Sales contract, Civil Code of PRC

Sales contract is one of the most important legal documents we use in daily business, and settlement of disputes arising from sales contract is what people frequently look for. Hereblow, I extract the laws of sales contract as written in China Civil Code.:

Article 595 A sales contract is a contract under which a seller transfers his ownership over the subject matter to a buyer who pays the price in return.
Article 596 A sales contract generally contains clauses specifying the name, quantity, quality, and price of the subject matter, the time period, place, and method of performance, the packaging, the standard and methods for inspection, the mode of settlement, the language used in the contract, the validity thereof, and the like. 111
Article 597 If the ownership of a subject matter is unable to be transferred owing to the fact that the seller fails to obtain the right of disposal, the buyer may rescind the contract and request the seller to bear default liability. Where there are laws, administrative regulations prohibiting or restricting the transfer of a subject matter, such provisions shall be followed.
Article 598A seller shall perform its obligation of delivering the subject matter or the documents for taking delivery thereof, and transferring the ownership over the subject matter to the buyer.
Article 599A seller shall deliver the relevant certificates and information other than the documents for taking delivery of the subject matter to the buyer in accordance with the contract or the course of dealing.
Article 600Where a subject matter to be sold involves intellectual property rights, unless otherwise provided by law or agreed by the parties, the intellectual property rights thereof does not belong to the buyer.
Article 601 A seller shall deliver the subject matter at a time as agreed in the contract. Where a time period for delivery is stipulated in the contract, the seller may deliver the subject matter at any time within such period.
Article 602Where there is no agreement between the parties on the time period for delivery or the agreement is unclear, the provisions of Article 510 and Subparagraph (4) of Article 511 of this Code shall be applied.
Article 603 A seller shall deliver the subject matter at the agreed place of delivery. Where there is no agreement between the parties on the place of delivery or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the following provisions shall be applied:(1) where the subject matter needs to be transported, the seller shall consign it to the first carrier for its delivery to the buyer; and(2) where the subject matter does not need to be transported, if the seller and the buyer know the location of the subject matter when they conclude the contract, the seller shall deliver the subject matter at the said location; if the location of the subject matter is unknown, the seller shall deliver the subject matter at the seller’s place of business at the time when the contract is concluded.
Article 604 The risks of destruction, damage, or loss of the subject matter shall be borne by the seller prior to the delivery and by the buyer after the delivery, unless otherwise provided by law or agreed by the parties.
Article 605Where a subject matter fails to be delivered within the agreed time limit owing to the buyer’s reason, the buyer shall bear the risks of destruction, damage, or loss of the subject matter from the time he breaches the agreement.
Article 606 Where a seller sells a subject matter en route that has been consigned to a carrier for transport, unless otherwise aged by the parties, the risks of destruction, damage, or loss of the subject matter shall be borne by the buyer from the time when the contract is formed.
Article 607 A buyer shall bear the risks of destruction, damage, or loss of the subject matter when the seller has transported the subject matter to the place designated by the buyer and delivered to the carrier in accordance with the agreement. Where there is no agreement between the parties on the place of delivery or the agreement is unclear, if the subject matter needs to be transported according to Subparagraph (1) of the second paragraph of Article 603 of this Code, the buyer shall bear the risks of destruction, damage, or loss of the subject matter when the seller consigns the subject matter to the first carrier for transport.
Article 608 Where a seller has placed the subject matter at the place of delivery in accordance with the agreement or the provisions of Subparagraph (2) of the second paragraph of Article 603 of this Code, if the buyer fails to take delivery thereof in default, the risks of destruction, damage, or loss of the subject matter shall be borne by the buyer from the time the buyer defaults.
Article 609 A seller’s failure to deliver the documents and information of the subject mattering accordance with the agreement does not affect the shift of the risks of destruction, damage, or loss of the subject matter.
Article 610 Where a subject matter fails to meet the quality requirements so that the purpose of the contract cannot be achieved, the buyer may refuse to accept the subject matter or may rescind the contract. Where the buyer refuses to accept the subject matter or rescind the contract, the risks of destruction, damage, or loss of the subject matter shall be borne by the seller.
Article 611 Where a seller’s performance is not in conformity with the agreement, the assumption of the risks of destruction, damage, or loss of the subject matter by the buyer does not affect the buyer’s right to request the seller to bear default liability.
Article 612 A seller has an obligation to guarantee that no third person has any right over the subject matter delivered, unless otherwise provided by law.
Article 613 Where, at the time a contract is concluded, the buyer knows or should have known that a third person has a right over the subject matter of the contract, the seller shall not assume the obligation provided in the preceding Article.
Article 614 Where a buyer has a definite evidence to prove that a third person has a right over the subject matter, he may suspend payment there for, unless the seller has provided an appropriate bond.
Article 615 A seller shall deliver the subject matter in conformity with the quality requirements as agreed by the parties. Where the seller provides quality specifications of the subject matter, the subject matter delivered shall conform to the specified quality requirements.
Article 616 Where there is no agreement between the parties on the quality requirements of the subject matter or the agreement is unclear, if the quality requirements cannot be determined according to the provisions of Article 510 of this Code, the provisions of Subparagraph (1) of Article 511 of this Code shall be applied.
Article 617 Where a subject matter delivered by the seller fails to meet the quality requirements, the buyer may request the seller to bear default liability in accordance with the provisions of Article 582 to 584 of this Code.
Article 618 Where the parties agree to alleviate or exempt the seller’s liability for the defects of the subject matter, if the seller, intentionally or by gross negligence, fails to inform the buyer about the defect of the subject matter, he has no right to claim alleviation or exemption of the liability.
Article 619 A seller shall deliver the subject matter in compliance with the packaging method as agreed in the contract. Where there is no agreement between the parties on the packaging method or the agreement is unclear, if the packing method cannot be determined according to the provisions of Article 510 of this Code, the subject matter shall be packed in a general way, or, in the absence of a general way, in a manner sufficient to protect the subject matter and conducive to saving resources and protecting the ecological environment.

Article 620 After a buyer receives the subject matter, he shall inspect it within the agreed period for inspection. If there is no agreed period for inspection, the buyer shall inspect it in a timely manner.

Article 621 Where the parties have agreed on a period for inspection, the buyer shall, within the period for inspection, notify the seller of any inconformity of the subject matter with the agreed quantity or quality. If notice is not given to the seller owing to the buyer’s indolence, the subject matter is deemed to be in conformity with the agreed quantity or quality. Where the parties have not agreed on a period for inspection, the buyer shall notify the seller of any inconformity of the subject matter with the agreed quantity or quality within a reasonable period of time after he discovers or should have discovered the inconformity. Where the buyer fails to notify the seller within reasonable period of time or within two years after he takes delivery of the subject matter, the subject matter shall be deemed to be in conformity with the agreed quantity or quality, except that where there is a warranty period within which the quality of the subject matter is guaranteed, the warranty period shall be applied. Where a seller knows or should have known that the subject matter delivered does not conform to the agreement, the buyer is not subject to the time limit for notification as provided in the preceding two paragraphs.
Article 622 Where a period for inspection agreed by the parties is excessively short, and it is difficult for the buyer to complete a comprehensive inspection within such a period by virtue of the nature of the subject matter and in accordance with the course of dealing, such period shall be deemed only as a period for the buyer to raise objections to the patent defects of the subject matter. Where an agreed period for inspection or a warranty period for quality guarantees shorter than the period provided by the relevant laws and administrative regulations, the latter shall prevail.
Article 623 Where the parties have not agreed on an inspection period, and the buyer has signed a delivery note, confirmation slip, or the like document on which the quantity, model, and specifications of the subject matter are stated, the buyer shall be presumed to have inspected the quantity and the patent defects of the subject matter, unless there is sufficient evidence to overturn such a presumption.
Article 624 Where a seller delivers a subject matter to a third person according to the 115instructions given by the buyer, if the inspection standard agreed between the seller and the buyer are inconsistent with that agreed between the buyer and the third person, the inspection standard agreed between the seller and the buyer shall prevail.
Article 625 Where, in accordance with the provisions of laws and administrative regulations or as agreed by the parties, the subject matter shall be recycled after expiration of its valid service life, the seller has the obligation to recycle the subject matter by himself or by an authorized third person.
Article 626 A buyer shall make payment in accordance with the agreed amount and method of payment. where there is no agreement between the parties on the amount of price or the method of payment, or the agreement is unclear, the provisions of Article 510 and Subparagraph (2) and (5) of Article 511 of this Code shall be applied.
Article 627 A buyer shall make payment at the place agreed in the contract. Where there is no agreement between the parties on the place of payment, or the agreement is unclear, if the place cannot be determined in accordance with the provisions of Article 510 of this Code, the buyer shall make the payment at the seller’s place of business, except that payment shall be made at the place where the subject matter or the document forsaking delivery thereof is delivered if the payment is conditioned upon the delivery of the subject matter.
Article 628 A buyer shall make payment at the time agreed in the contract. Where there is no agreement between the parties on the time for payment, or the agreement is unclear, if the time for payment cannot be determined according to the provisions of
Article 510 of this Code, the buyer shall make payment at the same time as it receives the subject matter or the document for taking delivery thereof.
Article 629 Where the amount of the subject matter delivered by a seller exceeds the agreed amount, the buyer may accept or refuse to accept the excessive part. Where the buyer accepts the excessive part, it shall pay for it at the price agreed in the contract. If the buyer refuses to accept the excessive part, he shall notify the seller in a timely manner.
Article 630 Any proceeds accrued from the subject matter before delivery shall belong to the seller and any proceeds accrued from the subject matter after delivery shall belong tithe buyer, unless otherwise agreed by the parties.
Article 631 Where a contract is rescinded due to the inconformity of the principal subject matter with the agreed requirements, the effect of the rescission shall be effective against the accessory subject matter. Where a contract is rescinded due to the 116inconformity of the accessory subject matter with the agreed requirements, the effect of the rescission shall be effective against the principal subject matter.
Article 632 Where the object of a contract is composed of several subject matters, if one of them fails to conform to the requirements agreed in the contract, the buyer may rescind the part of the contract in connection with that subject matter. However, where separation of the said subject matter from the other subject matters is to markedly harm the value of the subject matters of the contract, the buyer may rescind the contract in connection with the multiple subject matters concerned.
Article 633 Where the subject matters are to be delivered by installment, if a seller fails to deliver one lot of the subject matters, or has delivered the lot in a manner not inconformity with the agreement, so that the purpose of the contract in connection with the said lot cannot be achieved, the buyer may rescind the part of the contract in connection with the said lot. Where a seller fails to deliver one lot of the subject matters, or delivered the lotion a manner not in conformity with the agreement, so that the subsequent delivery of the remaining lots cannot achieve the purpose of the contract, the buyer may rescind the part of the contract in connection with the said lot and the remaining lots. Where a buyer has rescinded a part of the contract in connection with one lot of the subject matters, if the sand lot and any other lot are interdependent on each other, the buyer may rescind the contract in connection with all the lots disregarding whether they have been delivered or not.
Article 634 Where a buyer under an installment contract fails to make payment and the unpaid amount reaches one-fifth of the total price, if the buyer still fails to pay the due installment amount within a reasonable period of time after being demanded, the seller may request the buyer to pay the total sum or he may rescind the contract. The seller who rescinds the contract may request the buyer to pay a fee for these of the subject matter.
Article 635 The parties to a sale by sample shall seal up the sample and may make specifications of its quality. The subject matter delivered by the seller shall be identical in quality with the sample and its specifications.
Article 636 Where a buyer to a sale by sample is unaware of the sample’s hidden defects, even if the subject matter delivered is identical with the sample, the quality of the subject matter delivered by the seller shall still conform to the general standard for the same category of goods. 117
Article 637 The parties to a sale on trial use may agree on a period for trial use of the subject matter. Where there is no agreement between the parties on the period for trial use or the agreement is unclear, if the period for trial use cannot be determined according tithe provisions of Article 510 of this Code, it shall be determined by the seller.
Article 638 A buyer to a sale on trial use may purchase or refuse to purchase the subject matter within the period for trial use. Where, upon expiration of the period for trial use, the buyer makes no indication as to whether to purchase it or not, the buyer is deemed to have purchased the subject matter. If a buyer to a sale on trial use has, within the period for the trial use, already made partial payment or has sold, leased, created a security interest in the subject matter, the buyer is deemed to have agreed to purchase it.
Article 639 Where there is no agreement between the parties to a sale on trial use on the fee for the use of the subject matter, or the agreement is unclear, the seller has no right to request the buyer to pay such fee.
Article 640 The risks of destruction, damage, or loss of the subject matter shall be borne byte seller within the period for the trial use.
Article 641 The parties may agree in a sales contract that the seller retains the ownership of the subject matter if the buyer fails to pay the price or perform other obligations. The ownership of the subject matter retained by a seller, without being registered, shall not be asserted against a bona fide third.
Article 642 Where the parties agree that the seller shall retain the ownership of the subject matter of the contract, unless otherwise agreed by the parties, the seller has the right to take back the subject matter if the buyer falls under any of the following circumstances before such ownership is transferred and losses are thus caused to the seller:(1) the buyer fails to make payment in accordance with the contract, and fails today it within a reasonable period of time after being demanded;(2) the buyer fails to fulfill the specific conditions in accordance with the contract; or(3) the buyer sells, pledges, or otherwise improperly disposes of the subjectmatter.The seller may negotiate with the buyer to take back the subject matter. Where such negotiation fails, the procedures for enforcement of security interests may be 118applied mutatis mutandis.
Article 643 After a seller has taken back the subject matter according to the first paragraph of the preceding
Article, the buyer may request to redeem the subject matter if he eliminates the cause for the seller’s retrieving of the subject matter within reasonable period of redemption agreed by the parties or set by the seller. Where a buyer does not redeem the subject matter within the redemption period, the seller may sell the subject matter to a third person at a reasonable price. After deducting from the sale proceeds the amount unpaid by the buyer and the necessary expenses, any balance shall be returned to the buyer; if the sale proceeds are insufficient to cover the unpaid amount and the other necessary expenses, the deficiency shall be paid by the buyer.
Article 644 The rights and obligations of the parties to a sale through bidding, as well as the procedures for the bidding, shall be governed by the provisions of the relevant laws and administrative regulations.
Article 645 The rights and obligations of the parties to an auction, as well as the procedures of the auction, shall be governed by the provisions of the relevant laws and administrative regulations.
Article 646 Where there are provisions of laws governing other non-gratuitous contracts, such provisions shall be followed. In an absence of such a provision, the relevant provisions on sales contracts shall be applied mutatis mutandis.
Article 647 Where the parties agree to transfer the ownership of the subject matter by barter trade, the relevant provisions on sales contracts shall be applied mutatis mutandis.

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