The Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the General Principles of the Civil Code of the People's Republic of China on Contracts (hereinafter referred to as the Interpretation) was promulgated and implemented on December 5, 2023. In view of the status of the Civil Code, the contract chapter is a large article. On the basis of the relevant provisions of the original Interpretation of the Contract Law I, Interpretation of the Contract Law II, Interpretation of the Guarantee Law, Minutes of the National Conference on the Trial of Civil and Commercial Cases by Courts, and the Guiding Opinions of the Supreme People's Court on Several Issues Concerning the Trial of Civil and Commercial Contract Dispute Cases under the Current Situation, the Supreme People's Court has refined the standards and promulgated and implemented this Interpretation in accordance with the needs of trial practice. Legal practitioners must be included in the research Xi as soon as possible.
The following is a brief introduction to some of the "highlights" of this interpretation based on the content of the answers to reporters' questions from the responsible persons of the Second Civil Division and the Research Office of the Supreme People's Court.
OneDebt preservation system。This Interpretation makes a large number of specific operational provisions on the jurisdiction and parties of subrogation and revocation lawsuits. In particular, it provides a clear response to the relationship between subrogation litigation and arbitration agreements, and the legal effect of the exercise of the right of revocation, which are eagerly awaited by the theoretical and practical circles, and further unifies the standards for the application of law.
IIAppointment contractIn the "Conclusion of Contract" section, this interpretation focuses on the reservation contract. It involves the determination of the reservation contract (including the distinction between the reservation and the transaction intention, the distinction between the reservation and the contract), the determination of the breach of the reservation contract, and the liability for breach of contract for breach of the reservation contract. If the letter of intent, memorandum, etc. meets the requirements for the establishment of the aforesaid reservation contract, it shall also be deemed to constitute an reservation contract. Although there is no written document such as a letter of subscription, a letter of order, a letter of reservation, a letter of intent, a memorandum of understanding, etc., but a deposit has been paid for the conclusion of a contract in the future, it should be considered that a contractual relationship between the parties has been established. This Interpretation stipulates that one of the parties shall be liable for compensation for damages for breach of the reservation contract, but does not stipulate whether the parties can take the remedy of compulsory performance for breach of the reservation contract.
IIIJob Title**This interpretation addresses the more prominent issues in practice, such as when a staff member of a legal person or an unincorporated organization (such as a project manager) enters into a contract in the name of a legal person or an unincorporated organization, when it constitutes a position and when it constitutes a lack of authorityJob Title**The recognition is stipulated.
FourthWhether the set-off has retroactive effect。In view of the two diametrically opposed adjudication viewpoints that have long plagued judicial practice, unify the adjudication scale. This interpretation focuses on the following provisions: First, it provides that set-off takes effect when the notice arrives, which is conducive to resolving the long-standing differences in understanding of whether set-off has retroactive effect in judicial practice. Second, it is clarified that when the creditor's right is insufficient to offset the entire debt, the provisions of the Civil Code on repayment and set-off can be applied by reference, which supplements and improves the legal application rules of set-off. Third, it stipulates the circumstances under which the infringer may not claim set-off, which is conducive to strengthening the protection of the personal rights and interests of natural persons and cracking down on intentional or gross negligence infringement. Fourth, when it is clarified that the claim that has expired the statute of limitations is set off as an active claim, the other party may invoke the statute of limitations defense.
FiveLiquidated damages, depositsThis interpretation makes corresponding adjustments to the application of law.
SixThere is no right to dispose of the validity of the contract。The connection and application of this Interpretation and the Property Rights Section of the Civil Code.
SevenDebt joiningThe coordination between this interpretation and the guarantee contract and the unjust enrichment system provides for the detailed application of debt accession.
EightStandard TermsfromIn terms of the balance between equal protection and inclined protection, the determination of standard clauses and the obligation of the provider of standard clauses to prompt and explain the standard clauses are stipulated.
Nine"Yin and Yang Contract" and "Name and Reality".Contract. With regard to the determination and handling of such contracts in the course of civil and commercial trials, this Interpretation focuses on the nature of the content of contractual rights and obligations.
X**Whether the change constitutes a change of circumstancesThis interpretation makes corresponding adjustments to the application of law. When determining the specific time for modification or termination of the contract, the people's court shall comprehensively consider factors such as the time of major changes in the basic conditions of the contract, the circumstances of the parties' renegotiation, and the losses caused to the parties due to the modification or termination of the contract.
XIWhether the contract is invalid because it violates mandatory provisions or violates public order and good morals。This interpretation makes corresponding adjustments to the application of law. The Interpretation specifically lists five situations in which a breach of mandatory provisions does not affect the validity of a contract.
XIIPreservation system for contractsThe preservation system of the contract has been matched, supplemented and refined. To facilitate the exercise of creditors' rights of subrogation and avoidance as much as possible.
XIIIVariation and assignment of contractsThis Interpretation follows the rules for third parties in litigation in disputes over the assignment of creditor's rights and debts in accordance with Articles 27 to 29 of the original Interpretation I of the Contract Law, and has been revised and improved in accordance with the provisions of the Civil Code. With regard to the protection of the debtor in the assignment of creditor's rights, this interpretation makes it clear that if the debtor performs to the creditor before receiving the notice of assignment, the effect of extinguishing the debt may be produced; After the debtor receives the notice of assignment, the transferor cannot require the debtor to perform on the grounds that the contract for assignment of creditor's rights is invalid; In the case of multiple assignments, if the debtor has already performed to the assignee notified first, the effect of extinguishing the debt will occur. With regard to the protection of the assignee, this interpretation makes it clear that if the assignee directly sues the debtor without notifying the assignee, the assignment of the creditor's rights shall be effective against the debtor when the copy of the complaint is served; After the debtor confirms the true existence of the claim, it can no longer defend on the ground that the claim does not exist. With regard to the situation where multiple assignments are prone to occur in practice, provisions are made for the situation where the debtor has already performed. There is no provision for the debtor's failure to perform.
XIVTermination of rights and obligations under the contractThis interpretation focuses on two aspects: contract termination and set-off.
XVDamages for breach of contractImprove and improve the rules for calculating damages for breach of contract from three levels: First, determine the scope of losses for breach of contract. Second, the rule of foreseeability applies. Third, determine the amount of damages for breach of contract.