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Li Peng Solicits Public Opinion on Contract Law

Li Peng, chairman of the National People's Congress (NPC) Standing Committee, visited a Beijing district court January 13 to solicit opinions concerning formulation of the country's first unified Contract Law.

On Tuesday some 30 government officials, legal and economic experts, industry leaders, judges at various levels and attorneys expressed their opinions during a seminar held in the Great Hall of the People and a second seminar held January 13 at the Fengtai District Court in southwest Beijing.

The new law will integrate the three sometimes contradictory laws on economic, foreign trade and technology contracts.

The new law will serve as the foundation for the market economy. Various stipulations and major principles in the law have attracted attention nationwide.

Li said the contract legislation should proceed in conjunction with the pace of reform and opening. He said the law should incorporate international conventions and standard practices to promote the continued development of foreign trade.

The NPC chairman said the law should provide solutions for "triangular" and overlapping debts which continue to plague the Chinese economy, as well as protect the economy from the adverse impact of the ongoing financial crisis engulfing most of Asia.

Discussions during the seminars focused mainly on the validity of verbal contracts, and the fine line between unpredictable external changes and normal business risks.

The current draft law only recognizes the validity of written contracts, including fax and e-mail agreements, and the status of verbal contracts must be settled forthwith.

Industry leaders voiced approval for related stipulations and noted the difficulty in verifying verbal contracts. They also noted that the new rule will help to reduce the number of contract disputes.

"Safety should be the priority, but efficiency must not be ignored," according to Jiang Ping, a professor at the University of Politics and Law.

The law should recognize verbal contracts which are commonly used by small businesses, said Jiang.

Gao Hongbin, president of a local court in east China's Zhejiang Province, said that courts have in most cases partially recognized the validity of verbal contracts. He added that it would be inappropriate for the law to make verbal contracts illegal.

Jurists and attorneys suggested detailed additions to address different situations.

With regard to introducing the legal principle of "rebus sic stantibus", legal and economic experts expressed concern about the difference between the overwhelming changes in external circumstances which are beyond the control of debtors and market fluctuations.

They also expressed concern about protecting the legitimate interests of Chinese businesses in the foreign trade arena when the new principle becomes part of the law.

"Rebus sic stantibus" refers to the rights of debtors when unpredictable changes in social and economic situations affect the execution of contracts and negotiations with creditors concerning contract terms, as well as seeking arbitration or court rulings.

Li said the new law should address the risk of major fluctuations in the exchange rate to effectively reduce financial risks.

Participants also discussed whether or not the technology contract law should be separated and allowed to co-exist with the new contract law. They pointed out that the Ministry of Science and Technology has issued comprehensive administrative decrees regarding implementation of the law.

Members of the judiciary welcomed the 60 pages of special provisions contained in the draft law, and noted that judges will have detailed rules to follow when handling related cases.

Various participants questioned the ubiquitous right of government departments to supervise contracts.




Copyright by People's Daily Online
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