 Provisions for Trial of Collision Cases    Section 2 Provisions for Trial of General Average Cases    Section 3 Provisions for Exercising the Right of Subrogation by Marine Insurers    Section 4 Summary Procedure, Procedure for Hastening Debt Recovery and Procedure for Public Exigence   Chapter IX Procedure for Constitution of Limitation Fund for Maritime Claims   Chapter X Procedure for Registration and Repayment of Debt   Chapter XI Procedure for Exigence of Maritime Liens   Chapter XII Supplementary Provisions   Chapter I   General Principles   Article 1 This Law is enacted with a view to safeguarding the rights to litigation of the parties to maritime cases and ensuring that the people's courts shall ascertain the facts, establish the liabilities, properly apply the laws and promptly hear and determine maritime cases.   Article 2 The Civil Procedure Law of the People's Republic of China and this Law shall be applicable to maritime actions brought in the People's Republic of China. Where the provisions of this Law are applicable, they shall prevail.   Article 3 Where any provisions concerning foreign-related maritime actions contained in international conventions entered into or acceded to by the People's Republic of China are different from those contained in the Civil Procedure Law of the People's Republic of China and in this Law, the provisions of such international conventions shall apply, except those on which the People's Republic of China has announced reservation.   Article 4 The maritime courts shall entertain actions brought by the parties in respect of maritime tort, disputes over maritime contracts and other maritime disputes as provided for by law.   Article 5 In hearing and determining maritime cases, the maritime courts, the higher people's courts of the places where such maritime courts are located and the Supreme People's Court shall apply this Law.   Chapter II   Jurisdiction   Article 6 The relevant provisions of the Civil Procedure Law of the People's Republic of China shall apply to territorial jurisdiction of maritime actions.   The territorial jurisdiction of the maritime actions listed hereunder shall be determined as follows:   (1) apart from jurisdiction exercised in accordance with the provisions of Articles 29 to 31 in the Civil Procedure Law of the People's Republic of China, an action brought for maritime tort may also be under the jurisdiction of the maritime court of the place where the ship's port of registry is located;   (2) apart from jurisdiction exercised in accordance with the provisions of Article 28 in the Civil Procedure Law of the People's Republic of China, an action arising from a dispute over a contract for carriage by sea may also be under the jurisdiction of the maritime court of the place where the port of transshipment is located;   (3) an action arising from a charter-party dispute of a seagoing ship shall be under the jurisdiction of the maritime court of the place where the port of delivery, the port of re-delivery, the ship's port of registry and the domicile of the defendant is located;   (4) an action arising from a dispute over a protection and indemnity contract shall be under the jurisdiction of the maritime court of the place where the subject-matter of insurance is located, where the accident occurred or where the domicile of the defendant is located;   (5) an action arising from a dispute over the service contract of the crew of a sea-going ship shall be under the jurisdiction of the maritime court of the place where the domicile of the plaintiff is located, where the contract is signed, where the port of embarkation or disembarkation of the ship's crew is located, or where the domicile of the defendant is located;   (6) an action arising from a dispute over maritime security shall be under the jurisdiction of the maritime court of the place where collateral is located or where the domicile of the defendant is located; an action arising from a dispute over ship mortgage may also be under the jurisdiction of the maritime court of the place where the ship's port of registry is located;   (7) an action arising from a dispute over the ownership, possession, employment and maritime lien of a sea-going ship shall be under the jurisdiction of the maritime court of the place where the ship is located, where the ship's port of registry is located, or where the domicile of the defendant is located.   Article 7 The following maritime actions shall be under the exclusive jurisdiction of maritime courts specified in this Article respectively:   (1) an action arising from a dispute over coastal port operation shall be under the jurisdiction of the maritime court of the place where the port is located;   (2) an action brought against pollution damage to sea areas caused by discharge, spill or dumping of oil or other hazardous substances from ships, by production or operation at sea or by ship demolition or repair shall be under the jurisdiction of the maritime courts of the place where the pollution occurred, the place that is suffering from the harmful consequences or the place where pollution prevention measures were taken; and   (3) an action arising from a dispute over an offshore exploration and exploitation contract performed within the territory of the People's Republic of China or in the sea area under the jurisdiction of the People's Republic of China shall be under the jurisdiction of the maritime court of the place where the contract is being performed .   Article 8 Where all the parties to a maritime dispute are aliens, stateless persons, foreign enterprises or organizations and have agreed in writing to be subject to the jurisdiction of a maritime court of the People's Republic of China, notwithstanding that the place that is actually related to the dispute is not within the territory of the People's Republic of China, the said maritime court of the People's Republic of China shall have jurisdiction of the dispute.   Article 9 Any party who wishes to apply for a positive decision that certain property at sea is ownerless shall file an application with the maritime court of the place where the said property is located; anyone who wishes to apply for a declaration that a person is dead in an accident at sea shall file an application with the maritime court of the place where the competent authority dealing with the accident is located or with the maritime court that entertains the relevant maritime case.   Article 10 Any controversy that arises between a maritime court and a local people's court over jurisdiction shall be resolved by the two courts through consultation; if consultation fails, the matter shall be submitted to their common superior people's court for designation of jurisdiction.   Article 11 Any party who wishes to apply for the enforcement of a maritime arbitration award, the recognition and enforcement of a judgment or order of a foreign court or a foreign maritime arbitration award shall file an application with the maritime court of the place where the property against which enforcement is sought or the domicile of the person against whom enforcement is sought is located. In the absence of a maritime court at the said place, the application shall be filed with the intermediate people's court of the place where the property against which enforcement is sought or the domicile of the person against whom enforcement is sought is located.   Chapter III   Preservation of Maritime Claims   Section I   General Provisions   Article 12 Preservation of maritime claims means the compulsory measures taken by a maritime court on the application of a maritime claimant against the property of the person against whom a claim is made, for the purpose of ensuring fulfillment of the claim of the maritime claimant.   Article 13 Any party who wishes to apply for preservation of a maritime claim before instituting an action shall file an application with the maritime court of the place where the property subject to preservation is located.   Article 14 Preservation of a maritime claim shall not be bound by the jurisdiction agreement or arbitration agreement reached between the parties to an action in respect of the maritime claim.   Article 15 A maritime claimant who wishes to apply for preservation of a maritime claim shall file an application in writing with a maritime court. In the application the particulars of the maritime claim, reasons for the application, subject-matter to be preserved and the amount of security required shall be specified with relevant evidence attached.   Article 16 The maritime court, having entertained an application for preservation of a maritime claim, may enjoin the maritime claimant to provide security. If the maritime claimant fails to do so, the court shall reject the application.   Article 17 The maritime court, having accepted an application, shall make an order within 48 hours. Where the order involves adoption of measures for preservation of the maritime claim, it shall be executed forthwith; where the conditions for the preservation of the maritime claim are not met, it shall make an order to reject the application.   Any party who is dissatisfied with such an order may, within 5 days after receipt thereof, apply for review not more than once. The maritime court shall give the result of the review within 5 days after receipt of the application therefor. Execution of the order shall not be suspended during the period of review.   Where preservation of a maritime claim is objected by an interested person, the maritime court, having examined the objection and considering the reasons justified, shall discharge preservation against his property.   Article 18 Where a person against whom a claim is made provides security or a party applies for discharge of preservation of the maritime claim on justified grounds, the maritime court shall discharge the preservation promptly.   If within the time limit prescribed by this Law a maritime claimant fails to bring an action or apply for arbitration in accordance with an arbitration agreement, the maritime court shall discharge the preservation or return the security promptly.   Article 19 Where legal proceedings or arbitral proceedings are not commenced in respect of a maritime dispute after execution of the preservation of a maritime claim, any party may bring an action in respect of the maritime claim in the maritime court that adopts measures for preservation of the maritime claim or another maritime court that has jurisdiction, unless a jurisdiction agreement or arbitration agreement has been reached between the parties.   Article 20 A maritime claimant who has wrongly applied for preservation of a maritime claim shall indemnify the person against whom the claim is made or the interested person for the losses thus incurred.   Section II   Arrest and Auction of Ships   Article 21 With respect to the following maritime claims, an application may be made for the arrest of a ship:   (1) loss of or damage to property caused by ship operation;   (2) loss of life or personal injury in direct connection with ship operation;   (3) salvage at sea;   (4) damage or threat of damage caused by ship to environment, coast or relevant interested persons; measures adopted to prevent, diminish or eliminate such damage; compensation paid for such damage; expenses for reasonable measures actually adopted or to be adopted to restore environment; losses caused by such damage to or likely to a third party; and damage, expenses or losses of a similar nature as those specified in this subparagraph;   (5) expenses related to re-floating, removal, reclamation or destroying of a sunken ship, wreck, aground ship, abandoned ship or to making them harmless, including the expenses related to re-floating, removal, reclamation or destroying of the things which have or no longer remained on board the ship or to making them harmless and expenses related to maintaining of an abandoned ship and her crew;   (6) agreement in respect of employment or charting of a ship;   (7) agreement in respect of carriage of goods or passengers;   (8) cargo (including luggage) carried by a ship or loss or damage relating thereto;   (9) general average;   (10) towage;   (11) pilotage;   (12) providing of supplies or rendering of services in respect of ship operation, management, maintenance or repair;   (13) construction, re-construction, repair, refurbishment or equipment of a ship;   (14) dues or expenses for ports, canals, docks, harbours or other waterways;   (15) crew's wages and other moneys, including repatriation expenses and social insurance premium payable for the crew;   (16) expenses paid for a ship or a ship-owner;   (17) insurance premium for a ship (including protection and indemnity calls) payable by or paid for a ship-owner or bareboat charterer;   (18) commission, brokage or agency fee related to ships payable by or paid for a ship-owner or bareboat charterer;   (19) a dispute over ownership or possession of a ship;   (20) a dispute between joint owners of a ship over the employment or earnings of the ship;   (21) ship mortgage or rights of a similar nature; and   (22) a dispute arising out of a ship sale contract.   Article 22 No application may be made for the arrest of a ship on account of maritime claims other than the ones specified in Article 21 of this Law, except for the enforcement of a judgment, an arbitration award or other legal documents.   Article 23 The maritime court may arrest the ship concerned in any of the following circumstances:   (1) the ship-owner is liable for the maritime claim and is the owner of the ship at the time of arrest;   (2) the bareboat charterer of the ship is liable for the maritime claim and is the bareboat charterer or owner of the ship at the time of arrest;   (3) a maritime claim that gives rise to ship mortgage or to rights of a similar nature;   (4) a maritime claim related to ownership or possession of a ship; and   (5) a maritime claim that gives rise to maritime lien.   The maritime court may arrest other ships owned, at the time of arrest, by the ship-owner, bareboat charterer, time charterer or voyage charterer who is liable for the maritime claim, except for claims related to ownership or possession of a ship.   No ships engaged in military or governmental services may be subject to arrest.   Article 24 No maritime claimant may, on account of the same maritime claim, apply for arrest of a ship which was once arrested, except in any of the following circumstances:   (1) the person against whom the claim is made fails to provide sufficient security;   (2) it is likely that the surety cannot perform the obligations under the security in full or in part; or   (3) the maritime claimant agrees, on reasonable grounds, to release the arrested ship or to return the security provided; or the maritime claimant cannot, by reasonable means, stop the release of the arrested ship or the return of the security provided.   Article 25 A maritime claimant who wishes to apply for arrest of the ship concerned but cannot promptly ascertain the name of the person against whom the claim is made may still apply for its arrest.   Article 26 While the maritime court issues an order for arresting of a ship, it may send a notice to relevant departments for assistance in execution of the order. In the notice shall be stated the scope and specific tasks of the assistance in execution of the order, and the relevant departments have the obligation to assist in the execution. When the maritime court deems it necessary, it may directly send officers to go aboard for purposes of supervision.   Article 27 After ordering to preserve a ship, the maritime court may, with the consent of the maritime claimant, allow continued operation of the ship by means of restraining disposition or mortgaging of the ship.   Article 28 The time limit for ship arrest in preservation of a maritime claim is 30 days.   Where a maritime claimant brings an action or applies for arbitration within the 30 days, or where a maritime claimant applies for arrest of a ship in the process of a legal action or arbitration, arrest of the ship is not subject to the time limit prescribed in the preceding paragraph.   Article 29 Where on the expiry of the time limit for ship arrest, a person against whom a claim is made fails to provide security and it is not appropriate to keep the ship under arrest, the maritime claimant, having brought an action or applied for arbitration, may apply to the maritime court ordering the ship arrest for auction of the ship.   Article 30 The maritime court shall, after receipt of an application for auction of a ship, examine the application and make an order to allow or disallow the auction.   Any party who is dissatisfied with such an order may, within 5 days after receipt thereof, apply for review not more than once. The maritime court shall, within 5 days after receipt of the application therefor, give the result of the review. During the period of review, execution of the order shall be suspended.   Article 31 Where a maritime claimant, having applied for auction of a ship, applies for termination of the auction, the maritime court shall make an order to approve or disapprove the application. If the maritime court makes an order to terminate the auction of the ship, the expenses incurred in preparation for auction of the ship shall be borne by the maritime claimant.   Article 32 The maritime court which orders auction of a ship shall issue an announcement in newspapers or other news media. In the case of auction of a foreign ship, such announcement shall be issued in the newspapers or other news media of overseas distribution.   Such announcement shall contain:   (1) name and nationality of the ship for auction;   (2) reasons and grounds for auction of the ship;   (3) composition of the ship auction committee;   (4) time and venue of the ship auction;   (5) time and venue for display of the ship for auction;   (6) formalities to be completed for taking part in bidding;   (7) particulars necessary for registration of debts; and   (8) other matters which need to be announced.   The period of announcement for ship auction shall be not less than 30 days.   Article 33 The maritime court shall, 30 days before an auction of a ship, issue a notice to the ship registrar of the state of registry of the ship for auction and to the maritime lien holder, mortgagee and ship-owner already known.   Such notice shall contain the name of the ship for auction, time and venue of the ship auction, reasons and grounds for the ship auction, registration of debts, etc.   Such notice shall be despatched in written form or by other appropriate means where the receipt thereof can be confirmed.   Article 34 A ship auction shall be conducted by a ship auction committee. A ship auction committee shall consist of three or five persons, including the person of the maritime court in charge of execution designated by the court, the auctioneer and ship surveyor invited by the maritime court.   The ship auction committee shall arrange the assessment and evaluation of the ship; arrange and preside over the auction; sign auction confirmation with the bidder; and complete ship delivery formalities.   The ship auction committee is responsible to and under the supervision of the maritime court.   Article 35 Bidders shall register with the ship auction committee within the prescribed time limit. At the time of registration, certificates of identification of the person who registers with the committee, the legal representative of the enterprise or the leading official of other organization, and the power of attorney of the authorized proxy shall be submitted for examination and a certain amount of bidding deposit shall be paid.   Article 36 The ship auction committee shall, before auction of a ship, display the ship for auction and make the ship available for inspection and provide information about the ship.   Article 37 A buyer, having signed the auction confirmation, shall pay forthwith not less than 20% of the purchase price, and the balance shall be paid within seven days after the date of the purchase, unless the ship auction committee has agreed otherwise with the buyer.   Article 38 When a buyer has paid the purchase price in full, the ship-owner shall, within the designated time limit, deliver to the buyer the ship as is at the berthing place. The ship auction committee shall arrange and supervise the delivery of the ship and sign the letter of confirmation of delivery and acceptance with the buyer after delivery of the ship.   After delivery of the ship, the maritime court shall issue an order to release the ship.   Article 39 When a ship is delivered, the maritime court shall issue an announcement in newspapers or other news media stating that the ship has been sold by auction and delivered to the buyer.   Article 40 A buyer, having taken delivery of the ship, shall by virtue of the auction confirmation and other relevant documents, complete the formalities of registration with the ship registrar in respect of ownership of the ship. The former ship-owner shall cancel the registration with the previous ship registrar in respect of ownership of the ship. Ownership of the ship is transferred notwithstanding that the former ship-owner fails to cancel such registration.   Article 41 An auction is void if there is malicious collusion between the bidders. The bidders who take part in malicious collusion shall be liable for the expenses of the ship auction and make good the relevant losses. The maritime court may impose on the bidders who takes part in malicious collusion a fine of not less than 10% but not more than 30% of the highest bidding.   Article 42 In addition to the provisions of this Section, the relevant provisions of the Auction Law of the People's Republic of China shall apply to auction.   Article 43 Where a ship under arrest is to be auctioned for satisfaction of debts during the process of the procedure for execution, the relevant provisions of this Section may be applied mutatis mutandis.   Section III   Attachment and Auction of Cargo Carried By Ships   Article 44 A maritime claimant may apply for attachment of the cargo carried by a ship to ensure fulfillment of his maritime claim.   The cargo against which an attachment is applied for shall be that owned by the person against whom the claim is made.   Article 45 The value of the cargo against which an attachment is applied for by a maritime claimant shall be equal to the amount of his claim.   Article 46 The time limit for attachment of the cargo carried by a ship for preservation of a maritime claim is 15 days.   Where within the 15 days a maritime claimant brings an action or applies for arbitration or, in the process of legal action or arbitration, applies for attachment of the cargo carried by a ship, attachment of the cargo carried by the ship is not subject to the time limit prescribed in the preceding paragraph.   Article 47 Where on the expiry of the time limit for cargo attachment, the person against whom a claim is made fails to provide security and it is not appropriate to keep the cargo under attachment, the maritime claimant, having brought an action or applied for arbitration, may apply to the maritime court ordering the attachment of the cargo carried by the ship for auction of the cargo.   Where the cargo cannot be preserved or is difficult to preserve, or the expenses for its preservation are likely to exceed its value, a maritime claimant may apply for an earlier auction.   Article 48 The maritime court shall, after receipt of an application for auction of the cargo carried by a ship, examine the application and, within 7 days, make an order to allow or disallow the auction.   Any party who is dissatisfied with such an order may, within five days after receipt thereof, apply for review not more than once. The maritime court shall, within five days after receipt of the application therefor, give the result of the review. During the period of review, execution of the order shall be suspended.   Article 49 Auction of the cargo carried by a ship shall be conducted by an auction committee composed of the person of the maritime court in charge of execution designated by the court and the auctioneer invited by the maritime court, or conducted by an organization entrusted by the maritime court.   Where there are no provisions in this Section to govern certain auction of the cargo carried by a ship, the provisions of Section 2 of this Chapter regarding auction of ships may be applied mutatis mutandis   Article 50 Where a maritime claimant applies for preservation of a maritime claim in respect of a ship's bunkers and provisions related to the claim, the provisions of this Section shall apply.         Chapter IV   Maritime Injunction   Article 51 A maritime injunction means the compulsory measures adopted on the application of a maritime claimant by the maritime court to compel the person against whom a claim is made to do or not to do certain things, so as to prevent the lawful rights and interest of the claimant from being infringed upon.   Article 52 A party who wishes to apply for a maritime injunction before bringing an action shall file an application with the maritime court of the place where the maritime dispute arose.   Article 53 A maritime injunction shall not be bound by the jurisdiction agreement or arbitration agreement reached between the parties in respect of the maritime claim.   Article 54 A maritime claimant who wishes to apply for a maritime injunction shall file an application in writing with the maritime court. In the application shall be stated the reasons therefor, with relevant evidence attached.   Article 55 The maritime court, having entertained an application for a maritime injunction, may enjoin the maritime claimant to provide security. Where the maritime claimant fails to do so, It shall reject the application.   Article 56 The following conditions shall be met before a maritime injunction is granted:   (1) the claimant has a specific maritime claim;   (2) a breach of legal provisions or contractual provisions by the person against whom a claim is made needs to be redressed; and   (3) in a situation of emergency, losses will be caused or will become worse if a maritime injunction is not granted forthwith.   Article 57 The maritime court, having accepted an application, shall make an order within 48 hours. Where the order grants a maritime injunction, it shall be executed forthwith; where the conditions for a maritime injunction are not met, it shall make an order to reject the application.   Article 58 A party who is dissatisfied with an order may, within five days after receipt thereof, apply for review not more than once. The maritime court shall, within five days after receipt of the application therefor, give the result of the review. Execution of the order shall not be suspended during the period of review.   Where a maritime injunction is objected by an interested person, the maritime court, having examined the objection and considering the reasons therefor justified, shall cancel the maritime injunction.   Article 59 Where a person against whom a claim is made refuses to comply with the maritime injunction, the maritime court may, according to the seriousness of the case, impose a fine or put him under detention; if his act constitutes a crime, criminal liability shall be investigated in accordance with law.   A fine imposed upon an individual shall be not less than RMB 1,000 yuan but not more than RMB 30,000 yuan. A fine imposed upon a unit shall be not less than RMB 30,000 yuan but not more than RMB 100,000 yuan.   The detention period shall be not more than 15 days.   Article 60 A maritime claimant who has wrongly applied for a maritime injunction shall indemnify the person against whom the claim is made or the interested person for the losses thus incurred.   Article 61 Where legal proceedings or arbitral proceedings are not commenced in respect of a maritime dispute after execution of the maritime injunction, any party may bring an action in respect of the maritime claim in the maritime court granting the maritime injunction or in another maritime court having jurisdiction, unless a jurisdiction agreement or arbitration agreement has been concluded between the parties.   Chapter V   Preservation of Maritime Evidence   Article 62 Preservation of maritime evidence means the compulsory measures adopted, on the application of a maritime claimant, by the maritime court to take, preserve or seal up the evidence related to a maritime claim.   Article 63 A party who wishes to apply for preservation of maritime evidence before instituting an action shall file an application with the maritime court of the place where the evidence is to be preserved.   Article 64 Preservation of maritime evidence shall not be bound by the jurisdiction agreement or arbitration agreement reached between the parties in respect of the maritime claim.   Article 65 A maritime claimant who wishes to apply for preservation of maritime evidence shall file an application in writing with the maritime court. In the application shall be stated the evidence to be preserved, the connection of the evidence with the maritime claim and the reasons therefor.   Article 66 The maritime court, having entertained an application for preservation of maritime evidence, may enjoin the maritime claimant to provide security. When the maritime claimant fails to do so, it shall reject the application.   Article 67 The following conditions shall be met before preservation of maritime evidence is granted:   (1) the applicant is a party to the maritime claim;   (2) the evidence, preservation of which is requested, substantiates the maritime claim;   (3) the person against whom the application is made is a party relevant to the evidence, preservation of which is requested; and   (4) in a situation of emergency, the evidence relevant to the maritime claim might be lost or hard to obtain, unless the evidence is immediately preserved.   Article 68 The maritime court, having accepted an application, shall make an order within 48 hours. Where the order involves adoption of measures for preservation of the maritime evidence, it shall be executed forthwith; where the conditions for preservation of the maritime evidence are not met, the court shall make an order to reject the application.   Article 69 A party who is dissatisfied with the order may, within five days after receipt thereof, apply for review not more than once. The maritime court shall, within five days after receipt of the application therefor, give the result of the review. Execution of the order shall not be suspended during the period of review. If the reasons given by the person against whom a claim is made are justified, the evidence under preservation shall be returned to that person.   Where preservation of the maritime evidence is objected by an interested person, the maritime court, having examined the objection and considering the reasons therefor justified, shall make an order to cancel preservation of the maritime evidence.   Article 70 To preserve maritime evidence, the maritime court may, taking into account the specific circumstances, seal up the evidence, or take the reproductions, duplicates, photographs, or make video recording, extracts or records of inquests. It may also take the original evidence where definitely necessary.   Article 71 A maritime claimant who has wrongly applied for preservation of maritime evidence shall indemnify the person against whom the claim is made or the interested person for the losses thus incurred.   Article 72 Where legal proceedings or arbitral proceedings are not commenced in respect of a maritime dispute after preservation of the maritime evidence, any party may bring an action in respect of the maritime claim in the maritime court that adopts the measures for preservation of the evidence or another maritime court that has jurisdiction, unless a jurisdiction agreement or arbitration agreement has been concluded between the parties.   Chapter VI   Maritime Security   Article 73 Maritime security consists of securities involved in such procedures as preservation of maritime claims, maritime injunction and preservation of maritime evidence provided for in this Law.   The types of security include cash, guarantee, mortgage or pledge.   Article 74 The security of a maritime claimant shall be submitted to the maritime court; the security of a person against whom a claim is made may be submitted to the maritime court or the maritime claimant.   Article 75 The type and amount of the security provided by a maritime claimant shall be determined by the maritime court. The type and amount of the security provided by a person against whom the claim is made shall be determined through consultation by the maritime claimant and the person against whom the claim is made; if consultation fails, the matter shall be determined by the maritime court.   Article 76 The amount of the security requested for preservation of a maritime claim by a maritime claimant from a person against whom the claim is made shall be equal to the amount of his credit, but shall not exceed the value of the property preserved.   The amount of the security provided by a maritime claimant shall be equal to the loss the person against whom the claim is made may suffer as a result of his application. The exact amount shall be determined by the maritime court.   Article 77 After providing security, the provider may apply to the maritime court for reduction, alteration or cancellation of such security, if he has good reasons to do so.   Article 78 If the amount of the security requested by the maritime claimant is so excessive as to cause losses to the person against whom the claim is made, the maritime claimant shall bear the liability to compensate for the losses.   Article 79 The provisions of this Chapter may apply mutatis mutandis to securities involved in the procedures such as constitution of maritime limitation fund and advance execution.   Chapter VII   Service   Article 80 The service of legal documents in maritime actions is governed by the relevant provisions of the Civil Procedure Law of the People's Republic of China and may also be conducted in the following ways:   (1) on the agent ad litem duly entrusted by the person on whom the document is to be served;   (2) on the representative office or branch established in the People's Republic of China by the person on whom the document is to be served, or on the business agent appointed by the person on whom the document is to be served ; or   (3) in other appropriate ways whereby such service can be acknowledged.   The legal documents in respect of arrest of a ship may be served on the master of the ship concerned.   Article 81 Where a person who is under an obligation to accept legal documents refuses to acknowledge the receipt thereof, the server shall make a record on the receipt of service of the fact and, having the receipt of service signed or sealed by the server and the witness, leave the legal documents in the domicile or on the business premises of the person on whom the documents are to be served, in which case the service shall be deemed to be completed.   Chapter XIII   Trial Procedure   Section 1   Provisions for Trial of Collision Cases   Article 82 Both the plaintiff and the defendant shall fill in the Investigation Form for Maritime Accident truthfully at the time of bringing an action and of submitting defence respectively.   Article 83 No evidential documents shall be attached to the bill of complaint or the bill of defence served by the maritime court on the parties.   Article 84 The burden of proof shall be discharged by the parties before a court hearing. After the parties have discharged their burden of proof and furnished the maritime court with the statement to this effect, they may apply to consult the evidential documents concerning the ship collision.   Article 85 The parties may not reverse the statement previously made in the Investigation Form for Maritime Accident or the evidence adduced in discharging the burden of proof, unless new evidence has come to light and there is good reason for being unable to submit such new evidence within the period for producing evidence.   Article 86 The survey and appraisal of a ship shall be conducted by institutions or individual with due authorization of the State or by professionally qualified institutions or individuals. The maritime court shall not accept any conclusion of the survey or appraisal made or drawn up by institutions or individuals without authorization of the State or without professional qualifications.   Article 87 A case of ship collision shall be tried and concluded by the maritime court within one year after filing of the case. Where an extension of the period is necessary under special circumstances, it shall be subject to approval by the president of the court.   Section 2   Provisions for Trial of General Average Cases   Article 88 With respect to general average, the parties may either mutually agree to entrust average adjusters with the adjustment, or directly bring an action in a maritime court. In dealing with an unadjusted average dispute, the maritime court may entrust average adjusters with the adjustment.   Article 89 The general average statement made by average adjusters may be admissible as the proper basis for contribution if no objection is raised by any of the parties; otherwise, the maritime court shall decide whether to accept the statement or not.   Article 90 A party may bring an action against the liable person for non-general average losses without being prejudiced by the proceedings commenced for the general average claim arising from the same maritime accident.   Article 91 Actions brought by the parties in respect of the same maritime accident for non-general average losses and for general average contribution by recourse claim against the liable person in the maritime court that entertains the general average case can be consolidated by the same court.   Article 92 A case of general average shall be tried and concluded by a maritime court within one year after filing of the case. Where an extension of the period is necessary under special circumstances, it shall be subject to approval by the president of the court.   Section 3   Provisions for Exercising   Right of Subrogation by Marine Insurers   Article 93 Where an accident covered was caused by a third party and the insurer has indemnified the insured, the insurer is entitled to claim compensation against the third party by exercising the right of subrogation up to the amount of the indemnity paid.   Article 94 In exercising the right of subrogation, an insurer shall, bring an action in its own name against the third party that caused the accident covered, if no action has been brought by the insured against that third party.   Article 95 In exercising the right of subrogation, an insurer may apply to the court entertaining the case for an alteration of the party to the lawsuit and subrogate the rights of the insured against the third party that caused the accident covered, if an action has been brought by the insured against that third party.   Where the losses of the insured caused by a third party cannot be fully covered by insurance indemnity, the insurer and the insured may act as co-plaintiffs to claim compensation against the third party.   Article 96 Where an action is brought or an application for participating in the action is filed by an insurer pursuant to the provisions provided for in Articles 94 and 95 of this Law, the insurer shall submit to the maritime court that entertains the case the certificate evidencing payment of indemnity by the insurer and other documents necessary for participating in the action.   Article 97 An aggrieved party may claim for oil pollution damage caused by a ship either against the owner of the ship causing oil pollution damage or directly against the insurer who is answerable for the liabilities of the owner of the ship causing oil pollution damage, or against the person who provides financial security therefor.   Where the insurer for oil pollution damage or the person who provides financial security therefor is sued in an action, such insurer or person is entitled to demand the owner of the ship causing oil pollution damage to join the proceedings.   Section 4   Summary Procedure, Procedure for Hastening Debt Recovery   and Procedure for Public Exigence   Article 98 In hearing simple maritime cases in which the facts are evident, the rights and obligations are clear and the dispute is a minor one, the maritime court may apply the provisions governing summary procedure in the Civil Procedure Law of the People's Republic of China.   Article 99 Where a creditor, on the basis of a maritime-related matter, requests a debtor to pay a debt in cash or in securities, if it is found to be in conformity with the relevant provisions in the Civil Procedure Law of the People's Republic of China, the creditor may apply to the maritime court that has jurisdiction for an order of payment.   Where the debtor is an alien, a stateless person or a foreign enterprise or organization that has a domicile or representative office or branch within the territory of the People's Republic of China on which the order of payment can be served, the creditor may apply to the maritime court that has jurisdiction for an order of payment.   Article 100 A holder of a bill of lading or similar documents for taking delivery of cargo may apply for public exigence to the maritime court of the place where the cargo is located in case such documents are out of control or lost.      Chapter IX   Procedure for Constitution of   Limitation Fund for Maritime Claims   Article 101 After the occurrence of a marine accident, the ship-owner, charterer, operator, salvor or insurer, who wishes to apply for liability limitation in accordance with law, may apply to a maritime court for constitution of the limitation fund for maritime claims.   In the event of oil pollution damage caused by a ship, the ship-owner and the insurer or the person who provides financial security therefor shall, for the purpose of obtaining the right of liability limitation provided for by law, constitute with the maritime court a limitation fund for maritime claims in respect of oil pollution damage.   Constitution of limitation fund may be applied for either before an action is brought or during the process of legal proceedings, or, at the latest, before the judgement of first instance is given.   Article 102 A party who wishes to apply for constitution of a limitation fund for maritime claims before an action is brought shall file an application therefor with the maritime court of the place where the accident occurred, the contract is performed or the ship is under arrest.   Article 103 Constitution of a limitation fund for maritime claims shall not be bound by the jurisdiction agreement or arbitration agreement reached between the parties.   Article 104 A person who wishes to apply for constitution of a limitation fund for maritime claims shall file an application in writing with a maritime court. In the application shall be stated the amount of the limitation fund to be constituted for maritime claims, the reasons therefor as well as the names, addresses and means of correspondence of the interested persons already known, with relevant evidence attached.   Article 105 The maritime court shall, within seven days of the acceptance of an application for constitution of a limitation fund for maritime claims, notify all the interested persons already known and issue an announcement of the same in the newspapers or other news media.   Such notice and announcement shall contain:   (1) name of the applicant;   (2) facts and reasons for application;   (3) particulars for constitution of the limitation fund for maritime claims;   (4) particulars necessary in registration of claims; and   (5) other matters which need to be announced.   Article 106 Any interested person who objects to the application filed by the applicant for constitution of a limitation fund for maritime claims shall file in writing with the maritime court within seven days from the date of receipt of the notice, or within 30 days from the date of the announcement if no notice is received.   The maritime court, having received the written objection filed by an interested person, shall examine the objection and make an order within 15 days. If the objection is well founded, it shall make an order to reject the application of the applicant. Otherwise, it shall make an order to allow the applicant to constitute a limitation fund for maritime claims.    The party who is dissatisfied with such an order may appeal within seven days from the date of receipt thereof. The people's court of second instance shall make an order within 15 days from the date of receipt of the appeal.   Article 107 Where no objection is raised by an interested person within the prescribed time limit, the maritime court shall make an order to allow the applicant to constitute a limitation fund for maritime claims.   Article 108 After the order to allow the applicant to constitute a limitation fund for maritime claims becomes effective, the applicant shall constitute the fund with the maritime court.   A limitation fund for maritime claims may be constituted either by depositing cash or by providing security acceptable to the maritime court.   The sum of the limitation fund for maritime claims shall cover the amount of liability to be limited and any interest accruing from the date of the accident up to the date of constitution. Where the fund is constituted by way of security, the amount of the security shall cover the amount of the fund and any interest accruing thereon during the period of such constitution.   Where the fund is constituted with cash deposited, the date on which the fund is transferred into the bank account designated by the maritime court shall be deemed to be the date of constitution of the fund. Where the fund is constituted with security provided, the date on which the maritime court accepts the security shall be deemed to be the date of constitution of the fund.   Article 109 After a limitation fund for maritime claims has been constituted, the parties shall bring an action in respect of the maritime dispute with the maritime court with which the limitation fund for maritime claims has been constituted, unless a jurisdiction agreement or arbitration agreement has been reached between the parties.   Article 110 A person, having wrongly applied for constitution of a limitation fund for maritime claims, shall indemnify the interested person for the losses thus incurred.   Chapter X   Procedure for Registration and Repayment of Debts   Article 111 After announcement of the maritime court's order for forced auction of a ship, the creditors shall, within the time limit announced, apply for registration of their claims pertaining to the ship to be auctioned. Creditors who fail to register their claims before expiry of the said time limit period shall be deemed to have abandoned their rights to be satisfied from the proceeds of the auction.   Article 112 After the maritime court's announcement of acceptance of the application to constitute a limitation fund for maritime claims, the creditors shall, within the time limit announced, apply for registration of their claims relevant to the maritime accident that occurred at a particular scene. The creditors who fail to register their claims before expiry of the time limit announced shall be deemed to have abandoned their rights to debt.   Article 113 A creditor who wishes to apply for registration of his claims shall file an application in writing with the maritime court and provide relevant debt evidence.   Debt evidence includes legally-binding judgements, written orders, conciliation statements, arbitral awards, notarised documents concerning creditors' rights to debt and other evidential material substantiating the maritime claim.   Article 114 The maritime court shall examine the application submitted by a creditor, and make an order to allow the registration if debt evidence is provided, and to reject the application if it is not.   Article 115 Where the maritime court, having examined the judgements, written orders, conciliation statements, arbitral awards, or the notarised documents concerning creditors' rights to debt provided by the creditors, firmly believe that they are all true and lawful, it shall make an order to confirm them.   Article 116 Where a creditor wishes to provide other maritime claim evidence, he shall, after having registered his claims, bring an action to confirm his rights before the maritime court where the claims are registered. Where an arbitration agreement has been concluded between the parties, they shall apply for arbitration promptly.   The judgements and written orders made by the maritime court to confirm the rights are legally binding, no parties may appeal against them.   Article 117 After examining and confirming the debts, the maritime court shall issue a notice to the creditors for a creditors' meeting, and make arrangements for and convene the creditors' meeting.   Article 118 The creditors' meeting may through negotiation put forward a plan for distribution of the proceeds from auction of the ship or the limitation fund for maritime claims and sign an agreement on satisfaction.   The agreement on satisfaction shall be legally binding after the maritime court makes an order to confirm it.   Where consultation at the creditors' meeting fails, the maritime court shall, according to the ranking of claims provided for in the Maritime Code of the People's Republic of China and other related laws, decide on the plan for distribution of the proceeds from auction of the ship or the limitation fund for maritime claims.   Article 119 The proceeds from auction of a ship and interest thereon, or the limitation fund for maritime claims and interest thereon, shall be distributed at the same time.   In distribution of the proceeds from auction of a ship, the legal costs to be borne by the person liable, expenses incurred in order to preserve the ship or to procure its auction and to distribute the proceeds from the auction, as well as other expenses incurred in the common interest of the creditors, shall first be paid out of the proceeds from such auction.   The balance, after satisfaction of the debts, shall be refunded to the former ship-owner or the person constituting the limitation fund for maritime claims.   Chapter XI   Procedure for Exigence of Maritime Liens   Article 120 Where a ship is transferred, the transferee may apply to the maritime court for exigence of the maritime lien, demanding the maritime lien holder to assert his right promptly so as to extinguish the maritime lien attached to the ship.   Article 121 A transferee who wishes to apply for exigence of the maritime lien shall file an application with the maritime court of the place where the ship is to be delivered or where the domicile of the transferee is located.   Article 122 A person who wishes to apply for exigence of the maritime lien, shall submit to the maritime court a written application, the contract for ship transfer, technical data of the ship and other documents. In the written application shall be stated the name of the ship, the facts and grounds therefor.   Article 123 The maritime court, having received the application and the relevant documents, shall examine them and, within seven days, make an order to approve or disapprove the application.   A transferee who is dissatisfied with such an order may apply for review not more than once.   Article 124 After an order to approve an application becomes effective, the maritime court shall issue an announcement in newspapers or other news media urging the maritime lien holder to assert his right within the period of exigence.   The period for exigence of a maritime lien is 60 days.   Article 125 A maritime lien holder who asserts his right within the period of exigence shall complete registration with the maritime court; if the lien holder fails to assert his right, he shall be deemed to have waived the maritime lien.   Article 126 Where on the expiry of the period of exigence, no one asserts the maritime lien, the maritime court shall, on the application of a party, make a judgement, declaring that the ship to be transferred is free from maritime lien. The judgement shall be published.   Chapter XII   Supplementary Provisions   Article 127 This Law shall go into effect as of July 1, 2000.
  • General Principles of the Civil Law of the People's Republic of China

    2012-11-28

    (Adopted at the Fourth Session of the Sixth National People's Congress on April 12, 1986 and promulgated by Order No. 37 of the President of the People's Republic of China on April 12, 1986) Contents   Chapter I Basic Principles   Chapter II Citizen (Natural Person)   Section 1 Capacity for Civil Rights and Capacity for Civil Conduct   Section 2 Guardianship   Section 3 Declarations of Missing Persons and Death   Section 4 Individual Businesses and Leaseholding Farm Households   Section 5 Individual Partnership   Chapter III Legal Persons   Section 1 General Stipulations   Section 2 Enterprise as Legal Person   Section 3 Official Organ, Institution and Social Organization as Legal Persons   Section 4 Economic Association   Chapter IV Civil Juristic Acts and Agency   Section 1 Civil Juristic Acts   Section 2 Agency   Chapter V Civil Rights   Section 1 Property Ownership and Related Property Rights   Section 2 Creditors' Rights   Section 3 Intellectual Property Rights   Section 4 Personal Rights   Chapter VI Civil Liability   Section 1 General Stipulations   Section 2 Civil Liability for Breach of Contract   Section 3 Civil Liability for Infringement of Rights   Section 4 Methods of Bearing Civil Liability   Chapter VII Limitation of Action   Chapter VIII Application of Law in Civil Relations with Foreigners   Chapter IX Supplementary Provisions   Chapter I   Basic Principles   Article 1 This Law is formulated in accordance with the Constitution and the actual situation in our country, drawing upon our practical experience in civil activities, for the purpose of protecting the lawful civil rights and interests of citizens and legal persons and correctly adjusting civil relations, so as to meet the needs of the developing socialist modernization.   Article 2 The Civil Law of the People's Republic of China shall adjust property relationships and personal relationships between civil subjects with equal status, that is, between citizens, between legal persons and between citizens and legal persons.Article 3 Parties to a civil activity shall have equal status.   Article 4 In civil activities, the principles of voluntariness, fairness, making compensation for equal value, honesty and credibility shall be observed.   Article 5 The lawful civil rights and interests of citizens and legal persons shall be protected by law; no organization or individual may infringe upon them.   Article 6 Civil activities must be in compliance with the law; where there are no relevant provisions in the law, they shall be in compliance with State policies.   Article 7 Civil activities shall have respect for social ethics and shall not harm the public interest, undermine State economic plans or disrupt social economic order.   Article 8 The law of the People's Republic of China shall apply to civil activities within the People's Republic of China, except as otherwise stipulated by law.   The stipulations of this Law as regards citizens shall apply to foreigners and stateless persons within the People's Republic of China, except as otherwise stipulated by law.   Chapter II   Citizen (Natural Person)   Section 1   Capacity for Civil Rights and Capacity for Civil Conduct   Article 9 A citizen shall have the capacity for civil rights from birth to death and shall enjoy civil rights and assume civil obligations in accordance with the law.   Article 10 All citizens are equal as regards their capacity for civil rights.   Article 11 A citizen aged 18 or over shall be an adult. He shall have full capacity for civil conduct, may independently engage in civil activities and shall be called a person with full capacity for civil conduct.   A citizen who has reached the age of 16 but not the age 18 and whose main source of income is his own labour shall be regarded as a person with full capacity for civil conduct.   Article 12 A minor aged 10 or over shall be a person with limited capacity for civil conduct and may engage in civil activities appropriate to his age and intellect; in other civil activities, he shall be represented by his agent ad litem or participate with the consent of his agent ad litem.   A minor under the age of 10 shall be a person having no capacity for civil conduct and shall be represented in civil activities by his agent ad litem.   Article 13 A mentally ill person who is unable to account for his own conduct shall be a person having no capacity for civil conduct and shall be represented in civil activities by his agent ad litem.   A mentally ill person who is unable to fully account for his own conduct shall be a person with limited capacity for civil conduct and may engage in civil activities appropriate to his mental health; in other civil activities, he shall be represented by his agent ad litem or participate with the consent of his agent ad litem.   Article 14 The guardian of a person without or with limited capacity for civil conduct shall be his agent ad litem.   Article 15 The domicile of a citizen shall be the place where his residence is registered; if his habitual residence is not the same as his domicile, his habitual residence shall be regarded as his domicile.   Section 2   Guardianship   Article 16 The parents of a minor shall be his guardians.   If the parents of a minor are dead or lack the competence to be his guardian, a person from the following categories who has the competence to be a guardian shall act as his guardian:   (1) paternal or maternal grandparent;   (2) elder brother or sister; or   (3) any other closely connected relative or friend willing to bear the responsibility of guardianship and having approval from the units of the minor's parents or from the neighbourhood or village committee in the place of the minor's residence.   In case of a dispute over guardianship, the units of the minor's parents or the neighbourhood or village committee in the place of his residence shall appoint a guardian from among the minor's near relatives. If disagreement over the appointment leads to a lawsuit, the people's court shall make a ruling.   If none of the persons listed in the first two paragraphs of this Article is available to be the guardian, the units of the minor's parents, the neighbourhood or village committee in the place of the minor's residence or the civil affairs department shall act as his guardian.   Article 17 A person from the following categories shall act as guardian for a mentally ill person without or with limited capacity for civil conduct:   (1) spouse;   (2) parent;   (3) adult child;   (4) any other near relative;   (5) any other closely connected relative or friend willing to bear the responsibility of guardianship and having approval from the unit to which the mentally ill person belongs or from the neighbourhood or village committee in the place of his residence.   In case of a dispute over guardianship, the unit to which the mentally ill person belongs or the neighbourhood or village committee in the place of his residence shall appoint a guardian from among his near relatives. If disagreement over the appointment leads to a lawsuit, the people's court shall make a ruling.   If none of the persons listed in the first paragraph of this article is available to be the guardian, the unit to which the mentally ill person belongs, the neighbourhood or village committee in the place of his residence or the civil affairs department shall act as his guardian.   Article 18 A guardian shall fulfil his duty of guardianship and protect the person, property and other lawful rights and interests of his wards. A guardian shall not handle the property of his ward unless it is in the ward's interests.   A guardian's rights to fulfil his guardianship in accordance with the law shall be protected by law.   If a guardian does not fulfil his duties as guardian or infringes upon the lawful rights and interests of his ward, he shall be held responsible; if a guardian causes any property loss for his ward, he shall compensate for such loss. The people's court may disqualify a guardian based on the application of a concerned party or unit.   Article 19 A person who shares interests with mental patient may apply to a people's court for a declaration that the mental patient is a person without or with limited capacity for civil conduct.   With the recovery of the health of a person who has been declared by a people's court to be without or with limited capacity for civil conduct, and upon his own application or that of an interested person, the people's court may declare him to be a person with limited or full capacity for civil conduct.   Section 3   Declarations of Missing Persons and Death   Article 20 If a citizen's whereabouts have been unknown for two years, an interested person may apply to a people's court for a declaration of the citizen as missing.   If a person's whereabouts become unknown during a war, the calculation of the time period in which his whereabouts are unknown shall begin on the final day of the war.   Article 21 A missing person's property shall be placed in the custody of his spouse, parents, adult children or other closely connected relatives or friends. In case of a dispute over custody, if the persons stipulated above are unavailable or are incapable of taking such custody, the property shall be placed in the custody of a person appointed by the people's court.   Any taxes, debts and other unpaid expenses owed by a missing person shall defrayed by the custodian out of the missing person's property.   Article 22 In the event that a person who has been declared missing reappears or his whereabouts is ascertained, the people's court shall, upon his own application or that of an interested person, revoke the declaration of his missing-person status.   Article 23 Under either of the following circumstances, an interested person may apply to the people's court for a declaration of a citizen's death:   (1) if the citizen's whereabouts have been unknown for four years; or   (2) if the citizen's whereabouts have been unknown for two years after the date of an accident in which he was involved.   If a person's whereabouts become unknown during a war, the calculation of the time period in which his whereabouts are unknown shall begin on the final day of the war.   Article 24 In the event that a person who has been declared dead reappears or it is ascertained that he is alive, the people's court shall, upon his own application or that of an interested person, revoke the declaration of his death.   Any civil juristic acts performed by a person with capacity for civil conduct during the period in which he has been declared dead shall be valid.   Article 25 A person shall have the right to request the return of his property, if the declaration of his death has been revoked. Any citizen or organization that has obtained such property in accordance with the Inheritance Law shall return the original items or make appropriate compensation if the original items are no longer existent.   Section 4   Individual Businesses and Leaseholding Farm Households   Article 26 "Individual businesses" refers to businesses run by individual citizens who have been lawfully registered and approved to engage in industrial or commercial operation within the sphere permitted by law. An individual business may adopt a shop name.   Article 27 "Leaseholding farm households" refers to members of a rural collective economic organization who engage in commodity production under a contract and within the spheres permitted by law.   Article 28 The legitimate rights and interests of individual businesses and leaseholding farm households shall be protected by law.   Article 29 The debts of an individual business or a leaseholding farm household shall be secured with the individual's property if the business is operated by an individual and with the family's property if the business is operated by a family.   Section 5   Individual Partnership   Article 30 "Individual partnership" refers to two or more citizens associated in a business and working together, with each providing funds, material objects, techniques and so on according to an agreement.   Article 31 Partners shall make a written agreement covering the funds each is to provide, the distribution of profits, the responsibility for debts, the entering into and withdrawal from partnership, the ending of partnership and other such matters.   Article 32 The property provided by the partners shall be under their unified management and use.   The property accumulated in a partnership operation shall belong to all the partners.   Article 33 An individual partnership may adopt a shop name; it shall be approved and registered in accordance with law and conduct business operations within the range as approved and registered.   Article 34 The operational activities of an individual partnership shall be decided jointly by the partners, who each shall have the right to carry out and supervise those activities.   The partners may elect a responsible person. All partners shall bear civil liability for the operational activities of the responsible person and other personnel.   Article 35 A partnership's debts shall be secured with the partners' property in proportion to their respective contributions to the investment or according to the agreement made.   Partners shall undertake joint liability for their partnership's debts, except as otherwise stipulated by law. Any partner who overpays his share of the partnership's debts shall have the right to claim compensation from the other partners.   Chapter III   Legal Persons   Section 1   General Stipulations   Article 36 A legal person shall be an organization that has capacity for civil rights and capacity for civil conduct and independently enjoys civil rights and assumes civil obligations in accordance with the law.   A legal person's capacity for civil rights and capacity for civil conduct shall begin when the legal person is established and shall end when the legal person terminates.   Article 37 A legal person shall have the following qualifications:   (1) establishment in accordance with the law;   (2) possession of the necessary property or funds;   (3) possession of its own name, organization and premises; and   (4) ability to independently bear civil liability.   Article 38 In accordance with the law or the articles of association of the legal person, the responsible person who acts on behalf of the legal person in exercising its functions and powers shall be its legal representative.   Article 39 A legal person's domicile shall be the place where its main administrative office is located.   Article 40 When a legal person terminates, it shall go into liquidation in accordance with the law and discontinue all other activities.   Section 2   Enterprise as Legal Person   Article 41 An enterprise owned by the whole people or under collective ownership shall be qualified as a legal person when it has sufficient funds as stipulated by the State; has articles of association, an organization and premises; has the ability to independently bear civil liability; and has been approved and registered by the competent authority.   A Chinese-foreign equity joint venture, Chinese-foreign contractual joint venture or foreign-capital enterprise established within the People's Republic of China shall be qualified as a legal person in China, if it has the qualifications of a legal person and has been approved and registered by the administrative agency for industry and commerce in accordance with the law.   Article 42 An enterprise as legal person shall conduct operations within the range approved and registered.   Article 43 An enterprise as legal person shall bear civil liability for the operational activities of its legal representatives and other personnel.   Article 44 If an enterprise as legal person is divided or merged or undergoes any other important change, it shall register the change with the registration authority and publicly announce it.   When an enterprise as legal person is divided or merged, its rights and obligations shall be enjoyed and assumed by the new legal person that results from the change.   Article 45 An enterprise as legal person shall terminate for any of the following reasons:   (1) if it is dissolved by law;   (2) if it is disbanded;   (3) if it is declared bankrupt in accordance with the law; or   (4) for other reasons.   Article 46 When an enterprise as legal person terminates, it shall cancel its registration with the registration authority and publicly announce the termination.   Article 47 When an enterprise as legal person is disbanded, it shall establish a liquidation organization and go into liquidation. When an enterprise as legal person is dissolved or is declared bankrupt, the competent authority or a people's court shall organize the organs and personnel concerned to establish a liquidation organization to liquidate the enterprise.   Article 48 An enterprise owned by the whole people, as legal person, shall bear civil liability with the property that the State authorizes it to manage. An enterprise under collective ownership, as legal person, shall bear civil liability with the property it owns. A Chinese-foreign equity joint venture, Chinese-foreign contractual joint venture or foreign-capital enterprise as legal person shall bear civil liability with the property it owns, except as stipulated otherwise by law.   Article 49 Under any of the following circumstances, an enterprise as legal person shall bear liability, its legal representative may additionally be given administrative sanctions and fined and, if the offence constitutes a crime, criminal responsibility shall be investigated in accordance with the law:   (1) conducting illegal operations beyond the range approved and registered by the registration authority;   (2) concealing facts from the registration and tax authorities and practising fraud;   (3) secretly withdrawing funds or hiding property to evade repayment of debts;   (4) disposing of property without authorization after the enterprise is dissolved, disbanded or declared bankrupt;   (5) failing to apply for registration and make a public announcement promptly when the enterprise undergoes a change or terminates, thus causing interested persons to suffer heavy losses;   (6) engaging in other activities prohibited by law, damaging the interests of the State or the public interest.   Section 3   Official Organ, Institution and   Social Organization as Legal Person   Article 50 An independently funded official organ shall be qualified as a legal person on the day it is established.   If according to law an institution or social organization having the qualifications of a legal person needs not go through the procedures for registering as a legal person, it shall be qualified as a legal person on the day it is established; if according to law it does need to go through the registration procedures, it shall be qualified as a legal person after being approved and registered.   Section 4   Economic Association   Article 51 If a new economic entity is formed by the enterprises or an enterprise and an institution that engage in economic association and it independently bears civil liability and has the qualifications of a legal person, the new entity shall be qualified as a legal person after being approved and registered by the competent authority.   Article 52 If the enterprises or an enterprise and an institution that engage in economic association conduct joint operation but do not have the qualifications of a legal person, each party to the association shall, in proportion to its respective contribution to the investment or according to the agreement made, bear civil liability with the property each party owns or manages. If joint liability is specified by law or by agreement, the parties shall assume joint liability.   Article 53 If the contract for economic association of enterprises or of an enterprise and an institution specifies that each party shall conduct operations independently, it shall stipulate the rights and obligations of each party, and each party shall bear civil liability separately.   Chapter IV   Civil Juristic Acts and Agency   Section 1   Civil Juristic Acts   Article 54 A civil juristic act shall be the lawful act of a citizen or legal person to establish, change or terminate civil rights and obligations.   Article 55 A civil juristic act shall meet the following requirements:   (1) the actor has relevant capacity for civil conduct;   (2) the intention expressed is genuine; and   (3) the act does not violate the law or the public interest.   Article 56 A civil juristic act may be in written, oral or other form. If the law stipulates that a particular form be adopted, such stipulation shall be observed.   Article 57 A civil juristic act shall be legally binding once it is instituted. The actor shall not alter or rescind his act except in accordance with the law or with the other party's consent.   Article 58 Civil acts in the following categories shall be null and void:   (1) those performed by a person without capacity for civil conduct;   (2) those that according to law may not be independently performed by a person with limited capacity for civil conduct;   (3) those performed by a person against his true intentions as a result of cheating, coercion or exploitation of his unfavourable position by the other party;   (4) those that performed through malicious collusion are detrimental to the interest of the State, a collective or a third party;   (5) those that violate the law or the public interest;   (6) economic contracts that violate the State's mandatory plans; and   (7) those that performed under the guise of legitimate acts conceal illegitimate purposes.   Civil acts that are null and void shall not be legally binding from the very beginning.   Article 59 A party shall have the right to request a people's court or an arbitration agency to alter or rescind the following civil acts:   (1) those performed by an actor who seriously misunderstood the contents of the acts; and   (2) those that are obviously unfair.   Rescinded civil acts shall be null and void from the very beginning.   Article 60 If a part of a civil act is null and void, it shall not affect the validity of other part.   Article 61 After a civil act has been determined to be null and void or has been rescinded, the party who acquired property as a result of the act shall return it to the party who suffered a loss. The erring party shall compensate the other party for the losses it suffered as a result of the act; if both sides are in error, they shall each bear their proper share of the responsibility.   If the two sides have conspired maliciously and performed a civil act that is detrimental to the interests of the State, a collective or a third party, the property that they thus obtained shall be recovered and turned over to the State or the collective, or returned to the third party.   Article 62 A civil juristic act may have conditions attached to it. Conditional civil juristic acts shall take effect when the relevant conditions are met.   Section 2   Agency   Article 63 Citizens and legal persons may perform civil juristic acts through agents   An agent shall perform civil juristic acts in the principal's name within the scope of the power of agency. The principal shall bear civil liability for the agent's acts of agency.   Civil juristic acts that should be performed by the principal himself, pursuant to legal provisions or the agreement between the two parties, shall not be entrusted to an agent.   Article 64 Agency shall include entrusted agency, statutory agency and appointed agency.   An entrusted agent shall exercise the power of agency as entrusted by the principal; a statutory agent shall exercise the power of agency as prescribed by law; and an appointed agent shall exercise the power of agency as designated by a people's court or the appointing unit.   Article 65 A civil juristic act may be entrusted to an agent in writing or orally. If legal provisions require the entrustment to be written, it shall be effected in writing.   Where the entrustment of agency is in writing, the power of attorney shall clearly state the agent's name, the entrusted tasks and the scope and duration of the power of agency, and it shall be signed or sealed by the principal.   If the power of attorney is not clear as to the authority conferred, the principal shall bear civil liability towards the third party, and the agent shall be held jointly liable.   Article 66 The principal shall bear civil liability for an act performed by an actor with no power of agency, beyond the scope of his power of agency or after his power of agency has expired, only if he recognizes the act retroactively. If the act is not so recognized, the performer shall bear civil liability for it. If a principal is aware that a civil act is being executed in his name but fails to repudiate it, his consent shall be deemed to have been given.   An agent shall bear civil liability if he fails to perform his duties and thus causes damage to the principal.   If an agent and a third party in collusion harm the principal's interests, the agent and the third party shall be held jointly liable.   If a third party is aware that an actor has no power of agency, is overstepping his power of agency, or his power of agency has expired and yet joins him in a civil act and thus brings damage to other people, the third party and the actor shall be held jointly liable.   Article 67 If an agent is aware that the matters entrusted are illegal but still carries them out, or if a principal is aware that his agent's acts are illegal but fails to object to them, the principal and the agent shall be held jointly liable.   Article 68 If in the principal's interests an entrusted agent needs to transfer the agency to another person, he shall first obtain the principal's consent. If the principal's consent is not obtained in advance, the matter shall be reported to him promptly after the transfer, and if the principal objects, the agent shall bear civil liability for the acts of the transferee; however, an entrusted agency transferred in emergency circumstances in order to safeguard the principal's interests shall be excepted.   Article 69 An entrusted agency shall end under any of the following circumstances:   (1) when the period of agency expires or when the tasks entrusted are completed;   (2) when the principal rescinds the entrustment or the agent declines the entrustment;   (3) when the agent dies;   (4) when the principal loses his capacity for civil conduct; or   (5) when the principal or the agent ceases to be a legal person.   Article 70 A statutory or appointed agency shall end under any of the following circumstances:   (1) when the principal gains or recovers capacity for civil conduct;   (2) when the principal or the agent dies;   (3) when the agent loses capacity for civil conduct;   (4) when the people's court or the unit that appointed the agent rescinds the appointment; or   (5) when the guardian relationship between the principal and the agent ends for other reasons.   Chapter V   Civil Rights   Section 1   Property Ownership and Related Property Rights   Article 71 "Property ownership" means the owner's rights to lawfully possess, utilize, profit from and dispose of his property.   Article 72 Property ownership shall not be obtained in violation of the law.   Unless the law stipulates otherwise or the parties concerned have agreed on other arrangements, the ownership of property obtained by contract or by other lawful means shall be transferred simultaneously with the property itself.   Article 73 State property shall be owned by the whole people.   State property is sacred and inviolable, and no organization or individual shall be allowed to seize, encroach upon, privately divide, retain or destroy it.   Article 74 Property of collective organizations of the working masses shall be owned collectively by the working masses. This shall include:   (1) land, forests, mountains, grasslands, unreclaimed land, beaches and other areas that are stipulated by law to be under collective ownership;   (2) property of collective economic organizations;   (3) collectively owned buildings, reservoirs, farm irrigation facilities and educational, scientific, cultural, health, sports and other facilities; and   (4) other property that is collectively owned.   Collectively owned land shall be owned collectively by the village peasants in accordance with the law and shall be worked and managed by village agricultural production cooperatives, other collective agricultural economic organizations or villagers' committees. Land already under the ownership of the township (town) peasants' collective economic organizations may be collectively owned by the peasants' of the township (town).   Collectively owned property shall be protected by law, and no organization or individual may seize, encroach upon, privately divide, destroy or illegally seal up, distrain, freeze or confiscate it.   Article 75 A citizen's personal property shall include his lawfully earned income, housing, savings, articles for daily use, objects of cultural relics, books, reference materials, trees, livestock, as well as means of production the law permits a citizen to possess and other lawful property.   A citizen's lawful property shall be protected by law, and no organization or individual may appropriate, encroach upon, destroy or illegally seal up, distrain, freeze or confiscate it.   Article 76 Citizens shall have the right of inheritance under the law.   Article 77 The lawful property of social organizations, including religious organizations, shall be protected by law.   Article 78 Property may be owned jointly by two or more citizens or legal persons.   There shall be two kinds of joint ownership, namely co-ownership by shares and common ownership. Each of the co-owners by shares shall enjoy the rights and assume the obligations respecting the joint property in proportion to his share. Each of the common owners shall enjoy the rights and assume the obligations respecting the joint property.   Each co-owner by shares shall have the right to withdraw his own share of the joint property or transfer its ownership. However, when he offers to sell his share, the other co-owners shall have a right of pre-option if all other conditions are equal.   Article 79 If the owner of a buried or concealed object is unknown, the object shall belong to the State. The unit that receives the object shall commend or give a material reward to the unit or individual that turns in the object.   Lost-and-found objects, flotsam and stray animals shall be returned to their rightful owners, and any costs thus incurred shall be reimbursed by the owners.   Article 80 State-owned land may be used according to law by units under ownership by the whole people; it may also be lawfully assigned for use by units under collective ownership. The State shall protect the usufruct of the land, and the usufructuary shall be obligated to manage, protect and properly use the land.   The right of citizens and collectives to contract for management of land under collective ownership or of State-owned land under collective use shall be protected by law. The rights and obligations of the two contracting parties shall be stipulated in the contract signed in accordance with the law.   Land may not be sold, leased, mortgaged or illegally transferred by any other means.   Article 81 State-owned forests, mountains, grasslands, unreclaimed land, beaches, water surfaces and other natural resources may be used according to law by units under ownership by the whole people; or they may also be lawfully assigned for use by units under collective ownership. The State shall protect the usufruct of those resources, and the usufructuary shall be obliged to manage, protect and properly use them.   State-owned mineral resources may be mined according to law by units under ownership by the whole people and units under collective ownership; citizens may also lawfully mine such resources. The State shall protect lawful mining rights.   The right of citizens and collectives to lawfully contract for the management of forests, mountains, grasslands, unreclaimed land, beaches and water surfaces that are owned by the collectives or owned by the State but used by collectives shall be protected by law. The rights and obligations of the two contracting parties shall be stipulated in the contract in accordance with the law.   State-owned mineral resources and waters as well as forest land, mountains, grasslands, unreclaimed land and beaches owned by the State and those that are lawfully owned by collectives may not be sold, leased, mortgaged or illegally transferred by any other means.   Article 82 Enterprises under ownership by the whole people shall lawfully enjoy the rights of management over property that the State has authorized them to manage and operate, and the rights shall be protected by law.   Article 83 In the spirit of helping production, making things convenient for people's life, enhancing unity and mutual assistance, and being fair and reasonable, neighbouring users of real estate shall maintain proper neighbourly relations over such matters as water supply, drainage, passageway, ventilation and lighting. Anyone who causes obstruction or damages to his neighbour, shall stop the infringement, eliminate the obstruction and compensate for the damages.   Section 2   Creditors' Rights   Article 84 A debt represents a special relationship of rights and obligations established between the parties concerned, either according to the agreed terms of a contract or legal provisions. The party entitled to the rights shall be the creditor, and the party assuming the obligations shall be the debtor.   The creditor shall have the right to demand that the debtor fulfil his obligations as specified by the contract or according to legal provisions.   Article 85 A contract shall be an agreement whereby the parties establish, change or terminate their civil relationship. Lawfully established contracts shall be protected by law.   Article 86 When there are two or more creditors to a deal, each creditor shall be entitled to rights in proportion to his proper share of the credit. When there are two or more debtors to a deal, each debtor shall assume obligations in proportion to his proper share of the debt.   Article 87 When there are two or more creditors or debtors to a deal, each of the joint creditors shall be entitled to demand that the debtor fulfil his obligations, in accordance with legal provisions or the agreement between the parties; each of the joint debtors shall be obliged to perform the entire debt, and the debtor who performs the entire debt shall be entitled to ask the other joint debtors to reimburse him for their shares of the debt.   Article 88 The parties to a contract shall fully fulfil their obligations pursuant to the terms of the contract.   If a contract contains ambiguous terms regarding quality, time limit for performance, place of performance, or price, and the intended meaning cannot be determined from the context of relevant terms in the contract, and if the parties cannot reach an agreement through consultation, the provisions below shall apply:   (1) If quality requirements are unclear, State quality standards shall apply; if there are no State quality standards, generally held standards shall apply.   (2) If the time limit for performance is unclear, the debtor may at his convenience fulfil his obligations towards the creditor; the creditor may also demand at any time that the debtor perform his obligations, but sufficient notice shall be given to the debtor.   (3) If the place of performance is unclear, and the payment is money, the performance shall be effected at the seat or place of residence of the party receiving the payment; if the payment is other than money, the performance shall be effected at the seat or place of residence of the party fulfilling the obligations.   (4) If the price agreed by the parties is unclear, the State-fixed price shall apply. If there is no State-fixed price, the price shall be based on market price or the price of a similar article or remuneration for a similar service.   If the contract does not contain an agreed term regarding rights to patent application, any party who has completed an invention-creation shall have the right to apply for a patent.   If the contract does not contain an agreed term regarding rights to the use of scientific and technological research achievements, the parties shall all have the right to use such achievements.   Article 89 In accordance with legal provisions the agreement between the parties on the performance of a debt may be guaranteed using the methods below:   (1) A guarantor may guarantee to the creditor that the debtor shall perform his debt. If the debtor defaults, the guarantor shall perform the debt or bear joint liability according to agreement. After performing the debt, the guarantor shall have the right to claim repayment from the debtor.   (2) The debtor or a third party may offer a specific property as a pledge. If the debtor defaults, the creditor shall be entitled to keep the pledge to offset against the debt or have priority in satisfying his claim out of the proceeds from the sale of the pledge pursuant to relevant legal provisions.   (3) Within the limits of relevant legal provisions, a party may leave a deposit with the other party. After the debtor has discharged his debt, the deposit shall either be retained as partial payment of the debt or returned. If the party who leaves the deposit defaults, he shall not be entitled to demand the return of the deposit; if the party who accepts the deposit defaults, he shall repay the deposit in double.   (4) If a party has possession of the other party's property according to contract, and the other party violates the contract by failing to pay a required sum of money within the specified time limit, the possessor shall have a lien on the property and may keep the retained property to offset the debt or have priority in satisfying his claim out of the proceeds from the sale of the property pursuant to relevant legal provisions.   Article 90 Legitimate loan relationships shall be protected by law.   Article 91 If a party to a contract transfers all or part of his contractual rights or obligations to a third party, he shall obtain the other party's consent and may not seek profits therefrom. Contracts which according to legal provisions are subject to State approval, such as transfers, must be approved by the authority that originally approved the contract, unless the law or the original contract stipulates otherwise.   Article 92 If profits are acquired improperly and without a lawful basis, resulting in another person's loss, the illegal profits shall be returned to the person who suffered the loss.   Article 93 If a person acts as manager or provides services in order to protect another person's interests when he is not legally or contractually obligated to do so, he shall be entitled to claim from the beneficiary the expenses necessary for such assistance.   Section 3   Intellectual Property Rights   Article 94 Citizens and legal persons shall enjoy rights of authorship (copyrights) and shall be entitled to sign their names as authors, issue and publish their works and obtain remuneration in accordance with the law.   Article 95 The patent rights lawfully obtained by citizens and legal persons shall be protected by law.   Article 96 The rights to exclusive use of trademarks obtained by legal persons, individual businesses and individual partnerships shall be protected by law.   Article 97 Citizens who make discoveries shall be entitled to the rights of discovery. A discoverer shall have the right to apply for and receive certificates of discovery, bonuses or other awards.   Citizens who make inventions or other achievements in scientific and technological researches shall have the right to apply for and receive certificates of honour, bonuses or other awards.   Section 4   Personal Rights   Article 98 Citizens shall enjoy the rights of life and health.   Article 99 Citizens shall enjoy the right of personal name and shall be entitled to determine, use or change their personal names in accordance with relevant provisions. Interference with, usurpation of and false representation of personal names shall be prohibited.   Legal persons, individual businesses and individual partnerships shall enjoy the right of name. Enterprises as legal persons, individual businesses and individual partnerships shall have the right to use and lawfully assign their own names.   Article 100 Citizens shall enjoy the right of portrait.   The use of a citizen's portrait for profits without his consent shall be prohibited.   Article 101 Citizens and legal persons shall enjoy the right of reputation. The personality of citizens shall be protected by law, and the use of insults, libel or other means to damage the reputation of citizens or legal persons shall be prohibited.   Article 102 Citizens and legal persons shall enjoy the right of honour. It shall prohibited to unlawfully divest citizens and legal persons of their honorary titles.   Article 103 Citizens shall enjoy the right of marriage by choice. Mercenary marriages, marriages upon arbitrary decision by any third party and any other acts of interference in the freedom of marriage shall be prohibited.   Article 104 Marriage, the family, old people, mothers and children shall be protected by law.   The lawful rights and interests of the handicapped shall be protected by law.   Article 105 Women shall enjoy equal civil rights with men.   Chapter VI   Civil Liability   Section 1   General Stipulations   Article 106 Citizens and legal persons who breach a contract or fail to fulfil other obligations shall bear civil liability.   Citizens and legal persons who through their fault encroach upon State or collective property or the property or person of other people shall bear civil liability.   Civil liability shall still be borne even in the absence of fault, if the law so stipulates.   Article 107 Civil liability shall not be borne for failure to perform a contract or damage to a third party if it is caused by force majeure, except as otherwise provided by law.   Article 108 Debts shall be cleared. If a debtor is unable to repay his debt immediately, he may repay by installments with the consent of the creditor or a ruling by a people's court. If a debtor is capable of repaying his debt but refuses to do so, repayment shall be compelled by the decision of a people's court.   Article 109 If a person suffers damages from preventing or stopping encroachment on State or collective property, or the property or person of a third party, the infringer shall bear responsibility for compensation, and the beneficiary may also give appropriate compensation.   Article 110 Citizens or legal persons who bear civil liability shall also be held for administrative responsibility if necessary. If the acts committed by citizens and legal persons constitute crimes, criminal responsibility of their legal representatives shall be investigated in accordance with the law.   Section 2   Civil Liability for Breach of Contract   Article 111 If a party fails to fulfil its contractual obligations or violates the terms of a contract while fulfilling the obligations, the other party shall have the right to demand fulfilment or the taking of remedial measures and claim compensation for its losses.   Article 112 The party that breaches a contract shall be liable for compensation equal to the losses consequently suffered by the other party.   The parties may specify in a contract that if one party breaches the contract it shall pay the other party a certain amount of breach of contract damages; they may also specify in the contract the method of assessing the compensation for any losses resulting from a breach of contract.   Article 113 If both parties breach the contract, each party shall bear its respective civil liability.   Article 114 If one party is suffering losses owing to the other party's breach of contract, it shall take prompt measures to prevent the losses from increasing; if it does not promptly do so, it shall not have the right to claim compensation for the additional losses.   Article 115 A party's right to claim compensation for losses shall not be affected by the alteration or termination of a contract.   Article 116 If a party fails to fulfil its contractual obligations on account of a higher authority, it shall first compensate for the losses of the other party or take other remedial measures as contractually agreed and then the higher authority shall be responsible for settling the losses it sustained.   Section 3   Civil Liability for   Infringement of Rights   Article 117 Anyone who encroaches on the property of the State, a collective or another person shall return the property; failing that, he shall reimburse its estimated price.   Anyone who damages the property of the State, a collective or another person shall restore the property to its original condition or reimburse its estimated price. If the victim suffers other great losses therefrom, the infringer shall compensate for those losses as well   Article 118 If the rights of authorship (copyrights), patent rights, rights to exclusive use of trademarks, rights of discovery, rights of invention or rights for scientific and technological research achievements of citizens or legal persons are infringed upon by such means as plagiarism, alteration or imitation, they shall have the right to demand that the infringement be stopped, its ill effects be eliminated and the damages be compensated for.   Article 119 Anyone who infringes upon a citizen's person and causes him physical injury shall pay his medical expenses and his loss in income due to missed working time and shall pay him living subsidies if he is disabled; if the victim dies, the infringer shall also pay the funeral expenses, the necessary living expenses of the deceased's dependents and other such expenses.   Article 120 If a citizen's right of personal name, portrait, reputation or honour is infringed upon, he shall have the right to demand that the infringement be stopped, his reputation be rehabilitated, the ill effects be eliminated and an apology be made; he may also demand compensation for losses.   The above paragraph shall also apply to infringements upon a legal person's right of name, reputation or honour.   Article 121 If a State organ or its personnel, while executing its duties, encroaches upon the lawful rights and interests of a citizen or legal person and causes damages, it shall bear civil liability.   Article 122 If a substandard product causes property damage or physical injury to others, the manufacturer or seller shall bear civil liability according to law. If the transporter or storekeeper is responsible for the matter, the manufacturer or seller shall have the right to demand compensation for its losses.   Article 123 If any person causes damage to other people by engaging in operations that are greatly hazardous to the surroundings, such as operations conducted high aboveground, or those involving high pressure, high voltage, combustibles, explosives, highly toxic or radioactive substances or high-speed means of transport, he shall bear civil liability; however, if it can be proven that the damage was deliberately caused by the victim, he shall not bear civil liability.   Article 124 Any person who pollutes the environment and causes damages to others in violation of State provisions for environmental protection and the prevention of pollution shall bear civil liability in accordance with the law.   Article 125 Any constructor who engages in excavation, repairs or installation of underground facilities in a public place, on a roadside or in a passageway without setting up clear signs and adopting safety measures and thereby causes damages to others shall bear civil liability.   Article 126 If a building or any other installation or an object placed or hung on a structure collapses, detaches or drops down and causes damages to others, its owner or manager shall bear civil liability, unless he can prove himself not a fault.   Article 127 If a domesticated animal causes harm to any person, its keeper or manager shall bear civil liability. If the harm occurs through the fault of the victim, the keeper or manager shall not bear civil liability; if the harm occurs through the fault of a third party, the third party shall bear civil liability.   Article 128 A person who causes harm in exercising justifiable defence shall not bear civil liability. If justifiable defence exceeds the limits of necessity and undue harm is caused, an appropriate amount of civil liability shall be borne.   Article 129 If harm occurs through emergency actions taken to avoid danger, the person who gave rise to the danger shall bear civil liability. If the danger arose from natural causes, the person who took the emergency actions may either be exempt from civil liability or bear civil liability to an appropriate extent. If the emergency measures taken are improper or exceed the limits of necessity and undue harm is caused, the person who took the emergency action shall bear civil liability to an appropriate extent.   Article 130 If two or more persons jointly infringe upon another person's rights and cause him damages, they shall bear joint liability.   Article 131 If a victim is also at fault for causing the damage, the civil liability of the infringer may be reduced.   Article 132 If none of the parties are at fault in causing damage, they may share civil liability according to the actual circumstances.   Article 133 If a person without or with limited capacity for civil conduct causes damages to others, his guardian shall bear civil liability. If the guardian has done his duty of guardianship, his civil liability may be appropriately reduced.   If a person who has property but is without or with limited capacity for civil conduct causes damages to others, the expenses of compensation shall be paid from his property. Shortfalls in such expenses shall be appropriately compensated for by the guardian unless the guardian is a unit.   Section 4   Methods of Bearing Civil Liability   Article 134 The main methods of bearing civil liability shall be:   (1) cessation of infringements;   (2) removal of obstacles;   (3) elimination of dangers;   (4) return of property;   (5) restoration of original condition;   (6) repair, reworking or replacement;   (7) compensation for losses;   (8) payment of breach of contract damages;   (9) elimination of ill effects and rehabilitation of reputation; and   (10) extension of apology.   The above methods of bearing civil liability may be applied exclusively or concurrently.   When hearing civil cases, a people's court, in addition to applying the above stipulations, may serve admonitions, order the offender to sign a pledge of repentance, and confiscate the property used in carrying out illegal activities and the illegal income obtained therefrom. It may also impose fines or detentions as stipulated by law.   Chapter VII   Limitation of Action   Article 135 Except as otherwise stipulated by law, the limitation of action regarding applications to a people's court for protection of civil rights shall be two years.   Article 136 The limitation of action shall be one year on cases concerning the following:   (1) claims for compensation for bodily injuries;   (2) sales of substandard goods without proper notice to that effect;   (3) delays in paying rent or refusal to pay rent; or   (4) loss of or damage to property left in the care of another person.   Article 137 A limitation of action shall begin when the entitled person knows or should know that his rights have been infringed upon. However, the people's court shall not protect his rights if 20 years have passed since the infringement. Under special circumstances, the people's court may extend the limitation of action.   Article 138 If a party chooses to fulfil obligations voluntarily after the limitation of action has expired, he shall not be subject to the limitation.   Article 139 A limitation of action shall be suspended during the last six months of the limitation if the plaintiff cannot exercise his right of claim because of force majeure or other obstacles. The limitation shall resume on the day when the grounds for the suspension are eliminated.   Article 140 A limitation of action shall be discontinued if suit is brought or if one party makes a claim for or agrees to fulfilment of obligations. A new limitation shall be counted from the time of the discontinuance.   Article 141 If the law has other stipulations concerning limitation of action, those stipulations shall apply.   Chapter VIII   Application of Law in Civil Relations with Foreigners   Article 142 The application of law in civil relations with foreigners shall be determined by the provisions in this chapter.   If any international treaty concluded or acceded to by the People's Republic of China contains provisions differing from those in the civil laws of the People's Republic of China, the provisions of the international treaty shall apply, unless the provisions are ones on which the People's Republic of China has announced reservations.   International practice may be applied on matters for which neither the law of the People's Republic of China nor any international treaty concluded or acceded to by the People's Republic of China has any provisions.   Article 143 If a citizen of the People's Republic of China settles in a foreign country, the law of that country may be applicable as regards his capacity for civil conduct.   Article 144 The ownership of immovable property shall be bound by the law of the place where it is situated.   Article 145 The parties to a contract involving foreign interests may choose the law applicable to settlement of their contractual disputes, except as otherwise stipulated by law.   If the parties to a contract involving foreign interests have not made a choice, the law of the country to which the contract is most closely connected shall be applied.   Article 146 The law of the place where an infringing act is committed shall apply in handling compensation claims for any damage caused by the act. If both parties are citizens of the same country or have established domicile in another country, the law of their own country or the country of domicile may be applied.   An act committed outside the People's Republic of China shall not be treated as an infringing act if under the law of the People's Republic of China it is not considered an infringing act.   Article 147 The marriage of a citizen of the People's Republic of China to a foreigner shall be bound by the law of the place where they get married, while a divorce shall be bound by the law of the place where a court accepts the case.   Article 148 Maintenance of a spouse after divorce shall be bound by the law of the country to which the spouse is most closely connected.   Article 149 In the statutory succession of an estate, movable property shall be bound by the law of the decedent's last place of residence, and immovable property shall be bound by the law of the place where the property is situated.   Article 150 The application of foreign laws or international practice in accordance with the provisions of this chapter shall not violate the public interest of the People's Republic of China.   Chapter IX   Supplementary Provisions   Article 151 The people's congresses of the national autonomous areas may formulate separate adaptive or supplementary regulations or provisions in accordance with the principles of this Law and in the light of the characteristics of the local nationalities. Those formulated by the people's congresses of autonomous regions shall be submitted in accordance with the law to the Standing Committee of the National People's Congress for approval or for the record. Those formulated by the people's congresses of autonomous prefectures or autonomous counties shall be submitted to the standing committee of the people's congress in the relevant province or autonomous region for approval.   Article 152 If an enterprise owned by the whole people has been established with the approval of the competent authority of a province, autonomous region or centrally administered municipality or at a higher level and it has already been registered with the administrative agency for industry and commerce, before this Law comes into force, it shall automatically qualify as a legal person without having to re-register as such.   Article 153 For the purpose of this Law, "force majeure" means unforeseeable, unavoidable and insurmountable objective conditions.   Article 154 Time periods referred to in the Civil Law shall be calculated by the Gregorian calendar in years, months, days and hours.   When a time period is prescribed in hours, calculation of the period shall begin on the prescribed hour. When a time period is prescribed in days, months and years, the day on which the period begins shall not be counted as within the period; calculation shall begin on the next day.   If the last day of a time period falls on a Sunday or an official holiday, the day after the holiday shall be taken as the last day.   The last day shall end at 24:00 hours. If business hours are applicable, the last day shall end at closing time.   Article 155 In this Law, the terms "not less than," "not more than" "within" and "expires" shall include the given figure; the terms "under" and "beyond" shall not include the given figure.   Article 156 This Law shall come into force on January 1, 1987.
  • Guaranty Law of the People's Republic of China

    2012-11-28

    (Adopted at the 14th Meeting of the Standing Committee of the Eighth National People's Congress on June 30, 1995 and promulgated by Order No. 50 of the President of the People's Republic of China on June 30, 1995)   Contents   Chapter I General Provisions   Chapter II Suretyship    Section 1 Suretyship and Surety    Section 2 Suretyship Contract and Modes of Suretyship    Section 3 Suretyship Liability   Chapter III Mortgage    Section 1 Mortgage and Mortgaged Property    Section 2 Mortgage Contract and Registration of Mortgaged Property    Section 3 Effect of Mortgage    Section 4 Enforcement of Mortgage Right    Section 5 Mortgage of Maximum Amount   Chapter IV Pledge    Section 1 Pledge of Movables    Section 2 Pledge of Rights   Chapter V Lien   Chapter VI Deposit   Chapter VII Supplementary Provisions   Chapter I   General Provisions   Article 1 This Law is enacted with a view to promoting the accommodation of funds and the circulation of commodities, ensuring the enforcement of creditor's rights and developing the socialist market economy.   Article 2 If creditors need to have their claims honoured by means of guaranty in such economic activities as loans, purchase and sale of commodities, transportation of goods, and contract for processing materials, they may establish guaranty according to the provisions of this Law.   The modes of guaranty as provided by this Law are suretyship, mortgage, pledge, lien and deposit.   Article 3 In guaranty activities, the principles of equality, voluntariness, fairness, honesty and credibility shall be observed.   Article 4 Where a third party provides a guaranty to creditor for a debtor, the third party may require the debtor to provide him with a counter-guaranty.   The provisions on guaranty in this Law shall apply to the counter-guaranty.   Article 5 A guaranty contract is an ancillary contract of the principal contract. If the principal contract is null and void, the guaranty contract shall be null and void, accordingly. Where it is otherwise agreed in the guaranty contract, such agreement shall prevail.   If a guaranty contract is determined to be null and void, the debtor, the guarantor or the creditor who is in default shall bear civil liability according to their respective fault.   Chapter II   Suretyship   Section 1   Suretyship and Surety   Article 6 Suretyship as used in this Law means an agreement pursuant to which a surety and a creditor agree that the surety shall perform the obligation or bear the liability according to the agreement, when the debtor fails to perform his obligation.   Article 7 A legal person, other organization or a citizen capable of assuming debts may act as a surety.   Article 8 No State organ may act as a surety, except in the case of securing loans, for onlending, from a foreign government or an international economic organization as is approved by the State Council.   Article 9 Institutions such as schools, kindergartens and hospitals established for purposes of public welfare, and public organizations may not act as a surety.   Article 10 Branches and functioning departments of an enterprise as a legal person may not act as a surety.   If a branch of an enterprise as a legal person has a power of attorney from the legal person, it may provide a suretyship within the scope of authority.   Article 11 No organization or individual may compel a bank or another financial institution or an enterprise to provide a suretyship for another; a bank or another financial institution or an enterprise shall have the right to refuse to provide suretyship for another.   Article 12 Where there are two or more sureties for one obligation, the sureties shall undertake suretyship liability according to their proportion of suretyship agreed in the suretyship contract. In the absence of an agreement on the proportion of suretyship, the sureties shall be jointly and severally liable. The creditor may demand any one of the sureties to undertake all suretyship liability, and every surety shall have the obligation to ensure all of the creditor's rights. The surety who has undertaken the suretyship liability shall have the right of recourse against the debtor, or have the right to demand other sureties who are jointly and severally liable to discharge the proportion of obligations which they should respectively assume.   Section 2   Suretyship Contract and Modes of Suretyship   Article 13 A surety and a creditor shall conclude a suretyship contract in writing.   Article 14 A surety and a creditor may conclude separate suretyship contracts for a single principal contract, or may reach an agreement to conclude, to the extent of the maximum amount of claim, a single suretyship contract for loan contracts or for certain commodities transaction contracts which successively occur in a given period of time.   Article 15 A suretyship contract shall contain the following particulars:   (1) the kind and amount of the principal claim guaranteed;   (2) the time limit for the debtor to perform the obligation;   (3) the modes of suretyship;   (4) the scope of the suretyship guaranty;   (5) the term of the suretyship; and   (6) other matters the parties deem appropriate.   If a suretyship contract does not contain all the particulars specified in the preceding paragraph, the particulars omitted may be added by amendment.   Article 16 The modes of suretyship include:   (1) general suretyship;   (2) suretyship of joint and several liability.   Article 17 A general suretyship refers to a suretyship contract wherein the parties agree that the surety shall undertake suretyship liability in case the debtor defaults.   A general suretyship allows the surety to refuse to undertake suretyship liability towards the creditor before a dispute over the principal contract is tried or arbitrated and the obligations are not enforceable even after the debtor's assets have been seized according to law.   A surety may not exercise the right provided in the preceding paragraph in any of the following circumstances:   (1) The change of the debtor's domicile makes it extremely difficult for the creditor to have the debtor's obligation enforced;   (2) A People's Court suspends the enforcement proceedings due to its acceptance of the debtor's bankruptcy case; or   (3) The surety waives in writing the right provided in the preceding paragraph.   Article 18 A suretyship of joint and several liability refers to a suretyship contract wherein the parties agree that the surety and the debtor shall be jointly and severally liable.   Where the debtor of a suretyship of joint and several liability defaults when the time limit for his performance of the obligation provided in the principal contract expires, the creditor may demand that the debtor perform his obligation, or demand that the surety undertake the suretyship liability within the scope of the suretyship agreement.   Article 19 In the absence of an agreed or explicitly agreed mode of suretyship, the parties shall bear the suretyship liability following the mode of a suretyship of joint and several liability.   Article 20 The surety of a general suretyship or a suretyship of joint and several liability shall enjoy the debtor's right of defense. Where a debtor waives his right of defense against the obligation, the surety shall still enjoy a right of defense.   The right of defense means a debtor's right to exercise his right of claim on legal basis against the creditor when the creditor seeks to enforce his rights.   Section 3   Suretyship Liability   Article 21 The scope of the suretyship guaranty includes the principal claim and the interest thereof, default fine, compensation for damage and expenses for enforcing the claim, unless the suretyship contract provides otherwise.   In the absence of an agreed or explicitly agreed scope of the suretyship guaranty, the surety shall be liable for payment of all the above costs.   Article 22 If a creditor transfers, in accordance with law, his principal claim to a third party during the period of the suretyship, the surety shall continue to be bound by the suretyship contract within the scope of the original suretyship guaranty, unless the suretyship contract provides otherwise.   Article 23 Where a creditor permits a debtor to transfer his debts to a third party during the period of the suretyship, a consent in writing shall need to be obtained from the surety; the surety shall no longer be liable if the debts are transferred without his prior consent in writing.   Article 24 When a creditor and a debtor agree to alter the principal contract, they shall have to obtain the surety's consent in writing; the surety shall no longer be liable if the contract is altered without his prior consent in writing, unless the suretyship contract provides otherwise.   Article 25 If the surety of a general suretyship and the creditor have no agreement on the term of suretyship, the term of suretyship shall be six months from the date of maturity of the principal debts.   Where the creditor neither files a lawsuit against the debtor nor applies for arbitration during the term of suretyship agreed in the contract or provided in the preceding paragraph, the surety shall be relieved of the suretyship liability; where the creditor has filed a lawsuit or applied for arbitration, the provisions on the interruption of prescription shall apply to the term of suretyship.   Article 26 Where the surety of a suretyship of joint and several liability and the creditor have no agreement on the term of suretyship, the creditor shall, within six months from the date of maturity of the principal debts, have the right to demand that the surety undertake suretyship liability.   If the creditor does not demand that the surety undertake suretyship liability during the term of suretyship agreed in the contract or provided by the preceding paragraph, the surety shall be relieved of the suretyship liability.   Article 27 Where in accordance with the provisions of Article 14 of this Law, a surety provides a suretyship to a creditor's claims which successively occur but there is no agreement on the term of the suretyship, the surety may at any time notify in writing the creditor of termination of the suretyship contract, nevertheless, the surety shall be liable for the creditor's claims which vested before the creditor receives the notice.   Article 28 Where there are both suretyship and property security for the same claim, the surety shall be liable for the creditor's claim unsecured by the property security.   If the creditor waives the property security, the surety shall be relieved of his suretyship liability to the extent of the creditor's waiver.   Article 29 If a branch of an enterprise as a legal person concludes a suretyship contract with a creditor without the written authorization of the enterprise or beyond the scope of the authorization, the suretyship contract shall be null and void or the part of the contract that is beyond the scope of the authorization shall be null and void. If the creditor and the enterprise as a legal person are both at fault, they shall bear their respective civil liabilities commensurate with their own fault; if the creditor is not at fault, the enterprise as a legal person shall be civilly liable.   Article 30 The surety shall not be civilly liable under any of the following circumstances:   (1) the parties to the principal contract conspire to defraud the surety of a suretyship; and   (2) the creditor to the principal contract resorts to deception or coercion to induce or cause the surety to provide a suretyship against its will.   Article 31 The surety, after his assumption of the suretyship liability, shall be entitled to recourse against the debtor.   Article 32 If the creditor does not seek to enforce his claim after a People's Court's acceptance of the debtor's bankruptcy case, the surety may participate in the distribution of the bankruptcy property and exercise his right of recourse in advance.   Chapter III   Mortgage   Section 1   Mortgage and Mortgaged Property   Article 33 Mortgage as used in this Law means that the debtor or a third party secures the creditor's rights with property listed in Article 34 of this Law without transference of its possession. If the debtor defaults, the creditor shall be entitled to convert the property into money to offset the debts or have priority in satisfying his claim from the proceeds of auction or sale of the property in accordance with the provisions of this Law.   The debtor or the third party specified in the preceding paragraph is the mortgagor, the creditor is the mortgagee, and the property provided as security is the mortgaged property.   Article 34 The following property may be mortgaged:   (1) houses and other things firmly fixed on the land which are owned by the mortgagor;   (2) machines, means of transport and other property owned by the mortgagor;   (3) the land-use right to the State-owned land, State-owned houses and other things firmly fixed on the land which the mortgagor is entitled to dispose of according to law;   (4) State-owned machines, means of transport and other property which the mortgagor is entitled to dispose of according to law;   (5) the land-use right to barren hills, barren gullies, barren hillocks, waste flood land and other unreclaimed land contracted by the mortgagor according to law and consent for the mortgage of such right is obtained from the party granting the contract; and   (6) other property that may be mortgaged according to law.   A mortgagor may at the same time mortgage all the property listed in the preceding paragraph.   Article 35 The amount of a claim secured by a mortgagor shall not exceed the value of his mortgaged property.   If the value of the mortgaged property exceeds that of the claim secured, the surplus may be mortgaged again, but not in excess of the surplus.   Article 36 Where houses on State-owned land acquired in accordance with law are mortgaged, the land-use right to the State-owned land occupied by the houses shall be mortgaged at the same time.   Where the land-use right to State-owned land acquired by means of granting is mortgaged, the houses on the State-owned land shall be mortgaged at the same time.   The land-use right to the land used by a township (town) or village enterprise may not be mortgaged separately. Where factories and other buildings of township (town) or village enterprises are mortgaged, the land-use right to the land occupied by such buildings shall be mortgaged at the same time.   Article 37 The following property may not be mortgaged:   (1) ownership of the land;   (2) the land-use right to the land owned by the collectives such as cultivated land, house sites, private plots and private hills, with the exception of those provided in sub-paragraph (5) of Article 34 and sub-paragraph (3) of Article 36 of this Law;   (3) educational facilities, medical and health facilities of schools, kindergartens, hospitals and other institutions or public organizations established in the interest of the public and other facilities in the service of public welfare;   (4) property in relation to which the ownership or the right of use is unknown or disputed;   (5) property sealed up, distrained or placed under surveillance in accordance with law; or   (6) other property which may not be mortgaged as prescribed by law.   Section 2   Mortgage Contract and Registration of Mortgaged Property   Article 38 A mortgagor and a mortgagee shall conclude a mortgage contract in writing.   Article 39 A mortgage contract shall include the following particulars:   (1) the kind and amount of the principal claim secured;   (2) the term in which the debtor performs his obligation;   (3) the name, quantity, quality, condition, location, ownership or ownership of the right to the use of the mortgaged property;   (4) the scope of the guaranty of mortgage; and   (5) other matters the parties deem necessary to include in the contract.   If a mortgage contract does not include all the particulars specified in the preceding paragraph, the omissions may be added by amendment.   Article 40 In concluding a mortgage contract, the mortgagor and the mortgagee may not stipulate that the ownership of the mortgaged property shall be transferred to the creditor in case the mortgagee's claim is not satisfied after maturity of the debt.   Article 41 Where a party mortgages property provided for in Article 42 of this Law, he shall register the mortgaged property, and the mortgage contract shall become effective as of the date of registration.   Article 42 The departments responsible for the registration of mortgaged property are as follows:   (1) the land administration departments which verify and issue certificates evidencing the land-use right if the land-use right to the land to which nothing is firmly attached is mortgaged;   (2) the departments designated by local people's governments at or above the county level, if urban real estates or factories and other buildings of township (town) or village enterprises are mortgaged;   (3) the forestry administration departments at or above the county level, if forest trees are mortgaged;   (4) the registration departments for means of transport, if aircraft, ships and vehicles are mortgaged; or   (5) the administrative departments of industry and commerce in the place where the property is located, if the equipment and other movables of enterprises are mortgaged.   Article 43 Where a party mortgages other property, he may, of his own will, register the mortgaged property, and the mortgage contract shall become effective as of the date of execution.   If a party does not register the mortgaged property, he may not defend against the claims of third party. If a party intends to register the mortgaged property, the notary department in the place where the mortgagor resides shall be the registration department.   Article 44 To register the mortgaged property, a party shall submit to the registration department the following documents or their duplicates:   (1) the principal contract and the mortgage contract; and   (2) the certificates evidencing the ownership of or the use right to the mortgaged property.   Article 45 Consulting, transcribing or duplicating the materials registered with the registration departments shall be permitted.   Section 3   Effect of Mortgage   Article 46 The scope of guaranty of mortgage includes the principal debt and the interest thereof, default fine, compensation for damage and expenses for enforcing the mortgage, unless otherwise provided in the mortgage contract.   Article 47 If the mortgaged property is seized by a People's Court because of the debtor's failure to perform his obligation prior to the maturity of the debt, the mortgagee shall, from the date of seizure, be entitled to collect the natural fruits severed from the mortgaged property and the legal fruits which the mortgagor may collect from the mortgaged property. If the mortgagee fails to notify the person who has the obligation to pay legal fruits of the fact that the mortgaged property is seized, the mortgagee's right shall not extend to such fruits.   The fruits provided for in the preceding paragraph shall first be used to offset the expenses for collecting the fruits.   Article 48 If a mortgagor mortgages leased property, he shall notify the lessee of the fact in writing, and the original contract of lease continues in effect.   Article 49 If a mortgagor transfers mortgaged property already registered during the period of mortgage, he shall notify the mortgagee and inform the transferee that the transferred property is mortgaged; if the mortgagor fails to notify the mortgagee or inform the transferee of the fact, the transfer shall be null and void.   If the proceeds expected from the transfer of the mortgaged property are evidently less than its value, the mortgagee may demand that the mortgagor provide an additional guaranty; if the mortgagor fails to provide the additional guaranty, then he may not transfer the mortgaged property.   The proceeds which the mortgagor obtains from the transfer of the mortgaged property shall first be used to liquidate the claim secured by the mortgage or it shall be deposited with a third party agreed upon by the mortgagor and the mortgagee. If the proceeds exceed the claim, the balance shall belong to the mortgagor; if the proceeds do not cover the claim, the difference shall be paid by the debtor.   Article 50 The right of mortgage may not be separated from the creditor's rights and transferred singly, nor used to secure other creditors' rights.   Article 51 Where a mortgagor's acts are likely to cause the value of the mortgaged property to decline, the mortgagee shall be entitled to demand that the mortgagor cease and deist from such acts. Where the value of the mortgaged property has declined, the mortgagee shall be entitled to demand that the mortgagor restore the original value of the mortgaged property or provide security corresponding to the amount of the lost value.   If the mortgagor is not responsible for the decline in the value of the mortgaged property, the mortgagee may only demand that the mortgagor provide security to cover the loss resulting from the decline in value. The part of the mortgaged property whose value has not declined shall continue to serve as guaranty for the creditor's right.   Article 52 The right of mortgage shall co-exist with the creditor's right secured. If the creditor's right lapses, the right of mortgage shall also lapse.   Section 4   Enforcement of Right of Mortgage   Article 53 The mortgagee, who is not paid at the maturity of the obligation, may, through agreement with the mortgagor, be paid out of the proceeds from the conversion of the mortgaged property or from the auction or sale of the mortgaged property; if they fail to reach an agreement, the mortgagee may bring a lawsuit in a People's Court.   If the proceeds from the conversion of the mortgaged property or the proceeds from the auction or sale thereof exceed the claim, the balance shall be returned to the mortgagor; if the proceeds do not cover the claim, the difference shall be paid by the debtor.   Article 54 Where the same property is mortgaged to two or more creditors, the proceeds from the auction or sale of the mortgaged property shall be used for liquidation according to the following provisions:   (1) Where a mortgage contract takes effect with its registration, the liquidation shall be made in the order of the time of registration of the mortgaged property; if the registration is in the same order, the liquidation shall be made according to the respective proportions of the claims;   (2) Where a mortgage contract takes effect on the date of its execution and the mortgaged property is registered, the liquidation shall be made according to the provisions of sub-paragraph (1) of this Article; if the mortgaged property is not registered, the liquidation shall be made in the order of the effective dates of the contracts; if the order of the effective dates is the same, the liquidation shall be made according to the respective proportions of the claims. The claim secured by registered mortgage shall be satisfied prior to the claim secured by unregistered mortgage.   Article 55 After the execution of a contract in which urban real estate is mortgaged , the newly-built houses on the land shall not be included in the mortgaged property. Where it is necessary to auction the mortgaged real estate, the newly-built houses on the land may be auctioned, according to law, together with the mortgaged property, but the mortgagee shall have no right to enjoy the priority of having his claim satisfied with the proceeds from auction of the newly-built houses.   Where the land-use right to contracted barren hills is mortgaged or the land-use right to the land occupied by the factories and other buildings of a township (town) or village enterprise is mortgaged in accordance with the provisions of this Law, the collective ownership and the uses of the land may not be altered without following the legal procedure after enforcement of the right of mortgage .   Article 56 The mortgagee shall be entitled to the priority of having his claim satisfied with the proceeds from auction of the land-use right to the allocated State-owned land after payment of the granting fees for the land-use right.   Article 57 The third party who provides guaranty of mortgage for the debtor shall have the right of recourse against the debtor after enforcement of the right of mortgage by the mortgagee.   Article 58 The right of mortgage shall lapse due to loss or destruction of the mortgaged property. The compensation obtained for the loss or destruction shall be used as the mortgaged property.   Section 5   Mortgage of Maximum Amount   Article 59 A mortgage of maximum amount as used in this Law means that the mortgaged property shall be used to secure the creditor's claims which occur successively during a given period of time and to the extent of the total amount of the claims, as agreed upon between a mortgagor and a mortgagee.   Article 60 A loan contract may be accompanied by a contract of mortgage of maximum amount.   The contract executed by a creditor and a debtor for the continuous transaction of a specific commodity in a given period of time may be accompanied by a contract of mortgage of maximum amount.   Article 61 The creditor's right to the principal contract secured by a mortgage of maximum amount may not be transferred.   Article 62 The provisions of this section plus other provisions of this Chapter shall apply to mortgage of maximum amount.   Chapter IV   Pledge   Section 1   Pledge of Movables   Article 63 Pledge of movables as used in this Law means that the debtor or a third party transfers the possession of his movables to the creditor as a security for debt. If the debtor defaults, the creditor shall, in accordance with the provisions of this Law, be entitled to convert the property into money as payment of the debt or enjoy priority of having his claim satisfied with the proceeds of auction or sale of the pledged property.   The debtor or the third party mentioned in the preceding paragraph shall be the pledgor, the creditor shall be the pledgee, and the movables transferred shall be the pledged property.   Article 64 A pledgor and a pledgee shall conclude a pledge contract in writing.   A pledge contract shall become effective upon the delivery of the pledged property to the possession of the pledgee.   Article 65 A pledge contract shall include the following particulars:   (1) the kind and amount of the principal debt secured;   (2) the time limit for the debtor to perform his obligation;   (3) the name, quantity, quality and condition of the pledged property;   (4) the scope of the guaranty of pledge;   (5) the time for delivering the pledged property; and   (6) other matters the parties deem necessary to include in the contract.   If a pledge contract does not contain all the particulars specified in the preceding paragraph, the omissions may be added by amendment.   Article 66 A pledgor and a pledgee may not stipulate in the contract that ownership of the pledged property shall be transferred to the pledgee if the obligation is not discharged at its maturity.   Article 67 The scope of guaranty of pledge includes the principal claim and the interest thereof, default fine, the compensation for damage, the storage charges and the cost of enforcing the right of the pledge. If otherwise provided for in the pledge contract, the provisions there shall apply.   Article 68 The pledgee shall be entitled to collect the fruits derived from the pledged property. If otherwise provided for in the pledge contract, the provisions there shall apply.   The fruits mentioned in the preceding paragraph shall first be used to pay the expenses for collecting the fruits.   Article 69 The pledgee shall have the obligation to maintain the pledged property in good condition. The pledgee shall be civilly liable for the loss or destruction of or damage to the pledged property resulting from his negligence in storage.   Where the pledgee is unable to maintain the pledged property in good condition and may thus cause loss or destruction of or damage to the pledged property, the pledgor may demand that the pledgee have the pledged property deposited, or demand that his obligation be discharged in advance and the pledged property returned.   Article 70 Where there is a possibility for the pledged property to perish or for its value to obviously decline to a point sufficient to impair the rights of the pledgee, the pledgee may demand that the pledgor provide additional security in like amount. If the pledgor refuses to provide the additional security, the pledgee may auction or sell the pledged property, and conclude an agreement with the pledgor that the proceeds from the auction or sale shall be used to pay in advance the debt secured or be deposited with a third party as agreed upon with the pledgor.   Article 71 Where the debtor performs his obligation at its maturity, or where the pledgor pays, prior to maturity, the debt secured, the pledgee shall return the pledged property.   If the pledgee is not paid at the maturity of the obligation, he may conclude an agreement with the pledgor that the pledged property be converted into money in order to pay the debt, or he may auction or sell the said property according to law.   Where the money converted from the pledged property or the proceeds from auction or sale exceed the debt secured, the balance shall be paid to the pledgor. Where the money or the proceeds do not cover the whole debt secured, the difference shall be paid by the debtor.   Article 72 The third party who secures the obligation of the debtor shall have the right of recourse against the debtor after the pledgee's enforcement of the right of the pledge.   Article 73 The right of pledge shall lapse due to loss or destruction of the pledged property. The compensation obtained for the loss or destruction shall be used as the pledged property.   Article 74 The right of pledge shall co-exist with the creditor's right secured. When the creditor's right lapses, the right of pledge shall also lapse.   Section 2   Pledge of Rights   Article 75 The following rights may be pledged:   (1) bills of exchange, cheques, promissory notes, bonds, certificates of deposit, warehouse receipts, bills of lading;   (2) shares of stocks or certificates of stocks which are transferable according to law;   (3) the rights to exclusive use of trademarks, the property right among patent rights and copyrights which are transferable according to law; and   (4) other rights which may be pledged according to law.   Article 76 Where a bill of exchange, cheque, promissory note, bond, certificate of deposit, warehouse receipt or bill of lading is pledged, the document of title shall be delivered to the pledgee within the time limit specified in the pledge contract. The pledge contract shall become effective upon the delivery of the document of title.   Article 77 Where a bill of exchange, cheque, promissory note, bond, certificate of deposit warehouse receipt or bill of lading, which carries the date of payment or the date of delivery of goods, is pledged and if the date of its payment or delivery of goods is prior to the time limit for the performance of the obligation, the pledgee may be paid or accept the delivery of the goods before the expiration of the time limit for the performance of the obligation, and conclude an agreement with the pledgor that the payment or the goods accepted shall be used to pay in advance the debt secured or be deposited with a third party as agreed upon with the pledgor.   Article 78 Where certificates of stock transferable according to law are pledged, the pledgor and the pledgee shall conclude a contract in writing and register the pledge contract with the securities registration authorities. The pledge contract shall become effective on the date of the registration.   The certificates of stocks pledged may not be transferred, unless agreed between the pledgor and the pledgee. The proceeds the pledgor obtained from the transfer of the certificates of stocks shall be used to pay in advance the pledgee's claims secured, or be deposited with a third party as agreed upon with the pledgor.   Where shares of stocks of a limited liability company are pledged, the relevant provisions of the Company Law governing the transfer of shares shall apply. The pledge contract shall become effective on the date on which the pledge of shares is written into the shareholders' name-list.   Article 79 Where the right to exclusive use of trademarks, the property rights among patent rights and copyrights transferable according to law are pledged, the pledgor and the pledgee shall conclude a contract in writing and register the pledge contract with the administrative department in charge. The pledge contract shall become effective upon registration.   Article 80 If a right mentioned in Article 79 of this Law is pledged, the pledgor may not transfer or permit the right to be used by another , unless agreed between the pledgee and the pledgor. The proceeds from the transfer or the use obtained by the pledgor shall be used to pay in advance the pledgee's claims secured or be deposited with a third party as agreed between the pledgor and the pledgee.   Article 81 The pledge of rights is governed not only by the provisions of this Section, but also by the provisions of Section 1 of this Chapter.   Chapter V   Lien   Article 82 "Lien" as used in this Law means that the creditor shall possess the debtor's movables according to the terms of the contract as provided by Article 84 of this Law. If the debtor defaults on his debt, the creditor shall be entitled to retain the property in accordance with the provisions of this Law and to the priority of having the debt paid with the money converted from the property or proceeds from sale or auction of the property.   Article 83 The scope of guaranty of lien covers the principal claim and the interest thereof, default fine, compensation for damage, cost of preservation of the retained property and expenses for enforcing the lien.   Article 84 In the event of any costs arising from a storage, transportation or processing contract, if the debtor defaults, the creditor shall have the right to retain the property.   The provisions of the preceding paragraph shall be applicable to other contracts whereby the creditor has the right of retention as provided by law.   The parties may specify in the contract the property that may not be retained.   Article 85 Where the retained property can be divided, the value of the part retained shall be equal to the sum of the debt.   Article 86 The lien holder shall have the obligation to maintain the retained property in good condition. The lien holder shall be civilly liable for loss or destruction of or damage to the retained property resulting from his negligence.   Article 87 The creditor and the debtor shall stipulate in the contract that the debtor shall perform his obligation within not less than two months after the creditor takes possession of the debtor's property. If the creditor and the debtor fail to stipulate the same in the contract, the creditor shall, after taking possession of the debtor's property, fix a time limit of two months or more and notify the debtor to perform his obligation within such time limit .   If the debtor defaults within the specified time limit, the creditor may convert the retained property into money upon agreement with the debtor, or may auction or sell the retained property according to law.   Where the money converted from the retained property or the proceeds from auction or sale exceed the debt secured, their balance shall be paid to the debtor; where the money or proceeds do not cover the entire secured debt; the difference shall be paid by the debtor.   Article 88 The right of retention shall lapse due to the following reasons:   (1) the creditor's right lapses; or   (2) the debtor gives other security which is accepted by the creditor.   Chapter VI   Deposit   Article 89 The parties may agree that one party shall pay a deposit to the other for the security of a debt. After the debtor performs his obligation, the deposit shall either be retained as partial payment or be returned. If the party paying the deposit defaults, he shall have no right to demand the return of the deposit; if the party accepting the deposit defaults, he shall return twice the amount of the deposit.   Article 90 The deposit shall be executed in written form. The parties shall specify the time limit for the delivery of the deposit in the deposit contract . The deposit contract shall become effective on the date of the actual delivery of the deposit.   Article 91 The amount of the deposit shall be stipulated by the parties, but it shall not exceed 20 percent of the amount of the principal contract.   Chapter VII   Supplementary Provisions   Article 92 The "immovables" as used in this Law means land, and houses, forest, tress and other things firmly fixed on the land.   The "movables" as used in this Law means things other than the immovables.   Article 93 "Suretyship contract", "mortgage contract", "pledge contract" or "deposit contract" as used in this Law may be contract concluded separately in writing that includes the letters and telex in the nature of guaranty between the parties, or the guaranty clauses in the principal contract.   Article 94 Where the mortgaged property, the pledged property or the retained property is converted into money or sold, the price shall be fixed with reference to the market price.   Article 95 Where the Maritime Code and other laws have special provisions on guaranty, such provisions shall apply.   Article 96 This Law shall be implemented as of October 1, 1995.
  • Contract Law of the People's Republic of China

    2012-11-28

    (Adopted at the Second Session of the Ninth National People's Congress on March 15, 1999 and promulgated by Order No. 15 of the President of the People's Republic of China on March 15, 1999)   Contents   General Provisions   Chapter I Common Provisions   Chapter II Making of the Contract   Chapter III Validity of the Contract   Chapter IV Fulfillment of the Contract   Chapter V Modification and Transfer of the Contract   Chapter VI Termination of Rights and Obligations under the Contract   Chapter VII Liability for Breach of Contract   Chapter VIII Miscellaneous Provisions      Specific Provisions   Chapter IX Purchase and Sale Contracts   Chapter X Contracts for the Supply and Consumption of Electricity, Water, Gas or Heat   Chapter XI Donation Contracts   Chapter XII Loan Contracts   Chapter XIII Lease Contracts   Chapter XIV Contracts for Financial Lease   Chapter XV Work Contracts   Chapter XVI Construction Project Contracts   Chapter XVII Carriage Contracts   Chapter XVIII Technology Contracts   Chapter XIX Contracts of Deposit   Chapter XX Warehousing Contracts   Chapter XXI Entrustment Contracts   Chapter XXII Brokerage Contracts   Chapter XXIII Intermediation Contracts   Supplementary Provisions    General Provisions   Chapter I Common Provisions   Article 1 This Law is enacted for the purpose of protecting the legitimate rights and interests of the parties to contracts, maintaining the socio-economic order and promoting the socialist modernization.   Article 2 For the purpose of this Law, a contract means an agreement on the establishment, alteration or termination of a civil right-obligation relationship between natural persons, legal persons or other organizations as subjects with equal status.   Agreements on establishing such personal relationships as marriage, adoption and guardianship shall be governed by the provisions of other laws.   Article 3 The parties to the contract have equal legal status, and neither party may impose its will on the other.   Article 4 The parties shall, pursuant to law, have the right to enter into a contract on their own free will, and no unit or person may unlawfully interfere.   Article 5 The parties shall observe the principle of equity in defining each other's rights and obligations.   Article 6 The parties shall observe the principle of good faith in exercising their rights and fulfilling their obligations.   Article 7 The parties shall, in making and fulfilling the contract, abide by laws and administrative regulations and respect social ethics, and may not disrupt the socio-economic order nor impair social and public interests.   Article 8 A legally executed contract has legal binding force on the parties. The parties shall fulfill their obligations as contracted, and may not arbitrarily modify or terminate the contract.   A legally executed contract is protected by law.   Chapter II   Making of the Contract   Article 9 The parties shall, when making a contract, have corresponding capacity for civil rights and civil conduct.   A party may, in accordance with the law, entrust an agent to make a contract.   Article 10 The parties may, when making a contract, use written form, verbal form or any other form.   The written form shall be adopted if laws or administrative regulations so require. The written form shall be adopted if the parties so agree.   Article 11 "Written form" as used herein means any form which renders the information contained in a contract capable of being reproduced in tangible form such as a written agreement, a letter, or electronic text (including telegram, telex, facsimile, electronic data interchange and e-mail).   Article 12 The content of a contract is determined by the parties and generally includes the following clauses:   (1) designations or names and addresses of the parties;   (2) the targeted matter;   (3) quantity;   (4) quality;   (5) price or remuneration;   (6) time, place and mode of fulfillment;   (7) liability for breach of contract; and   (8) dispute settlement.   The parties may make contracts with reference to various model contract forms.   Article 13 The parties shall, in making a contract, take the form of offer and acceptance.   Article 14 An "offer" is an intent indication showing the desire to enter into a contract with others, and the intent indication shall conform to the following provisions:   (1) the content indicated shall be concrete and definite;   (2) the offeror shall, as is indicated, be bound by the intent indication upon its acceptance by an offeree.   Article 15 An invitation for offer is an intent indication showing the desire to receive offers from others. Mailed or delivered price catalogs, auction announcements, invitations for bid, capital-raising prospectus and commercial advertisements are such invitations for offer.   A commercial advertisement shall, if its content conforms to the provisions regarding offers, be deemed an offer.   Article 16 An offer becomes effective when it reaches the offeree.   If a contract is made in the form of text in electronic data and the receiver has designated a special receiving system to receive such data text, the time at which the text in electronic data enters the designated special system shall be the time of arrival; if no special receiving system is designated, the time at which the text in electronic data first enters any of the receiver's systems shall be the time of arrival.   Article 17 An offer may be withdrawn. The withdrawal notice of an offer shall reach the offeree before or at the same time as the arrival of the offer at the offeree.   Article 18 An offer may be revoked. The revocation notice of an offer shall reach the offeree before the dispatch of an acceptance notice by the offeree.   Article 19 An offer may not be revoked under any of the following conditions:   (1) the offeror has specified a time limit for the acceptance, or has explicitly indicated in any other manner the irrevocability of the offer;   (2) there are grounds for the offeree to maintain the irrevocability of the offer and the offeree has made preparations for the fulfillment of the contract.   Article 20 An offer loses its effect under any of the following conditions:   (1) a rejection notice of the offer has reached the offeror;   (2) the offeror has revoked the offer pursuant to law;   (3) when the fixed time limit for acceptance expires, the offeree undertakes no acceptance; or   (4) the offeree makes a substantial change of the content of the offer.   Article 21 An acceptance is an assent indication of the offeree to an offer.   Article 22 An acceptance shall be made in form of a notice, unless, in light of trade practices or as indicated by the offer, the offeree may indicate the assent by performing an act.   Article 23 An acceptance shall reach the offeror within the time limit fixed by the offer.   If no time limit is fixed by the offer, the acceptance shall reach the offeror in accordance with the following provisions:   (1) if an offer is made orally, acceptance shall be made promptly unless the parties stipulate otherwise; and   (2) if an offer is not made orally, the acceptance shall reach the offeror within a reasonable period of time.   Article 24 If an offer is made through a letter or a telegram, the time limit for acceptance commences on the date shown on the letter or on the date the telegram is handed in for dispatch or, if no such date is shown on the letter, from the date shown by the postmark of the letter. If an offer is made by means of instantaneous communications such as telephone or facsimile, the time limit for acceptance commences at the moment that the offer reaches the offeree.   Article 25 A contract is executed at the time when the acceptance becomes effective.   Article 26 The acceptance becomes effective when the acceptance notice reaches the offeror. If an acceptance needs no notice, it becomes effective when an act of acceptance is performed in light of trade practices or as indicated by the offer.   Where a contract is made in the form of text in electronic data, the provisions of Paragraph 2, Article 16 of this Law shall be applicable to the time of arrival of the acceptance.   Article 27 An acceptance may be withdrawn. The withdrawal notice of the acceptance shall reach the offeror before or at the same time as the acceptance notice reaches the offeror.   Article 28 If the offeree makes an acceptance beyond the time limit for acceptance, it shall constitute a new offer unless the offeror notifies the offeree in time that the acceptance is effective.   Article 29 If an offeree makes within the time limit for acceptance an acceptance that could reach the offeror in time under normal conditions but happens to reach the offeror beyond the limit due to other reasons, the acceptance shall be effective notwithstanding unless the offeror notifies the offeree in time that the acceptance is denied due to its delayed arrival.   Article 30 The content of an acceptance shall be consistent with the content of the offer. If the offeree proposes any substantial change to the content of the offer, it shall constitute a new offer. Changes related to the targeted matter, quantity, quality, price or remuneration, duration of fulfillment, place and mode of fulfillment, liability for breach of contract and method of dispute settlement in a contract are substantial changes to the content of an offer.   Article 31 If an acceptance makes non-substantial changes to the content of the offer, the acceptance shall be effective notwithstanding and the content of the contract shall thus be based on the content of the acceptance, unless the offeror indicates in time its objection thereto, or as indicated in the offer, the acceptance may not make any change to the content of the offer.   Article 32 If the parties enter into a contract in the form of a contract instrument, the contract is executed at the time when both parties put their signatures or affix their seals thereto.   Article 33 If the parties enter into a contract in the form of letter or text in electronic data or any other forms, a confirmation instrument may be required prior to the execution of the contract. The contract is executed at the time when the confirmation instrument is signed.   Article 34 The place where the acceptance becomes effective shall be the place where the contract is executed.   Where a contract is made in the form of text in electronic data, the receiver's major place of business is the place of execution of the contract; in the absence of a major place of business, the receiver's habitual residence is the place of execution of the contract. Where the parties stipulate otherwise, such stipulations shall govern.   Article 35 If the parties adopt the form of a contract instrument to make a contract, the place where both parties sign or stamp the contract is the place of execution of the contract.   Article 36 Where the parties fail to make a contract in written form as provided for by laws or administrative regulations or as agreed by the parties, but a party has already performed the major obligations and the other party has accepted the performance, the contract shall be considered as executed.   Article 37 If, in making a contract in the form of a contract instrument, a party has already performed the major obligations pending the signature or seal and the other party has accepted the performance, the contract shall be considered as executed.   Article 38 If the State gives, according to the needs, mandatory assignments or State purchase orders, the legal persons and other organizations concerned shall conclude contracts in accordance with the rights and obligations provided for by the relevant laws and administrative regulations.   Article 39 If standard clauses are used in making a contract, the party that provides the standard clauses shall determine the rights and obligations between the parties in accordance with the principle of fairness, and shall call in a reasonable manner the other party's attention to the exemptible and restrictive clauses regarding its liability, and give explanations of such clauses at the request of the other party.   "Standard clauses" means the clauses that are formulated in anticipation by a party for the purpose of repeated usage and that are not a result of consultation with the other party in the making of the contract.   Article 40 Standard clauses shall become invalid if they fall under any of the circumstances set forth in Articles 52 and 53 of this Law or if the party that provides the standard clauses exempts itself from the liability, imposes heavier liability on the other party, or precludes the other party from its main rights.   Article 41 If a dispute arises over the understanding of a standard clause, the clause shall be interpreted in accordance with its common understanding. If a standard clause has more than one interpretation, the clause shall be interpreted in a manner unfavorable to the party providing the clause. If a standard clause is inconsistent with the non-standard clause, the non-standard clause shall be adopted.   Article 42 In the making of a contract, the party that falls under any of the following circumstances, causing thus loss to the other party, shall hold the liability for the loss.   (1) engaging in consultation with malicious intention in name of making a contract;   (2) concealing intentionally key facts related to the making of the contract or providing false information; or   (3) taking any other act contrary to the principle of good faith.   Article 43 Neither party may disclose or inappropriately exploit business secrets obtained in the making of a contract no matter the contract is executed or not. The party that discloses or inappropriately exploits the said business secrets causing thus loss to the other party shall hold the liability for the loss.   Chapter III   Validity of the Contract   Article 44 A contract legally executed shall become effective upon execution.   Where a contract may become effective only after the completion of approval and registration procedure according to the provisions of laws and administrative regulations, such provisions shall govern.   Article 45 The parties may agree to attach conditions on the validity of the contract. A contract with collateral conditions on its entry into effect shall become effective upon the fulfillment of the conditions. A contract with collateral conditions on its dissolution shall lose its validity upon the fulfillment of the conditions.   Where either party, for the sake of its own interests, unjustifiably prevents the fulfillment of the aforesaid conditions, the conditions shall be deemed as fulfilled; where either party unjustifiably hastens the fulfillment of the conditions, the conditions shall be deemed as not fulfilled.   Article 46 The parties may agree to attach a time limit for the entry into effect of a contract. A contract with an attached time limit for its entry into effect shall become effective upon expiry of the time limit. A contract attached with a time limit for its termination shall lose its effect upon expiry of the time limit.   Article 47 A contract entered into by a person with limited civil capacity may become valid only after ratification by his legal agent. However, a contract of such kind which is purely profit-making or the making of which is compatible to the age, intelligence and mental health of the person concerned needs no ratification by his legal agent.   The counterpart may urge the legal agent to give ratification within one month. Where the legal agent does not respond, the non-response shall be deemed a refusal of ratification. Pending the ratification, the bona fide counterpart has the right to rescind. The rescission shall be made by a notice.   Article 48 A contract that is entered into by an actor without the right of agency, in excess of the right of agency or beyond the expiration of the right of agency, in the name of a principal and without ratification by the principal, shall have no binding force on the principal, and the actor shall bear the responsibility therefor.   The counterpart may urge the principal to give ratification of the contract within one month. Where the principal does not respond, the non-response shall be deemed a refusal of ratification. Pending the ratification, the bona fide counterpart has the right to rescind. The rescission shall be made by a notice.   Article 49 Where an actor enters, without the right of agency, in excess of the right of agency or beyond the expiration of the right of agency, into a contract in the name of a principal, and where the counterpart has grounds to believe that the actor has the right of agency, the act of agency shall be deemed as effective.   Article 50 Where a legal person, or the legal representative or the person in charge of an organization exceeds the limits of power in making a contract, the act of representation shall be effective unless the counterpart is aware or ought to be aware of the excess of the limit of power.   Article 51 Where a person without the right of disposal disposes of another's property, upon ratification by the obligee or if the person without the right of disposal obtains the right of disposal after making the contract, the contract shall be effective.   Article 52 A contract is invalid under any of the following circumstances:   (1) either party enters into the contract by means of fraud or coercion and impairs the State's interests;   (2) there is malicious conspiracy causing damage to the interests of the State, of the collective or of a third party;   (3) there is an attempt to conceal illegal goals under the disguise of legitimate forms;   (4) harm is done to social and public interests; or   (5) mandatory provisions of laws and administrative regulations are violated.   Article 53 The following clauses on liability exemption in a contract shall be invalid:   (1) those causing physical injury to the other party; or   (2) those causing losses to property to the other party by intention or due to gross negligence.   Article 54 Either party has the right to request a people's court or an arbitration institution to alter or rescind any of the following contracts:   (1) any contract which is made under substantial misunderstanding; or   (2) any contract the making of which lacks fairness.   Where a party makes the other party enter into a contract against its true will by means of deceit, coercion or taking advantage of its difficulties, the injured party has the right to request a people's court or an arbitration institution to alter or rescind the contract.   Where the request of the party is an alteration to the contract, the people's court or arbitration institution shall not rescind it.   Article 55 The right to rescind shall vanish where:   (1) the party with the right to rescind has not exercised it within a year from the date on which it was aware or ought to be aware of the matter for the rescission; or   (2) the party with the right to rescind waivers its right by express indication or by its own act after it was aware of the matter for the rescission.   Article 56 An invalid or rescinded contract does not have legal binding force from the outset. If a part of a contract becomes invalid without affecting the validity of the other parts, the other parts remain valid.   Article 57 If a contract becomes invalid, or is rescinded or terminated, the validity of its independently existing clauses pertaining to the settlement of disputes shall not be affected.   Article 58 After a contract becomes invalid or is rescinded, any property obtained under the contract shall be returned. If it is impossible or unnecessary to return the property, compensation shall be made at an estimated price. The party at fault shall compensate the other party for the loss caused by the fault. If both parties have faults, they shall bear their respective responsibilities.   Article 59 If the parties impair by malicious conspiracy the interests of the State, of the collective or of a third party, the property they have thus obtained shall be returned to the State, the collective or the third party.   Chapter IV   Fulfillment of the Contract   Article 60 The parties shall fulfill fully their respective obligations as contracted.   The parties shall observe the principle of good faith and fulfill the obligations of notification, assistance and confidentiality in accordance with the nature and aims of the contract and trade practices.   Article 61 For a contract that has become valid, where the parties have not stipulated the contents regarding quality, price or remuneration or the place of performance, or have stipulated them unclearly, the parties may supplement them by agreement; if they are unable to reach a supplementary agreement, the problem shall be determined in accordance with the related clauses of the contract or with trade practices.   Article 62 Where the parties have unclearly stipulated related contents in a contract and fails to determine them in accordance with the provisions of Article 61 of this Law, the following provisions shall apply:   (1) in case of unclear quality requirements, the contract shall be performed in accordance with State standards or trade standards, or in the absence of such standards, in accordance with common standards or special standards conforming to the aim of the contract;   (2) in case of unclear price or remuneration stipulation, the contract shall be performed in accordance with the market price in the place of contract performance at the time of the making of the contract, or according to the government-set price or government-guided price if it is so required by law;   (3) in case of unclear stipulation of place of performance, where the payment is in cash, the contract shall be performed in the place of the cash recipient; where the payment is in real estate, the contract shall be performed in the place where the real estate is located; where other targeted matters are involved, the contract shall be performed in the place of the party fulfilling the obligations;   (4) in case of unclear time limit for the performance, the debtor may fulfill its obligations at any time, and the creditor may demand the fulfillment at any time, while giving the debtor necessary time to make preparations;   (5) in case of unclear mode of performance, the contract shall be performed in a manner conducive to the realization of the aim of the contract; and   (6) in case of unclear charge for the performance, the charge shall be borne by the party fulfilling the obligations.   Article 63 For a contract with the government-set price or government-guided price as the fulfilling price, where the government price is adjusted within the delivery period of the contract, the price at the time of delivery shall be the fulfilling price. Where an overdue delivery occurs and the price goes up at the delivery, the original price shall be the fulfilling price; if the price drops at the delivery, the new price shall be the fulfilling price. Where an overdue delivery-taking or overdue payment occurs, the new price shall be the fulfilling price if the price goes up; and the original price shall be the fulfilling price if the price goes down.   Article 64 Where the parties agree that the debtor shall discharge the debts to a third party and where the debtor fails to do so or fails to meet its liability as contracted, the debtor shall bear the liability for breach of contract to the creditor.   Article 65 Where the parties agree that a third party shall discharge the debts to the creditor and where the third party fails to do so or fails to meet its liability as contracted, the debtor shall bear the liability for breach of contract to the creditor.   Article 66 Where the parties are in debt to each other and there is no time order for discharging the debts, they shall meet their respective liabilities simultaneously. Either party has the right to reject the other party's demand for the discharge before the latter meets its own liabilities. Either party has the right to reject the other party's demand for the discharge if the latter fails to meet its liabilities as contracted.   Article 67 Where the parties are in debt to each other and there is a time order for them to discharge the debts, the party which is the next to discharge the debts has the right to reject the discharge demanded by the party which is the first to meet its liabilities but fails to meet them. The party which is the next to discharge the debts has also the right to reject a corresponding discharge demanded by the party which is the first to meet its liabilities but fails to meet them as contracted.   Article 68 The party which ought to discharge its debts first may suspend the discharge if it has truthful evidence to prove that the other party falls under any of the following situations:   (1) business operations seriously deteriorating;   (2) diverting properties and withdrawing capital to evade debts;   (3) falling into business discredit; or   (4) other situations showing inability or possible inability to meet liabilities.   A party that suspends the discharge without truthful evidence shall bear the liability for breach of contract.   Article 69 Where a party suspends the discharge of its debts in accordance with the provisions of Article 68 of this Law, it shall promptly notify the other party of the suspension. The party shall resume the discharge when the other party provides a guarantee. The party that has suspended the discharge may dissolve the contract if the other party has failed to regain its capability of meeting its liabilities and to provide a guarantee within a reasonable period of time.   Article 70 If a creditor splits, merges or changes domicile without notifying the debtor and thus makes it difficult to discharge the debts, the debtor may suspend the discharge or deposit the targeted matter.   Article 71 The creditor may refuse an anticipated discharge of debts by the debtor, except that the anticipated discharge does not impair the creditor's interest.   Any additional expenses caused to the creditor by the debtor's anticipated discharge of debts shall be borne by the debtor.   Article 72 The creditor may refuse a discharge of debts in part by the debtor, except that the partial discharge does not impair the creditor's interest.      Any additional expenses caused to the creditor by the debtor's discharge of debts in part shall be borne by the debtor.   Article 73 If a debtor is indolent in exercising its matured creditor's rights and thus causes losses to the creditor, the creditor may apply to a people's court to subrogate the debtor's creditor's rights and exercise them under the creditor's name, except for the creditor's rights exclusively belonging to the debtor.   The scope for exercising the subrogation is limited to the creditor's rights enjoyed by the creditor. The expenses required by the creditor's subrogation shall be borne by the debtor.   Article 74 If a debtor disclaims its due creditor's rights or transfers gratis its property and thus causes losses to the creditor, the creditor may apply to a people's court to rescind the debtor's action. The creditor may also apply to a people's court to rescind the debtor's action if the debtor causes losses to the creditor by transferring its property at a low price evidently unreasonable and with awareness of the transferee.   The scope for exercising the right of rescission is limited to the creditor's rights enjoyed by the creditor. The expenses required by the creditor in exercising its right of rescission shall be borne by the debtor.   Article 75 The right of rescission shall be exercised within one year from the day on which the creditor is aware or ought to be aware of the matters for the rescission. If a creditor does not exercise its right of rescission within five years from the day on which the action of the debtor occurred, the right of rescission shall vanish.   Article 76 After a contract has become valid, neither party may refuse to perform its obligations under the contract due to any change in name or designation or any change in legal representative, person in charge or sponsor.   Chapter V   Modification and Transfer of the Contract   Article 77 The parties may modify the contract upon consensus through consultation.   Where provisions of laws and administrative regulations require the modification of a contract to go through approval and registration procedures, such provisions shall govern.   Article 78 A contract shall be assumed as not having been modified if the content of the modification of the contract is not clearly agreed upon by the parties.   Article 79 A creditor may transfer its rights under a contract in whole or part to a third party, except in any of the following circumstances:   (1) the transfer is not allowed according to the nature of the contract;   (2) the transfer is not allowed according to the agreement between the parties; or   (3) the transfer is not allowed according to the provisions of laws.   Article 80 Any transfer of rights by a creditor shall be notified to the debtor. The transfer shall not bind the debtor without such notification.   A creditor may not revoke the notice of its transfer of rights, except with the consent of the transferee.   Article 81 Where a creditor transfers its rights, the transferee shall also obtain the accessory rights related to the creditor's rights, except for cases the accessory rights exclusively belonging to the creditor.   Article 82 After a debtor has received a notice on the transfer of creditor's rights, the debtor may address its plea against the transferor to the transferee.   Article 83 When a debtor receives a notice on the transfer of creditor's rights, and if the debtor has creditor's rights over the transferee and the creditor's rights of the debtor are matured before or at the same time as the transferred creditor's rights, the debtor may advocate to the transferee an offset.   Article 84 If a debtor intends to transfer its obligations under a contract in whole or in part to a third party, consent shall be obtained from the creditor.   Article 85 If a debtor transfers its obligations, the new debtor may advocate the original debtor's plea against the creditor.   Article 86 If a debtor transfers its obligations, the new debtor shall assume the accessory debts related to the principal debts, except for the accessory debts exclusively assumed by the original debtor.   Article 87 Where provisions of laws and administrative regulations require the transfer of rights or obligations to go through approval and registration procedures, such provisions shall govern.   Article 88 Either party may, with the consent of the other party, transfer its rights together with its obligations under the contract to a third party.   Article 89 When rights together with obligations are transferred, the provisions of Article 79, Articles 81 to 83, and Articles 85 to 87 of this Law shall apply.   Article 90 Where a party merges after the execution of the contract, the legal person or the organization arising from the merger shall exercise the rights under the contract and fulfill the obligations under the contract. Where a party splits after the execution of the contract, unless the creditor and the debtor stipulate otherwise, the legal persons or the organizations arising from the split shall enjoy joint and several creditor's rights under the contract and assume joint and several liabilities under the contract.   Chapter VI   Termination of Rights and Obligations under the Contract   Article 91 The rights and obligations under a contract shall terminate in any of the following situations:   (1) liabilities have all been met as contracted;   (2) the contract is dissolved;   (3) liabilities are offset against each other;   (4) the debtor has deposited the targeted matter according to law;   (5) the creditor grants exemption from liabilities;   (6) both creditor's rights and liabilities are undertaken by one same person; or   (7) other situations as provided for by law or stipulated by the parties.   Article 92 After the termination of rights and obligations under a contract, the parties shall perform the duties of notification, assistance and confidentiality in light of the principle of good faith and in accordance with trade practices.   Article 93 The parties may dissolve the contract upon consensus through consultation.   The parties may stipulate the conditions for dissolution of the contract by either party. When the conditions for dissolution of the contract mature, the party with the right to dissolve may dissolve the contract.   Article 94 The parties may dissolve the contract under any of the following circumstances:   (1) the aim of the contract cannot be attained because of force majeure;   (2) before the period of performance expires, either party clearly indicates by word or by act that it will not discharge the principal debts;   (3) either party delays the discharge of the principal debts and still fails to discharge them within a reasonable period of time after being urged;   (4) either party delays the discharge of debts or is engaged in other illegal activities and thus makes realization of the aim of the contract impossible; or   (5) any other circumstances as provided for by law.   Article 95 If a time limit for exercising the right to dissolve the contract is provided for by laws or by agreement of the parties, and the party concerned does not exercise such right at the expiration of the time limit, such right shall vanish.   If no time limit for exercising the right to dissolve is provided for by laws or by agreement of the parties, but the party concerned does not exercise such right within a reasonable period of time after being urged by the other party, such right shall vanish.   Article 96 When a party advocates the dissolution of the contract in accordance with the provisions of Paragraph 2 of Article 93 and Article 94 of this Law, the party shall notify the other party. The contract shall be dissolved when the notice reaches the other party. If the other party has objection, it may apply to a people's court or an arbitration institution to determine the validity of the dissolution of the contract.   Where provisions of laws and administrative regulations require the dissolution of a contract to go through approval and registration procedures, such provisions shall govern.   Article 97 After the dissolution of a contract, for those clauses not yet performed, the performance shall cease. For those already performed, the party concerned may, in accordance with the situation of performance and the nature of the contract, demand their restoration to the original status or take other remedial measures, and have the right to claim compensation.   Article 98 The termination of rights and obligations under a contract shall not affect the validity of its clauses regarding settlement and liquidation.   Article 99 If the parties mutually owe matured liabilities, and if the varieties and quality of targeted matters of the liabilities are the same, either party may offset its liabilities against those of the other party, except for the liabilities that cannot be offset according to the provisions of laws or according to the nature of the contract.   The party that advocates an offset shall notify the other party. The notice shall become effective when it reaches the other party. No conditions or time limit may be attached to the offset.   Article 100 If the parties mutually owe liabilities and the targeted matters are different in variety and quality, they may also be offset against each other upon consensus through consultation by the parties.   Article 101 The debtor may deposit its targeted matter if it has difficulty to discharge its debts owing to any of the following situations:   (1) the creditor refuses to accept the discharge without justifiable reason;   (2) the whereabouts of the creditor is unknown;   (3) the creditor dies without determining an heir or has lost capacity of civil conduct without determining a guardian; or   (4) other situations as provided for by law.   If the targeted matter is unsuitable for deposit or the deposit is too expensive, the debtor may auction or sell it and deposit the proceeds according to law.   Article 102 After the targeted matter is deposited, the debtor shall promptly notify the creditor or his heir or guardian thereof, unless the whereabouts of the creditor is unknown.   Article 103 The risk of damage and loss of the targeted matter after deposit shall be borne by the creditor. Accrued interest from the targeted matter during the period of deposit shall belong to the creditor. The expenses for depositing the targeted matter shall be borne by the creditor.   Article 104 The creditor may collect the deposited targeted matter at any time. However, if the creditor owes the debtor matured liabilities, the depositary agency shall, at the debtor's request, disallow the creditor to collect the targeted matter before meeting its own liabilities or providing a guarantee.   The right of a creditor to collect the targeted matter shall vanish if the right is not exercised within five years from the date of deposit and the targeted matter deposited shall belong to the State after deduction of the deposit expenses.   Article 105 If the creditor exempts the debtor from its liabilities in whole or in part, the rights and obligations under the contract shall terminate in whole or in part.   Article 106 If both creditor's rights and obligations are undertaken by one same person, the rights and obligations under the contract shall terminate, except for those involving the interests of a third party.   Chapter VII   Liability for Breach of Contract   Article 107 Either party that fails to perform its obligations under the contract or fails to perform them as contracted shall bear the liability for breach of contract by continuing to perform the obligations, taking remedial measures, or compensating for losses.   Article 108 If either party explicitly expresses or indicates by act its intention not to perform its obligations under the contract, the other party may, before the expiration of the period of fulfillment, demand that the party in question bear the liability for breach of contract.   Article 109 If either party fails to pay charges or remuneration, the other party may demand the payment.   Article 110 If either party fails to discharge non-pecuniary debt or fails to discharge non-pecuniary debt as contracted, the other party may demand the discharge, except in any of the following situations:   (1) legally or practically the discharge is impossible;   (2) the targeted matter of the debt is unsuitable for a compulsory discharge or too expensive for the discharge; or   (3) the creditor does not demand the discharge within a reasonable period of time.   Article 111 If the quality fails to meet the agreed requirements, liability for breach of contract shall be borne in accordance with the agreement between the parties. If the liability for breach of contract is not stipulated or is not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the party suffering the loss may, with reference to the nature of the targeted matter and the degree of the loss, choose in a reasonable manner to demand that the other party bear the liability for breach of contract in such form as repair, replacement, redoing, return of the targeted matter, discount in payment or remuneration.   Article 112 Where either party fails to perform its obligations under the contract or does not perform its obligations as contracted, and losses are still caused to the other party after the performance of obligations or the adoption of remedial measures, the party in fault shall compensate for the losses.   Article 113 If either party fails to perform its obligations under the contract or does not perform its obligations as contracted and thus causes losses to the other party, the amount of compensation for the loss shall be equivalent to the loss actually caused by the breach of contract and shall include the profit obtainable after the performance of the contract, but shall not exceed the sum of the loss that might be caused by a breach of contract and has been anticipated or ought to be anticipated by the breaching party in the making of the contract.   A business operator who practices fraud in providing commodities or services to consumers shall undertake to compensate for the damage in accordance with the provisions of the Law of the People's Republic of China on the Protection of Consumers' Rights and Interests.   Article 114 The parties may stipulate that in case of breach of contract by either party a certain amount of penalty shall be paid to the other party according to the seriousness of the breach, and may also stipulate the method for calculating the sum of compensation for losses caused by the breach of contract.   If the stipulated penalty for breach of contract is lower than the loss caused by the breach, the party concerned may apply to a people's court or an arbitration institution for an increase. If the stipulated penalty for breach of contract is excessively higher than the loss caused by the breach, the party concerned may apply to a people's court or an arbitration institution for an appropriate reduction.   If the parties agree upon a penalty for the breach of contract by a delayed fulfillment, the breaching party shall, after paying the penalty for breach of contract, discharge the debts notwithstanding.   Article 115 The parties may, in accordance with the Guaranty Law of the People's Republic of China, agree that one party pays a deposit to the other party as a guarantee of the creditor's rights. After the debtor has met its liabilities, the deposit shall be calculated as part of the price or be refunded. If the party paying the deposit fails to meet its liabilities as contracted, it shall not be entitled to the refund of the deposit. If the party receiving the deposit fails to meet its liabilities as contracted, it shall doubly refund the deposit.   Article 116 In the event that a penalty for breach of contract and a deposit are both stipulated by the parties, when either party breaches the contract, the other party may choose to apply either the clause on penalty for breach of contract or the clause on deposit.   Article 117 If a contract cannot be fulfilled due to force majeure, the obligations may be exempted in whole or in part depending on the impact of the force majeure, unless laws provide otherwise. If the force majeure occurs after a delayed fulfillment, the obligations of the party concerned may not be exempted.   Force majeure as used herein means objective situations which cannot be foreseen, avoided or overcome.   Article 118 Either party that is unable to fulfill the contract due to force majeure shall notify the other party in time in order to reduce losses possibly inflicted to the other party, and shall provide evidence thereof within a reasonable period of time.   Article 119 After either party breaches the contract, the other party shall take appropriate measures to prevent the increase of the loss; the party that fails to take appropriate preventive measures and thus aggravates the loss may not claim compensation for the increased part of the loss.   The reasonable expenses incurred by the other party in preventing the aggravation of the loss shall be borne by the breaching party.   Article 120 If both parties breach the contract, they shall bear their respective liabilities accordingly.   Article 121 Either party that breaches the contract due to a third party shall bear the liability for breach of contract to the other party. The disputes between the breaching party and the third party shall be settled pursuant to law or by agreement.   Article 122 If the breach of contract by either party causes infringement on the personal or property rights and interests to the other party, the injured party has the right to choose whether to demand that the breaching party bear the liability for breach of contract pursuant to this Law or bear the liability for infringement of rights in accordance with other laws.   Chapter VIII   Miscellaneous Provisions   Article 123 Where other laws stipulate otherwise on contracts, such provisions shall govern.   Article 124 For contracts not explicitly regulated by the Specific Provisions of this Law or other laws, the General Provisions of this Law shall apply, and the most similar provisions in the Specific Provisions of this Law or other laws may concurrently be used as reference.   Article 125 In the event that the parties dispute about the understanding of a clause of the contract, the actual meaning of the clause shall be inferred and determined on the basis of the words and sentences used in the contract, related clauses of the contract, aim of the contract, trade practices and the principle of good faith.   If a contract is made in two or more languages which are equally authentic as contracted, the words and sentences used in the different language texts shall be assumed to be identical in denotation. If the words and sentences used in different language texts contain discrepancies, they shall be interpreted according to the aim of the contract.   Article 126 The parties to a foreign-related contract may choose those laws applicable to the settlement of contract disputes, unless stipulated otherwise by law. If the parties to a foreign-related contract fail to make such choice, the State laws most closely related to the contract shall apply.   For the contracts to be fulfilled in the territory of the People's Republic of China on Chinese-foreign equity joint ventures, on Chinese-foreign contractual joint ventures and on Chinese-foreign cooperation in exploring and exploiting natural resources, the laws of the People's Republic of China shall apply.   Article 127 The administrative departments for industry and commerce and other relevant competent administrative departments shall, within the scope of their respective duties and powers and in accordance with the law, be responsible for the supervision and treatment of the illegal activities endangering the State's interests and the social and public interests by making use of contracts; if a crime is constituted, criminal responsibility shall be investigated pursuant to law.   Article 128 The parties may settle contract disputes through consultations or mediation.   If the parties are unwilling to resort to consultation or mediation, or such consultation or mediation fails, the parties may apply to an arbitration institution for arbitration according to the arbitration agreement. The parties to a foreign-related contract may, according to the arbitration agreement, apply to a Chinese arbitration institution or any other arbitration institution for arbitration. If the parties have no arbitration agreement or the arbitration agreement is invalid, they may initiate an action in a people's court. The parties shall implement any legally effective judgment, arbitral award or letter of mediation; in case of a refusal to implement, the other party may apply to a people's court for execution.   Article 129 The time limit for initiating legal proceedings or applying for arbitration regarding contracts of international sale of goods and contracts on technology import and export shall be four years, calculated from the day on which the party concerned is aware or ought to be aware of the infringement of its rights. The time limit for initiating legal proceedings or applying for arbitration regarding other contracts shall be governed by the provisions of relevant laws. Specific Provisions   Chapter IX Purchase and Sale Contracts   Article 130 A "purchase and sale contract" is a contract whereby the seller transfers its ownership over the targeted matter to the buyer and the buyer pays the price therefor.   Article 131 In addition to those clauses prescribed in Article 12 of this Law, a purchase and sale contract may also contain such clauses as method of packaging, inspection standards and method, mode of settlement, language used for the contract and their validity.   Article 132 The seller shall own the targeted matter for sale or have the right of disposal.   For a targeted matter the transfer of which is forbidden or restricted by laws or administrative regulations, the provisions therein shall govern.   Article 133 The ownership over a targeted matter is transferred upon the delivery of the targeted matter, unless the law provides otherwise or the parties stipulate otherwise.   Article 134 The parties may stipulate in a purchase and sale contract that the seller retains the ownership over the targeted matter if the buyer fails to pay the price or to perform other obligations.   Article 135 The seller shall perform its obligations of delivering the targeted matter or providing documents for taking delivery of the targeted matter and transferring the ownership over the targeted matter to the buyer.   Article 136 The seller shall hand over the related certificates and data to the buyer as contracted or according to trade practices in addition to the documents for taking delivery of the targeted matter.   Article 137 Where targeted matters involving intellectual property rights such as computer software are to be sold, unless the laws provide otherwise or the parties stipulate otherwise, the intellectual property rights of these targeted matters shall not belong to the buyer.   Article 138 The seller shall deliver the targeted matter within the stipulated time limit. Where a time limit is stipulated for the delivery, the seller may deliver the targeted matter at any time within the time limit.   Article 139 If the time limit for delivery is not stipulated or is unclearly stipulated, the provisions of Article 61 and sub-paragraph 4, Article 62 of this Law shall apply.   Article 140 If the buyer has already possessed the targeted matter before the contract is entered into, the time at which the contract becomes valid is the time of delivery.   Article 141 The seller shall deliver the targeted matter to the agreed place of delivery.   If the place of delivery is not stipulated or is unclearly stipulated by the parties and cannot be determined according to the provisions of Article 61 of this Law, the following provisions shall apply:   (1) If the targeted matter needs to be transported, the seller shall consign the targeted matter to the first carrier for its delivery to the buyer; and   (2) If the targeted matter does not need to be transported, and if the seller and the buyer know the location of the targeted matter when entering into the contract, the seller shall deliver the targeted matter at the said location of the targeted matter; if the location of the targeted matter is unknown, the seller shall deliver the targeted matter at the seller's place of business at the time when the contract is made.   Article 142 The risks of damage and loss of the targeted matter shall be borne by the seller prior to the delivery and by the buyer after the delivery, unless the laws provide otherwise or the parties stipulate otherwise.   Article 143 If the targeted matter is unable to be delivered within the agreed time limit because of the buyer, the buyer shall bear the risks of damage and loss of the targeted matter from the date of breaching the agreement.   Article 144 When the seller consigns its sold targeted matter to a carrier for transport, unless the parties stipulate otherwise, the risks of damage and loss of the targeted matter en route shall be borne by the buyer from the time when the contract is made.   Article 145 If the place of delivery is not stipulated or is unclearly stipulated by the parties, and if the targeted matter needs to be transported according to sub-paragraph 1, paragraph 2, Article 141 of this Law, the buyer shall bear the risks of damage and loss of the targeted matter when the seller consigns the targeted matter to the first carrier for transport.   Article 146 If the seller puts the targeted matter at the place of delivery as contracted or in accordance with the provisions of sub-paragraph 2, paragraph 2, Article 141 of this Law and if the buyer, in violation of the stipulation, does not take delivery of the targeted matter, the risks of damage and loss shall be borne by the buyer from the day on which the buyer violates the stipulations.   Article 147 The seller's failure to provide documents and data in relation to the targeted matter as contracted shall not affect the shift of the risks of damage and loss of the targeted matter.   Article 148 If the aim of a contract cannot be achieved owing to the fact that the quality of a targeted matter fails to meet the requirements, the buyer may refuse to accept the targeted matter or may dissolve the contract. In case the buyer refuses to accept the targeted matter or dissolves the contract, the risks of damage and loss of the targeted matter shall be borne by the seller.   Article 149 The responsibility of the buyer to bear the risks of damage and loss of a targeted matter shall not affect the buyer's right to demand that the seller bear the liability for breach of contract if the seller's discharge of debts fails to comply with the agreement.   Article 150 The seller has the obligation to guarantee that no third party shall claim rights against the buyer over the targeted matter delivered unless the law provides otherwise.   Article 151 If the buyer is aware or ought to be aware that a third party has rights over the targeted matter while entering into the contract, the seller shall not assume the obligations stipulated in Article 150 of this Law.   Article 152 Where a buyer has clear evidence to prove that a third party may probably claim rights over the targeted matter, the buyer may suspend the payment therefor, except in the case that the seller has provided an appropriate guarantee.   Article 153 The seller shall deliver the targeted matter in accordance with the contracted quality requirements. When the seller provides quality specifications of the targeted matter, the targeted matter delivered shall conform to the specified quality requirements.   Article 154 If the parties have not stipulated or have unclearly stipulated the quality requirements of the targeted matter, nor can they determine them pursuant to the provisions of Article 61 of this Law, the provisions of sub-paragraph 1 of Article 62 of this Law shall apply.   Article 155 If the targeted matter delivered by the seller fails to meet the quality requirements, the buyer may demand that the seller bear the liability for breach of contract pursuant to the provisions of Article 111 of this Law.   Article 156 The seller shall deliver the targeted matter in compliance with the contracted packaging method. If the parties have not stipulated or have unclearly stipulated the packaging method, nor can they determine it pursuant to the provisions of Article 61 of this Law, the targeted matter shall be packed in a general way, and in the absence of a general way, it shall be packed in a manner sufficient to protect the targeted matter.   Article 157 The buyer shall inspect the targeted matter after receiving it within the agreed period for inspection. If no period for inspection is stipulated, the buyer shall inspect the targeted matter in time.   Article 158 If the parties stipulate the period for inspection, the buyer shall, within the period for inspection, notify the seller of any unconformity of the targeted matter with the agreed quantity or quality. If the buyer is indolent to notify the seller thereof, the targeted matter shall be deemed in conformity with the agreed quantity or quality.   If the parties have not stipulated an inspection period, the buyer shall notify the seller of the unconformity of the targeted matter with the agreed quantity or quality within a reasonable period of time after it discovers or ought to discover the unconformity. If the seller fails to notify the seller within a reasonable period of time or within two years after the date of taking delivery of the targeted matter, the targeted matter shall be deemed in conformity with the agreed quantity or quality. However, in the event that there is a quality guarantee period for the targeted matter, the quality guarantee period shall apply instead of the provisions on the two-year limit.   If the seller is aware or ought to be aware of the unconformity of the targeted matter with the stipulation, the buyer shall not be limited by the informing time limit stipulated in the preceding paragraphs.   Article 159 The buyer shall effect the payment in accordance with the contracted price. If the parties have not stipulated or have unclearly stipulated the price, the provisions of Article 61 and sub-paragraph 2, Article 62 of this Law shall apply.   Article 160 The buyer shall effect the payment at the agreed place. If the parties have not stipulated or have unclearly stipulated the place of payment, nor can they determine it pursuant to the provisions of Article 61 of this Law, the buyer shall pay at the place of business of the seller or, if the delivery of the targeted matter or that of the document for taking delivery of the targeted matter is contracted as the precondition for the payment, the payment shall be effected at the place where the targeted matter or the document for taking delivery of the targeted matter is delivered.   Article 161 The buyer shall effect the payment at the agreed time. If the time for payment is not stipulated or not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the buyer shall pay at the same time as it takes delivery of the targeted matter or receives the document for taking delivery of the targeted matter.   Article 162 If the seller delivers extra targeted matter, the buyer may accept or refuse to accept the extra part. If the buyer accepts the extra, it shall pay for the extra at the price contracted. If the buyer refuses to accept the extra, the buyer shall promptly notify the seller.   Article 163 Any accrued interest generated by the targeted matter shall belong to the seller before delivery and to the buyer after the delivery.   Article 164 If a contract is dissolved due to the unconformity of the principal targeted matter with the contracted requirements, the effect of the dissolution shall extend to the accessory matters. If the contract is dissolved due to the unconformity of the accessory matters with the contracted requirements, the effect of the dissolution shall not extend to the principal targeted matter.   Article 165 If a targeted matter is composed of several objects and one of them fails to meet the contracted requirements, the buyer may dissolve the part of the contract in connection with that object. If the separation of that object from the other objects affects markedly the value of the targeted matter, the party concerned may dissolve the contract in connection with the several objects.   Article 166 For the targeted matter to be delivered by batches, if the seller leaves one batch of the targeted matter not delivered, or delivered in a manner not in conformity with the agreement, so that the aim of the contract in connection with that batch of the targeted matter cannot be attained, the buyer may dissolve what is in connection with that batch of the targeted matter.   If the seller leaves one batch of the targeted matter not delivered, or delivered in a manner not in conformity with the agreement, so that the subsequent delivery of the remaining batches of the targeted matter cannot attain the aim contracted, the buyer may dissolve what is in connection with that batch and the remaining batches of the targeted matter.   If the buyer has dissolved the part of the contract in connection with one of the batches of the targeted matter and if that batch and the remaining batches of the targeted matter are interdependent on each other, the buyer may dissolve the part in connection with all the batches whether already or not yet delivered.   Article 167 If a buyer effects payment by installments and the unpaid installments amount to one-fifth of the total price, the seller may demand that the buyer pay the total sum or may dissolve the contract.   The seller deciding to dissolve the contract may request demand that the buyer pay a fee for the use of the targeted matter.   Article 168 The parties to a sale transaction by sample shall seal up the sample and may make specifications of its quality. The targeted matter delivered by the seller shall be identical in quality with the sample and its specifications.   Article 169 If the buyer to a sale transaction by sample is unaware of the sample's hidden defects, even if the targeted matter delivered is identical with the sample, the quality of the targeted matter delivered by the seller shall still conform to the common standards for the same category of objects.   Article 170 The parties to a sale transaction on trial use may stipulate a period for trial use of the targeted matter. If the period for trial use is not stipulated or not clearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, it shall be determined by the seller.   Article 171 The buyer to a sale transaction on trial use may purchase or refuse to purchase the targeted matter within the period for trial use. If, on the expiry of the period for trial use, the buyer makes no indication as to whether to purchase or not, the targeted matter shall be deemed as purchased.   Article 172 The rights and obligations of the parties to a sale transaction by bid and tender, as well as the procedures for bid and tender, shall be governed by the provisions of the relevant laws and administrative regulations.   Article 173 The rights and obligations of the parties to an auction, as well as the auction procedures, shall be governed by the provisions of the relevant laws and administrative regulations.   Article 174 Any other non-gratuitous contract shall comply with laws containing relevant provisions and in the absence of such provisions, shall be handled with reference to the provisions governing purchase and sale contracts.   Article 175 The parties that agree to transfer the ownership of the targeted matters by barter trade shall handle the case with reference to the provisions governing purchase and sale contracts.   Chapter X   Contracts for the Supply and Consumption of Electricity, Water, Gas or Heat   Article 176 A contract for the supply and consumption of electricity is a contract whereby the supplier provides electricity to the consumer and the consumer pays the price therefor.   Article 177 A contract for the supply and consumption of electricity shall contain such clauses as the mode, quality and time of the supply, the volume, address and nature of the consumption, the measuring method, the settlement method of electricity price and charges, and the responsibility for the maintenance of electricity supply and consumption facilities.   Article 178 The place of performance of the contract for the supply and consumption of electricity shall be stipulated by the parties; if such place is not stipulated or is unclearly stipulated by the parties, the place of demarcation for property rights of the electricity supply facilities shall be the place of performance.   Article 179 The supplier shall safely supply electricity pursuant to the quality standards for power supply set by the State and as contracted. If the supplier fails to safely supply electricity pursuant to the quality standards for power supply set by the State and as contracted, and thus causes losses to the consumer, the supplier shall hold the liability for damages.   Article 180 If the supplier needs to cut electricity supply due to scheduled overhauls, unscheduled overhauls, legal limitation of electricity consumption, or consumer's illegal electricity consumption, the supplier shall, pursuant to the relevant regulations of the State, notify the consumer in advance. If the supplier cuts the electricity supply without notifying the consumer in advance and thus causes losses to the consumer, the supplier shall hold the liability for damages.   Article 181 The supplier shall rush to repair without delay according to the State's relevant regulations whenever the electricity supply is cut off due to such reasons as natural disasters. Where the supplier does not rush to repair and thus causes losses to the consumer, the supplier shall hold the liability for damages.   Article 182 The consumer shall pay in time the electricity fee pursuant to the relevant regulations of the State and as contracted by the parties. Where the consumer fails to pay the electricity fee within the scheduled period, it shall pay a penalty in accordance with the contract. Where the consumer, after being urged, still fails to pay the fee and penalty within a reasonable period of time, the supplier may stop the supply of electricity in accordance with the procedures specified by the State.   Article 183 The consumer shall safely consume the electricity in accordance with the relevant regulations of the State and as contracted by the parties. Where the consumer fails to safely consume the electricity in accordance with the relevant regulations of the State and as contracted by the parties and thus causes losses to the supplier, the consumer shall hold the liability for damages.   Article 184 Contracts for the supply and consumption of water, gas or heat shall be governed with reference to the provisions of the contract for the supply and consumption of electricity.   Chapter XI   Donation Contracts   Article 185 A "donation contract" is a contract whereby the donor gives its own property to a donee gratis, and the donee indicates its acceptance of the donation.   Article 186 The donor may rescind the donation prior to the transfer of the rights of the donated property.   The provisions of the preceding paragraph shall not apply to donation contracts of a public welfare or moral obligation nature such as contracts on disaster-relief, or poverty-relief nor to the donation contracts already notarized.   Article 187 The donated property shall go through registration and other procedures if the law so requires.   Article 188 For any donation contract of a public welfare or moral obligation nature such as a contract on disaster-relief or poverty-relief, or for any donation contract already notarized, if the donor does not deliver the property to be donated, the donee may demand the delivery.   Article 189 Where damage or loss of the donated property is caused by the donor due to its deliberate intention or major fault, the donor shall hold the liability therefor.   Article 190 A donation may be subject to collateral obligation.   If a donation is subject to collateral obligations, the donee shall perform its obligations as contracted.   Article 191 If the donated property has defects, the donor shall not bear any responsibility. If the donated property under a donation subject to collateral obligation has defects, the donor shall, within the limit of the collateral obligations, bear the same liabilities as a seller.   If the donor does not notify the donee about the defects intentionally or has guaranteed the flawlessness and thus causes losses to the donee, the donor shall hold the liability for damages.   Article 192 The donor may rescind the donation if the donee behaves in any of the following manners:   (1) severely infringing upon the donor or upon any close relatives of the donor;   (2) having obligation to support the donor but failing to fulfill that obligation; or   (3) failing to fulfill the obligations as stipulated in the donation contract.   The right of rescission of the donor shall be exercised within one year from the date on which it is aware or ought to be aware of the reasons therefor.   Article 193 If a donee's illegal act leads to the death or loss of capacity for civil conduct of the donor, the heir or legal agent of the donor may rescind the donation.   The right of rescission of the donor's heir or legal agent shall be exercised within six months from the date the heir or the legal agent is aware or ought to be aware of the reasons therefor.   Article 194 If a donation is rescinded, the person having the right to rescind may demand that the donee return the donated property.   Article 195 A donor whose financial conditions deteriorates markedly and whose production, business or family life is thereby severely affected may cease to perform the donation obligations.   Chapter XII   Loan Contracts   Article 196 A "loan contract" is a contract whereby the borrower borrows a loan from the lender and repays the loan with interest when the loan becomes due.   Article 197 Loan contracts shall be made in written form, except for the loans otherwise contracted between natural persons.   A loan contract contains such clauses as the category of the loan, kind of currency, purpose of use, amount, interest rate, term and method of repayment.   Article 198 In making a loan contract, the lender may require the borrower to provide a guaranty. The guaranty shall be governed by the provisions of the Guaranty Law of the People's Republic of China.   Article 199 In making a loan contract, the borrower shall, as required by the lender, provide the lender with truthful information about its business activities and financial conditions related to the borrowing.   Article 200 The interest on a loan may not be deducted from the principal in advance. If the interest is deducted from the principal in advance, the loan shall be repaid and the interest shall be calculated according to the actual amount of the loan provided.   Article 201 A lender who fails to provide the loan at the contracted time and amount and thus causes a loss to the borrower shall hold the liability for the loss.   A borrower who fails to take the loan at the contracted time and amount shall pay an interest based on the contracted time and amount.   Article 202 The lender may, as contracted, inspect and supervise the use of the loan. The borrower shall as contracted regularly provide such materials as financial and accounting statements to the lender.   Article 203 If the borrower fails to use the loan in accordance with the contracted purpose of the use, the lender may stop providing the loan, recall the loan ahead of time or dissolve the contract.   Article 204 The interest rates of the financial institutions offering loan services shall be fixed within the ceiling and floor of loan interest rates set by the People's Bank of China.   Article 205 The borrower shall pay the interest within the contracted time limit. If the time limit for payment of interest is not stipulated or not clearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the interest shall be paid together with the repayment of the loan in case the loan term is less than one year; the interest shall be paid at the end of each full year in case the loan term is more than one year and, the interest shall be paid together with the loan repayment if the remaining loan term is less than one year.   Article 206 The borrower shall repay the loan within the contracted time limit. If the time limit is not stipulated or not clearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the borrower may repay the loan at any time, and the lender may urge the borrower to repay the loan within a reasonable period of time.   Article 207 A borrower who fails to repay the loan within the contracted time limit shall pay an overdue interest pursuant to the contract or to the relevant regulations of the State.   Article 208 If the borrower repays the loan ahead of schedule, unless the parties stipulate otherwise, the interest shall be calculated according to the actual duration of the loan.   Article 209 The borrower may apply to the lender for an extension of the loan term before the loan becomes due. With the consent of the lender, the loan term may be extended.   Article 210 A loan contract between natural persons takes effect from the time when the lender provides the loan.   Article 211 Where a loan contract between natural persons does not stipulate the payment of interest or stipulates it unclearly, the loan shall be deemed as bearing no interest.   If a loan contract between natural persons stipulates the payment of interest, the interest rate may not violate the regulations of the State regarding the restriction on the loan interest rates.   Chapter XIII   Lease Contracts   Article 212 A "lease contract" is a contract whereby the lessor delivers the leased object to the lessee for use or for obtaining proceeds, and the lessee pays the rent therefor.   Article 213 A contract for lease shall contain such clauses as the name of the leased object, quantity, purpose of use, term of the lease, rent and the time limit and method of its payment, and the maintenance of the leased object.   Article 214 The lease term may not exceed twenty years. If it exceeds twenty years, the period in excess shall be invalid.   When the lease term expires, the parties may renew the lease contract, however, the contracted lease term may not exceed twenty years from the date of renewal of the contract.   Article 215 A lease contract with a term exceeding six months shall be made in written form. Where the parties do not use written form, the lease shall be deemed a lease without fixed term.   Article 216 The lessor shall deliver the leased object to the lessee as contracted and keep the leased object fit for the contracted use during the lease term.   Article 217 The lessee shall use the leased object in the contracted manner. If the manner of use is not stipulated or is unclearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the leased object shall be used in a manner consistent with its nature.   Article 218 The lessee shall not hold the liability for the loss caused by the wear and tear in the use of the leased object when the manner of use is consistent with the contract or with the nature of the object.   Article 219 Where the lessee fails to use the leased object in the manner as contracted or consistent with its nature, thus causing damage to the leased object, the lessor may dissolve the contract and claim compensation therefor.   Article 220 The lessor shall perform the duty of maintaining the leased object, unless the parties stipulate otherwise.   Article 221 When a leased object requires maintenance and repair, the lessee may ask the lessor to take care of the maintenance and repair within a reasonable period of time. If the lessor fails to perform the maintenance obligation, the lessee may maintain and repair the leased object on its own and the expenses arising therefrom shall be borne by the lessor. If the maintenance and repair of the leased object affects its use by the lessee, the rent shall be reduced or the lease term shall be extended accordingly.   Article 222 The lessee shall appropriately preserve the leased object, and in case of any damage or loss of the leased object caused by an inappropriate preservation, the lessee shall hold the liability for damages.   Article 223 The lessee may, with the consent of the lessor, improve the leased object or supplement it with other objects.   If the lessee improves the leased object or supplement it with other objects without the consent of the lessor, the lessor may demand that the lessee restore the leased object to its original state or compensate for the losses.   Article 224 The lessee may, with the consent of the lessor, sublease the leased object to a third party. The lease contract between the lessee and the lessor shall continue to be valid despite the sublease by the lessee, and if the third party causes losses to the leased object, the lessee shall hold the liability for the losses.   In case of a sublease by the lessee without the consent of the lessor, the lessor may dissolve the contract.   Article 225 Any proceeds resulted from the possession or use of the leased object during the lease term shall belong to the lessee, unless the parties stipulate otherwise.   Article 226 The lessee shall pay the rent within the contracted time limit. If the time limit is not stipulated or is unclearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the rent shall be paid at the expiration of the lease term if the term is less than one year, at the end of each year where the lease term exceeds one year, and shall be paid at the expiration of the lease term if the remaining term is less than one year.   Article 227 If the lessee fails to pay the rent or delays the payment of rent without justifiable reason, the lessor may demand that the lessee pay the rent within a reasonable time limit. The lessor may dissolve the contract if the lessee fails to pay the rent beyond the time limit.   Article 228 If the lessee is unable to use or to gain proceeds from the leased object because of the claim from a third party, the lessee may demand a reduction of or exemption from the rent.   Where a third party claims rights, the lessee shall promptly notify the lessor.   Article 229 A change in the ownership of the leased object within the lease term shall not affect the validity of the lease contract.   Article 230 The lessor intending to sell a leased house shall notify the lessee within a reasonable period of time prior to the sale, and the lessee has the priority to purchase the house under equal conditions.   Article 231 Where a part or the whole of the leased object is damaged or lost for reasons not attributable to the lessee, the lessee may request a reduction of or exemption from the rent; and the lessee may dissolve the contract if the partial or complete damage or loss of the leased object makes it impossible to achieve the contracted goals.   Article 232 Where the parties have not stipulated or have unclearly stipulated the term of the lease, nor can they determine it pursuant to the provisions of Article 61 of this Law, the lease shall be deemed a lease without a fixed term. Either party may dissolve the contract at any time. However, where the lessor is to dissolve the contract, the lessee shall be notified thereof a reasonable period of time in advance.   Article 233 If the leased object endangers the lessee's safety or health, even if the lessee is clearly aware of the substandard quality of the leased object when making the contract, the lessee may dissolve the contract at any time.   Article 234 If the lessee dies within the lease term of a leased house, the persons who live together with the deceased may lease the house according to the original lease contract.   Article 235 The lessee shall return the leased object at the expiration of the lease term. The leased object returned shall be maintained in its after-use state as contracted or in conformity with its nature.   Article 236 If the lessee continues to use the leased object after the expiration of the lease term and the lessor does not raise any objection, the original lease contract shall continue to be valid, but the lease term shall become unfixed.   Chapter XIV   Contracts for Financial Lease   Article 237 A "contract for financial lease" is a contract whereby the lessor, in accordance with the seller and the leased object chosen by the lessee, purchases the leased object from the seller and provides it for use by the lessee, and the lessee pays the rent therefor.   Article 238 A contract for financial lease shall contain such clauses as the name of the leased object, quantity, specifications, technical performance, inspection method, lease term, composition of rent, the time limit, method and kind of currency for the payment of the rent, and the ownership over the leased object at the expiration of the lease term.   Contracts for financial lease shall be made in written form.   Article 239 Where a lessor concludes a purchase and sale contract in accordance with the seller and the leased object chosen by a lessee, the seller shall deliver the targeted matter to the lessee as contracted, and the lessee shall enjoy the rights of the buyer relating to the targeted matter received.   Article 240 The lessor, the seller and the lessee may stipulate that, if the seller fails to perform the obligations under the purchase and sale contract, the lessee shall exercise the right to claim. If the lessee exercises the right to claim, the lessor shall render assistance.   Article 241 Where the lessor concludes a purchase and sale contract in accordance with the seller and the leased object chosen by the lessee, the lessor may not, without the consent of the lessee, modify the content of the contract related to the lessee.   Article 242 The lessor enjoys the ownership over the leased object. If the lessee goes bankrupt, the leased object shall not fall into the category of bankrupt property.   Article 243 The rent under a contract for financial lease shall, unless the parties stipulate otherwise, be determined according to the major part or the whole of the cost for the purchase of the leased object plus reasonable profits for the lessor.   Article 244 If the leased object fails to comply with the agreed requirements or with the purpose of its use, the lessor shall not bear any liability, except in the event that the lessee is dependent upon the lessor's expertise in deciding the leased object or the lessor intervenes with the selection of the leased object.   Article 245 The lessor shall guarantee the possession and use of the leased object by the lessee.   Article 246 Within the period of possession over the leased object by the lessee, if the leased object causes any personal injury or property loss to a third party, the lessor shall not bear any liability.   Article 247 The lessee shall properly maintain and use the leased object.   The lessee shall perform the obligations for the maintenance of the leased object within the period of its possession.   Article 248 The lessee shall pay the rent as contracted. If the lessee fails to pay the rent within a reasonable period of time after being urged, the lessor may demand the full payment of the rent, or dissolve the contract and take back the leased object.   Article 249 Where the parties stipulate that the lessee shall have the ownership over the leased object after the expiration of the lease term, where the lessee has paid most of the rent but is unable to pay the remaining part, and where the lessor has therefore dissolved the contract and taken back the leased object, the lessee may demand a partial refund if the value of the leased object taken back exceeds the rent in arrears and other expenses.   Article 250 The lessor and the lessee may stipulate the ownership over the leased object at the expiration of the lease term. If the ownership of the leased object is not stipulated or is unclearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the ownership of the leased object shall belong to the lessor.   Chapter XV   Work Contracts   Article 251 A "work contract" is a contract whereby the contractor, in accordance with the requirements of the client, completes a work and delivers its results and the client pays remuneration.   A contracted work includes such items as processing, manufacturing on order, repair, reproduction, testing and inspection.   Article 252 A work contract contains such clauses as the targeted matter, quantity, quality, remuneration, mode of work, supply of materials, period of performance, and standards and method of inspection.   Article 253 The contractor shall complete the principal part of the work with its own equipment, technology and labor force, unless the parties stipulate otherwise.   If the contractor entrusts the completion of the major part of its contracted work to a third party, the contractor shall be accountable to the client concerning the work results completed by the third party. The client may dissolve the contract if no consent has been obtained from the client in this regard.   Article 254 The contractor may entrust the completion of any auxiliary part of its contracted work to a third party. The contractor shall be accountable to the client concerning the work results completed by the third party, if the contractor entrusts the completion of any auxiliary part of its contracted work to a third party.   Article 255 If the contractor is to provide materials, it shall select and use materials as contracted and accept the inspection of the client.   Article 256 If the client is to provide materials, it shall provide materials as contracted. The contractor shall promptly inspect the materials provided by the client, and, if any unconformity with the agreement is found, the contractor shall promptly tell the client to make replacement, make up the shortage or take other remedial measures.   The contractor may not, without consent, change materials provided by the client nor change accessories and parts requiring no repair.   Article 257 The contractor shall promptly notify the client if it 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 indolence in response or like reasons, the client shall hold the liability for losses.   Article 258 Where the client changes in the course of the contracted work its requirements and thus causes losses to the contractor, the client shall hold liability for losses.   Article 259 If the contracted work requires assistance from the client, the client has the obligation to provide assistance.   Where the client fails to perform its obligation of assistance and makes thus the completion of the contracted work impossible, the contractor may urge the client to perform its obligation within a reasonable period of time, and may also prolong correspondingly the term of performance. If the client still fails to fulfill its obligation beyond the time limit, the contractor may dissolve the contract.   Article 260 The contractor shall accept necessary supervision and inspection of the client in the course of its work. The client may not disturb the normal work of the contractor by its supervision and inspection.   Article 261 Upon completion of its work, the contractor shall deliver to the client the work results and provide it with the necessary technical materials and related quality certificates. The client shall check and accept the work results.   Article 262 Where the work results delivered by the contractor fail to meet the quality requirements, the client may require the contractor to assume the liability for breach of contract in form of repair, reworking, remuneration reduction or compensation for losses.   Article 263 The client shall pay remuneration within the contracted time limit. If the time limit for paying remuneration is not stipulated or is not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this law, the client shall make payment at the time of delivery of the results of the work; and when part of the work results is delivered, the client shall pay remuneration correspondingly.   Article 264 If the client fails to pay remuneration or the prices for materials, the contractor has the right of lien on the work results, unless the parties stipulate otherwise.   Article 265 The contractor shall appropriately preserve the materials provided by the client as well as the completed work results. The contractor shall hold the liability for any damage or loss caused by poor preservation.   Article 266 The contractor shall maintain confidentiality in accordance with the requirements of the client and, without the latter's permission, may not retain copies or technical data.   Article 267 Co-contractors shall bear joint and several liabilities to their client, unless the parties stipulate otherwise.   Article 268 The client may dissolve the work contract at any time, but shall hold the liability for any loss caused thereby to the contractor.   Chapter XVI   Construction Project Contracts   Article 269 A "construction project contract" is a contract whereby the contractor carries out the construction of the project and the contract-offering party pays the price therefor.   Construction project contracts include contracts for project prospecting, designing and construction.   Article 270 Construction project contracts shall be made in written form.   Article 271 Bidding for construction projects shall be carried out in an open, fair and impartial manner in accordance with the provisions of relevant laws.   Article 272 The contract-offering party may enter into a construction project contract with a general contractor, and may also enter into separate contracts for prospecting, designing and construction with the prospecting, designing and construction parties separately. The 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.   The general contractor or the prospecting, designing or construction contractor may, subject to consent by the contract-offering party, entrusts the completion of part of its contracted work to a third party. The third party shall assume joint and several liabilities together with the general contractor or the prospecting, engineering or construction contractor to the contract-offering party over the work results of the third party. A contractor may not assign the whole of its contracted construction project to a third party or break up the whole of its contracted construction project into several parts and assign them separately to third parties in the name of subcontracting.   It is forbidden for a contractor to subcontract its projects to a unit without corresponding qualifications. It is forbidden for a subcontractor to re-subcontract its contracted project. The main structure of the construction project must be completed by the contractor itself.   Article 273 Contracts for State key construction projects shall be entered into in accordance with the procedures set forth by the State and such documents as investment plans and feasibility study reports approved by the State.   Article 274 A prospecting or designing contract contains such clauses as the time limit for delivery of relevant basic materials and documents (including budgetary estimates), quality requirements, expenses and other cooperative conditions.   Article 275 A construction contract contains such clauses as the project scope, period for construction, time of commencement and completion of the projects to be delivered in mid course, project quality, costs, delivery time of technical materials, responsibility for the supply of materials and equipment, fund allocation and settlement, project inspection and acceptance upon its completion, range of quality guarantee, quality warranty period, and cooperation between the parties.   Article 276 For any construction projects in which the superintendence system is to be applied, the contract-offering party shall conclude an entrustment contract of superintendence in written form with the entrusted supervisor. The rights and obligations as well as legal responsibilities of the contract-offering party and the supervisor shall be defined pursuant to the provisions on entrustment contracts of this Law as well as the relevant provisions of other laws and administrative regulations.   Article 277 The contract-offering party may, under the condition of not disturbing the normal operation of the contractor, inspect the progress and quality of the work at any time.   Article 278 Prior to the concealment of a concealed project, the contractor shall notify the contract-offering party for the latter's inspection. If the contract-offering party fails to conduct a prompt inspection, the contractor may extend correspondingly the period for the completion of the project, and may demand compensation for losses caused by work stoppage and workers' forced idleness.   Article 279 When a construction project is completed, the contract-offering party shall undertake promptly the inspection for acceptance in accordance with the construction drawings and descriptions, as well as the criteria for construction project inspection and acceptance and the quality inspection standards issued by the State. Where the project passes the inspection for acceptance, the contract-offering party shall pay the contracted prices 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 the inspection for acceptance or failing to pass the inspection, the construction project may not be delivered and put into use.   Article 280 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, thus delaying the period for construction, the prospecting or designing party shall go on perfecting the prospecting or designing, reduce or waive the prospecting or designing fees and make compensation for the losses.   Article 281 If the quality of a construction project fails to meet the contracted requirements due to reasons attributable to the construction party, the contract-offering party has the right to demand the repair, reworking or reconstruction free of charge by the construction party within a reasonable period of time. If delivery is delayed because of the repair or reworking and reconstruction, the construction party shall bear the liability for breach of contract.   Article 282 If a construction project causes personal injury and property losses due to reasons attributable to the contractor within a reasonable period of use of the project, the contractor shall hold the liability for losses.   Article 283 If the contract-offering party fails to provide raw materials, equipment, sites, funds or technical materials at the contracted time and pursuant to the contracted requirements, the contractor may extend correspondingly the period of construction and has the right to demand compensation for the losses caused by work stoppage and workers' forced idleness.   Article 284 If a construction project is stopped or suspended in mid course due to reasons attributable to the contract-offering party, the contract-offering party shall take measures to make up for the loss or reduce the loss, and compensate the contractor for any losses and actual expenses caused by work stoppage, workers' forced idleness, back transportation, transfer of machinery equipment and piling up of materials and structural components.   Article 285 Where the contract-offering party alters its plan, provides inaccurate materials or fails to provide as scheduled necessary working conditions for prospecting or designing, thus leading to the redoing or stoppage of the prospecting or designing work, or the revision of the design, the contract-offering party shall raise its payment of fees according to the amount of work actually undertaken by the prospecting or designing party.   Article 286 Where the contract-offering party fails to pay the prices as contracted, the contractor may urge the contract-offering party to effect the payment within a reasonable period of time. Where the contract-offering party still fails to effect the payment at the expiration of that period, the contractor may negotiate with the contract-offering party for converting the construction project into money or may apply to a people's court for the auction of the project according to law, unless the construction project concerned is by nature unsuitable for conversion into money or auction. The payment for the construction of the project shall be effected, in priority, out of the proceeds from the conversion into money or auction of the said project.   Article 287 For questions not regulated by this Chapter, the relevant provisions on work contracts shall apply.   Chapter XVII   Carriage Contracts   Section I   Common Provisions   Article 288 A "carriage contract" is a contract whereby the carrier transports the passenger or goods to the contracted destination from the place of dispatch, and the passenger, or the consignor or consignee pays the fare or the freight.   Article 289 The carrier engaging in public transport may not reject normal and reasonable transport requests of passengers and consignors.   Article 290 The carrier shall safely transport passengers and goods to the contracted destination within the contracted time limit or within a reasonable period of time.   Article 291 The carrier shall transport passengers and goods to the contracted destination via the contracted or the usual transport route.   Article 292 The passenger, consignor or consignee shall pay the fare or the freight. If the carrier does not transport via the contracted route or the usual route and thus increases the fare or the freight, the passenger, consignor or consignee may refuse to pay the extra part of the fare or the freight.   Section II   Passenger Transport Contracts   Article 293 A passenger transport contract is executed at the time when the carrier delivers the ticket to the passenger, unless the parties agree otherwise or follow other trade practices.   Article 294 The passenger shall hold a valid ticket while getting on board for travel. Any passenger who travels on board without a ticket, beyond the paid distance, in a higher class or with an invalid ticket shall make up for the difference in the ticket price, and the carrier may charge an extra fare according to the provisions. Where the passenger refuses to pay the fare accordingly, the carrier may refuse the carriage.   Article 295 A passenger who is unable to get on board at the time indicated by the ticket due to his own fault shall, within the prescribed period of time, undergo the procedures for returning the ticket and getting the refund or making a change of the ticket. If the passenger fails to undergo the refund or change procedures within the prescribed period of time, the carrier may refuse to refund the ticket, and has no more need to undertake the transport obligation.   Article 296 The passenger shall carry baggage within the prescribed quantity limit in transport. A passenger who carries baggage in excess of the gravity limit shall have the baggage checked.   Article 297 The passenger may not carry with him or secretly carry in his baggage any inflammable, explosive, toxic, corrosive and radioactive articles, nor any other dangerous articles that might endanger the safety of persons and property aboard the means of transport, nor other contraband articles.   If a passenger violates the provisions of the preceding paragraph, the carrier may unload the contraband articles or destroy them or submit them to the related departments. If the passenger insists on carrying with him the contraband articles or carrying them in his baggage, the carrier shall refuse the carriage.   Article 298 The carrier shall notify passengers about important matters rendering the transport out of a normal state and matters of attention for a safe transport.   Article 299 The carrier shall transport passengers at the time and in the number of runs or flights indicated by the ticket. The carrier delaying the transport shall, at passengers' requests, arrange another number of runs or flights to transport the passengers or refund their tickets.   Article 300 Where the carrier unilaterally changes the means of transport, thus downgrading the service standards, the carrier shall, at passengers' requests, refund their tickets or reduce the ticket price; where the service standards are upgraded by the change, the fare charged shall not be raised.   Article 301 The carrier shall, in the course of transportation, spare no efforts to rescue and help passengers who suffer acute diseases, commence childbirth or are in danger.   Article 302 The carrier shall hold the liability for the damages 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 deliberate intention and gross fault.   The provisions of the preceding paragraph apply also to any passenger exempted from ticket according to provisions, holding a complimentary ticket or permitted by the carrier to travel without tickets.   Article 303 Where passengers' carry-on articles are damaged or lost in the course of transportation and the carrier is at fault, the carrier shall hold the liability for damages.   In case of damage or loss of passengers' checked luggage, the relevant provisions on the freight transport shall apply.   Section III   Freight Transport Contracts   Article 304 The consignor, when consigning goods for transport, shall clearly declare to the carrier all the information necessary for freight transport such as the designation or name of the consignee or the consignee by order, as well as the name, nature, weight and quantity of the goods and 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 hold the liability therefor.   Article 305 Where the freight transport is subject to examination, approval or inspection formalities, the consignor shall submit to the carrier the documents showing the completion of the relevant formalities.   Article 306 The consignor shall package the goods in the contracted manner. If the packaging manner is not stipulated or not clearly stipulated, the provisions of Article 156 of this Law shall apply.   Where the consignor violates the provisions of the preceding paragraph, the carrier may refuse the transport.   Article 307 While consigning for transport 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 thereto warning signs and labels, and submit to the carrier written documents concerning the name, nature and precautional measures relevant to the dangerous goods.   Where the consignor violates the provisions of the preceding paragraph, the carrier may refuse the transport, or may also take appropriate measures to prevent losses, and expenses thus incurred shall be borne by the consignor.   Article 308 Before the carrier delivers the goods to the consignee, the consignor may ask the carrier to stop the transportation, return the goods, change the place of destination, or deliver the goods to another consignee. However, the consignor shall compensate for the losses thus caused to the carrier.   Article 309 When the goods are transported to the place of destination and the carrier knows the consignee, the carrier shall promptly notify the consignee, and the consignee shall promptly take delivery of the goods. If the consignee delays in taking delivery of the goods, the consignee shall pay storage and other fees to the carrier.   Article 310 When taking delivery of the goods, the consignee shall inspect the goods within the contracted time limit. If the time limit for inspection of the goods is not stipulated or is not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the consignee shall inspect the goods within a reasonable period of time. If the consignee does not voice any complaint about the quantity, damage or loss of the goods within the stipulated time limit or within a reasonable period of time, the silence shall be deemed as a preliminary evidence that the carrier has delivered the goods in accordance with the transport documents.   Article 311 The carrier shall hold the liability for any damage or loss of goods occurring in the course of transport. However, if the carrier proves that the damage or the loss of the goods is caused by force majeure, the natural property of the goods or reasonable wear and tear, or is caused by the negligence of the consignor or the consignee, the carrier shall not hold the liability for damages.   Article 312 If the parties have agreed on the amount of compensation for damage or loss of the goods, their agreement shall apply; if the amount of compensation is not stipulated or not clearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the amount shall be calculated at the market price of the place of delivery when the goods are delivered or ought to be delivered. If laws and administrative regulations stipulate otherwise concerning the calculation method of the compensation amount and the limit of the compensation amount, such stipulations shall govern.   Article 313 If two or more carriers engage in a connected transport of the same mode, the carrier which concludes the contract with the consignor shall be responsible for the entire process of transport. If a loss occurs at one transportation section, the carrier which concludes the contract with the consignor and the carrier in the said section shall bear joint and several liabilities.   Article 314 In the event that goods are lost in the course of transport due to force majeure, if the freight has not yet been collected, the carrier may not demand the payment of the freight; if the freight has already been collected, the consignor may ask for a refund.   Article 315 If the consignor or consignee does not pay freight, storage fees and other fees of transportation, the carrier has the right of lien on the goods transported, unless the parties stipulate otherwise.   Article 316 If the consignee is unknown or the consignee refuses to take delivery of the goods without justifiable reasons, the carrier may have the goods deposited in accordance with the provisions of Article 101 of this Law.   Section IV   Multi-modal Transport Contracts   Article 317 The operator of multi-modal transport is responsible for fulfilling or organizing the fulfillment of a multi-modal transport contract, enjoy the rights of a carrier and assume its obligations throughout the entire transport process.   Article 318 The operator of multi-modal transport may stipulate with the carriers of the different sections of the multi-modal transport on their respective responsibility for transport in each section under the multi-modal transport contract. However, such stipulations shall not affect the obligations of the operator for the entire transport process.   Article 319 The operator of multi-modal transport shall, when receiving the goods consigned for transport by the consignor, issue multi-modal transport documents. At the request of the consignor, the multi-modal transport documents may be transferable or non-transferable.   Article 320 If losses are caused to the operator of multi-modal transport due to the fault of the consignor at the time of consigning the goods for transport, even if the consignor has transferred its multi-modal transport documents, the consignor shall still hold the liability for losses.   Article 321 If damage or loss of goods occurs in one section of the multi-modal transport, the provisions of related laws regulating the transport modes of the section shall apply to the liability for damages and its limits to be held by the operator of multi-modal transport. If it is impossible to determine in which section of transport such damage or loss has occurred, the liability for damages shall be governed by the provisions of this Chapter.   Chapter XVIII   Technology Contracts   Section I   Common Provisions   Article 322 A technology contract is a contract made by the parties to define their rights and obligations for technology development, transfer, consultation or service.   Article 323 The making of a technology contract shall be conducive to the advance of science and technology, and shall accelerate the transformation, application and dissemination of the results achieved in science and technology.   Article 324 The contents of a technology contract shall be stipulated by the parties, and generally, shall contain the following clauses:   (1) name of the project;   (2) contents, scope and requirements of the targeted matter;   (3) plan, schedule, period, place, area and manner of performance;   (4) confidentiality of technical information and materials;   (5) sharing of risk liabilities;   (6) ownership over technological results and proceeds distribution method;   (7) criteria and method of the inspection for acceptance;   (8) price, remuneration or royalty and methods of payment thereof;   (9) calculation method of penalty for breach of contract or compensation for losses;   (10) method for dispute settlement; and   (11) definition of technical terms and expressions.   Materials such as technical background, feasibility studies and technical evaluation reports, project task paper and plans, technical standards, technical norms, original design and technique documents, as well as other technical documents which are relevant to the performance of the contract may, as agreed upon by the parties, constitute component parts of the contract,   If a technology contract involves any patent, it shall indicate the designation of the invention or creation, the applicant and the patentee, the date of application, application number, patent number and duration of the patent rights.   Article 325 The methods of payment for prices, remuneration and royalty in a technology contract shall be stipulated by the parties, and they may adopt the methods of overall computation and lump payment or overall computation and installment payment, and may also adopt the method of percentage-deduction payment or such payment plus an anticipated initial payment.   When the percentage-deduction payment is agreed upon, such payment may be calculated at a specific percentage of the price of the product, of the newly-increased output value and profits attained from the application of patents and exploitation of technological know-how, or of the sales revenue of the product, and may also be computed according to the other methods agreed upon. The percentage of such payment may be a fixed percentage, or an annual progressively increased or decreased percentage.   When payment by deducting a percentage is agreed upon, the parties shall specify in the contract the method for checking and consulting the relevant accounting books.   Article 326 If the right to use or transfer of a service-related technological result belongs to a legal person or any other organization, the legal person or that organization may conclude a technology contract on the said service-related technological result. The legal person and or that organization shall deduct a certain percentage of the proceeds from using and transferring the service-related technological result so as to give rewards or remuneration to the person(s) achieving the service-related technological result. When the legal person or that organization concludes a technology contract to transfer the service-related technological result, the person(s) achieving the service-related technological result shall have the priority to acquire the transfer on equal conditions.   "Service-related technological result" refers to a technological result achieved in the performance of a task assigned by the legal person or any other organization, or achieved primarily by making use of the materials and technical conditions of the legal person or any other organization.   Article 327 The right of use or transfer of a non-service-related technological result belongs to the person(s) achieving the result, and the person(s) achieving the non-service-related technological result may conclude a technology contract on that result.   Article 328 The person achieving a technological result has the right to indicate on the documents relevant to the technological result that he is the person achieving the result, as well as the right to obtain certificates of honor and rewards.   Article 329 Any technology contract that illegally monopolies technologies, impedes technological progress or infringe upon technological results of others is null and void.   Section II   Technological Development Contracts   Article 330 A technological development contract is a contract made by the parties concerning the research and development of any new technology, new product, new technique or new material, as well as the system thereof.   Technological development contracts include commissioned development contracts and cooperative development contracts.   Technological development contracts shall be in written form.   Contracts concluded by the parties on the application and transformation of any technological result with a value for industrial use shall be made with reference to the provisions for the technological development contracts.   Article 331 The client of a commissioned development contract shall pay funds for research and development and remuneration as contracted, provide technical materials and firsthand data, complete all cooperative work and accept the results of the research and development.   Article 332 The researcher-developer of a commissioned development contract shall work out and implement research and development plan in accordance with the contract, rationally use the research and development funds, complete the research and development work as scheduled, deliver the results of research and development, and provide related technical materials and necessary technical instructions so as to help the client to master the research and development results.   Article 333 Where the client violates the contract and causes thus the standstill, delay or failure of the research and development work, the client shall bear the liability for breach of contract.   Article 334 Where the researcher-developer violates the contract and causes thus the standstill, delay or failure of the research and development work, the researcher-developer shall bear the liability for breach of contract.   Article 335 The parties to a cooperative development contract shall make investments as contracted, including investment in the form of technology, participate in the research and development work divided into them respectively, and cooperate and coordinate in the research and development.   Article 336 Where either party to a cooperative development contract violates the contract and causes thus the standstill, delay or failure of the research and development work, the party in question shall bear the liability for breach of contract.   Article 337 Where the technology stipulated as the targeted matter of a technology development contract is revealed to the public by others, rendering thus the performance of the contract meaningless, the parties may dissolve the contract.   Article 338 Where insurmountable technical difficulties arising in the performance of a technology development contract lead to the total or partial failure of the research and development, the risk liability shall be stipulated by the parties. If the risk liability is not stipulated or not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the parties shall reasonably share the liability.   Where either party finds, as specified in the preceding paragraph, that a situation may cause the total or partial failure of the research and development, the party shall promptly notify the other party and take appropriate measures to minimize the loss. Where the party fails to promptly inform and take appropriate measures and causes thus the aggravation of the loss, the party in question shall be liable for the aggravated part of the loss.   Article 339 For any invention or creation achieved through the commissioned development, the right to apply for patents belongs to the researcher-developer, unless the parties stipulate otherwise. If the researcher-developer obtains the patent right, the client may exploit the patent free of charge.   If the researcher-developer transfers its right of application for patent, the client enjoys the priority to acquire the transfer on equal conditions.   Article 340 For any invention and creation achieved through the cooperative development, the right of application for patent belongs jointly to all parties to the cooperative development, unless the parties stipulate otherwise. If one of the parties transfers its joint right of application for patent, any other party enjoys the priority to acquire the transfer on equal conditions.   If a party to a cooperative development waivers its joint right of application for patent, any or all of the other parties to the cooperative development may make exclusive or joint application. If the patent right is obtained by the applicant(s), the party that has waived its right of application may exploit the patent free of charge.   If one party to a cooperative development does not agree to apply for patent, the other party or parties may not apply therefor.   Article 341 The right to use, the right to transfer and the method of proceeds distribution of the secret technological results achieved through the commissioned development or cooperative development shall be stipulated by the parties. If they are not stipulated or are not clearly stipulated, nor can they be determined pursuant to the provisions of Article 61 of this Law, all the parties concerned shall enjoy the rights to use and to transfer. However, the researcher-developer of a commissioned development may not transfer the research and development results to a third party before their delivery to the client.   Section III   Technological Transfer Contracts   Article 342 Technological transfer contracts include contracts for the transfer of patent right, transfer of the right to apply for patent, transfer of technological know-how and license for exploitation of patents.   Technological transfer contracts shall be in written form.   Article 343 A technological transfer contract may stipulate the scope for the transferor and transferee to exploit the patent or to use the technological know-how, but may not restrict technological competition and technological development.   Article 344 A patent exploitation license contract shall be valid only within the period of continued existence of the patent. If the valid duration of the patent right expires or the patent right is declared invalid, the patentee may not conclude a patent exploitation license contract relating to that patent with others.   Article 345 The transferor in a patent exploitation license contract shall, as contracted, permit the license transferee to exploit the patent, deliver technical materials related to patent exploitation and provide necessary technical guidance.   Article 346 The license transferee in a patent exploitation license contract shall exploit the patent as contracted and may not allow a third party outside the contract to exploit the patent; and shall pay royalties as contracted.   Article 347 The transferor in a technical know-how transfer contract shall, as contracted, provide technical materials, give technical guidance, guarantee the practical applicability and reliability of the technology, and maintain confidentiality.   Article 348 The transferee in a technical know-how transfer contract shall, as contracted, utilize the technology, pay royalties, and maintain confidentiality.   Article 349 The transferor in a technological transfer contract shall guarantee its legitimate ownership over the technology provided and guarantee the technology provided to be complete, errorless, effective, and capable of attaining the contracted goal.   Article 350 The transferee in a technological transfer contract shall, in accordance with the contracted scope and period of time, maintain confidentiality regarding the parts of the technology provided by the transferor and not yet been disclosed to the public.   Article 351 The transferor that fails to transfer the technology as contracted shall refund the royalties in part or in full and bear the liability for breach of contract. The party that exploits a patent or utilizes technical know-how beyond the contracted scope, or allows an unauthorized third party to exploit the patent or utilize the technical know-how in violation of the contract shall stop its contract-breaching acts and bear the liability for breach of contract. The party that violates the contracted obligation of maintaining confidentiality shall bear the liability for breach of contract.   Article 352 The transferee that fails to pay royalties as contracted shall make up the payment of royalties and pay a penalty for breach of contract as contracted, and, if failing to make up the payment of royalties and pay the penalty, shall stop its exploitation of the patent or utilization of the technical know-how, return the technical materials and bear the liability for breach of contract. The transferee that exploits the patent or utilizes the technical know-how in excess of the contracted scope or allows a third party, without the consent of the transferor, to exploit the patent or to utilize the technical know-how shall stop its contract-breaching acts and bear liability for breach of contract. The transferee that violates its contracted obligation of maintaining confidentiality shall bear the liability for breach of contract.   Article 353 Where the exploitation of the patent or utilization of the technical know-how by the transferee as contracted infringes upon the legitimate rights and interests of others, the liability therefor shall be borne by the transferor, unless the parties stipulate otherwise.   Article 354 The parties to a technological transfer contract may, in accordance with the principle of mutual benefit, stipulate the method for sharing any subsequently improved technological result obtained from the patent exploitation or utilization of the technical know-how. Where such method is not stipulated or not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the subsequently improved technological result achieved by one party may not be shared by any of the other parties.   Article 355 Where laws and administrative regulations stipulate otherwise on contracts for technology import and export or on contracts for patents and patent applications, the relevant provisions thereof shall govern.   Section IV   Technical Consultation Contracts and Technical Service Contracts   Article 356 "Technical consultation contracts" include contracts for providing reports concerning a specific technological project on such subjects as feasibility study, technical projection, special technological investigations, and analysis and evaluation.   A "technical service contract" refers to a contract whereby one party uses its technical knowledge to solve specific technical problems for the other party, while not embracing the construction project contract and the work contract.   Article 357 The client to a technical consultation contract shall, as contracted, state the issues for consultation, provide background technical information and related technical materials and data, and accept the work results of the agent and pay remuneration.   Article 358 The agent to a technical consultation contract shall complete the consultation report or solve the problems within the contracted time limit, and the consultation report submitted shall meet the stipulated requirements.   Article 359 If the client to a technical consultation contract fails to provide necessary materials and data as contracted and thus affects the progress and quality of the work, or the client fails to accept the work results or delays the acceptance, the paid remuneration may not be reimbursed, while the unpaid remuneration shall be paid.   The agent to a technical consultation contract that fails to submit the consultation report as scheduled or submits a report failing to meet the contracted requirements shall bear the liability for breach of contract in form of reduction or waiver of its remuneration.   Any losses caused by the decision made by the client to a technical consultation contract according to the agent's consultation report and advice that meet the contracted requirements shall be borne by the client, unless the parties stipulate otherwise.   Article 360 The client to a technical service contract shall, as contracted, provide working conditions, accomplish cooperative work, accept the results of the work and pay remuneration.   Article 361 The agent to a technical service contract shall, as contracted, complete the service items, solve technical problems, guarantee the quality of the work, and impart the knowledge for solving technical problems.   Article 362 Where the client to a technical service contract fails to perform its contracted obligations or performs its obligations in a manner inconsistent with the contracted requirements, thus affecting the progress and quality of the work, or fails to accept the work results or delays its acceptance, the paid remuneration may not be reimbursed, while the unpaid remuneration shall be paid.   The agent to a technical service contract that fails to complete the service work as contracted shall bear the liability for breach of contract in the form of waiver of its remuneration, and etc.   Article 363 In the course of the performance of a technical consultation contract or a technical service contract, new technological results achieved by the agent with technical materials and working conditions provided by the client shall belong to the agent. New technological results achieved by the client on the basis of the work results of the agent shall belong to the client. If the parties have agreed otherwise, their agreement shall govern.   Article 364 Where laws and administrative regulations stipulate otherwise on technology brokerage contracts and technical training contracts, the relevant provisions thereof shall govern.   Chapter XIX   Contracts of Deposit   Article 365 A "contract of deposit" is a contract whereby the depository safekeeps the articles delivered by the depositor and returns the said article.   Article 366 The depositor shall pay the deposit fee to the depository as contracted.   If the deposit fee is not stipulated or is not clearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the deposit shall be gratis.   Article 367 A contract of deposit shall be executed upon delivery of the deposited article unless the parties stipulate otherwise.   Article 368 Where the depositor delivers the deposited article to the depository, the latter shall issue a deposit certificate, unless there are other trade practices.   Article 369 The depository shall properly safekeep the article.   The parties may stipulate the place and method of safekeeping. Except in case of emergency or in the interests of the depositor, the place and method for safekeeping may not be changed unilaterally.   Article 370 If the article delivered for safekeeping by a depositor has defects or needs by nature special safekeeping measures, the depositor shall notify the depository about the relevant information. Where the depositor fails to give information resulting thus in loss or damage to the article, the depository shall not hold the liability for damages; if the depository suffers a loss therefrom, the depositor shall be liable for the loss unless the depository is aware or ought to be aware of the situation but fails to take remedial measures.   Article 371 The depository may not transfer the article to a third party for deposit, unless the parties stipulate otherwise.   A depository that violates the provisions of the preceding paragraph, transfers the article to a third party for deposit, and thus causes damage or loss to the article shall hold the liability for damages.   Article 372 The depository may not use nor permit a third party to use the deposited article, unless the parties stipulate otherwise.   Article 373 Where a third party claims rights over the deposited articles, the depository shall perform the obligation of returning the article to the depositor, except that the deposited article is put under preservation or execution according to law.   Where a third party initiates an action against the depository or applies for the distraint of the deposited article, the depository shall promptly notify the depositor.   Article 374 Where damage or loss of the deposited article is caused within the period of safekeeping due to improper safekeeping by the depository, the depository shall hold the liability for damages. However, if the deposit is non-gratis and the depository can prove itself free from any gross negligence, the depository shall not hold the liability for damages.   Article 375 The depositor shall declare to the depository where currencies, negotiable securities or other valuable objects are deposited, and the depository shall accept them after check or seal them. Where the said deposited article is damaged or lost in the absence of a declaration from the depositor, the depository may make a compensation at a rate for general articles.   Article 376 The depositor may collect its deposited article at any time.   Where the deposit period is not stipulated or unclearly stipulated by the parties, the depository may, at any time, ask the depositor to collect the deposited article; where the deposit period is stipulated, the depository may not ask the depositor to collect the deposited article ahead of time without a particular reason.   Article 377 When the deposit period expires or the depositor collects the deposited article ahead of schedule, the depository shall return the article together with its accrued interest to the depositor.   Article 378 Where a depository safekeeps currencies, the depository may return the same kind of currencies in same amount. Where other replaceable articles are deposited, the depository may return them in same kind, same quality and same quantity according to the contract.   Article 379 Under a contract for non-gratuitous deposit, the depositor shall pay a deposit fee to the depository at a contracted time.   Where the time limit for payment is not stipulated or is not clearly stipulated by the parties, nor can it be determined pursuant to the provisions of Article 61 of this Law, the payment shall be made at the time of collecting the deposited article.   Article 380 If the depositor fails to pay the deposit fee and other charges, the depository has the right of lien on the deposited article, unless the parties stipulate otherwise.   Chapter XX   Warehousing Contracts   Article 381 A warehousing contract is a contract whereby the depository stores the goods delivered by the depositor and the depositor pays the warehousing fee.   Article 382 A warehousing contract becomes valid when it is executed.   Article 383 Where dangerous goods such as inflammable, explosive, toxic, corrosive and radioactive or perishable articles are to be warehoused, the depositor shall state the nature of the said goods or articles and provide relevant information and materials.   If the depositor violates the provisions of the preceding paragraph, the depository may refuse to accept the goods for warehousing, or may take appropriate measures to avoid the occurrence of losses, and the expenses thus incurred shall be borne by the depositor.   The depository that warehouses dangerous goods such as inflammable, explosive, toxic, corrosive and radioactive materials shall have corresponding warehousing conditions.   Article 384 The depository shall check the goods as contracted before accepting the warehousing. If the depository finds during the check any inconsistency in the goods to be stored with the contract, the depository shall promptly notify the depositor. Where the warehoused goods are found, after being checked and accepted by the depository, not in conformity with the contract in terms of varieties, quantity or quality, the depository shall hold the liability for damages.   Article 385 Upon delivering of the goods by the depositor for storage, the depository shall issue a warehousing certificate.   Article 386 The depository shall sign or stamp the warehousing certificate. A warehousing certificate shall contain the following particulars:   1. designation or name and address of the depositor;   2. variety, quantity, quality, package, number of pieces and marks of the stored goods;   3. standards for damage and spoilage of the stored goods;   4. warehousing site;   5. warehousing period;   6. warehousing fee;   7. the insured amount, duration of insurance and designation of the insurance company if the goods to be stored have been insured; and   8. name of the issuer and the place and date of issuance.   Article 387 The warehousing certificate is the proof for collecting the stored goods. Where the depositor or the holder of the warehousing certificate endorses the certificate which is thus signed or stamped by the depository, the right to collect the stored goods may be transferred.   Article 388 The depository shall, at request of the depositor or the holder of the warehousing certificate, allow the depositor or the holder to examine the stored goods or to take samples.   Article 389 Where the depository finds that the warehoused goods deteriorate or suffer from other damages, the depository shall promptly inform the depositor or the holder of the warehousing certificate.   Article 390 Where the depository finds that the warehoused goods deteriorate or suffer from other damages, which endangers the safety and normal warehousing of other warehoused goods, it shall urge the depositor or the holder of the warehousing certificate to make necessary disposal. In case of emergency, the depository may make necessary disposal, but shall promptly notify the depositor or the holder of the warehousing certificate about the situation afterwards.   Article 391 If the warehousing period is not stipulated or is unclearly stipulated by the parties, the depositor or the holder of the warehousing certificate may collect at any time the warehoused goods, and the depository may also ask at any time the depositor to collect the warehoused goods but a reasonable period of time necessary for preparations shall be given.   Article 392 Where the warehousing period expires, the depositor or the holder of the warehousing certificate shall collect the stored goods on the strength of the warehousing certificate. If the depositor or the holder of the warehousing certificate delays in collecting the stored goods, extra warehousing fees shall be charged; if the goods are collected before the expiration, the warehousing fees shall not be reduced.   Article 393 Where the depositor or the holder of the warehousing certificate fails to collect the stored goods at expiration of the warehousing period, the depository may urge the depositor or the holder of the warehousing certificate to collect the goods within a reasonable period of time; if the depositor or the holder still fails to collect the goods beyond the reasonable period, the depository may have the stored goods deposited.   Article 394 If damages or losses caused to the stored goods are due to improper warehousing by the depository within the warehousing period, the depository shall hold the liability for damages.   If the deterioration or damage of the stored goods is due to the nature of the goods, the failure of their packaging to meet the requirements or the overrun of their valid storage period, the depository shall not be liable therefor.   Article 395 For matters not regulated by this Chapter, the relevant provisions on the contracts of deposit shall apply.   Chapter XXI   Entrustment Contract   Article 396 An entrustment contract is a contract whereby the principal and the agent agree that the agent shall handle the affairs of the principal.   Article 397 The principal may specifically authorize the agent to handle one or several affairs, and may also generally authorize the agent to handle all affairs.   Article 398 The principal shall pay in advance the expenses for handling the entrusted affairs. If the agent pays for the principal necessary expenses in handling entrusted affairs, the principal shall repay the expenses as well as the interest accrued.   Article 399 The agent shall handle the entrusted affairs in accordance with the instructions of the principal. If it is necessary to modify the instructions of the principal, the modification shall be approved by the principal; if it is difficult to contact the principal in an emergency, the agent shall properly handle the entrusted affairs, and shall promptly inform the principal of the situation afterwards.   Article 400 The agent shall handle in person the entrusted affairs. With the consent of the principal, the agent may sub-entrust a third party. If the sub-entrustment obtains consent, the principal may directly instruct the third party sub-entrusted on an entrusted affair, and the agent shall only be liable for the choice of the third party and for the instructions given by the agent to the third party. If the sub-entrustment does not obtain consent, the agent shall be liable for any acts of the sub-entrusted third party, except in case of emergency, a sub-entrustment for agent to protect the interests of the principal.   Article 401 The agent shall, at the request of the principal, report on the situation of the entrusted affairs handled. Upon termination of the entrustment contract, the agent shall report the result of the entrusted affairs handled.   Article 402 Where the agent enters into a contract with a third party under the agent's name within the scope of authorization by the principal, and if the third party is aware of the proxy relationship between the agent and the principal, the said contract shall directly bind the principal and the third party, unless truthful evidence proves that the said contract binds only the agent and the third party.   Article 403 Under a contract concluded by the agent in the agent's name with a third party that is not aware of the proxy relationship between the agent and the principal, when the agent fails to perform obligations toward the principal because of the third party, the agent shall disclose the third party to the principal, and the principal may then exercise the rights of the agent vis-a-vis the third party, except that the third party is unwilling to enter into the contract if it is aware of the principal while making the contract with the agent.   Where the agent fails to perform obligations towards the third party because of the principal, the agent shall disclose the principal to the third party, and the third party may then choose either the agent or the principal as the counterpart to claim its rights. However, the third party may not change the counterpart once chosen.   Where the principal exercises the rights of the agent vis-a-vis the third party, the third party may address its plea against the agent to the principal. When the third party chooses the principal as the counterpart, the principal may address to the third party the principal's plea against the agent as well as the agent's plea against the third party.   Article 404 The agent shall hand over to the principal any property acquired in handling the entrusted affairs.   Article 405 When the agent has accomplished the entrusted affairs, the principal shall pay remuneration to the agent. If the entrustment contract is dissolved or the entrusted affairs can not be accomplished due to reasons not attributable to the agent, the principal shall pay corresponding remuneration to the agent. If the parties have stipulated otherwise, such stipulations shall govern.   Article 406 Under a non-gratuitous entrustment contract where any loss is caused to the principal due to negligence of the agent, the principal may demand compensation therefor. Under a gratuitous entrustment contract where any loss is caused to the principal due to deliberate intention or gross fault of the agent, the principal may demand compensation therefor.   Where the agent acts beyond the authorization and causes thus losses to the principal, the agent shall make compensation therefor.   Article 407 If the agent suffers a loss in handling the entrusted affairs not due to reasons attributable to the agent, compensation therefor may be demanded from the principal.   Article 408 The principal may, with consent of the agent, authorize a third party to handle entrusted affairs in addition to the agent. If a loss is thus caused to the agent, the agent may demand compensation therefor from the principal.   Article 409 If two or more agents jointly handle the entrusted affairs, they shall bear joint and several liabilities.   Article 410 The principal or the agent may dissolve the entrustment contract at any time. If the dissolution of the contract by a party causes losses to the other party, the dissolving party shall compensate for the losses, except for reasons not attributable to that party.   Article 411 An entrustment contract shall terminate when either the principal or the agent dies, loses capacity of civil conduct or goes bankrupt, except in the event that the parties stipulate otherwise or it is inappropriate to terminate the contract due to the nature of the entrusted affairs.   Article 412 Where the termination of an entrustment contract is resulted from the death, loss of capacity of civil conduct or bankruptcy of the principal and will impair the interests of the principal, the agent shall continue to handle the entrusted affairs till the heir, legal agent or liquidation organization of the principal takes over the entrusted affairs.   Article 413 If the death, loss of capacity of civil conduct or bankruptcy of the agent leads to the termination of an entrustment contract, the heir, the legal agent or the liquidation organization of the agent shall promptly inform the principal. If the termination of the entrustment contract will impair the interests of the principal, the heir, the legal agent or the liquidation organization of the agent shall take necessary measures before the principal makes arrangement to deal with the aftermath.   Chapter XXII   Brokerage Contracts   Article 414 A brokerage contract is a contract whereby the broker in its own name engages in trade activities for the truster and the truster pays remuneration therefor.   Article 415 Expenses inflicted by the broker in handling the entrusted affairs shall be borne by the broker, unless the parties stipulate otherwise.   Article 416 If the broker possesses the commissioned articles, the broker shall properly safekeep the articles.   Article 417 If the commissioned articles have defects or are vulnerable to degeneration or deterioration at the time when they are delivered to the broker, the broker may, with the consent of the truster, dispose of the articles; if the broker is unable to make prompt contact with the truster, the broker may dispose of the articles in a proper manner.   Article 418 If a broker sells at a price lower than the price set by the truster or buys at a price higher than the price set by the truster, the broker shall obtain the consent of the truster. If a deal is made without the consent of the truster, the broker shall make up for the price difference and the said deal shall be effective for the truster.   If a broker sells at a price higher than the price set by the truster or buys at a price lower than the price set by the truster, remuneration may be increased as contracted. If the increase is not stipulated or is not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the benefits involved shall belong to the truster.   If the truster has given special instructions regarding price, the broker may not sell or buy contrary to the said instructions.   Article 419 If the broker buys or sells commodities at a market price, unless the truster indicates otherwise, the broker itself may serve as the buyer or the seller.   Despite the conditions stipulated in the preceding paragraph, the broker may still ask the truster to pay remuneration.   Article 420 If the broker buys a commissioned article pursuant to the contract, the truster shall accept the article in a timely manner. If, after being urged by the broker, the truster refuses to accept the article without a justifiable reason, the broker may have the commissioned article deposited in accordance with the provisions of Article 101 of this Law.   If a commissioned article cannot be sold or the truster withdraws the commissioned sale, and if the truster after being urged by the broker fails to retrieve or dispose of the said article, the broker may have the commissioned article deposited pursuant to the provisions of Article 101 of this Law.   Article 421 A broker that enters into a contract with a third party shall directly enjoy the rights and bear the responsibilities under that contract.   Where the third party fails to fulfill the contracted obligations and causes thus losses to the truster, the broker shall be liable therefor, unless the broker and the truster stipulate otherwise.   Article 422 Where the broker has accomplished the commissioned affairs in full or in part, the truster shall pay remuneration accordingly. If the truster fails to pay remuneration as scheduled, the broker shall enjoy the right of lien on the commissioned articles, unless the parties stipulate otherwise.   Article 423 For questions not regulated by this Chapter, the relevant provisions on entrustment contracts shall apply.   Chapter XXIII   Intermediation Contracts   Article 424 An intermediation contract is a contract whereby the middleman reports to the truster the opportunity for making a contract or provides intermediating services for the making of a contract, and the truster pays remuneration therefor.   Article 425 The middleman shall truthfully report to the truster matters related to the making of a contract.   If the middleman intentionally conceals important facts in relation to the making of the contract or provides untrue information and thus impairs the interests of the truster, the middleman may not claim remuneration and shall hold the liability for damages.   Article 426 If the middleman contributes to the making of a contract, the truster shall pay remuneration as contracted. If the remuneration for the middleman is not stipulated or not clearly stipulated, nor can it be determined pursuant to the provisions of Article 61 of this Law, the remuneration shall be reasonably determined in accordance with the middleman's services. If the intermediating services provided by the middleman prompts the making of a contract, the parties to the said contract shall equally share the disbursement of the remuneration to the middleman.   In prompting the making of a contract, the expenses incurred in the intermediating activities shall be borne by the middleman.   Article 427 If the middleman fails to prompt the making of a contract, the middleman may not demand the payment of remuneration, but may ask the truster to pay the necessary expenses incurred in the intermediating activities. Supplementary Provisions   Article 428 This Law shall go into effect as of October 1, 1999. The Economic Contract Law of the People's Republic of China, the Law of the People's Republic of China on Economic Contracts Involving Foreign Interest and the Law of the People's Republic of China on Technology Contracts shall be simultaneously annulled.
  • Property Law of the People’s Republic of China

    2012-11-28

      Order of the President of the People’s Republic of China   No. 62   The Property Law of the People’s Republic of China, adopted at the Fifth Session of the Tenth National People’s Congress of the People’s Republic of China on March 16, 2007, is hereby promulgated and shall go into effect as of October 1, 2007.   Hu Jintao   President of the People’s Republic of China   March 16,2007   Property Law of the People’s Republic of China   (Adopted at the Fifth Session of the Tenth National People’s Congress on March 16, 2007)   Contents   Part One General Provisions   Chapter I Basic Principles   Chapter II Creation, Alteration, Transfer and Extinction of the Property Right   Section 1 Registration of the Immovables   Section 2 Delivery of the Movables   Section 3 Other Provisions   Chapter III Protection of the Property Right   Part Two Ownership   Chapter IV General Stipulations   Chapter V Ownership of the State, the Collective and the Individual Person   Chapter VI Condominium Right of Property Owners   Chapter VII Neighboring Relations   Chapter VIII Co-ownership   Chapter XV Special Provisions on Acquirement of Ownership   Part Three Usufructs   Chapter X General Stipulations   Chapter XI The Right to Land Contractual Management   Chapter XII The Right to the Use of Land for Construction   Chapter XIII The Right to the Use of House Sites   Chapter XIV Easements   Part Four Security Interest in Property   Chapter XV General Stipulations   Chapter XVI Interests Obtained from Mortgage   Section 1 General Interest Obtained form Mortgage   Section 2 Maximum Mortgage Interest   Chapter XVII Interest Acquired Through Pledge   Section 1 Interest Acquired Through Pledge of Movables   Section 2 Interests Acquired Through Pledge of Rights Chapter XVIII Lien   Part Five Possession   Chapter XIX Possession   Supplementary Provisions   Part One General Provisions   Chapter I Basic Principles   Article 1 This Law is enacted in accordance with the Constitution for the purpose of upholding the basic economic system of the State, maintaining the order of the socialist market economy, defining the attribution of things, giving play to the usefulness of things and protecting the property right of obligees.   Article 2 This Law shall be applicable to civil relationships stemming from attribution and use of things.   For the purposes of this Law, things include the immovables and the movables. Where laws stipulate that rights are taken as objects of the property right, the provisions of such laws shall prevail.   The property right mentioned in this Law means the exclusive right enjoyed by the obligee to directly dominate a given thing according to law, which consists of the right of ownership, the usufruct and the security interest on property.   Article 3 In the primary stage of socialism, the State upholds the basic economic system under which public ownership is dominant and the economic sectors of diverse forms of ownership develop side by side.   The State consolidates and develops the public sectors of the economy, and encourages, supports and guides to the development of the non-public sectors of the economy.   The State maintains a socialist market economy and guarantees the equal legal status and the right to development of all the mainstays of the market.   Article 4 The property right of the State, the collectives, the individual persons and other obligees are protected by law, and no units or individuals shall encroach on it.   Article 5 The categories and contents of the property right shall be stipulated by law.   Article 6 The creation, alteration, transfer or extinction of the property right of the immovables shall be registered in accordance with the provisions of law. The property right of the movables shall be created or transferred upon delivery in accordance with the provisions of law.   Article 7 The law shall be observed and social ethics shall be respected in acquiring or exercising the property right and public interests and the lawful rights and interests of another person shall not be jeopardized.   Article 8 Where other laws specially provide for the property right otherwise, the provisions there shall prevail.   Chapter II Creation, Alteration, Transfer and Extinction of the Property Right   Section 1 Registration of the Immovables   Article 9 The creation, alteration, transfer or extinction of the property right shall become valid upon registration according to law; otherwise it shall not become valid, unless otherwise provided for by law.   Registration of ownership of all the natural resources which are owned by the State in accordance with law may be dispensed with.   Article 10 Registration of the immovables shall be handled by the registration authority at the place where they are located.   The State practices a unified system of registration with respect to the immovables. The scope of unified registration, the registration authority and the measures for registration shall be stipulated by law and administrative regulations.   Article 11 To apply for registration, the party concerned shall, on the basis of the different matters for registration, submit the certificate of the attribution of right and the necessary materials on boundary and the area of the immovables, etc.   Article 12 The registration authority shall perform the following duties:   (1) to examine the certificate of the attribution of right and the other necessary materials submitted by the applicant;   (2) to inquire of the applicant about the matters for registration;   (3) to register the relevant matters truthfully and in a timely manner; and   (4) to perform the other duties provided for by laws and administrative regulations.   Where further certification of the condition of the immovables, the registration of which is applied for, is needed, the registration authority may require the applicant to supplement the materials and may, when necessary, check them on the spot.   Article 13 The registration authority shall not do any of the following:   (1) demanding evaluation of the immovables;   (2) making repeated registration in the name of annual inspection, etc.; or   (3) doing other things beyond the limits of its duty for registration.   Article 14 Where the creation, alteration, transfer and extinction of the property right of the immovables are required to be registered according to the provisions of law, they shall become valid as of the time when they are entered in the register of the immovables.   Article 15 The contract made between the parties concerned on the creation, alteration, transfer or extinction of the property right of the immovables shall become valid as of the time when the contract is concluded, unless otherwise provided for by law or agreed upon in the contract; and where the property right is not registered, it shall not affect the validity of the contract.   Article 16 The register of the immovables provides the basis for the attribution and contents of the property right.   The register of the immovables shall be kept by the registration authority.   Article 17 The right attribution certificate of the immovables is the proof that the obligee is entitled to the property right of the said immovables. The items recorded in the right attribution certificate of the immovables shall be consistent with what is recorded in the register of the immovables; and in case of inconsistencies, what is recorded in the register of the immovables shall be taken as the standard unless there is evidence to prove that there are errors in what is recorded in the register of the immovables.   Article 18 The obligee or the interested party may apply for consulting and duplicating the registered information, and the registration authority shall provide such materials accordingly.   Article 19 Where the obligee or the interested party believes that there are errors in what is recorded in the register of the immovables, he may apply for correction. Where the obligee recorded in the register of the immovables agrees in written form to make corrections or there is evidence to prove that there are definitely errors in the registration, the registration authority shall make corrections accordingly.   Where the obligee recorded in the register of the immovables disagrees on making corrections, the interested party may apply for the registration of disagreement. Where the registration authority registers the disagreement, the applicant in question fails to file a lawsuit within 15 days from the date the disagreement is registered, such a registration shall become invalid. If damages are caused to the obligee due to inappropriate registration of disagreement, the obligee may request the applicant to make compensation.   Article 20 When the party concerned intends to sign an agreement on the purchase or sale of a house or other property right of immovables, he may, in accordance with what is agreed upon, apply to the registration authority in advance for registration, in order to ensure the realization of his property right in future. Where after the registration is made in advance, such immovables are disposed of without the consent of the obligee who is recorded in the registration in advance, the property right of such immovables shall be invalid.   Where after the registration is made in advance, the creditor’s rights extinguish or no application for registration of the immovables is made within three months from the date when such registration can be made, the registration made in advance shall become invalid.   Article 21 Where the party concerned submits false materials when applying for registration, thus causing damages to another person, he shall be liable for compensation.   Where damages are caused to another person due to the errors made in registration, the registration authority shall be liable for compensation. After making the compensation, the said authority may have recourse to the person who makes the errors in registration.   Article 22 Charges for registration of the immovables shall be collected piece by piece and shall not be collected on the basis of the areas or sizes of the immovables or in proportion to the purchase prices. The specific rates for the charges shall be prescribed by relevant department under the State Council together with the department of pricing.   Section 2 Delivery of the Movables   Article 23 The creation or transfer of the property right of the movables shall become valid as of the time of their delivery, unless otherwise provided for by law.   Article 24 Before registration, the creation, alteration, transfer or extinction of the property right of the vessels, aircraft, motor vehicles, etc. shall not be used against a bona fide third party.   Article 25 Where an obligee has already possessed the movables according to law prior to the creation or transfer of the property right of such movables, the property right shall become valid as of the time when such legal act becomes effective.   Article 26 Where a third party has taken possession of the movables according to law prior to the creation or transfer of the property right of the said movables, the person who is obligated to deliver the movables may do so, instead, through transferring the right of requesting the third party to return the original movables.   Article 27 Where both parties agree that the transferor continues to possess the movables while the property right of such movables is being transferred, the said property right shall be valid as of the time when the said agreement becomes effective.   Section 3 Other Provisions   Article 28 Where the property right is created, altered or transferred or extinguishes in accordance with the legal document of a people’s court or an arbitration committee or a decision made by a people’s government on expropriation, etc., such creation, alteration, transfer and extinction shall become valid as of the time when the said document or decision comes into effect.   Article 29 Where the property right is obtained through inheritance or acceptance of legacy, such property right shall become valid as of the time of inheritance or acceptance of legacy.   Article 30 Where the property right is created or extinguishes due to such factual acts as lawful construction and demolition of houses, such property right shall become valid as of the time when the factual acts are achieved.   Article 31 Where a person enjoys the property right over the immovables in accordance with the provisions of Articles 28 through 30 of this Law, and registration is required according to the provisions of laws, when such property right is disposed of, the property right shall be invalid if no registration is made.   Chapter III Protection of the Property Right   Article 32 Where the property right is encroached on, the obligee may have the matter settled by means of conciliation, mediation, arbitration or litigation.   Article 33 Where a dispute arises over the attribution or contents of the property right, the interested parties may request confirmation of their right.   Article 34 Where a person takes possession of the immovables or movables without the right to do so, the obligee may request return of the original immovables or movables.   Article 35 Where the property right is impaired or is likely to be impaired, the obligee may request removal of such impairment or elimination of the potential danger.   Article 36 Where the immovables or movables are damaged or destroyed, the obligee may request repairs, reconstruction or remaking, replacement or restoration to their original state.   Article 37 Where the infringement of the property right causes damages to an obligee, the obligee may request compensation for the damages and may also request the infringing party to assume other civil liabilities.   Article 38 The forms for protection of the property right as provided for in this Chapter may be applied separately and may also be applied otherwise, depending on the circumstances of infringement.   Apart from bearing civil liability for infringement on the property right, a person who, in addition, violates the administrative provisions shall bear administrative liability according to law; and if a crime is constituted, he shall be investigated for criminal liability according to law.   Part Two Ownership   Chapter IV General Stipulations   Article 39 Owners of immovables or movables shall be entitled to possess, use, benefit from and dispose of the immovables or movables according to law.   Article 40 On their own immovables or movables, owners shall have the right to create usufruct and security interest. In exercising their rights, the usufructuaries or guarantors shall not impair the rights and interests of the owners.   Article 41 No units or individuals shall be allowed to acquire ownership of the immovables and movables which are exclusively owned by the State as are provided for by law.   Article 42 For public interests, land owned by the collectives, and the houses and other immovables of units and individuals may be expropriated within the limits of power and in compliance with the procedures provided for by law.   Where land owned by the collective is expropriated, such fees as compensations for the land expropriated, subsidies for resettlement and compensations for the attachments and the young crops on land shall be paid in full according to law, and the premiums for social insurance of the farmers whose land is expropriated shall be arranged in order to guarantee their daily lives and safeguard their lawful rights and interests.   Where houses and other immovables of units or individuals are expropriated, compensations for their resettlement shall be paid according to law, and their lawful rights and interests shall be protected; and where the housings of individuals are expropriated, their living conditions shall be guaranteed.   No units or individuals shall embezzle, misappropriate, privately divide, withhold or default on payment of such fees as the compensations for expropriation.   Article 43 The State provides cultivated land with special protection through strictly restricting the transformation of the farmland into land for construction and keeping under control the total amount of land used for construction. No land owned by the collectives shall be expropriated in violation of the limits of power and in compliance with the procedures as provided for by law.   Article 44 In order to meet such urgent needs as rushing to rescue or providing disaster relief, the immovables or movables of units or individuals may be requisitioned within the limits of power and in compliance with the procedures as provided for by law. After the use of the requisitioned immovables or movables, they shall be returned to the units or individuals whose immovables or movables are requisitioned. Where the immovables or movables of units or individuals are requisitioned or if they are damaged or lost thereafter, compensations shall be made therefor.   Chapter V Ownership of the State, the Collective and the Individual Person   Article 45 The property owned by the State as is provided for by law belongs to the State, that is, the entire people.   The State Council shall exercise ownership of State-owned property on behalf of the State; and where laws provide for otherwise, the provisions there shall prevail.   Article 46 All mineral resources, waters and sea areas belong to the State.   Article 47 Land in the cities belongs to the State. Land in the rural and suburban areas which belongs to the State as is provided for by law is owned by the State.   Article 48 Such natural resources as forests, mountains, grasslands, wasteland and tidal flats belong to the State, except where they belong to the collectives as is provided for by law.   Article 49 All resources of the wildlife that belong to the State, as is provided for by law, are owned by the State.   Article 50 All resources of radio-frequency spectrum belong to the State.   Article 51 All cultural relics that belong to the State, as is provided for by law, are owned by the State.   Article 52 All assets for national defense belong to the State.   All infrastructures such as railways, highways, power facilities, telecommunications facilities and oil and gas pipelines that belong to the State in accordance with the provisions of law are owned by the State.   Article 53 Government departments are entitled to possess and use the immovables and movables directly under their control and to dispose of them in accordance with laws and the relevant regulations of the State Council.   Article 54 Institutions sponsored by the State shall have the right to possess and use the immovables and movables directly under their control and to benefit from and dispose of them in accordance with laws and the relevant regulations of the State Council.   Article 55 With respect to enterprises invested by the State, the State Council or the local people’s governments shall, in accordance with the provisions of laws and administrative regulations, perform the duties of the investors on behalf of the State and enjoy the rights and interests of the investors.   Article 56 The property owned by the State shall be protected by law, and illegal possession, looting, privately dividing, withholding or destruction of such property by any units or individuals shall be prohibited.   Article 57 The authority performing the duties of administration and supervision over State-owned property and its staff members shall, according to law, exercise vigorous administration and supervision over State-owned property, promote the preservation and increase of the value of such property, and prevent its loss; and where losses are caused to State-owned property due to their abuse of power or dereliction of their duties, they shall bear legal liability according to law.   Where, in violation of the provisions governing the management of State-owned property, losses are caused to such property due to transferring it at a low price, privately dividing it in conspiracy with other persons, creating security on it without authorization or by other means in the course of enterprise restructuring, merger or division, affiliated transaction, etc., legal liability shall be borne according to law.   Article 58 The immovables and movables owned by the collective include the following:   (1) the land, forests, mountains, grasslands, wasteland and tidal flats belong to the collective, as is provided for by law;   (2) the buildings, production equipment, water conservancy facilities of farmland that are owned by the collective;   (3) the educational, scientific, cultural, public health and sports facilities that are owned by the collective; and   (4) other immovables and movables owned by the collective.   Article 59 The immovables and movables collectively owned by the farmers belong to the members of the collective.   The following matters shall be subject to decision by the members of a given collective in accordance with the statutory procedure:   (1) plans for contracting of land, and subcontracting of land to other units or to individuals other than those belonging to the collective;   (2) adjustment to be made to the contracted land by the individual persons among themselves who have the right to land contractual management;   (3) methods for the use and distribution of such fees as compensations paid for land;   (4) such matters as change in ownership of the enterprises invested by the collective; and   (5) other matters as provided for by law.   Article 60 With respect to the land, forests, mountains, grasslands, wasteland, tidal flats, etc. owned by the collective, the right of their ownership shall be exercised in accordance with the following provisions:   (1) For those owned by the collective of farmers of a village, the collective economic organization of the village or the villagers’ committee shall exercise the right of ownership on behalf of the collective;   (2) For those respectively owned by two or more collectives of farmers within a village, the collective economic organizations or villagers’ teams concerned within the village shall exercise the right of ownership on behalf of the collectives; and   (3) For those owned by the collective of farmers of a town or township, the collective economic organization of the town or township shall exercise the right of ownership on behalf of the collective.   Article 61 With respect to the immovables and movables owned by a collective of a town or township, the said collective shall, in accordance with the provisions of laws and administrative regulations, have the right to possess, use, benefit from and dispose of such immovables and movables.   Article 62 The collective economic organization or the villagers’ committee or team shall, in accordance with laws and administrative regulations as well as the articles of association, village rules and farmers’ agreements, make the position of the collective property known to the members of the collective.   Article 63 The property owned by the collective shall be protected by law, and illegal possession, looting, privately sharing, and destruction of such property by any units or individuals shall be prohibited.   Where a decision made by a collective economic organization, or villagers’ committee or by the leading person of the organization or committee encroaches on the lawful rights and interests of the members of the collective, the said members may apply to a people’s court for reversing such decision.   Article 64 All individual persons shall be entitled to enjoy ownership of such immovables and movables as their lawful incomes, houses, articles for daily use, tools of production, and raw and semi-finished materials.   Article 65 The lawful savings and investments of individual persons and the gains derived there from are protected by law.   The State protects, in accordance with the provisions of law, the right of individual persons to inheritance and their other lawful rights and interests.   Article 66 The lawful property of individual persons is protected by law, and illegal possession, looting and destruction of such property by any units or individuals are prohibited.   Article 67 The State, the collective or the individual person may, in accordance with law, invest to establish companies with limited liability, companies limited by shares or other enterprises. Where the immovables or movables owned by the State, the collective or the individual person are invested in enterprises, the investor shall have such rights as receiving benefits derived from the assets, making major decisions and selecting managers, and shall perform it/his duties, in accordance with what is agreed upon or in proportion to the amount of investment.   Article 68 An enterprise legal person has the right to possess, use, benefit from and dispose of his immovables and movables in accordance with laws and administrative regulations as well as the articles of association.   The rights enjoyed by legal persons other than enterprise legal persons with respect to their immovables and movables shall be governed by the provisions of relevant laws and administrative regulations as well as the articles of association.   Article 69 The immovables and movables owned by public organizations according to law are protected by law.   Chapter VI Condominium Right of Property Owners   Article 70 Property owners shall enjoy ownership of the special parts within a building, such as the residential units and the units for business purposes and shall enjoy the right to share and jointly manage the common parts other than the special parts.   Article 71 An owner shall enjoy the rights of possession, use, benefiting from and disposition of the part exclusively owned by him within a building. In exercising his rights, the owner shall not endanger the safety of the building or infringe on the lawful rights and interests of other owners therein.   Article 72 An owner shall enjoy rights and fulfill obligations with respect to the common parts of a building other than the special parts, and shall not refuse to fulfill the obligations by forfeiting his rights.   When an owner transfers a residential unit or a unit for business purposes owned by him within a building, his right to share and jointly manage the common parts shall be transferred along.   Article 73 The roads in the district of a building shall be jointly owned by all the owners, with the exception of the public roads belonging to a city or township. The greens within the district of a building shall be jointly owned by all the owners, with the exception of the public greens belonging to a city or township, and the greens belonging to individual persons, as is clearly indicated. Other public spaces, public facilities and houses or rooms used for property management within the district of a building shall be jointly owned by all the owners.   Article 74 In the district of a building, the designed parking places and garages shall first be used to meet the need of the owners.   In the district of a building, ownership of the designed parking places and garages shall be decided on through agreement among the parties concerned, by such means as selling, giving away as gifts, and leasing.   The roads and other places commonly owned by all the owners which are used for parking vehicles shall be jointly owned by all the owners.   Article 75 The owners may form an owners’ assembly and elect an owners’ committee.   The department concerned of the local people’s government shall give guidance and assistance to the formation of an owners’ assembly and the election of an owners’ committee.   Article 76 The following matters shall be decided on by all the owners:   (1) formation and revision of the rules of procedure of the owners’ assembly;   (2) formation and revision of the rules and agreement on managing the buildings and the attached facilities;   (3) election of the owners’ committee or replacement of its members;   (4) employment or removal of the property management service or other managers;   (5) raising and use of funds for the maintenance of a building and its attached facilities;   (6) renovation and reconstruction of a building and its attached facilities; and   (7) other major matters relating to joint ownership and joint management rights.   For decision on the matters specified in Subparagraphs (5) and (6) of the preceding paragraph, an agreement shall be reached by the owners whose ownership of the exclusive parts within the building in question accounts for two-thirds or more of the total construction area of the building and who account for two-thirds or more of the total number of the owners. For decision on the rest of the matters specified in the preceding paragraph, an agreement shall be reached by the owners whose ownership of the exclusive parts in the building accounts for more than half of the total construction area of the building and who account for more than half of the total number of the owners.   Article 77 No owners may, in violation of the relevant laws, regulations or the management rules and agreements, turn a residential unit into a unit for business purposes. If an owner intends to do so, he shall, in addition to observing the relevant laws, regulations and the management rules and agreements, obtain the consent of the interested owners.   Article 78 The decisions of the owners’ assembly or the owners’ committee shall be binding to all the owners.   If a decision made by the owners’ assembly or the owners’ committee infringes on the lawful rights and interests of an owner, the said owner may apply to a people’s court for voiding of the decision.   Article 79 The funds for maintenance of a building and its attached facilities shall belong to all the owners, which, upon their common decision, may be used for maintaining and repairing the common parts such as the elevators and water tanks. The raising and use of such funds shall be made public.   Article 80 The apportioning of the expenses for a building and its attached facilities and the distribution of benefits therefrom shall follow the agreement reached; if there is no such agreement or the agreement is unclear, such apportioning and distribution shall be determined on the basis of the ratio of the area of the exclusive parts an owner owns to the total construction area of the building.   Article 81 Owners may manage the building and its affixtures by themselves, or entrust the matter to a property management service or other managers.   The owners shall, according to law, have the right to replace the property management service or other managers employed by the developer.   Article 82 The property management service or other managers shall manage the building and its affixtures within the district of the building, as entrusted by the owners, and shall be subject to supervision by the owners.   Article 83 Owners shall observe the relevant laws and regulations and the management rules and agreements.   With respect to a person who randomly discards garbage, discharges pollutants, makes noises, keeps animals in violation of regulations, erects structures against rules, occupies passages, refuses to pay property management fees, etc., thus infringing on the lawful rights and interests of another person, the owners’ assembly and the owners’ committee shall, according to the relevant laws and regulations and the management rules and agreements, have the right to require the person to discontinue such infringement, eliminate the hazards, clear away the obstructions and compensate the losses entailed. The owner whose lawful rights and interests are infringed on may bring a lawsuit to the people’s court against such acts.   Chapter VII Neighboring Relations   Article 84 Owners of neighboring immovables shall properly deal with their neighboring relations in adherence to the principles of conduciveness to production, convenience for daily lives, unity and mutual help, and fairness and rationality.   Article 85 Where there are laws or regulations governing neighboring relations, the provisions there shall prevail; otherwise, such relations shall be dealt with in accordance with local customs.   Article 86 An owner of immovables shall provide the necessary convenience to a neighboring obligee in the use or discharge of water.   The natural flowing waters shall be reasonably distributed among the neighboring obligees of immovables. The direction of natural flow shall be set store by where discharge of such water is concerned.   Article 87 Where a neighboring obligee has to use for passage, etc. the land of an obligee of immovables, the latter shall provide the necessary convenience to the former.   Article 88 Where an obligee of immovables, for constructing or maintaining a building, or laying wires, cables, or pipelines for water, heating or gas, has to use the neighboring land or building, the owner of the said land or building shall provide the necessary convenience accordingly.   Article 89 In construction of a building, ventilation, light and sunshine of the neighboring building shall not be blocked in violation of the relevant construction standards of the State.   Article 90 An obligee of immovables shall not, in violation of State regulations, discard solid waste or discharge hazardous substances, such as air and water pollutants, noises, and optical and electromagnetic radiation.   Article 91 When digging, constructing a building, laying pipelines or installing facilities, etc., an owner of immovables shall not endanger the neighboring immovables.   Article 92 When making use of the neighboring immovables for the drawing or draining off of water, for passage or for laying of pipelines, an owner of immovables shall do the best to avoid causing damage to the owner of the neighboring land; if damage is caused, he shall compensate for the damage.   Chapter VIII Co-ownership   Article 93 Immovables or movables may be co-owned by two or more units or individuals. Co-ownership consists of shared ownership and joint ownership.   Article 94 Persons who share the ownership of immovables or movables shall enjoy the ownership in proportion to the amount of their shares.   Article 95 Persons who jointly own immovables or movables shall enjoy the ownership jointly.   Article 96 Co-owners shall manage the immovables or movables they own as agreed upon; if there is no agreement or the agreement is indefinite in this respect, all the co-owners shall have the right and duty of management.   Article 97 Disposing of or making major repairs to the co-owned immovables or movables shall be subject to agreement reached by the co-owners who possess two-thirds or more of the total shares or by all of the joint owners, except where the owners agree otherwise.   Article 98 The fees for managing what is co-owned and other expenses shall be paid according to agreement; if there is no such agreement or the agreement is indefinite in this respect, they shall be paid by the persons who share the ownership in proportion to the amounts of their respective shares, or jointly paid by the joint owners.   Article 99 Where the co-owners have agreed not to sever the immovables or movables owned by them in order to maintain the co-ownership, such agreement shall be complied with; however, if a co-owner has major reasons for severing them, he may make a request for severance; where there is no such agreement or the agreement is indefinite in this respect, a person who shares the ownership may make a request for severance at any time, while a joint owner may do so if the basis for joint ownership no longer exists or he has major reasons for severance. Where the severance causes losses to the other co-owners, they shall be compensated for the losses.   Article 100 The co-owners may decide on the method for severance through consultation. If they fail to reach an agreement, and the immovables or movables owned by them can be severed and its value will not be reduced because of such severance, the actual property shall be severed; if it is difficult to sever the property or its value will be reduced because of such severance, the severance shall be made after the property is converted into money, or auctioned, or sold.   If the immovables or movables of a co-owner obtains from the severance is flawed, the other co-owners shall share the losses.   Article 101 A co-owner who shares ownership of the immovables or movables shall have the right to transfer his own share. The other co-owners shall have the priority to purchase under equal conditions.   Article 102 In external relations, the co-owners shall have joint and several claims arising from the immovables or movables owned by them and bear joint and several liability for the debts arising likewise, except where laws provide otherwise or where a third party is aware that the co-owners are not associated in the aftersaid manner; in internal relations, unless otherwise agreed upon by the co-owners, the co-owners who share the ownership shall enjoy the claims and bear liability for the debts in proportion to the amounts of their respective shares, while the joint owners shall jointly enjoy the claims and bear liability for the debts. Where a person who shares ownership pays debts in excess of his share, he shall have the right to recourse from the other co-owners.   Article 103 Where the co-owners fail to reach an agreement either on shared or on joint ownership of the immovables or movables, or the agreement reached is indefinite in this respect, the ownership shall be deemed to be shared ownership, unless the co-owners are of a family or have other relations.   Article 104 Where the shares of immovables or movables are not agreed upon among the persons who share the ownership, or the agreement reached is indefinite in this respect, their shares shall be determined on the basis of the amounts of their respective capital contributions; if it is difficult to determine the amounts of capital contributions, the immovables or movables shall be deemed to be shared equally among them.   Article 105 Where two or more entities or individuals jointly enjoy usufructs or security interest, the provisions in this Chapter shall be applied mutatis mutandis.   Chapter XV Special Provisions on Acquirement of Ownership   Article 106 Where a person transfers to a transferee immovables or movables which he has no right to dispose of, the owner shall have the right to recover them; except where otherwise provided for by law, the transferee shall acquire ownership of the said immovables or movables under one of the following circumstances:   (1) The transferee is in good faith when the said immovables or movables are transferred to him;   (2) The transfer is made at a reasonable price; or   (3) The said immovables or movables have duely been registered as is required by law, or have been delivered to the transferee where no registration is required.   Where a transferee acquires the ownership of the immovables or movables in accordance with the provisions in the preceding paragraph, the original owner shall have the right to request the person who has no right of disposition to compensate for the losses.   Where a party acquires other property rights in good faith, the preceding two paragraphs shall be applied mutatis mutandis.   Article 107 An owner or any other obligee shall have the right to recover a lost-and-found thing. Where the thing comes to be possessed by another person through transfer, the obligee shall have the right to request the person who has no right of disposition to compensate for the losses or, within two years from the date he becomes, or ought to become, aware of the transferee, request the transferee to return the lost thing, however, if the lost thing is purchased by the transferee at auction or from a qualified seller, the obligee shall, when requesting the transferee to return the original thing, compensate the transferee for the expenses the latter has paid for the thing. After the obligee compensates the transferee for the expenses, he shall have the right to recover the payment he has made from the person who has no right of disposition.   Article 108 After a bona fide transferee acquires a piece of movables, the rights previously attached to the said piece shall extinguish, unless where the bona fide transferee is or ought to be aware of the attached rights at the time of transfer of the piece.   Article 109 A person who finds a lost thing shall return it to the obligee. The finder shall, in a timely manner, give a notice to the obligee asking him to take it back, or deliver it to the public security organ or relevant departments.   Article 110 Where the relevant department that receives a found thing knows who the obligee is, it shall, without delay, give a notice to the obligee to notify the obligee asking him to take the thing back; otherwise, it shall publish a notice of the finding of the lost thing without delay.   Article 111 Before a finder delivers a found thing to the relevant department and before the lost thing is taken back from the department, both the finder and the department shall safekeep the thing. If, the thing in his or its safekeeping is damaged, destroyed or lost intentionally or through gross negligence, he or it shall bear civil liability therefor.   Article 112 When an obligee goes to take back the thing he lost, he shall pay to the finder or the relevant department the necessary expenses entailed by safekeeping, etc.   Where an obligee offers a reward for the finding of the thing he lost, he shall fulfill his obligation as promised when taking the thing back.   Where a finder illegally takes into his own possession a lost thing, he shall have no right to request the expenses paid for the safekeeping of the thing, nor shall he have the right to request the obligee to fulfill the obligation as promised.   Article 113 A lost thing shall belong to the State if no one goes to claim it within six months from the date the notice of the finding of the thing is published.   Article 114 The provisions governing the finding of lost things shall be applied mutatis mutandis to the finding of drift-stuff or buried or hidden things. Where the laws such as the Law on Protection of Cultural Relics provide for otherwise, the provisions there shall prevail.   Article 115 Where the principal part of a thing is transferred, the ancillaries shall be transferred along with it, except where the parties concerned agree otherwise.   Article 116 The natural fruits of a thing shall go to the owner; if there are both owner and usufructuary, the fruits shall go to the usufructuary. Where the parties concerned agree otherwise, their agreement shall prevail.   The statutory fruits of a thing shall go to the party as agreed upon if there is an agreement between the parties concerned; if there is no such agreement or the agreement in this respect is indefinite, the fruits shall be acquired according to the customs of transaction.   Part Three Usufructs   Chapter X General Stipulations   Article 117 A usufructuary shall, according to law, have the right to possess, use and benefit from the immovables or movables owned by another.   Article 118 Units or individuals may, according to law, possess, use and benefit from the natural resources which are owned by the State, or owned by the State but used by the collective, or owned by the collective as stipulated by law.   Article 119 The State shall apply a system of compensated use of natural resources, unless otherwise stipulated by law.   Article 120 In exercising his rights, the usufructuary shall observe the provisions of law governing the protection and reasonable exploitation and utilization of resources. The owner shall not interfere with the exercise of rights by the usufrustuary.   Article 121 The usufurstuary shall, in accordance with the provisions of Articles 42 and 44 of this Law, get appropriate compensation when his usufruct extinguishes or the exercise of his usufruct is limited due to expropriation or requisition of the immovables or movables.   Article 122 The right to the use of sea areas that is obtained in accordance with law shall be protected by law.   Article 123 The rights to prospecting for mineral deposits, mining, water taking, and the rights to the use of waters or tidal flats for aquaculture or fishing, which are obtained in accordance with law, shall be protected by law.   Chapter XI The Right to Land Contractual Management   Article 124 Rural collective economic organizations apply the dual management system characterized by the combination of centralized management with decentralized management on the basis of management by households under a contract.   The contractual management system shall, in accordance with law, be applied to the cultivated land, forestlands, grasslands and other land used for agriculture, which are owned collectively by the farmers or by the State but used collectively by the farmers.   Article 125 Contractors for the right to land management shall, in accordance with law, have the right to possess, use, and benefit from the cultivated land, forestlands, grasslands, etc. which are under their contractual management, and shall have the right to engage in agricultural production, including crop cultivation, forestry and animal husbandry.   Article 126 The term of contract for cultivated land is 30 years. The term of contract for grasslands ranges from 30 to 50 years. The term of contract for forestlands ranges from 30 to 70 years; and that for forestlands where special trees grow may be extended upon approval by the competent administrative department for forestry under the State Council.   At the expiration of the term of contract stipulated in the preceding paragraph, the contract may be renewed by the contractor for the right to land management in accordance with the relevant regulations of the State.   Article 127 The right to land contractual management shall be established as of the date the contract for the right to land management becomes valid.   Local people’s governments at or above the county level shall issue to the contractors for the right to land management certificates of the right to land contractual management, certificates of the right to use forestlands, or certificates of the right to use grasslands, and shall have them registered to confirm their right to land contractual management.   Article 128 Contractors for the right to land management shall, in accordance with the provisions of the Law on Land Contract in Rural Areas, have the right to circulate the right to land contractual management by subcontracting, exchanging or transferring the right or by other means. The term of circulation may not exceed the remaining period of the term of a contract. Without approval as granted according to law, no contracted land may be used for non-agricultural development.   Article 129 When contractors for the right to land management exchange or transfer the said right and the parties concerned request registration, they shall apply to the local people’s governments at or above the county level for alteration of the registration of the right to land contractual management. Where such registration is lacking, it shall not be used against a bona fide third party.   Article 130 During the term of contract, the party giving out the contract may not readjust the contracted land.   When the contracted cultivated land or grasslands need to be readjusted appropriately under the special circumstances in which the contracted land or grasslands are seriously damaged due to natural disasters, the matter shall be handled in accordance with the provisions of the Law on Land Contract in Rural Areas, etc.   Article 131 During the term of contract, the party giving out the contract may not take back the contracted land. Where the Law on Land Contract in Rural Areas and other laws provide otherwise, the provisions there shall apply.   Article 132 Where the contracted land is expropriated, the contractors for the right to land management shall be entitled to corresponding compensation in accordance with the provisions of the second paragraph of Article 42 of this Law.   Article 133 Where a person enters into a contract for the right to rural land such as barren land through bidding, auction, open consultation or other means, his right to land contractual management may, in accordance with such laws as the Law on Land Contract in Rural Areas and the relevant regulations of the State Council, be circulated through transfer, pooling of rights as shares, mortgage or other means.   Article 134 Where contractual management is applied to the land owned by the State which is used for agricultural purposes, the relevant provisions of this Law shall be followed mutatis mutandis.   Chapter XII The Right to the Use of Land for Construction   Article 135 A person who enjoys the right to the use of land for construction shall, according to law, possess, use and benefit from the land owned by the State, and shall have the right to use the land for erecting buildings and structures and the facilities attached to them.   Article 136 The right to the use of land for construction may be separately created on the surface, above or under the ground. The newly created right to the use of land for construction shall not infringe on the usufruct which has already been created thereon.   Article 137 The right to the use of land for construction may be created by assignment, allocation or other means.   Where land is used for industrial, commercial, tourist or entertaining purposes, as commodity residences, or for other profit-making purposes, or there are two or more persons who are willing to use the same piece of land, the right to the use of land for construction shall be assigned through bid invitation, auction or other open bidding.   Creation of the right to the use of land for construction through allocation shall strictly be controlled. Creation of the right by such means shall be done in compliance with the provisions of laws and administrative regulations governing the purposes of use of land.   Article 138 Where the right to the use of land for construction is created through bid invitation, auction, agreement or by other means of assignment, the parties shall enter into a contract for assigning the right to the use of land for construction in written form.   A contract for assigning the right to the use of land for construction generally contains the following particulars:   (1) names and addresses of the parties;   (2) the boundary and the area of the land;   (3) the space occupied by the buildings and structures and the facilities attached to them;   (4) purposes of use of land;   (5) the period of time for use;   (6) payment for the assigning and other fees, and the manners of payment; and   (7) means for settlement of disputes.   Article 139 For creating the right to the use of land for construction, an application for registration of such right shall be made to the registration authority. The right to the use of land for construction shall be deemed to be created as of the time of registration. The registration authority shall issue to the person who is granted the right to the use of land for construction the certificate of the right to the use of land for construction.   Article 140 Persons who enjoy the right to the use of land for construction shall make rational use of the land and shall not change the purposes of use of the land; if the purposes of use need to be changed, the matter shall be subject to approval by relevant administrative departments according to law.   Article 141 The persons who enjoy the right to the use of land for construction shall, in accordance with the provisions of law and the stipulations in the contract, pay the expenses for assignment and other fees.   Article 142 Ownership of the buildings and structures and the facilities attached to them that the person who enjoys the right to the use of land for construction has constructed belongs to the said person, unless there is evidence to prove the contrary.   Article 143 A person who enjoys the right to the use of land for construction shall have the right to transfer, exchange, offer as capital contributions, give as a gift or mortgage such right, except where otherwise provided for by law.   Article 144 Where the right to the use of land for construction is transferred, exchanged, offered as capital contributions, given as a gift or mortgaged, the parties shall enter into a contract in written form accordingly. The period of time for use shall be agreed upon by the parties, provided that the remaining period of time for the right to the use of land for construction is not exceeded.   Article 145 Where the right to the use of land for construction is to be transferred, exchanged, offered as capital contributions, or given as a gift, an application for alteration of registration shall be made to the registration authority.   Article 146 Where the right to the use of land for construction is transferred, exchanged, offered as capital contributions, or given as a gift, the buildings and structures and the facilities attached to them which are attached to the said land shall be disposed of along with it.   Article 147 Where buildings and structures and the facilities attached to them are transferred, exchanged, offered as capital contributions, or given as a gift, the right to the use of the land for construction to which the said buildings and structures and facilities are attached shall be disposed of along with them.   Article 148 Where, before the expiration of the period of time for the right to the use of land for construction, the land needs to be taken back for public interests, compensations for the houses and other immovables on the land shall be paid in accordance with the provisions of Article 42 of this Law, and the fees paid for assignment shall appropriately be returned.   Article 149 When the period of time for the right to the use of land for construction of residences expires, it shall automatically be renewed.   Renewal of the period of time for the right to the use of land for nonresidential construction shall be handled in accordance with the provisions of law. Ownership of the houses and other immovables on the said land shall be decided on according to the agreement reached; if there is no agreement or the agreement on the matter is indefinite, it shall be decided in accordance with the provisions of laws and administrative regulations.   Article 150 When the right to the use of land for construction lapses, the assignor shall have his registration cancelled in time. The registration authority shall take back the certificate of the right to the use of land for construction.   Article 151 Where land owned by the collective is to be used for construction purposes, the matter shall be handled according to the provisions of the Land Administration Law and of other laws   Chapter XIII The Right to the Use of House Sites   Article 152 Persons with the right to the use of house sites who, according to law, enjoy the right to possess and use the land owned by the collective, shall have the right to use the land for constructing residences and the facilities to be attached to them according to law.   Article 153 Such laws as the Land Administration Law and the relevant State regulations shall be applicable to the obtaining, exercising and transferring of the right to the use of house sites.   Article 154 When house sites disappear due to natural disasters or other reasons, the right to the use of the house sites extinguishes. New house sites shall be allocated to the villagers who lose their house sites.   Article 155 When the registered right to the use of house sites is transferred or extinguishes, registration of the change or cancellation of registration shall be handled in a timely manner.   Chapter XIV Easement   Article 156 Easement holders shall, according to the stipulations in the contract, have the right to use another person’s immovable property to get better results from his own immovables.   Another person’s immovable property mentioned in the preceding paragraph is the servient estate, and one’s own immovables are the dominant estate.   Article 157 For creating an easement, the parties shall enter into a contract for easement in written form.   The contract for easement generally includes the following particulars:   (1) names or titles, and domiciles of the parties;   (2) locations of the servient estate and the dominant estate;   (3) purposes and means of use;   (4) the period of time for use;   (5) fees and the manner of payment; and   (6) means to be used for settling disputes.   Article 158 An easement is created as of the time when the easement contract becomes valid. If the parties request registration, they may apply to the registration authority for registration of easement. Where the registration is lacking, such right may not be used against a bona fide third party.   Article 159 The obligee of the servient estate shall, according to what is stipulated in the contract, allow the easement holder to use his land and shall not obstruct the latter from exercising his right.   Article 160 The easement holder shall use the servient estate in conformity with the purposes and means of use as agreed upon in the contract and to lighten as much as possible the restrictions on the property right of the obligee of the servient estate.   Article 161 The period of time for an easement shall be agreed upon by the parties, provided that it does not exceed the remaining period for usufructs, such as the right to land contractual management and the right to the use of the land for construction.   Article 162 When the owner of a piece of land who enjoys, or is encumbered with an easement creates a right on the right to land contractual management or the right to the use of house sites, the contractor for the right to land contractual management or the user of the house sites shall continue to enjoy or be encumbered with the created easement.   Article 163 If on a piece of land is already created the right to land contractual management, the right to the use of the land for construction or the right to the use of house sites, etc., the owner of the piece of land shall not create any easement without the consent of the usufructuary.   Article 164 An easement shall not be transferred separately. When the right to land contractual management or the right to the use of land for construction is transferred, the easement shall be transferred along with it, unless the contract stipulates otherwise.   Article 165 An easement shall not be mortgaged separately. If the right to land contractual management or the right to the use of land for construction is mortgaged, the easement shall be transferred along with it at the time when the mortgage interest is enforced.   Article 166 When the dominant estate and part of the right to land contractual management or of the right to the use of land for construction thereon are transferred, if the part to be transferred involves easement, the transferee shall concurrently enjoy the easement.   Article 167 When the servient estate and part of the right to land contractual management or of the right to the use of land for construction thereon are transferred, if the part to be transferred involves easements, the easements shall be binding to the transferee.   Article 168 If an easement holder is under any of the following circumstances, the obligee of the servient estate shall have the right to terminate the easement contract, and the easement extinguishes:   (1) abusing the easement in violation of the provisions of law or the contract; or   (2) in the case of compensated use of the servient estate, at the expiration of the duration for payment as is agreed upon, failing to pay the fees after two exigents are given within a reasonable time limit.   Article 169 If a registered easement is altered, transferred or extinguishes, the alteration shall be registered or cancelled in a timely manner.   Part Four Security Interest in Property   Chapter XV General Stipulations   Article 170 Unless otherwise stipulated by law, the holder of security interests shall have the priority in having his claim paid if a debtor defaults or if the conditions for enforcement of the said interests, as agreed upon by the parties concerned, arise.   Article 171 Where, in the making of loans, in business transactions or other civil activities, a creditor needs a guarantee to have his claim honored, a security interest may be created in accordance with the provisions of this Law and other laws.   Where a third party provides a guarantee to a creditor for a debtor, the third party may require the debtor to provide him with a counter-guarantee. The relevant provisions of this Law and other laws shall be applicable to counter-guarantee.   Article 172 For creation of a security interest, a guarantee contract shall be concluded in accordance with the provisions of this Law and other laws. A guarantee contract is an ancillary contract of the principal claim-debt contract. When the principal claim-debt contract is null and void, the guarantee contract shall be null and void accordingly, unless otherwise provided for by law.   After it is confirmed that a guarantee contract is nullified, the debtor, the guarantor and the creditor who are in fault shall, on the merits of each case, bear civil liability respectively.   Article 173 The scope of security interest embraces the principal creditor’s right and the interest therefrom, penalty, damages and expenses for safekeeping of the property used as security and for enforcing security interest. Where the parties concerned agree otherwise, their agreement shall prevail.   Article 174 In case of damage or destruction, loss or requisition of the mortgaged property during the period of guarantee, the holder of the security interest shall have priority in having his claim paid with the insurance monies, compensations or indemnities. The holder of security interest may also have the insurance monies, compensation payment or indemnities deposited with a third party before the time limit for payment of the guaranteed claim expires.   Article 175 Where a guarantee is provided by a third party, if the creditor permits the debtor to transfer part or all of his debts without the consent of the third party in written form, the guarantor shall not undertake the corresponding suretyship liability.   Article 176 Where both security and suretyship are provided to guarantee for the same claim, the creditor shall have his claim paid as agreed upon, if the debtor defaults or the conditions for enforcement of the interest, as agreed upon by the parties concerned, arise; where there is no such agreement or the agreement is indefinite in this respect, if the debtor himself provides property as security, the creditor shall have his claim paid with such property first; where a third party provides property as security, the creditor may either have his claim paid with such property or request the guarantor to undertake the suretyship. After the third party has borne the suretyship, he shall have the right of recourse against the debtor.   Article 177 The security interest shall extinguish under one of following circumstances:   (1) The principal claim extinguishes;   (2) The security interest is enforced;   (3) The creditor waives the security interest; or   (4)Other circumstances provided for by law under which the security interest extinguishes.   Article 178 In case of any inconsistencies between the provisions of the Guarantee Law and of this Law, those of this Law shall prevail.   Chapter XVI Interests Obtained from Mortgage   Section 1 General Interest Obtained from Mortgage   Article 179 Where a debtor or a third party, for guaranteeing the payment of debts, mortgages property to a creditor instead of transferring of the possession of such property, if the debtor defaults or the conditions for enforcement of the interest, as agreed upon by the parties concerned, arise, the creditor shall have priority in having his claim paid with the property.   The debtor or the third party specified in the preceding paragraph is the mortgagor, the creditor specified there is the mortgagee, and the property used as security is mortgaged property.   Article 180 The following property which the debtor or the third party is entitled to dispose of may be mortgaged:   (1) buildings and other attachments on the ground;   (2) the right to the use of land for construction;   (3) the contractual management right to barren land, etc. obtained through bidding, auction, open consultation or other means;   (4) production equipment, raw and semi-finished materials, semi-finished products and finished products;   (5) buildings, vessels and aircraft under construction;   (6) means of transportation; and   (7) other property that is not prohibited from being mortgaged by laws or administrative regulations.   A mortgagor may mortgage all the property specified in the preceding paragraph at the same time.   Article 181 Subject to written agreement between the parties, enterprises, self-employed industrial and commercial households and agricultural producers and distributors may mortgage their existing and anticipated production equipment, raw and semi-finished materials, semi-finished products and finished products, and if the debtor defaults or the conditions for enforcement of the interest, as agreed upon by the parties concerned, arise, the creditor shall have priority in having his claim paid with the movables.   Article 182 Where a building is mortgaged, the right to the use of the land for construction within the area occupied by the building shall be mortgaged along with the building. Where the right to the use of the land for construction is mortgaged, the buildings on the land shall be mortgaged along with that right.   If the mortgagor fails to comply with what is provided for in the preceding paragraph, the property not mortgaged shall be deemed to be mortgaged along with what is mortgaged.   Article 183 The right to the use of the land for construction enjoyed by a town (township) or village enterprise may not be mortgaged separately. Where workshops and other buildings of a town (township) or village enterprise are mortgaged, the right to the use of the land for construction within the area occupied by the workshops or other buildings shall be mortgaged along with the workshops and other buildings.   Article 184 The following property may not be mortgaged:   (1) land ownership;   (2) the right to the use of the land owned by the collective, such as cultivated land, house sites, private plots and private hills, except where otherwise provided for by law;   (3) educational facilities, medical and health facilities and other public welfare facilities of undertakings for public welfare, such as schools, kindergartens and hospitals and public organizations;   (4) property the ownership or right to the use of which is indefinite or controversial;   (5) property sealed up, distrained or placed under custody in accordance with law; and   (6) other property which may not be mortgaged as prescribed by laws and administrative regulations.   Article 185 To create a mortgage interest, the parties concerned shall conclude a mortgage contract in written form.   A mortgage contract generally includes the following particulars:   (1) the kind and amount of claims secured;   (2) the time limit for the debtor to repay the debt;   (3) the name, quantity, quality, conditions, location or attribution of the ownership or the right to the use, of the mortgaged property; and   (4) the scope of security interest.   Article 186 Before maturity of the debts, the mortgagee may not enter into an agreement with the mortgagor that the mortgaged property shall come under the ownership of the creditor when the debtor defaults.   Article 187 Where the property specified in Subparagraphs (1), (2) and (3), or the buildings under construction specified in Subparagraph (5), under the first paragraph of Article 180 of this Law are mortgaged, such mortgage shall be registered. The mortgage interest is created as of the date of registration.   Article 188 Where the property specified in Subparagraphs (4), (5) and (6), or the vessels and aircraft under construction specified in Subparagraph (5), under the first paragraph of Article 180 of this Law are mortgaged, the mortgage interest is created at the time when the mortgage contract becomes valid; if the mortgage interest is not registered, it shall not be used against a bona fide third party.   Article 189 Where an enterprise, a self-employed industrial or commercial household, or an agricultural producer or distributor mortgages movable property specified in Article 181 of this Law, it shall register with the administration department for industry and commerce at the place where the domicile of the mortgagor is located. The mortgage interest shall be created at the time when the mortgage contract becomes valid; if such interest is not registered, it shall not be used against a bona fide third party.   Where a mortgage is made in accordance with the provisions of Article 181 of this Law, it shall not be used against the buyer who has paid reasonable price and obtained the mortgaged property in the ordinary course of business operations.   Article 190 If a mortgagor leases the mortgaged property before the mortgage contract is concluded, the previously established leasing relation shall not be affected. If a mortgagor leases the mortgaged property after the creation of the mortgage interest, the leasing relation may not be used against the registered mortgage interest.   Article 191 If a mortgagor transfers the mortgaged property with the consent of the mortgagee during the period of mortgage, the proceeds which the mortgagor obtains from the transfer of the mortgaged property shall in advance be used to settle the claim secured by the mortgagee or be deposited with a third party. If the proceeds obtained from the transfer exceed the secured claim, the balance shall go to the mortgagor; if the proceeds is insufficient to cover the claim, the uncovered part shall be paid by the debtor.   The mortgagor may not transfer the mortgaged property without the consent of the mortgagee during the period of mortgage, unless the transferee pays off the debts for the mortgagor and thus the mortgage interest extinguishes.   Article 192 The mortgage interest may not be separated from the claim to be transferred independently, or to be used to secure another claim. If the claim is transferred, the interest of mortgage shall be transferred along with it, unless otherwise provided for by law or agreed upon by the parties.   Article 193 Where a mortgagor acts in such a way as to cause depreciation of the mortgaged property, the mortgagee shall have the right to demand that the mortgagor cease and desist from such act. Where the value of the mortgaged property depreciates, the mortgagee shall have the right to demand that the mortgagor restore the original value of the mortgaged property or provide security corresponding to the amount of the value reduced. Where a mortgagor fails to restore the original value of the mortgaged property or provide corresponding security, the mortgagee shall have the right to demand the debtor to settle the claim in advance.   Article 194 A mortgagee may waive his mortgage interest or his place in the order of mortgage interest. A mortgagee and a mortgagor may, upon agreement, change the place in the order of the mortgage interest, the amount of secured claims, etc., provided that such a change, without the written consent of other mortgagees, shall not have an adverse effect on other mortgagees.   Where a debtor uses his own property for mortgage, if a mortgagee waives his mortgage interest or his place in the order of the mortgage interest or makes changes in respect of his mortgage interest, other guarantors shall be exempted from the suretyship to the extent that the mortgagee forfeits his rights and interests in terms of the priority in being paid off, unless the said guarantors are still committed to the suretyship.   Article 195 Where the debtor defaults or the conditions for enforcement of the mortgage interest thereof, as agreed upon by the parties concerned, arise, the mortgagee may enter into an agreement with the mortgagor that he be given the priority in being paid with the money into which the mortgaged property is converted or the proceeds obtained from auction or sale of the property. If such agreement undermines the interests of other creditors, they may apply to the people’s court for cancellation of the agreement within one year from the date they come to know or should have known the cause for cancellation.   If the mortgagee and mortgagor fail to reach an agreement on the means of enforcing the mortgage interest, the mortgagee may apply to the people’s court for auction or sale of the mortgaged property.   The mortgaged property shall be converted into money or be sold off by referring to its market price.   Article 196 Where a mortgage interest is created in accordance with the provisions of Article 181 of this Law, the mortgaged property shall be established when one of the following circumstances arises:   (1) The debts are not paid when they fall due;   (2) The mortgagor is declared bankrupt or is dissolved;   (3) The conditions for enforcement of the mortgage interest, as agreed upon by the parties concerned, arise; or   (4) Other circumstances arise which may seriously affect the enforcement of the claim.   Article 197 If the mortgaged property is seized by a people’s court according to law because the debtor defaults or the conditions for enforcement of the interest, as agreed upon by the parties concerned, arise, the mortgagee shall, from the date of the seizure, have the right to collect the natural or statutory fruits accrued from the mortgaged property, except where the mortgagee fails to notify the person who is obliged to pay the statutory fruits.   The fruits mentioned in the preceding paragraph shall first be used to pay off the expenses for collecting such fruits.   Article 198 If the proceeds obtained from conversion into money or from auction or sale of mortgaged property exceed the amount of a claim, the balance shall go to the mortgagor; and if the proceeds are insufficient to cover the claim, the uncovered part shall be paid by the debtor.   Article 199 Where a piece of property is mortgaged to two or more creditors, the proceeds from auction or sale of the mortgaged property shall be used for liquidation according to the following provisions:   (1) Where the mortgage interest is registered, the liquidation shall be made in the order of the registration of the mortgage interest; if the order of registration is the same, liquidation of the claims shall be made on a pro rata basis;   (2) The claim secured by a registered mortgage interest shall be satisfied prior to the unregistered ones; and   (3) Liquidation of unregistered mortgage interests shall be made on a pro rata basis in respect of the claims.   Article 200 After the right to the use of land for construction is mortgaged, the buildings erected thereafter are not mortgaged property. Where the said land use right is used to satisfy the mortgage interest, the newly-erected buildings on the land shall be disposed of together with the land use right; however, the mortgagee shall have no priority in having his claim paid with the proceeds from the said buildings.   Article 201 Where the right to land contractual management is mortgaged, as specified in Subparagraph (3) under the first paragraph of Article 180 of this Law, or the right to the use of land for construction within the area occupied by the workshops and other buildings of a town (township) or village enterprise is mortgaged along with the workshops or other buildings, as specified in Article 183 of this Law, the nature of ownership and the purpose of use of the land may not be altered without going through the statutory procedure after the enforcement of the mortgage interests thereon.   Article 202 The mortgagee shall exercise his mortgage interest within the limitation provided for action of the principal claim; if he fails to do so, the people’s court shall not provide protection in this respect .   Section 2 Maximum Mortgage Interest   Article 203 Where a debtor or a third party provides security for the debts to be incurred consecutively within a given period of time, if the debtor defaults or the conditions for enforcement of the mortgage interest, as agreed upon by the parties concerned, arise, the mortgagee shall have the priority in having his claims paid with the security to the extent of the maximum amount of the claims.   A claim that exists before the creation of the maximum mortgage interest may, with consent of the parties, be included in the claims secured by the maximum amount of mortgage.   Article 204 Where, before the claims secured by the maximum amount of mortgage are established, part of the claims is transferred, the maximum amount of the mortgage interest may not be transferred along, unless otherwise agreed upon by the parties.   Article 205 Before the claims secured by the maximum amount of mortgage are established, the mortgagee and the mortgagor may alter the term, scope and maximum amount of the claims through agreement, provided that such alteration shall not have any adverse effect on the other mortgagees.   Article 206 The claim of the mortgagee is established under one of the following circumstances:   (1) The agreed term for establishment of the claim expires;   (2) In the absence of a definitely agreed term for establishing the claim or the term agreed upon is indefinite, the mortgagee or the mortgagor requests establishment of the claim after the lapse of two years calculated from the date of creation of the maximum mortgage interest;   (3) No new claim is likely to be created;   (4) The mortgaged property is sealed up or distrained;   (5) The debtor or the mortgagor is declared bankrupt or is dissolved; or   (6) Other circumstances provided by law under which a claim is established.   Article 207 The maximum mortgage interest shall be governed by the provisions of Section 1 of this Chapter on general interests acquired through mortgage, apart from the provisions of this Section.   Chapter XVII Interest Acquired Through Pledge   Section 1 Interest Acquired Through Pledge of Movables   Article 208 Where to guarantee the repayment of debts, the debtor or a third party pledges his movables to the creditor, if the debtor defaults or the conditions for enforcement of the interest, as agreed upon by the parties concerned, arise, the creditor shall be entitled to the priority in having his claim paid with the pledged movables.   As mentioned in the preceding paragraph, the debtor or the third party is the pledgor, the creditor is the pledgee, and the movables delivered are the pledged property.   Article 209 Movables the transfer of which is prohibited by laws or administrative regulations shall not be pledged.   Article 210 To create the interest of a pledge, the parties concerned shall conclude a pledge contract in written form.   A pledge contract generally includes the following particulars:   (1) the kind and amount of the claim secured;   (2) the time limit for the debtor to repay his debts;   (3) the name, quantity, quality and conditions of the pledged property;   (4) the scope of the secured interest; and   (5) the time for delivery of the pledged property.   Article 211 Before the maturity of the debts, the pledgee shall not conclude an agreement with the pledgor that ownership of the pledged property go to the pledgee if the debtor defaults.   Article 212 The interest of a pledge is established upon delivery of the pledged property by the pledgor.   Article 213 The pledgee shall have the right to collect the fruits accrued from the pledged property, unless otherwise stipulated in the contract.   The fruits specified in the preceding paragraph shall first be used to pay off the expenses for collecting the fruits.   Article 214 If, without the consent of the pledgor, the pledgee uses or disposes of the pledged property during the existence of the pledge interest, thus causing losses to the pledgor, he shall be liable for compensation.   Article 215 The pledgee has the duty to safekeep the pledged property. If the pledged property is damaged, destroyed or lost due to improper keeping, the pledgee shall be liable for compensation.   Where the action of the pledgee will likely cause damage, destruction or loss of the pledged property, the pledgor may request the pledgee to deposit the pledged property with a third party, or to offer to clear his debts in advance and return the pledged property.   Article 216 Where due to no fault of the pledgee, the pledged property is likely to be so damaged or destroyed or its value to be depreciated so markedly as to undermine the rights of the pledgee, the pledgee shall have the right to demand that the pledgor provide an appropriate security. If the pledgor refuses to do so, the pledgee may have the pledged property auctioned or sold and may, through agreement with the pledgor, use the proceeds therefrom to repay the debts in advance or deposit the proceeds with a third party.   Article 217 If, during the existence of the interest of a pledge, the pledgee repledges the pledged property to a third party without the consent of the pledgor, thus causing damage, destruction or loss of the property, the pledgee shall be liable for compensation.   Article 218 The pledgee may waive his interest to the pledge. Where the debtor pledges his own property and the pledgee waives his interest to the pledge, the other guarantors may be exempted from suretyship to the extent that the pledgee forfeits his rights and interests in terms of the priority in being paid off, unless the guarantors are still committed to the suretyship.   Article 219 Where the debtor repays the debts or the pledgor pays off in advance the debts he guaranteed, the pledgee shall return the pledged property.   If the debtor defaults or the conditions for enforcement of the interest, as agreed upon by the parties concerned, arise, the pledgee may conclude an agreement with the pledgor that the pledged property be converted into money, or he may enjoy the priority in having his claim paid with the proceeds obtained from auction or sale of the pledged property.   The pledged property shall be converted into money or be sold off by referring to its market price.   Article 220 The pledgor may request the pledgee to enforce his interest to the pledge in a timely manner at the maturity of the debts. Where the pledgee fails to do so, the pledgor may request the people’s court to have the pledged property auctioned or sold.   Where the pledgor requests the pledgee to enforce his interest to the pledge in a timely manner, the pledgee slacks in doing so, thus causing losses, he shall be liable for compensation.   Article 221 If, after the pledged property is converted into money or auctioned or sold, the proceeds therefrom exceed the amount of the claim, the balance shall go to the pledgor, and if they are insufficient to cover the debts, the difference shall be paid by the debtor.   Article 222 The pledgor and the pledgee may create the maximum pledge interest by agreement.   Apart from the relevant provisions of this Section, the provisions in Section 2 of Chapter 16 of this Law on maximum mortgage interest shall be applicable mutantis mutandis.   Section 2 Interests Acquired Through Pledge of Rights   Article 223 The following rights that a debtor or a third party is entitled to dispose of may be pledged:   (1) bills of exchange, cheques, promissory notes;   (2) bonds, certificates of deposit;   (3) warehouse receipts, bills of lading;   (4) portions of funds or certificates of stocks which are transferable;   (5) proprietary rights consisted in the intellectual property rights, such as the right to exclusive use of registered trademarks, the patents and copyrights, which are transferable;   (6) accounts receivable; and   (7) other property rights which may be pledged as provided for by laws and administrative regulations.   Article 224 Where a bill of exchange, cheque, promissory note, bond, certificate of deposit, warehouse receipt or bill of lading is pledged, the parties concerned shall conclude a contract in written form. The interest to the pledge is created at the time when the certificate of right is delivered to the pledgee; if there is no such certificate, the interest is created at the time when the pledge is registered with the relevant authority.   Article 225 Where the date of payment or of delivery of goods in respect of a pledged bill of exchange, cheque, promissory note, bond, certificate of deposit, warehouse receipt or bill of lading is matured prior to the date of maturity of the principal claim, the pledgee may accept the payment or the goods delivered and may conclude an agreement with the pledgor that the payment or the goods accepted be used to pay the debts in advance or be deposited with a third party.   Article 226 Where portions of funds or shares are pledged, the parties concerned shall conclude a contract in written form. Where portions of funds or the shares that are registered with the securities registration and settlement authority are pledged, the interest to the pledge is established at the time when the pledge is registered with the securities registration and settlement authority. Where other kinds of shares are pledged, the interest to the pledge is established at the time when the pledge is registered with the administration department for industry and commerce.   The portions of funds or the shares that are pledged may not be transferred, unless otherwise agreed upon by the pledgor and the pledgee. The proceeds the pledgor obtained from the transfer of the portions of funds or shares shall be used in advance to pay the debts owed to the pledgee or be deposited with a third party.   Article 227 Where the proprietary rights consisted in the intellectual property rights, such as the right to exclusive use of registered trademarks, the patents and copyrights, are pledged, the parties concerned shall conclude a contract in written form. The interest to the pledge is perfected at the time when the pledge is registered with the relevant authority.   If the proprietary rights consisted in the intellectual property rights are pledged, the pledgor may not transfer or permit another person to use such rights, unless otherwise agreed upon by the pledgor and the pledgee through consultation. The proceeds obtained by the pledgor through transfer of such rights or through permitting another person to use such rights shall be used in advance to pay the debts owed to the pledgee or be deposited with a third party.   Article 228 Where the accounts receivable are pledged, the parties concerned shall conclude a contract in written form. The interest to the pledge is created at the time when the pledge is registered with the credit information service.   The pledged accounts receivable may not be transferred, unless otherwise agreed upon by the pledgor and the pledgee through consultation. The proceeds obtained by the pledgor from the transfer of the accounts receivable shall be used in advance to pay the debts owed to the pledge or be deposited with a third party.   Article 229 The interests acquired through pledge of rights are governed, apart from by the provisions of this Section, by those under Section 1 of this Chapter on interests acquired through pledge.   Chapter XVIII Lien   Article 230 If a debtor defaults, the creditor may retain the debtor’s movables which have been legally possessed by the creditor and shall have the priority in being paid with the said property.   The creditor mentioned in the preceding paragraph is the lien holder, and the movables in his possession are the retained property.   Article 231 The movables retained by the creditor fall in the same nexus of legal relationships with the creditor’s claims, except in the case of a lien between enterprises.   Article 232 The movables may not be retained as are so stipulated by law or by agreement between the parties concerned.   Article 233 Where the retained property is dividable, the value of the retained property shall be equivalent to the amount of the debts owed.   Article 234 The lien holder shall have the duty to safekeep the retained property. If the retained property is damaged, destroyed or lost due to improper keeping, the lien holder shall be liable for compensation.   Article 235 The lien holder shall have the right to collect the fruits accrued from the retained property.   The fruits mentioned in the preceding paragraph shall first be used to pay the expenses for collecting the fruits.   Article 236 The lien holder and the debtor shall reach an agreement on the time limit for the debtor to pay the debts after the property is retained. If there is no such agreement or if the agreement is indefinite, the lien holder shall allow a time limit of two months or longer for the debtor to pay the debts, except where the movables are fresh, living or perishable things. If the debtor defaults at the expiration of the specified time limit, the lien holder may upon agreement with the debtor have the retained property converted into money, or may enjoy the priority in having the debts paid with the proceeds from auction or sale of the property.   The retained property shall be converted into money or be sold off by referring to its market price.   Article 237 The debtor may request the lien holder to enforce the right of lien after the expiration of the time limit for payment of the debts. Where the lien holder fails to enforce the right, the debtor may request the people’s court to have the retained property auctioned or sold.   Article 238 If after the retained property is converted into money, auctioned or sold, the proceeds therefrom exceed the amount of the claim, the balance shall go to the debtor, and if they are insufficient to cover the debts, the difference shall be paid by the debtor.   Article 239 Where a lien is created on the same piece of the movables that has been mortgaged or pledged, the lien holder shall enjoy the priority in having his debts paid.   Article 240 Where the lien holder forfeits his possession of the retained property or accepts other security provided by the debtor, the right of lien shall extinguish.   Part Five Possession   Chapter XIX Possession   Article 241 In the event of possession arising from contractual relationship, the use of the immovables or movables in question, the benefits therefrom and breach of duty shall be subject to the terms of the contract. If there are no such terms in the contract or such terms are indefinite, they shall be governed by the provisions of relevant laws.   Article 242 Where a possessor causes damage to the immovables or movables in the use of it, the possessor, if he is a mala fidei one, shall be liable for compensation.   Article 243 Where the immovables or movables come to be possessed by another person, the obligee may request the person to return them and the fruits therefrom; however, the obligee shall compensate the possessor, if he is a bona fide one, for his expenses necessitated for maintaining the property.   Article 244 Where the immovables or movables in the possession of another person is damaged, or destroyed or lost and the obligee requests compensation, the possessor shall return the insurance monies, compensation payment, indemnities, etc. to the obligee. If the losses of the obligee are not fully covered thereby, the possessor, if he is a mala fidei one, shall, in addition, compensate for the uncovered part.   Article 245 Where the immovables or movables in a person’s possession are encroached upon, the person shall have the right to request the return of the original property. In the event of trespass to the possession of another, the possessor shall have the right to request elimination of such trespass or hazard. If damage is caused by encroachment or the trespass, the possessor shall have the right to request compensation.   The right of claim to the return of the original property shall extinguish, if the possessor fails to exercise it within one year from the date of the encroachment.   Supplementary Provisions   Article 246 Before the scope, authority and measures for unified registration of immovable property are stipulated by laws or administrative regulations, they may be stipulated by local regulations according to the relevant provisions of this Law.   Article 247 This Law shall go into effect as of October 1, 2007
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