Chapter 11: Contracts For Donation | Doing Business with China

Article 185 A donation contract refers to a contract whereby the donator presents gratis its property to the donee, and the donee expresses the acception of the donation.

Article 186 The donator may rescind the donation before transferring of the rights of the donated property.

Where the donation contract is of such nature as for public welfare or moral obligation in providing disaster or poverty relief, or the donation contract is notarized, the provisions of the preceding paragraph shall not be applied.

Article 187 If the donated property needs to go through such formalities as registration according to law, the relevant formalities shall be completed.

Article 188 In case of a donation contract being of such nature as for public welfare or moral obligation in providing disaster or poverty relief, or that the donation contract is notarized, if the donator does not deliver the donated property, the donee may request for the delivery.

Article 189 Where, due to the deliberate intention or gross fault of the donator, destruction or losses are caused to the donated property, the donator shall be liable for damages.

Article 190 The donation may be subject to collateral obligations.

Where the donation is subject to collateral obligations, the donee shall perform the obligations in accordance with the terms of the contract.

Article 191 Where the donated property has defects, the donator shall not bear any liability. In case of a donation subject to collateral obligations, if the donated property has defects, the donator shall bear the same liability as a seller within the limit of the collateral obligations.

Where the donator does not inform of the defects intentionally or insures that there is no defect, thus causing losses to the donee, the donator shall be liable for damages.

Article 192 Where the donee is under any of the following circumstances, the donator may rescind the donation:

seriously infringing upon the donator or his/her close relatives;
not performing the obligation in respect of supporting the donator;
not performing the obligation agreed upon in the donation contract.

The right of the donator to rescission shall be exercised within one year as of the date when he knows or ought to know the rescission reasons.

Article 193 In case of the donee's illegal acts resulting in the death of the donator or the loss of the donator's civil of capacity conduct, the heir or statutory agent of the donator may rescind the donation.

The right to rescission of the heir or statutory agent of the donator shall be exercised within six months as of the date when he knows or ought to know the rescission reasons.

Article 194 Where a person having the right to rescission rescinds the donation, the person may request the donee to return the donated property.

Article 195 Where economic conditions of the donator is strikingly deteriorating, which seriously affects his/her production and business operations or the family life, the donator may no longer perform the donation obligation.

Article 196 A loan contract refers to a contract whereby the borrower raises a loan from the lender, and repays the loan with interest thereof when it becomes due.

Article 197 Loan contracts shall be in written form, except as otherwise agreed upon by natural persons in respect of loans between them.

The contents of a loan contract shall contain such clauses as the category of loans, the kind of currency, the purpose of use, the amount, the interest rate, the term and the method for returning the loan.

Article 198 In concluding a loan contract, the lender may require the borrower to provide a guaranty. The guaranty shall abide by the provisions of the Guaranty Law of the People's Republic of China.

Article 199 In concluding a loan contract, the borrower shall provide with the truthful information about the business activities and financial conditions relating to the loan according to the requirements of the lender.

Article 200 The interest of the loan shall not be deducted from the principal in advance. Where the interest is deducted in advance from the principal, the loan shall be repaid and the amount of the interest calculated according to the actual amount of the loan.

Article 201 Where the lender fails to extend the loan in accordance with the agreed date and amount and causes losses to the borrower, the lender shall compensate for the losses.

Where the borrower fails to accept the loan in accordance with the agreed date and amount, the borrower shall pay the interest according to the agreed date and amoant.

Article 202 The lender may inspect and supervise the use of the loan in accordance with the terms of the contract. The borrower shall provide regularly the relevant financial statements and other materials to the lender in accordance with the terms of the contract.

Article 203 Where the borrower fails to use the loan in accordance with the agreed usage of the loan, the lender may cease in extending the loan, recall the loan ahead of time or rescind the contract.

Article 204 Loan interest rates of the financial institutions conducting loan business shall be determined according to the upper limit and lower limit of loan interest rates stipulated by the People's Bank of China.

Article 205 The borrower shall pay the interest in accordance with the agreed time limit. Where there is no agreement in the contract as to the time limit for payment of interest or such agreement is unclear, nor can it be determined according to the provisions of Article 61 of this Law, the interest shall be paid at the time when the loan is returned for loans under a term of less than one year; as for loans under a term of more than one year, the interest shall be paid at the time when every one full year expires , and if the remaining term is less than one year, the interest thereof shall be paid at the time when the loan is returned.

Article 206 The borrower shall return the loan in accordance with the agreed time limit in the contract. Where there is no agreement in the contract as to the loan term or such agreement is unclear, nor can it be determined according to the provisions of Article 61 of this Law, the borrower may return the loan at any time, and the lender may urge the borrower to return the loan within a reasonable time limit.

Article 207 Where the borrower fails to return the loan in accordance with the agreed time limit, the borrower shall pay overdue interest according to the terms of the contract or the relevant provisions of the State.

Article 208 Where the borrower returns the loan ahead of time, except as otherwise agreed upon between the parties, the interest thereof shall be calculated according to the actual term of the loan.

Article 209 The borrower may apply to the lender for an extension of the loan return term before the loan term expires. If the lender consents, the term may be extended.

Article 210 A loan contract between natural persons shall come into force as of the time when the lender extends the loan.

Article 211 If there is no agreement in a loan contract between natural persons as to the payment of interest or such agreement is unclear, it shall be deemed as non- payment of interest.

If the payment of interest is agreed in a loan contract between natural persons, the loan interest rates shall not violate the provisions of the State on the restriction on loan interest rates.

Article 212 A lease contract refers to a contract whereby the lessor shall deliver the leased property to the lessee for the latter's use or obtaining proceeds through the use, and the lessee pays the rent.

Article 213 The contents of a lease contract shall contain such clauses as the name , quantity, purpose for use, term of the lease, rent as well as time limit and method for its payment, maintenance of the leased property.

Article 214 The term of a lease may not exceed 20 years; in case of a term exceeding 20 years , the exceeding part shall be invalid.

At the expiry of the term of the lease, the parties may extend the lease contract; however, the extended term of the lease agreed upon shall not exceed 20 years as of the date of extending the contract.

Article 215 Where the lease term is above 6 months, the lease contract shall be in written form. If the parties do not conclude it in written form, it shall be deemed an unfixed lease.

Article 216 The lessor shall deliver the leased property to the lessee and keep it being fit for the use according to the terms of the contract during the term of the lease.

Article 217 The lessee shall use the leased property in accordance with the methods agreed upon in the contract. Where there is no agreement in the contract on the methods for using the leased property or such agreement is unclear, nor can it be determined according to the provisions of Article 61 of this Law, the leased property shall be used in a manner in light of its nature.

Article 218 Where the lessee uses the leased property in accordance with the methods agreed upon in the contract or the nature of the leased property and causes losses to the leased property, the lessee shall not bear the liability for damages.

Article 219 Where the lessee uses the leased property not in accordance with the methods agreed upon in the contract or the nature of the leased property and causes losses to the leased property, the lessor may rescind the contract and claim compensation for losses.

Article 220 The lessor shall perform the obligation of maintenance of the leased property, except as otherwise agreed upon by the parties.

Article 221 The lessee may request the lessor to maintain and repair the leased property within a reasonable time limit when the leased property needs maintenance and repair. Where the lessor fails to perform the obligation of maintaining and repairing the leased property, the lessee may maintain it by itself, and the expenses for the maintenance shall be borne by the lessor. Where the maintenance affects the use of the leased property, the rent shall be reduced or the lease term shall be extended correspondingly.

Article 222 The lessee shall keep the leased property in proper storage. In case that improper storage causes destruction of, damage to or lost of the leased property, the lessee shall bear the liability for damages.

Article 223 With the consent of the lessor, the lessee may improve or add other items to the leased property.

Where the lessee improves or adds other items to the leased property without the consent of the lessor, the lessor may request the lessee to restore it to the original conditions or compensate for the losses.

Article 224 With the consent of the lessor, the lessee may sublet the leased property to a third party. In case of subletting by the lessee, the lease contract between the lessee and lessor shall continue to be effective, and the lessee shall compensate for the losses if the third party causes losses to the leased property.

Where the lessee sublets the leased property without the consent of the lessor, the lessor may rescind the contract.

Article 225 The proceeds gained due to possession or use of the leased property shall belong to the lessee, except as otherwise agreed upon by the parties.

Article 226 The lessee shall pay the rent according to the time limit agreed upon in the contract. Where there is no agreement in the contract as to the time limit for payment or such agreement is unclear, nor can it be determined according to the provisions of Article 61 of this Law, the rent shall be paid at the expiry of the lease

term if the lease term is less than one year, or shall be paid at the expiry of every one full year if the lease term is more than one year, the rest of rent shall be paid at the expiry of the lease term if the remaining lease term is less than one year.

Article 227 Where the lessee fails to pay or delays the payment of the rent without justified reasons, the lessor may require it to pay the rent within a reasonable time limit. If the lessee fails to pay the rent according to the time limit, the lessor may rescind the contract.

Article 228 Where a third party claims rights and makes it impossible for the lessee to use or obtain proceeds from the leased property, the lessee may request a reduction of rent or not to pay the rent.

Where rights are claimed by a third party, the lessee shall notify the lessor promptly.

Article 229 In case of a change with regard to the ownership of the leased property, the effectiveness of the contract shall not be affected.

Article 230 If the lessor sells out a leased house, it shall, within a reasonable time limit before the sale, notify the lessee and the lessee shall have the right to priority to buy the leased house on equal conditions.

Article 231 If, due to causes which are not attributable to the lessee, part or all of the leased property is damaged, destroyed or lost, the lessee may request for a reduction of the rent or not to pay the rent. If the damage to or destruction or loss of part or all of the leased property makes it impossible to realise the purpose of the contract, the lessee may rescind the contract.

Article 232 Where there is no agreement between the parties in the contract as to the term of the lease or such agreement is unclear, nor can it be determined according to the provisions of Article 61 of this Law, such lease shall be considered to be an unfixed lease. The parties may rescind the contract at any time, but the lessor shall, at the rescission of the contract, notify the lessee before a reasonable time limit.

Article 233 Where the leased property endangers the safety or health of the lessee, even if the lessee knows the leased property does not meet the quality requirements when concluding the contract, the lessee may rescind the contract at any time.

Article 234 Where the lessee is deceased during the term of a house lease, the persons who live together with the deceased may lease the house in accordance with the original lease contract.

Article 235 The lessee shall return the leased property at the expiry of the lease term. The property returned shall be in conformity with the conditions after use according to the terms of the contract or the nature of the leased property.

Article 236 Where the lessee continues to use the leased property after the expiry of the lease term, and the lessor does not raise objection, the original lease contract shall continue to be effective, but the lease term is not fixed.