Contract Signing and Templates for Domestic Contracts

Author: Cultural Lin
Editor:
Publisher:
Publish Date: 2002-01-01
Features: A plan is an economic target or task that the state issues to enterprises through mandatory indicators, which enterprises must strictly comply with and ensure completion. For mandatory plans, the relevant enterprises shall enter into contracts in accordance with the provisions of relevant laws and administrative regulations. Since enterprises in our country enjoy legal operational autonomy, and the status of enterprises in signing contracts is equal, accepting a mandatory plan does not grant them a special status. They still need to enter into contracts in accordance with the law. When enterprises implement mandatory plans, they have the right to require the organization of relevant government departments to enter into contracts with other enterprises. Once a mandatory plan contract is signed, enterprises must strictly fulfill their respective obligations under the contract. This provision reflects both the principle of equality in the Contract Law and the characteristics of China's socialist market economy, aligning with the requirements of building socialism with Chinese characteristics.
Article 39: When contracts are established using standardized clauses, the party providing the standardized clauses shall determine the rights and obligations between the parties in accordance with the principle of fairness and adopt reasonable measures to draw the other party's attention to clauses that exempt or limit its liability. The other party may request an explanation of such clauses. Standardized clauses are those prepared in advance for repeated use and agreed upon by the parties at the time of contract formation. This article defines the meaning of standardized clauses. A standardized clause refers to a clause prepared in advance for repeated use and not negotiated with the other party at the time of contract formation. Currently, standardized clauses are widely used, such as transportation contracts provided by airlines, insurance terms provided by insurance companies, and standardized clauses for issuing performance guarantees provided by banks, etc. They are numerous and varied. Since standardized clauses are not negotiated with the party entering into the contract in advance, they are inconsistent with the principles of voluntariness and equality in the Contract Law. The existence of standardized clauses is due to the need for service-providing enterprises to simplify procedures and improve efficiency. For example, if an airline negotiated with every passenger before entering into a transportation contract, it would be unnecessary and inconsistent with the requirements of modern efficiency. However, standardized clauses weaken the position of one party, leaving the other party passively choosing to accept or reject them. Therefore, the law imposes heavier responsibilities on the party providing standardized clauses to prevent them from becoming "dominant clauses."
This article of the Contract Law imposes restrictions on the provider of standardized clauses in the following two aspects:
(1) The provider of standardized clauses has the obligation to provide notice and explanation. This obligation is an active duty of the provider, and even if the other party does not request it, the provider should still take the initiative to notify and explain. If the provider fails to fulfill its notice obligation or refuses to explain the standardized clause, the clause shall not be effective.
(2) The provider of standardized clauses shall determine the rights and obligations between the parties in accordance with the principle of fairness. Fairness is a fundamental principle of the Contract Law, and the purpose of standardized clauses is to simplify contract formation, not to grant the provider a privileged position. If standardized clauses do not reflect the principle of fairness, they are also invalid.
Article 40: Standardized clauses are invalid if they meet the circumstances specified in Article 52 and Article 53 of this Law, or if the provider of standardized clauses exempts its own liability, imposes heavier liability on the other party, or excludes the other party's rights. This article, like the previous one, imposes restrictions on the provider of standardized clauses. In the following circumstances, the standardized clause is invalid:
(1) The provider of standardized clauses uses fraud, coercion, or takes advantage of a vulnerable situation to force the other party to accept the clause against its true intentions.
(2) The standardized clause harms the interests of the state, collective, or a third party.
(3) The standardized clause uses a legitimate form to conceal an illegal purpose.
(4) The standardized clause harms the public interest.
(5) The standardized clause violates the mandatory provisions of laws and administrative regulations.
(6) The standardized clause exempts the provider's liability for property damage caused by its intentional or grossly negligent actions.
(7) The standardized clause exempts the provider's liability for personal injury.
(8) The standardized clause exempts the provider's main obligations, such as exempting liability for breach of contract.
(9) The standardized clause excludes the main rights of the other party, such as prohibiting the other party from claiming compensation when the provider breaches the contract.
An invalid standardized clause does not take effect for the other party, even if the contract has been signed. The provider of standardized clauses remains liable for the invalidity of the clause.
Article 41: In case of disputes over the interpretation of standardized clauses, they shall be interpreted in accordance with the common understanding. If there are two or more interpretations, the interpretation that is disadvantageous to the provider of standardized clauses shall prevail. If standardized clauses and non-standardized clauses are inconsistent, non-standardized clauses shall prevail.
This article also imposes restrictions on standardized clauses. The previous provision states that the provider of standardized clauses has the obligation to provide notice and explanation. After explaining the standardized clauses or after the contract is formed, if disputes arise over the standardized clauses, the law stipulates that the interpretation should be unfavorable to the provider of standardized clauses. For example, the provider may be required to provide evidence that the disputed clause is fair, reasonable, and legal. If the provider cannot provide such evidence, the clause shall not be effective. Additionally, if the relevant content of standardized clauses and non-standardized clauses in the same contract is inconsistent, non-standardized clauses shall prevail. This provision is designed to fully protect the interests of the parties and uphold the basic principles of voluntariness, equality, and fairness in contract law, ensuring that contracts are formed on an equal footing.
From a formal perspective, all important contracts must be in written form. The State Council (82) 73 document stipulates that contract management shall be uniformly handled by the Administration for Industry and Commerce. The Administration for Industry and Commerce is responsible for formulating management measures for standardized contract texts and ensuring the organization, deployment, and implementation of related work. Standardized texts uniformly formulated by the Contract Management Department of the Administration for Industry and Commerce are called "uniform texts." The clauses in these texts are divided into standard clauses, optional clauses, and agreed clauses, as they consider various situations and are suitable for contract formation in different scenarios. Texts designed by relevant business departments based on laws, regulations, and departmental characteristics are called "departmental texts." Since business departments are familiar with their respective fields, they are responsible for formulating, printing, distributing, and using departmental texts. Especially for loan contracts, property insurance contracts, transportation contracts, electricity supply contracts, gas supply contracts, and heat supply contracts, which are highly specialized and have special requirements, and involve specific parties such as banks, insurance companies, transportation departments, and power supply and heating units, these contracts can only be formulated, printed, distributed, and used by their respective business departments. These contracts are mostly standardized clauses and must comply with the spirit of Articles 39, 40, and 41 of the Contract Law and be uniformly numbered and filed by the Administration for Industry and Commerce.
Contracts for the purchase and sale of industrial and mining products, agricultural and sideline products, construction and installation contracts, engineering design contracts, engineering exploration contracts, processing and subcontracting contracts, leasing contracts, and storage and custody contracts, etc., are formulated because the parties are not specific, and the contracts involve a wide range. Their text formats are designed, printed, distributed, and used by the Administration for Industry and Commerce, based on the text formats of local Administration for Industry and Commerce offices and after consulting with relevant ministries and bureaus of the State Council. Certain economic activities with special requirements allow parties to use self-formulated or handwritten contracts. This book systematically introduces the standardized texts of the above types of contracts for reference, copying, or reproduction.