上海交通大学：《Chinese Contract Law》课程教学资源_Reading Materials_Liabilities in Contract Law of China：Their Mechanism and Points in Dispute.pdf

122 Front.Law China(2006)1:121-152 New trends of civil legislation in China The drafting of law of property and the amendment of constitution law It is aimed that China has a perfect legal system compliant with market economy and rule of law by the end of year 2010.Now there is no formal civil code in P.R.China,so in March of 1998,the legislative organ of China(National People's Congress)invited nine civil law scholars and experts to set up a working group to prepare for the drafting of Civil Code of China.As the programs of the working group,a new contract law should be adopted in 1999, a property law should be adopted in 4 or 5 years,and by the end of 2010,there should be a formal civil code of China. According to the programs,Professor Huixing Liang (Professor of Law,Law Institute, Chinese Academy of Social Sciences)was consigned in charge of preparing and submitting a draft of Property Law.And a draft of Property Law by the Professor Liang's group was accomplished in October 1999.It is composed of 12 chapters of 435 articles.But the draft is thought has not pay enough attention on State Property and Property of Collective Organizations of the Working Masses by the legislative organ of China.As a result,Professor Liming Wang(Professor of Law,Law School,Chinese People University)was consigned in charge of preparing and submitting another draft of Property Law.Professor Wang and his group accomplished their draft in December 2000.2The Legal Work Commission of the Standing Committee of the National People's Congress prepared a new draft on the base of the above two drafts in January 2002.Now the new draft is in the course ofinquiring opinions and suggestions. On 14 March 2004 the Constitution Law of P.R.China has been amended.The expropriation system has been improved(art.10)and the protection of private property has been emphasized (art.13). The amendment of law of marriage Law of Marriage of P.R.China 1980 has been applied for more than 20 years since it was enacted.And the society has changed sharply during the past 20 years.In order to adapt to the changed society,the Law was amended and adopted on 28 April 2001.The contents of the Law include:Chapter I,General Provisions;Chapter II,Marriage;Chapter III,Family Relationship;Chapter IV,Divorce;Chapter V,Methods for Help and Legal Liabilities;and Chapter VI,Supplementary Provisions.There are some important improvements in the new Law of Marriage,including new provisions on void marriage and voidable marriage(arts.10- 12),manipulable standards of divorce(art.32),and the right for party without fault in divorce claiming compensation(art.46).The Law of Marriage will be one Book of the future Chinese Civil Code. As a publication in Chinese,Huixing Liang etc.,A propositional draft of Chinese property law:its articles. notes,comments and comparative law.(2000),Social Sciences Documents Publishing House. 2As a publication in Chinese,Liming Wang ed.,A propositional draft and its illustrations of Chinese property law,(2001).China Legal System Publishing House

New trends of civil legislation in China The drafting of law of property and the amendment of constitution law It is aimed that China has a perfect legal system compliant with market economy and rule of law by the end of year 2010. Now there is no formal civil code in P.R. China, so in March of 1998, the legislative organ of China (National People’s Congress) invited nine civil law scholars and experts to set up a working group to prepare for the drafting of Civil Code of China. As the programs of the working group, a new contract law should be adopted in 1999, a property law should be adopted in 4 or 5 years, and by the end of 2010, there should be a formal civil code of China. According to the programs, Professor Huixing Liang (Professor of Law, Law Institute, Chinese Academy of Social Sciences) was consigned in charge of preparing and submitting a draft of Property Law. And a draft of Property Law by the Professor Liang’s group was accomplished in October 1999. It is composed of 12 chapters of 435 articles.1 But the draft is thought has not pay enough attention on State Property and Property of Collective Organizations of the Working Masses by the legislative organ of China. As a result, Professor Liming Wang (Professor of Law, Law School, Chinese People University) was consigned in charge of preparing and submitting another draft of Property Law. Professor Wang and his group accomplished their draft in December 2000.2 The Legal Work Commission of the Standing Committee of the National People’s Congress prepared a new draft on the base of the above two drafts in January 2002. Now the new draft is in the course of inquiring opinions and suggestions. On 14 March 2004 the Constitution Law of P.R. China has been amended. The expropriation system has been improved (art. 10) and the protection of private property has been emphasized (art. 13). The amendment of law of marriage Law of Marriage of P.R. China 1980 has been applied for more than 20 years since it was enacted. And the society has changed sharply during the past 20 years. In order to adapt to the changed society, the Law was amended and adopted on 28 April 2001. The contents of the Law include: Chapter I, General Provisions; Chapter II, Marriage; Chapter III, Family Relationship; Chapter IV, Divorce; Chapter V, Methods for Help and Legal Liabilities; and Chapter VI, Supplementary Provisions. There are some important improvements in the new Law of Marriage, including new provisions on void marriage and voidable marriage (arts. 10– 12), manipulable standards of divorce (art. 32), and the right for party without fault in divorce claiming compensation (art. 46). The Law of Marriage will be one Book of the future Chinese Civil Code. 1 As a publication in Chinese, Huixing Liang etc., A propositional draft of Chinese property law: its articles, notes, comments and comparative law,(2000), Social Sciences Documents Publishing House. 2 As a publication in Chinese, Liming Wang ed., A propositional draft and its illustrations of Chinese property law, (2001), China Legal System Publishing House. 122 Front. Law China (2006) 1: 121–152

Front.Law China(2006)1:121-152 123 The drafiing of Chinese civil code According to the design of Professor Huixing Liang and his drafting group,the future Chinese Civil Code should be composed of seven Books,which includes: Book One:General Provisions; Book Two:Law of Property; Book Three:Law of Obligation in General; Book Four:Law of Contracts; Book Five:Law of Torts; Book Six:Law of Marriage and Family Relationship; Book Seven:Law of Succession. A drafting group,which is composed by more than 20 Chinese scholars and in charged by Professor Liang,had finished its drafting work of Chinese Civil Code.And as a final achievement,a text composed of 1,924 articles has been published.4 The Legal Work Commission of the Standing Committee of the National People's Congress also prepared a new draft of civil law in December 2002 (here after the "Draft 2002").The Draft 2002 is composed with nine books,namely: Book One:General Provisions; Book Two:Law of Property; Book Three:Law of Contract; Book Four:Law of Personality; Book Five:Law of Marriage; Book Six:Law of Adoption; Book Seven:Law of Succession; Book Eight:Law of Torts; Book Nine:Law of Application of Law in Civil Relations with Foreigners. Now the new draft is also in the course of inquiring opinions and suggestions. The expansion of contractual obligations and a new structure of contractual liabilities in Chinese laws The expansion of contractual obligations In former Chinese contract law theories,it had been thought that contractual obligations meant obligations agreed by the parties(Leistungspflicht).But in the past 10 years,theories on contractual obligations in Chinese civil law science developed a lot.And this profits from theory receptions of foreign cases and theories.> 3 The author is also a member ofthe drafting group,in charge of the drafting of Liabilities for Breach of Contract of Book Four. As a publication in Chinese,see Huixing Liang ed..A propositional draft of Chinesecivil code,(2003),Law Press,China. 5 See Tze-chien Wang,Studies on civil law theories and cases,Vol.4.(1991),Taiwan;Jiafu Wang ed.,Law of Obligation,(1991.Guangxing Zhang),Law Press,China,pp.143-150

The drafting of Chinese civil code According to the design of Professor Huixing Liang and his drafting group,3 the future Chinese Civil Code should be composed of seven Books, which includes: Book One: General Provisions; Book Two: Law of Property; Book Three: Law of Obligation in General; Book Four: Law of Contracts; Book Five: Law of Torts; Book Six: Law of Marriage and Family Relationship; Book Seven: Law of Succession. A drafting group, which is composed by more than 20 Chinese scholars and in charged by Professor Liang, had finished its drafting work of Chinese Civil Code. And as a final achievement, a text composed of 1,924 articles has been published.4 The Legal Work Commission of the Standing Committee of the National People’s Congress also prepared a new draft of civil law in December 2002 (here after the “Draft 2002”). The Draft 2002 is composed with nine books, namely: Book One: General Provisions; Book Two: Law of Property; Book Three: Law of Contract; Book Four: Law of Personality; Book Five: Law of Marriage; Book Six: Law of Adoption; Book Seven: Law of Succession; Book Eight: Law of Torts; Book Nine: Law of Application of Law in Civil Relations with Foreigners. Now the new draft is also in the course of inquiring opinions and suggestions. The expansion of contractual obligations and a new structure of contractual liabilities in Chinese laws The expansion of contractual obligations In former Chinese contract law theories, it had been thought that contractual obligations meant obligations agreed by the parties (Leistungspflicht). But in the past 10 years, theories on contractual obligations in Chinese civil law science developed a lot. And this profits from theory receptions of foreign cases and theories.5 3 The author is also a member of the drafting group, in charge of the drafting of Liabilities for Breach of Contract of Book Four. 4 As a publication in Chinese, see Huixing Liang ed., A propositional draft of Chinesecivil code, (2003), Law Press, China. 5 See Tze-chien Wang, Studies on civil law theories and cases, Vol. 4, (1991), Taiwan; Jiafu Wang ed., Law of Obligation, (1991, Guangxing Zhang), Law Press, China, pp.143–150. Front. Law China (2006) 1: 121–152 123

124 Front.Law China(2006)1:121-152 Now in Chinese law,good faith and fair dealing (Treu und Glauben)becomes the most important general principle(GPCL art.4;CCL art.6),and it must be followed by the parties of a contract while exercise a right or perform an obligation.Correspondingly,the contents of contractual obligations,influenced by the civil law theories of Germany and Taiwan,is thought no longer limited to what the parties agreed upon.The parties shall observe the principle of good faith and fair dealing,and fulfill the obligations of notification,assistance and confidentiality in accordance with the nature and purpose of the contract and trade practices (CCL art.60 par.2).These kinds of obligations are called "ancillary obligations" (Nebenpflicht). Now"ancillary obligation"theory has taken its root both in legal theories and legislations of China.Besides,there are articles on pre-contractual obligations(arts.42 and 43)and post- contractual obligations (art.92)in CCL,and contractual obligations are expended further. Generally laying down ancillary obligations,pre-contractual obligations and post- contractual obligations in a statute,perhaps China is the first one in doing so in civil law countries.As these kinds of rules are almost in case laws in other civil law countries.6 A new structure of contractual liabilities In Chinese civil law theories,the concept of"contractual liability"is a point in dispute.'In this paper,contractual liability presupposes the existence of contractual obligations(include those kind of obligations provided by CCL).Corresponding with the above expansion of contractual obligations,there is a phenomenon in CCL of expansion of contractual liabilities. The phenomenon in CCL is somewhat similar with what Japanese scholars called"expansion of contractual obligations"(keiyaku sekinin no kakutyou),but there are still some differences.For example,as the German case law theory of"Contract with Effects Protecting a Third Party,"although there are some introductions about it in China,but some Chinese scholars emphasized the doctrine of"privity of contract."According to their viewpoints,as a general rule,a contract cannot confer rights arising from it on a third person.CCL confirms the doctrine (as can be reflected indirectly from art.121).On the other hand,some other articles permit a third person having some rights arising from contract.For example, according to art.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. In this paper,"contractual liability"refers mainly to liability for Culpa in contrahendo, liability for breach of contract and liability for breach of post-contractual obligations(post- contract fault),as being expressed in Figure 1. 6 Greece Civil Code only has a provision on pre-contractual duty.When the Act on the Reform of the Law of Obligations(Schuldrechtsreformgesetz)of Germany entered into force on 1 January 2002.it should be noticed that the appended $241(2)provides"duties arising out of the obligation",namely"an obligation may require each party to have regard to the other party's rights,legally protected interests and other interests". As one viewpoint,contractual liability means liability for breach of contract.See Jianyuan Cui,Studies on contractual liabilities,(1992)Jilin University Publishing House,p.8.As to another viewpoint,contractual liability means liabilities in contract law.See Liming Wang.On liabilities for breach of contract,(1996). Chinese Politic and Law University Publishing House,p.26. s See Kenzo Miyamoto,Obligation of care for safety and the expansion of contractual liabilities,(1993). Tokyo,Japan,p.5. Liming Wang.Studies on civil and commercial law,vol.3,(1999),Law Press China,p.429

Now in Chinese law, good faith and fair dealing (Treu und Glauben) becomes the most important general principle (GPCL art. 4; CCL art. 6), and it must be followed by the parties of a contract while exercise a right or perform an obligation. Correspondingly, the contents of contractual obligations, influenced by the civil law theories of Germany and Taiwan, is thought no longer limited to what the parties agreed upon. The parties shall observe the principle of good faith and fair dealing, and fulfill the obligations of notification, assistance and confidentiality in accordance with the nature and purpose of the contract and trade practices (CCL art. 60 par. 2). These kinds of obligations are called “ancillary obligations” (Nebenpflicht). Now “ancillary obligation” theory has taken its root both in legal theories and legislations of China. Besides, there are articles on pre-contractual obligations (arts. 42 and 43) and postcontractual obligations (art. 92) in CCL, and contractual obligations are expended further. Generally laying down ancillary obligations, pre-contractual obligations and postcontractual obligations in a statute, perhaps China is the first one in doing so in civil law countries. As these kinds of rules are almost in case laws in other civil law countries.6 A new structure of contractual liabilities In Chinese civil law theories, the concept of “contractual liability” is a point in dispute.7 In this paper, contractual liability presupposes the existence of contractual obligations (include those kind of obligations provided by CCL). Corresponding with the above expansion of contractual obligations, there is a phenomenon in CCL of expansion of contractual liabilities. The phenomenon in CCL is somewhat similar with what Japanese scholars called “expansion of contractual obligations” (keiyaku sekinin no kakutyou),8 but there are still some differences. For example, as the German case law theory of “Contract with Effects Protecting a Third Party,” although there are some introductions about it in China, but some Chinese scholars emphasized the doctrine of “privity of contract.” According to their viewpoints, as a general rule, a contract cannot confer rights arising from it on a third person.9 CCL confirms the doctrine (as can be reflected indirectly from art. 121). On the other hand, some other articles permit a third person having some rights arising from contract. For example, according to art. 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. In this paper, “contractual liability” refers mainly to liability for Culpa in contrahendo, liability for breach of contract and liability for breach of post-contractual obligations (postcontract fault), as being expressed in Figure 1. 6 Greece Civil Code only has a provision on pre-contractual duty. When the Act on the Reform of the Law of Obligations (Schuldrechtsreformgesetz) of Germany entered into force on 1 January 2002, it should be noticed that the appended §241(2) provides “duties arising out of the obligation”, namely “an obligation may require each party to have regard to the other party’s rights, legally protected interests and other interests”. 7 As one viewpoint, contractual liability means liability for breach of contract. See Jianyuan Cui, Studies on contractual liabilities, (1992) Jilin University Publishing House, p.8. As to another viewpoint, contractual liability means liabilities in contract law. See Liming Wang, On liabilities for breach of contract, (1996), Chinese Politic and Law University Publishing House, p.26. 8 See Kenzo Miyamoto, Obligation of care for safety and the expansion of contractual liabilities, (1993), Tokyo, Japan, p.5. 9 Liming Wang, Studies on civil and commercial law, vol.3, (1999), Law Press China, p.429. 124 Front. Law China (2006) 1: 121–152

Front.Law China (2006)1:121-152 125 Pre-contractual obligations Liability for culpa in contrahendo pend Leistungspflicht Liabilities for Contractual obligations breach of “Ancillary obligations'” contract (Nebenpflicht). Contractual liabilities xpend Expend Liability for breach of Post-contractual obligations post-contractual obligations Fig.1 Breach of contract and its liabilities Breach ofcontract Chapter Seven of CCL is named "Liability for Breach of Contract"(arts. 107-122).In Chinese laws,"breach of contract"means "a party fails to perform its obligations under the contract or fails to perform them as contracted"(CCL art.107;GPCL art.111).On one hand,"contractual obligations,"as has been pointed above,is not confined to Leistungspflicht,it also includes ancillary obligations(CCL art.60 par.2).A breach of ancillary obligations may also amount a breach of contract,and may entail liabilities for breach of contract.On the other hand,"breach of contract"concems only to the object aspect of one's act or omission,and does not care about whether ornot the act oromission excused. As to the types of breach of contract,there are a lot of disputes between Chinese scholars. Before the enactment of CCL,the main dispute concerns on whether "anticipatory breach" may be a kind of breach in Chinese law or not.CCL confirms that anticipatory breach is a type of breach of contract(arts.108,94 sent.2). Now the types of breach of contract may be divided into two categories,namely anticipatory breach and actual breach.And anticipatory breach,as can be read out from CCL art.108,includes"explicitly expressing its intention not to perform its obligations under the contract"(anticipatory renunciation of contract)and "indicating by act its intention not to perform its obligations under the contract"(anticipatory disablement of performance).Actual breach,as can be read out from CCL art.107,denotes"failing to perform its obligations under the contract'”and“failing to perform its obligations as contracted.”“Failure to perform an obligation"may be interpreted as including disablement of performance,delay of performance and refusal to perform,the essential characteristic of them (as opposed to anticipatory breach)is that they occur after the time due for performance."Failure to perform an obligation as contracted"may be interpreted as defective performance.Where the per- 10"Breach of contract"in CCL should be distinguished from the words in the common law sense.In the common law sense,a breach of contract is meant a non-performance that is not excused,e.g.under the rules as to frustration.See G.H.Treitel,The Law of Contract(1995),p.746.So a breach of contract in CCL resembles a "non-performance"of a contract in Principles of European Contract Law(PECL)

Breach of contract and its liabilities Breach of contract Chapter Seven of CCL is named “Liability for Breach of Contract” (arts. 107–122). In Chinese laws, “breach of contract” means “a party fails to perform its obligations under the contract or fails to perform them as contracted” (CCL art. 107; GPCL art. 111). On one hand, “contractual obligations,” as has been pointed above, is not confined to Leistungspflicht, it also includes ancillary obligations (CCL art. 60 par. 2). A breach of ancillary obligations may also amount a breach of contract, and may entail liabilities for breach of contract. On the other hand, “breach of contract” concerns only to the object aspect of one’s act or omission, and does not care about whether or not the act or omission excused.10 As to the types of breach of contract, there are a lot of disputes between Chinese scholars. Before the enactment of CCL, the main dispute concerns on whether “anticipatory breach” may be a kind of breach in Chinese law or not. CCL confirms that anticipatory breach is a type of breach of contract (arts. 108, 94 sent. 2). Now the types of breach of contract may be divided into two categories, namely anticipatory breach and actual breach. And anticipatory breach, as can be read out from CCL art. 108, includes “explicitly expressing its intention not to perform its obligations under the contract” (anticipatory renunciation of contract) and “indicating by act its intention not to perform its obligations under the contract” (anticipatory disablement of performance). Actual breach, as can be read out from CCL art. 107, denotes “failing to perform its obligations under the contract” and “failing to perform its obligations as contracted.” “Failure to perform an obligation” may be interpreted as including disablement of performance, delay of performance and refusal to perform, the essential characteristic of them (as opposed to anticipatory breach) is that they occur after the time due for performance. “Failure to perform an obligation as contracted” may be interpreted as defective performance. Where the perFig. 1 10 “Breach of contract” in CCL should be distinguished from the words in the common law sense. In the common law sense, a breach of contract is meant a non-performance that is not excused, e.g. under the rules as to frustration. See G. H. Treitel, The Law of Contract (1995), p.746. So a breach of contract in CCL resembles a “non-performance” of a contract in Principles of European Contract Law (PECL). Front. Law China (2006) 1: 121–152 125