The main clauses that should be included in a contract as per China laws.

As per the Article 470 of China Civil Code: The contents of a contract shall be agreed upon by the parties and generally include the following clauses:

（1） The name and address of the parties involved;

（2） Subject matter;

（3） Quantity;

（4） Quality;

（5） Price or remuneration;

（6） Deadline, location, and method of performance;

（7） Liability for breach of contract;

（8） Methods for resolving disputes.

The parties may enter into a contract by referring to model texts of various types of contracts

This article is about the provisions of contract terms and model texts.

Contract terms are specific clauses that express the contractual content agreed upon by the parties to the contract. The contract should

The contract terms included are: (1) the names or addresses of the parties, expressing the content of the contract subject. (2) The subject matter refers to the object to which the rights and obligations of the contract are directed, and it is necessary to clearly state the name of the goods or services to make the subject matter of the contract specific. (3) Quantity is the basic condition for measuring standards, and it should be precise and confirm the measurement method recognized by both parties. (4) Quality is also a condition for measuring standards, and its importance is lower than quantity. (5) Price and remuneration: Price generally refers to the acquisition of goods, while remuneration generally refers to the acquisition of services. Free contracts do not have price and remuneration clauses. (6) The deadline, place, and method of performance. The deadline for performance is the time limit for contract performance, the place of performance is the regional concept for determining the performance of contractual obligations, and the method of contract performance is the specific method of performance. (7) Liability for breach of contract refers to the adverse consequences that a party should bear under contract law after violating the obligations stipulated in the contract. (8) The method of resolving disputes refers to the means and methods that should be used to resolve disputes arising from future contracts.

Case in point

On February 5, 2015, the plaintiff Lin and the defendant Xu signed a “Share Transfer Agreement”, which roughly is: Defendant Xu agrees to acquire all of the plaintiff’s shares (200000 yuan shares) in Defendant Changsha Investment Management Co., Ltd; The plaintiff shall no longer enjoy the rights and obligations of the defendant Changsha Investment Management Co., Ltd. in the transferred portion from the date of its share transfer. The rights and obligations of the plaintiff in the transferred portion of the defendant Changsha Investment Management Co., Ltd. shall be inherited by the defendant Xu based on the acquired shares. Afterwards, due to the two defendants’ failure to complete the procedures for changing shareholders’ business registration as agreed, the plaintiff filed a lawsuit with the court on December 11, 2017, confirming the validity of the “Share Transfer Agreement” signed between the plaintiff and defendant Xu and continuing to perform the agreement. The defendant argued that the transfer agreement involved in the case had no provisions on the subject matter, price, etc. in terms of content, no consideration in terms of effect, and did not have the necessary clauses of a contract. It was not a complete contract and should be deemed that the contract was not established.

Court ruling

The plaintiff and defendant Xu are both shareholders of the defendant Changsha Investment Management Co., Ltd

The Share Transfer Agreement signed on February 5, 2015 represents the true intentions of both parties, and the equity transfer has been approved by the shareholders’ meeting of the defendant Changsha Investment Management Co., Ltd. It also does not violate the mandatory provisions of the company’s articles of association and laws and regulations, and is legal and effective. Both parties shall fully fulfill their respective contractual obligations in accordance with the agreement. According to Article 12 of the Contract Law, “The content of a contract shall be agreed upon by the parties and generally includes the following clauses: (1) the name or address of the parties; (2) the subject matter; (3) quantity; (4) quality.

Lawyer’s review

A contract is a product of mutual agreement between the parties, and its content must be the result of mutual agreement between the parties

Fruit. In this sense, the terms of a contract should be freely determined by the parties without violating prohibitive legal norms, rather than being prescribed by law. The parties may refer to this provision when entering into a contract, or may not enter into a contract in accordance with the prescribed content. The formation and validity of a contract do not solely depend on whether it is entered into in accordance with this provision. Except for the subject matter and quantity, certain clauses that are not specified in the contract but can be determined by legal provisions or industry practices can still be considered valid and effective for the establishment of the contract; On the contrary, even if it does not fall under the provisions of this article, it can still be deemed that the contract is not established if it is not stipulated in the contract based on the necessary clauses required by the special nature of the contract. In this case, although the “Share Transfer Agreement” involved has consideration, the consideration is not an essential clause of the contract and does not affect the formation of the contract. Therefore, the defendant’s defense cannot be established.