Law of the People’s Republic of China on Promotion of Privately-run Schools
(Adopted at the 31st Meeting of the Standing Committee of the Ninth National People’ s Congress on December 28, 2002 )
Contents
Chapter I General Provisions
Chapter Il Establishment
Chapter III Organization and Activities of Schools
Chapter IV Teachers and Educates
Chapter V School Assets and Financial Management
Chapter VI Administration and Supervision
Chapter VII Support and Reward
Chapter VIII Alteration and Termination
Chapter IX Legal Responsibility
Chapter X Supplementary Provisions
Chapter I General Provisions
Article 1 This Law is enacted in accordance with the Constitution and the Education Law with a view to implementing the strategy of invigorating the country through science, technology and
education, promoting the sound development of privately-run schools, and safeguarding the lawful rights and interests of the privately-run schools and the educates.
Article 2 This haw shall be applicable to activities conducted by public organizations or individuals, other than State organs, to establish and run schools and other institutions of education with non governmental financial funds, which are geared to the need of society. In cases to which no provisions of this Law are applicable, the provisions in the Education Law and other laws concerning education shall apply.
Article 3 Privately-run schools belong to public welfare undertakings and constitute a component part of the cause of socialist education.
With regard to privately-run schools, the State applies the principles of enthusiastic encouragement, vigorous support, correct guidance, and administration according to law.
People’s governments at all levels shall incorporate the undertakings of the privately-run schools into their plans of national economic and social development.
Article 4 Privately-run policy schools shall abide by laws and regulations, implement the education of the State, guarantee the educational quality and devote their efforts to the training of various types of people for the cause of socialist development.
Privately-run schools shall implement the principle of separating education from religion. No organizations or individuals may make use of religion to conduct activities designed to interfere with the educational system of the State.
Article 5 Privately-run schools and government-run schools shall share equal legal status, and the State safeguards the autonomy of the privately-run schools.
The State protects the lawful rights and interests of the sponsors, principals, teachers and staff members and educates of privately-run schools.
Article 6 The State encourages donations made for establishing and running schools.
The State rewards and commends organizations and individuals that have made outstanding contributions to the development of the undertakings of privately-run schools.
Article 7 The administrative department for education under the State Council shall be in charge of the overall planning, comprehensive coordination and macro-administration of the work relating to privately-run schools nationwide.
The administrative department for labor and social security and the relevant departments under the State Council shall respectively be in charge of the work relating to the privately-run schools within the scope of their duties as defined by the State Council.
Article 8 The administrative departments for education under the local people’s governments at or above the county level shall be responsible for the work relating to privately-run schools in their own administrative regions.
The administrative departments for labor and social security and the relevant departments under the local people’s governments at or above the county level shall respectively be responsible for the work relating to privately-run schools within the scope of their duties.
Chapter II Establishment
Article 9 Public organizations that establish privately-run schools shall possess the qualifications of a legal person.
Individuals that establish privately-run schools shall possess political rights and full capacity for civil conduct.
A privately-run school shall have the qualifications of a legal person.
Article 10 The establishment of a privately-run school shall meet the local need for educational development and the requirements provided for by the education Law and relevant laws and regulations.
The standards for the establishment of privately-run schools shall, mutatis mutandis, conform to those for the establishment of government-run schools of the same grade and category.
Article 11 The establishment of privately-run schools that provide education for academic credentials, pre-school education, training for preparing self study examinations and other cultural education shall be subject to examination and approval by the administrative departments for education under the people’s governments at or above the county level within the limits of their powers defined by the State; the establishment of a privately-run school that mainly provides training for vocational skills, including training for vocational qualification, shall be subject to examination and approval by the administrative department for labor and social security under the people’s governments at or above the county level within the limits of its powers defined by the State, which shall send a duplicate of the approval document to the administrative department for education at the same level for the record.
Article 12 To apply for preparing to establish a privately-run school, the sponsor shall submit to the examination and approval authority the following materials:
(1) an application, the contents of which mainly include: the sponsor, the aims of education, size of the student they, level of the school, forms of education, conditions for establishing and running the school, internal management system, raising of funds and their management and use, etc.,
(2) name of the sponsors and their addresses or the title of the sponsor and its address;
(3) source of the assets, amount of the funds and their effective certificates, in which the property rights are clearly stated; and
(4) where the assets of the school are donated, an agreement on the donations, in which the names of the donators, the amount of the assets donated, their use and management, and the relevant effective certificates are clearly stated.
Article 13 The examination and approval authority shall, within 30 days from the date it receives the application for preparing to establish a privately-run school, make a decision in writing on whether to approve it or not.
If it approves the application, it shall issue a written approval for preparing to establish the school; and if it does not approve the application, it shall explain the reasons.
The period of preparation for establishment of such a school shall not exceed three years; and if it exceeds three year, the sponsor shall renew its application.
Article 14 To apply for official establishment of a privately-run school, the sponsor shall submit the following materials to the examination and approval authority:
(1) the written approval for preparing to establish the school;
(2) a report on the preparations made for the establishment;
(3) articles of association of the school and the name lists of the component members of the first executive council, board of directors or other decision-making bodies of the school;
(4) effective certificates of the assets of the school; and
(5) qualification certificates of the principal, teachers, and book keepers and accountants.
Article 15 Where conditions for the establishment of a school are satisfied and the standards for establishment are reached, an application may directly be made for its official establishment, and the materials specified in Article 12 and subparagraphs (3), (4) and (5) of Article 14 of this Law shall be submitted.
Article 16 Where an application for official establishment of a privately-run school is made, the examination and approval authority shall, within three months from the date it receives the application, make a decision in writing on whether to approve it or not, and sere the decision on the applicant; and where, in this regard, an application is made for the official establishment of a privately-run institution of higher education, the examination and approval authority may, within six months from the date it receives the application, likewise make a decision in writing on whether to approve it or not and serve the decision on the applicant.
Article 17 The examination and approval authority shall issue a license for establishment of a school to the privately-run school for the official establishment of which it gives approval.
Where the examination and approval authority does not approve the official establishment of a school, it shall explain the reasons.
Article 18 Where a privately-run school obtains the license for establishment and, in accordance with the provisions of relevant laws and administrative regulations, registers with the registration authority, the latter shall immediately handle the matter in accordance with relevant regulations.
Chapter III Organizations and Activities of Schools
Article 19 A privately-run school shall set up an executive council, a board of directors or other forms of decision-making bodies of the school.
Article 20 The executive council or the board of directors of the school shall be composed of the sponsors or their representatives, the principal, and the representatives of the teachers and staff members. More than one-third of the council members or directors shall, at least, have five years’ education or teaching experience each.
The executive council or the board of directors of the school shall be composed of not less than five persons, with one of them serving as chairman of the council or board. The name list of the chairman and members of the council or the chairman of the board and directors shall be submitted to the examination and approval authority for the record.
Article 21 The executive council or the board of directors of a school shall exercise the following functions and powers:
(1) to appoint and dismiss the principal;
(2) to amend the articles of association of the school and formulate rules and regulations of the school;
(3) to make development plans and approve annual work plans;
(4) to raise funds for running the school, and examine and verify the budgets and final accounts;
(5) to decide on the size and the wage standards of the teachers and staff members;
(6) to decide on the division, merging and termination of the school; and
(7) to decide on other important matters.
The functions and powers of other forms of decision-making bodies shall be defined in reference to the provisions of this Article.
Article 22 The chairman of the executive council or the board of directors or the principal of a privately-run school shall serve as the legal representative of the school.
Article 23 A privately-run school shall, in reference to the qualifications for the principal of a government-run school of the same grade and category, appoint its principal, and the age limit may appropriately be extended both ways, and the appointment shall be reported to the examination and approval authority for verification and approval.
Article 24 The principal of a privately-run school shall be in charge of education, teaching and administration of the school, and exercise the following functions and powers:
(1) to carry out the decisions made by the executive council, board of directors or any other form of decision-making body;
(2) to put into execution the development plans, draw up the annual work plans and financial budgets, and formulate the rules and regulations of the school;
(3) to appoint and dismiss staff members of the school, and give rewards and impose punishments;
(4) to make arrangements for education, teaching and scientific research, and ensure the quality of education and teaching;
(5) to be responsible for the daily work of school administration; and
(6) other powers delegated by the executive council, the board of directors or any other form of decision-making they of the school.
Article 25 A privately-run school may, on the basis of their classifications, the length of schooling and their academic performance and in accordance with the relevant regulations of the State, issue academic credentials, certificates for completing a course or qualification certificates of training to the students it enrolled.
Students who receive training in vocational skills may be awarded vocational qualification certificates of the State when they are considered qualified by the vocational skills appraisal authority approved by the State.
Article 26 A privately-run school shall, in accordance with law, ensure that the teachers and staff members participate in democratic management and supervision through the representative assembly of the teachers and staff members with the teachers as the main body, or through other forms.
Teachers and staff members of a privately-run school shall, in accordance with the Trade Union Law, have the right to form trade union organizations to protect their lawful rights and interests.
Chapter IV Teachers and Educates
Article 27 Teachers and educates of privately-run schools shall enjoy equal legal status as the teachers and educates of government run schools shall.
Article 28 Teachers appointed by privately-run schools shall possess the qualifications for teaching specified by the State.
Article 29 Privately-run schools shall conduct ideological and moral education and professional training among teachers.
Article 30 Privately-run schools shall guarantee the wages and welfare benefits for teachers and staff members according to law, and pay social insurance premiums for them.
Article 31 The teachers and staff members of privately-run schools shall, in accordance with law, share equal rights with those of government-run schools in respect of professional training, appointment of posts, calculation of the length of service as a teacher or staff member, commendation and reward, and social activities.
Article 32 Privately-run schools shall, in accordance with law, safeguard the lawful rights and interests of educates.
Privately-run schools shall, in accordance with the regulations of
the State, establish the System for administration of students’ records and give rewards and sanctions to educates.
Article 33 Educates of privately-run schools shall enjoy equal rights as those of government-run schools of the same grade and category in respect of admission into schools of a higher grade, employment, preferential treatment and being elected as advanced students.
Chapter V School Assets and Financial Management
Article 34 Privately-run schools shall, in accordance with law, establish financial and accounting systems and assets management system, and keep account books in accordance with the relevant regulations of the State.
Article 35 Privately-run schools shall enjoy property rights of the legal persons in respect of the assets provided by sponsors to privately-run schools, State-owned assets, donated property and school accumulation.
Article 36 During the period of existence of privately-run schools, all the assets shall, in accordance with law, be managed and used by the schools, and no organization or individual may take illegal possession of them.
No organization or individuals may, in violation of laws or regulations, collect any fee from privately-run institutions of education.
Article 37 The items and rates of fees to be collected by privately-run schools from educates who receive education from academic credentials shall be worked out by the schools, submitted to relevant departments for approval and made public; and the items and rates of fees to be collected from other educates shall be worked out by the schools concerned, submitted to relevant departments for the record and made public.
The fees collected by privately-run schools shall be used mainly for educational and teaching activities and the improvement of schools conditions.
Article 38 The use and the financial management of the assets for privately-run schools shall be subject to supervision by the examination and approval authority and relevant departments.
Privately-run schools shall prepare their financial and accounting statements towards the end of each fiscal year, entrust public accounting firm to audit the statements according to law, and publish the audit results.
Chapter VI Administration and Supervision
Article 39 Administrative Departments for education and the relevant departments shall provide guidance to privately-run schools in respect of education and teaching and training among teachers.
Article 40 Administrative departments for education and the relevant departments shall, in accordance with law, exercise supervision over and provide guidance to privately-run schools, in order to promote the enhancement of the quality of such schools; and they shall make arrangements or entrust public intermediary bodies with the arrangements for assessing the level and the quality of education of such schools, and make the results of the assessment known to the general public.
Article 41 The general regulations and advertisements for student enrollment of privately-run schools shall be submitted to the examination and approval authority for the record.
Article 42 Where a privately-run school infringes upon the lawful rights and interests of educates, the educates and their relatives shall have the right to make petition to the administrative department for education and any relevant department, and the said department shall handle it without delay.
Article 43 The State supports and encourages public intermediary bodies to provide services to privately-run schools.
Chapter VII Support and Reward
Article 44 People’s governments at or fore the county level may set up special funds for financing the development of privately-run schools and for rewarding and commending the collectives and individuals that have made outstanding contributions.
Article 45, People’s governments at or above the county level may take such measures as financial aid and the lease or transfer of idle State-owned assets in support of privately-run schools.
Article 46 Privately-run schools shall enjoy preferential taxation policy formulated by the State.
Article 47 Civilian-run schools may, in accordance with the relevant laws and regulations of the State, accept donations afforded by citizens, legal persons or other organizations.
The State, in accordance with relevant regulations, applies preferential taxation policy to citizens, legal persons or other organizations that donate property to privately-run schools, and bestows commendations on them.
Article 48 The State encourages financial institutions to support the development of privately-run schools by means of credit.
Article 49 Where a people’s government entrusts a privately-run school with the task of compulsory education, it shall, in accordance
with the agreement of entrustment, appropriate the necessary amount of funds for education.
Article 50 Where a privately-run school is contracted or expanded, the people’s government concerned shall give it preferential treatment in accordance with the regulations on the use of land for, and the construction of , public welfare undertakings. No land to be used for education may be used for other purposes.
Article 51 After the cost of a privately-run school is deducted, the funds for its development are withheld and the sum of money for other necessary expenses is drawn in accordance with the relevant regulations of the State, the fund providers may obtain a reasonable amount of requital from the cash surplus of the school. Specific measures for obtaining reasonable amounts of requital shall be formulated by the State Chuncil.
Article 52 The State takes measures to support and encourage public organizations and individuals to establish and run privately-run schools for the development of education in minority nationality areas and in out-lying and poverty-stricken areas.
Chapter VIII Alteration and Termination
Article 53 The executive council or the hard of directors of a privately-run school to be divided or merged into other schools shall, after financial settlement, apply to the examination and approval authority for approval.
Where a privately-run school applies for division or merging, the examination and approval authority shall, within three months form the date it receives the application, give a reply in writing; and where the application is made for the division or merging of a privately-run institution of higher education, the examination and approval authority may, within six months from the date it receives the application, likewise give a reply in writing.
Article 54 For alteration of the sponsor of a privately-run school, the matter shall be put forth by the sponsor and, after financial settlement and upon agreement by the executive council or the board of directors of the school, submitted to the examination and approval authority for verification and approval.
Article 55 For alteration of the name, level, or category of a privately-run school, the matter shall be submitted by the executive council or the board of directors of the school to the examination and approval authority for approval.
Where an application is made for the alteration of a privately-run school from one type to another, the examination and approval authority shall, within three months from the date it receives the application, give a reply in writing; and where the application is made for alteration to a privately-run institution of higher education, the examination and approval authority may, within six months from the date it receives the application, likewise give a reply in writing.
Article 56 Where a privately-run school is found in one of the following circumstances, it shall be terminated:
(1) it is required to be terminated according to the provisions of the articles of association of the school, and the termination is approved by the examination and approval authority;
(2) the license for running the school is revoked; or
(3) it cannot continue due to insolvency.
Article 57 When a privately-run school is to be terminated, it sha1l make proper arrangements for the students in school. When a privately-run school providing compulsory education is to be terminated, the examination and approval authority shall assist the school to make arrangements for the students to continue their studies.
Article 58 When a privately-run school is to be terminated, it shall make financial settlement according to law.
Where a privately-run school requests termination itself, it shall make arrangements for the settlement; where it is abolished by the examination and approval authority according to law, the settlement shall be arranged by the authority; and where it is terminated because it cannot continue due to insolvency, the settlement shall be arranged by the People’s Court.
Article 59 Property of a privately-run school shall be Liquidated in the following order:
(1) tuition fees and extras and other expenses paid by educates that should be returned;
(2) wages payable to the teachers and staff members and the social insurance premiums that should be paid; and
(3) other debts that should be cleared off.
The remaining property of a privately-run school after the debts mentioned above are cleared off shall be disposed of in accordance with the provisions of relevant laws and administrative regulations.
Article 60 When a privately-run school is terminated, the license for running the school shall be taken back, its seals destroyed and its registration cancelled by the examination and approval authority.
Chapter IX Legal Responsibility
Article 61 Where, in conducting education activities, a privately-run school violates the provisions of the Education Law or the Teachers haw, it shall be punished in accordance with the relevant provisions of the Education Law or the Teachers Law.
Article 62 Where a privately-run school commits one of the following acts, the examination and approval authority or the relevant department shall order it to rectify within a time limit and give it a disciplinary warning; if there are unlawful gains derived there from, they shall be confiscated after returning the fees collected; if the circumstances are serious, it shall be ordered to stop enrolling students and its license for running the school shall be revoked; and if a crime is constituted, it shall be investigated for criminal responsibility according to law:
(1) dividing or merging the privately-run school without authorization;
(2) altering the name, level, category and sponsor of the privately-run school without authorization;
(3) publishing false general regulations of enrollment or advertisements for the purpose of defrauding money;
(4) unlawfully issuing or forging academic credential, certificates of courses completed, certificates of training or vocational qualification certificates;
(5) seriously affecting education and teaching due to haphazard administration, which exerts a bad influence on society;
(6) obtaining the license for running the school by submitting false supporting documents or concealing important facts by other deceptive means;
(7) forging, counterfeiting, dealing in, renting or lending its license for running the school; or
(8) terminating the school in bad faith, illegally withdrawing its funds or misappropriating the funds for running the school.
Article 63 Where the examination and approval authority or the relevant department commits one of the following acts, it shall be ordered by the authority at the higher level to rectify; if the circumstances are serious, the persons directly in charge and the other persons directly responsible shall be given administrative sanctions according to law; if economic losses are caused, it shall bear the responsibility to pay compensation according to law; and if a crime is constituted, it shall be investigated for criminal responsibility according to law:
(1) failing to give a reply within the prescribed time limit to an accepted application for the establishment of a privately-run school;
(2) giving approval to an application which does not conform to the conditions provided for in this Law;
(3) causing serious consequences due to careless administration;
(4) collecting fees in violation of the relevant regulations of the State;
(5) infringing upon the lawful rights and interests of a privately run school; or
(6) abusing its powers or engaging in malpractices in other ways.
Article 64 Where a public organization or individual establishes or runs a private school without authorization, it/he shall be ordered by the relevant administrative department of the people’s government at or above the county level to rectify within a time limit; if the school conforms to the conditions provided for in this Law or relevant laws regarding privately-run schools, it may go through the formalities of examination and approval; if fails to meet the conditions at the expiration of a prescribed time limit, it shall be ordered to stop running the school, and if economic losses are caused, it shall bear the responsibility to pay compensation.
Chapter X Supplementary Provisions
Article 65 The privately-run schools mentioned in this Law include other privately-run institutions of education established according to law.
The principals mentioned in this Law include the principal administrative persons in charge of other privately-run institutions of education.
Article 66 Measures for administration of profit-making privately run training institutions registered with the administrative department for industry and commerce shall be separately formulated by the State council.
Article 67 Measures for schools established and run cooperatively by overseas organizations or individuals within the territory of the People’s Republic of China shall be formulated by the State Council.
Article 68 This Law shall go into effect as of September 1, 2003. The Regulations on Schools Run by Different Sectors of Society issued by the State Council on July 31, l997 shall be abolished at the same time.aa
Law of the People’s Republic of China on Economic Contracts Involving Foreign Interest
(Adopted at the Tenth Session of the Standing Committee of the Sixth National People's Congress and promulgated by Order No. 22 of the President of the People's Republic of China on March 21, 1985)
Chapter I General Provisions
Chapter II The Conclusion of Contracts
Chapter III The Performance of Contracts and Liability for Breach of Contract
Chapter IV The Assignment of Contracts
Chapter V The Modification, Rescission and Termination of Contracts
Chapter VI The Settlement of Disputes
Chapter VII Supplementary Provisions
Chapter I General Provisions
Article 1
This Law is formulated with a view to protecting the lawful rights and interests of the parties to Chinese-foreign economic contracts and promoting the development of China's foreign economic relations.
Article 2
This Law shall apply to economic contracts concluded between enterprises or other economic organizations of the People’s Republic of China and foreign enterprises, other economic organizations or individuals. (hereinafter referred to as "contracts"). However, this provision shall not apply to international transport contracts.
Article 3
Contracts shall be concluded according to the principle of equality and mutual benefit and the principle of achieving agreement through consultation.
Article 4
In concluding a contract, the parties must abide by the law of the People's Republic of China and shall not harm the public interest of the People's Republic of China.
Article 5
The parties to a contract may choose the proper law applicable to the settlement of contract disputes. In the absence of such a choice by the parties, the law of the country which has the closest connection with the contract shall apply. The law of the People's Republic of China shall apply to contracts that are to be performed within the territory of the People's Republic of China, namely contracts for Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and Chinese-foreign cooperative exploration and development of natural resources. For matters that are not covered in the law of the People's Republic of China, international practice shall be followed.
Article 6
Where an international treaty which is relevant to a contract, and to which the People's Republic of China is a contracting party or a signatory, has provided differently from the law of the People's Republic of China, the provisions of the international treaty shall prevail, with the exception of those clauses on which the People's Republic of China has declared reservation.
Chapter II The Conclusion of Contracts
Article 7
A contract shall be formed as soon as the parties to it have reached a written agreement on the terms and have signed the contract. If an agreement is reached by means of letters, telegrams or telex and one party requests a signed letter of confirmation, the contract shall be formed only after the letter of confirmation is signed. Contracts which are subject to the approval of the state, as provided for by the laws or administrative regulations of the People's Republic of China, shall be formed only after such approval is granted.
Article 8
Appendices specified in a contract shall be integral parts of the contract.
Article 9
Contracts that violate the law or the public interest of the People’s Republic of China shall be void. In case any terms in a contract violate the law or the public interest of the People's Republic of China, the validity of the contract shall not be affected if such terms are cancelled or modified by the parties through
consultations.
Article 10
Contracts that are concluded by means of fraud or duress shall be void.
Article 11
A party which is responsible for the invalidity of a contract shall be liable for the losses suffered by the other party as a result of the contracts becoming invalid.
Article 12
A contract shall, in general, contain the following terms:
(1) the corporate or personal names of the contracting parties and their nationalities and principal places of business or domicile;
(2) the date and place of the signing of the contract;
(3) the type of contract and the kind and scope of the object of the contract;
(4) The technical conditions, quality, standard, specifications and quantity of the object of the contract;
(5) the time limit, place and method of performance;
(6) the price, amount and method of payment, and various incidental charges;
(7) whether the contract is assignable and, if it is, the conditions for its assignment;
(8) liability to pay compensation and other liabilities for breach of contract;
(9) the ways for settling contract disputes; and
(10) the language(s) in which the contract is to be written and its validity.
Article 13
So far as it may require, a contract shall provide for the limits of the risks to be borne by the parties in performing the object; if necessary, it shall provide for the coverage of insurance for the object.
Article 14
Where a contract needs to be performed continuously over a long period, the parties shall set a period of
validity for the contract and may also stipulate conditions for its extension and its termination before its expiry.
Article 15
In the contract the parties may agree to provide a guaranty. The guarantor shall be held liable within the agreed scope of guaranty.
Chapter III The Performance of Contracts and Liability for Breach of Contract
Article 16
A contract shall be legally bindings as soon as it is established in accordance with the law. The parties shall perform their obligations stipulated in the contract. No party shall unilaterally modify or rescind the contract.
Article 17
A party may temporarily suspend its performance of the contract if it has conclusive evidence that the other party is unable to perform the contract. However, it shall immediately inform the other party of such suspension. It shall perform the contract if and when the other party provides a sure guarantee for performance of the contract. If a party suspends performance of the contract without conclusive evidence of the other party's inability to perform the contract, it shall be liable for breach of contract.
Article 18
If a party fails to perform the contract or its performance of the contractual obligations does not conform to the agreed terms. Which constitutes a breach of contract, the other party is entitled to claim damages or demand other reasonable remedial measures. If the losses suffered by the other party cannot be completely made up after the adoption of such remedial measures, the other party shall still have the right to claim damages.
Article 19
The liability of a party to pay compensation for the breach of a contract shall be equal to the loss suffered by the other party as a consequence of the breach. However, such compensation may not exceed the loss which the party responsible for the breach ought to have foreseen at the time of the conclusion of the contract as a possible consequence of a breach of contract.
Article 20
The parties may agree in a contract that, if one party breaches the contract, it shall pay a certain amount of breach of contract damages to the other party; they may also agree upon a method for calculating the damages resulting from such a breach. The breach of contract damages as stipulated in the contract shall be regarded as compensation for the losses resulting from breach of contract. However, if the contractually agreed breach of contract damages are far more or far less than is necessary to compensate for the losses resulting from the breach, the party concerned may request an arbitration body or a court to reduce or increase them appropriately.
Article 21
If both parties breach the contract, each shall be commensurately liable for the breach of contract that is its responsibility.
Article 22
A party which suffers losses resulting from a breach of contract by the other party shall promptly take appropriate measures to prevent the losses from becoming severer. If the losses are aggravated as a result of its failure to adopt appropriate measures, it shall not be entitled to claim compensation for the aggravated part of the losses.
Article 23
If a party fails to pay on time any amount stipulated as payable in the contract or any other amount related to the contract that is payable, the other party is entitled to interest on the amount in arrears. The method for calculating the interest may be specified in the contract.
Article 24
If a party is prevented from performing all or part of its obligations owing to force majeure, it shall be relieved of all or part of its obligations.
If a party cannot perform its obligations within the contractually agreed time limit owing to force majeure, it shall be relieved of the liability for delayed performance during the aftereffect of the event. Force majeure means an event that the parties could not have foreseen at the time of conclusion of the contract, both parties being unable to either avoid or overcome its occurrence and consequences. The scope of force majeure may be specified in the contract.
Article 25
The party which fails to perform wholly or in part its contractual obligations owing to force majeure shall promptly inform the other party so as to mitigate possible losses inflicted on the other party, and shall also provide a certificate issued by the relevant agency within a reasonable period of time.
Chapter IV The Assignment of Contracts
Article 26
When a party assigns, wholly or in part, its contractual rights and obligations to a third party, it must obtain the consent of the other party.
Article 27
In the case of a contract which, according to the laws or administrative regulations of the People's Republic of China, is to be formed with the approval of the state, the assignment of the contractual rights and obligations shall besubject to the approval of the authority whichapproved the contract, unless otherwise stipulated in the approved contract.
Chapter V The Modification, Rescission and Termination of Contracts
Article 28
A contract may be modified if both parties agree through consultation.
Article 29
A party shall have the right to notify the other party that a contract is rescinded in any of the following situations:
(1) if the other party has breached the contract, thus adversely affecting the economic benefits they expected to receive at the time of the conclusion of the contract;
(2) if the other party fails to perform the contract within the time limit agreed upon in the contract, and again fails to perform it within the reasonable period of time allowed for delayed performance;
(3) if all the obligations under the contract cannot be performed owing to force majeure; or
(4) if the contractually agreed conditions for the rescission of the contract are present.
Article 30
For a contract consisting of several independent parts, some may be rescinded according to the provisions of the preceding article while the other parts remain valid.
Article 31
A contract shall be terminated in any one of the following situations:
(1) if the contract has already been performed in accordance with the agreed terms;
(2) if an arbitration body or a court has decided that the contract shall be terminated; or
(3) if the parties agree through consultation to terminate the contract.
Article 32
Notices or agreements on the modification or rescission of contracts shall be made in writing.
Article 33
In the case of a contract which, according to the laws or administrative regulations of the People's Republic of China, is to be established with the approval of the state, any significant modification of the contract shall be subject to the approval of the authority which approved the contract, and the rescission of the contract shall be filed with the same authority for the record.
Article 34
The modification, rescission or termination of a contract shall not affect the rights of the parties to claim damages.
Article 35
The contractually agreed terms for the settlement of disputes shall not become invalid because of the rescission or termination of a contract.
Article 36
The contractually agreed terms for the settlement of accounts and liquidation of a contract shall not become invalid because of the rescission or termination of the contract.
Chapter VI The Settlement of Disputes
Article 37
If disputes over a contract develop, the parties shall, as far as possible, settle them through consultation, or through mediation by a third party. If the parties are unwilling to settle their dispute through consultation or mediation, or if consultation or mediation proves unsuccessful, they may, in accordance with the arbitration clause provided in the contract or a written arbitration agreement reached by the parties afterwards, submit the dispute to a Chinese arbitration body or any other arbitration body for arbitration.
Article 38
If no arbitration clause is provided in the contract, and a written arbitration agreement is not reached afterwards, the parties may bring suit in a people's court.
Chapter VII Supplementary Provisions
Article 39
The time limit for filing suit or applying for arbitration in a dispute over a contract for the purchase and sale of goods shall be four years, counting from the day when the party was aware or ought to have been aware of its rights' being infringed upon. The time limit for filing suit or applying for arbitration in a dispute over any other contract shall be stipulated separately by law.
Article 40
If new legal provisions are formulated while contracts for Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures, or Chinese-foreign cooperative exploration and development of natural resources, which have been concluded with the approval of the state, are being performed within the territory of the People's Republic of China, the performance may still be based on the terms of the contracts.
Article 41
This Law may apply to contracts concluded before it goes into effect if this is agreed to by the parties through consultation.
Article 42
The State Council shall, in accordance with this Law, formulate rules for its implementation.
Article 43
This Law shall go into effect on July 1, 1985.
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