Unilateral Contracts are Enforceable Under The Contract Law
June 20, 2009
if a party announces publicly that it will make a payment to any person who completes a certain task, this is a contract enforceable under the contract law.
This provision makes clear that unilateral contracts are enforceable under the Contract Law. This clarifies a difficult issue. The plain wording of the Contract Law suggests that only multi-party contracts fall within the scope of the Contract Law. This Explanation would exclude unilateral contracts of reward or gift. However, such an exclusion is not consistent with other interpretations of the Contract Law and actual judicial practice in China. This clarifies the matter and makes clear that unilateral contracts are valid under Chinese law.
In this regard, note that China follows the German approach to contracts and has no requirement for consideration. Thus, a “naked promise” is enforceable under Chinese law.
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An Oral Contract is Enforceable Under Chinese Law
June 20, 2009
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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