7.1.2TheImportanceofContractsContractsperformvariousessentialbusinessfunctions,makingthemcriticalbusinessdocumentsformanyorganizations.Theimportanceofsigning a contract stems mainlyfromthe fact that it performs thefollowingpurposes:(1)actingasrecordsofrights,responsibilities,andobligationso(2)makingprivatepromiseslegallyenforceable(3)formalizingrelationshipso(4)ensuringconfidentiality(5)preventingdisputes
7.1.2 The Importance of Contracts Contracts perform various essential business functions, making them critical business documents for many organizations. The importance of signing a contract stems mainly from the fact that it performs the following purposes: ◦ (1) acting as records of rights, responsibilities, and obligations. ◦ (2) making private promises legally enforceable. ◦ (3) formalizing relationships. ◦ (4) ensuring confidentiality. ◦ (5) preventing disputes
7.1.3GeneralPrinciplesofContractLawTwofundamentalprinciplesofcontractlaw:ContractualfreedomContractual justiceWithinChinese contractlaw,tobe more specific,the contract principlesencompassarangeoffacetsasoutlinedbelow:(1)PrincipleofEquality(2)PrincipleofVoluntariness:(3)PrincipleofFairness:(4)Principleof Good Faith:(5)PrincipleofNon-InfringementofPublicInterests:(6)Greenprinciple:
7.1.3 General Principles of Contract Law Two fundamental principles of contract law: ◦ Contractual freedom ◦ Contractual justice Within Chinese contract law, to be more specific, the contract principles encompass a range of facets as outlined below: ◦ (1) Principle of Equality: ◦ (2) Principle of Voluntariness: ◦ (3) Principle of Fairness: ◦ (4) Principle of Good Faith: ◦ (5) Principle of Non-Infringement of Public Interests: ◦ (6) Green principle:
1)PrincipleofEqualityThisprinciplesignifiesthatbothpartiesinvolvedincontractformationareinanequallegalposition,regardlessofwhetherthecontractingpartyisabusiness,company,oranordinaryindividual.Whenenteringintoacontract,theirpositions,rights,andobligationsareequal(2)PrincipleofVoluntariness:Thisprincipledictatesthatonepartytothecontractisnotsubjecttointerferencebyanyexternal entity.OnlycontractsformedbasedonmutualconsentarelegallyvalidIfapartyexploitsitsdominantposition,engagesindeception,orcoercion,ortakesadvantageofsomeone'svulnerabilitytoforcetheotherpartyintoacontractagainsttheirtrueintent,itviolatestheprincipleofvoluntariness.(3)PrincipleofFairness:Theprincipleoffairnessemphasizesthattherightsandobligationsbetweenthepartiesenteringintoacontractshouldbebalancedand equitable.Likewise,thecivilliabilitiesandriskburdensassumedbybothpartiesshouldalsobebalancedandequal.Basedonthefairnessprinciple,partieshavetherighttorequesttheannulmentofcontractsthatclearlylackfairness
(1) Principle of Equality: ◦ This principle signifies that both parties involved in contract formation are in an equal legal position, regardless of whether the contracting party is a business, company, or an ordinary individual. When entering into a contract, their positions, rights, and obligations are equal. (2) Principle of Voluntariness: ◦ This principle dictates that one party to the contract is not subject to interference by any external entity. Only contracts formed based on mutual consent are legally valid. If a party exploits its dominant position, engages in deception, or coercion, or takes advantage of someone's vulnerability to force the other party into a contract against their true intent, it violates the principle of voluntariness. (3) Principle of Fairness: ◦ The principle of fairness emphasizes that the rights and obligations between the parties entering into a contract should be balanced and equitable. Likewise, the civil liabilities and risk burdens assumed by both parties should also be balanced and equal. Based on the fairness principle, parties have the right to request the annulment of contracts that clearly lack fairness
4)PrincipleofGoodFaith:Theprincipleofgoodfaithdictatesthatbothpartiesinvolvedincontractformationandexecutionshouldbehonest,refrainfromconcealingthetruth,abstainfromfraudulentactions,andavoidengagingin.contractfraud.Thisprinciplemandatesthatbothpartiesactivelyfulfiltheirobligationsasstipulatedafferthecontractisformed.(5)PrincipleofNon-InfringementofPublicInterests:Thisprincipleassertsthatpartiesenteringintoandexecutingcontractsmustadheretotheiaw,respectpublicethics,andnotViolatepublicorderormoralstandardsPublicorderreferstonotcontraveningtheprohibitiveregulationsofthelaw.whilegoodcustomsdenotetheminimalethicalstandardsthatindividualsshoulduphold(6)GreenprincipleThegreenprincipleisasignificantinnovationintheCivilCode,whichalignswithChina'scurrentfundamentalnational conditionsandpossessesdistinctcharacteristicsofthetimes.Asthecoretransactionalrulesofamarketeconomy,thecontractualactivitiesshouldalso.similarlyadheretothegreenprinciple.Throughouttheentireprocessofcontractfulfilment,partiesshouldconsidertheiractionsavoidingresourcewastage,environmentalpollutionandecologicalharm
(4) Principle of Good Faith: ◦ The principle of good faith dictates that both parties involved in contract formation and execution should be honest, refrain from concealing the truth, abstain from fraudulent actions, and avoid engaging in contract fraud. This principle mandates that both parties actively fulfil their obligations as stipulated after the contract is formed. (5) Principle of Non-Infringement of Public Interests: ◦ This principle asserts that parties entering into and executing contracts must adhere to the law, respect public ethics, and not violate public order or moral standards. Public order refers to not contravening the prohibitive regulations of the law, while good customs denote the minimal ethical standards that individuals should uphold. (6) Green principle: ◦ The green principle is a significant innovation in the Civil Code, which aligns with China's current fundamental national conditions and possesses distinct characteristics of the times. As the core transactional rules of a market economy, the contractual activities should also similarly adhere to the green principle. Throughout the entire process of contract fulfilment, parties should consider their actions, avoiding resource wastage, environmental pollution, and ecological harm
7.1.4ClassificationofContractsContractsmustbewritten?All contractsarevalid?OralandwrittencontractsBilateraland UnilateralContractsExpress,Implied,andQuasi-ContractValid,Void,Voidable,andEffectiveness-PendingContract
7.1.4 Classification of Contracts Contracts must be written? All contracts are valid? Oral and written contracts Bilateral and Unilateral Contracts Express, Implied, and Quasi-Contract Valid, Void, Voidable, and Effectiveness-Pending Contract