An Oral Contract is Enforceable Under Chinese Law

The Contract Law at Article 10 provides that contracts can be formed through a writing, orally or through “other means.” If the conduct of the parties is sufficient to show the parties intended to enter into a contract, then the courts should enforce such contract as a contract formed by “other means.”

First, many of businesspersons believe that an oral contract is not enforceable under Chinese law. This is not true. Article 10 of the Contract Law clearly provides that oral contracts are valid and enforceable.

Second, there is a general trend in the Chinese courts to limit enforcement of oral contracts. The Supreme Court constantly battles against this trend. Lower courts have avoided enforcing contracts arising from conduct, and the Supreme Court is now pushing the courts to expand their jurisdiction to cover such contracts.

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