Guangzhou Contract Disputes Lawyer

Under Article 188 of the Civil Code, the statute of limitations for claiming protection of civil rights is three years, calculated from the date the right holder knows or should know that the right has been infringed and the obligor. For contracts involving periodic performance such as rent or installments, the statute of limitations for each obligation is calculated separately from the expiration of its performance period. It is important to preserve evidence of demand to interrupt the statute of limitations.

Under the Civil Code, contracts may be formed in writing, orally, or by other forms. A written form is not required for contract validity except where the law specifically requires it or the parties have agreed otherwise. Even without a written contract, if both parties have actually performed their main obligations and the other party has accepted, the contract is still deemed formed. However, in the event of a dispute, oral contracts face greater difficulties in proving the content of the agreement. It is advisable to supplement evidence such as correspondence records, payment vouchers, and delivery receipts.

Liability for breach of contract is determined by whether the breaching party has failed to perform its contractual obligations or its performance does not conform to the agreement. Common forms of liability include continued performance, remedial measures, compensation for losses, and payment of agreed liquidated damages. If both parties breach the contract, each shall bear its corresponding liability. The amount of compensation for losses shall be equivalent to the losses caused by the breach, including benefits obtainable after performance of the contract, but shall not exceed the losses foreseeable at the time of contracting.

Under the Civil Code, a party may terminate the contract under any of the following circumstances: (1) the purpose of the contract cannot be achieved due to force majeure; (2) before the expiration of the performance period, the other party explicitly indicates by words or conduct that it will not perform the principal obligation; (3) the other party delays performance of the principal obligation and still fails to perform within a reasonable period after being urged; (4) the other party delays performance or has other breaching conduct that makes the purpose of the contract impossible to achieve. Termination requires notice to the other party, and the contract is terminated when the notice reaches the other party.

Liquidated damages clauses are generally valid, but if the agreed liquidated damages are significantly lower than the losses caused, the parties may request the court or arbitration institution to increase them; if the agreed liquidated damages are excessively higher than the losses caused, the parties may request appropriate reduction. In judicial practice, liquidated damages exceeding 30% of actual losses are generally considered excessively high. The court will adjust based on factors such as actual losses, contract performance, and the degree of fault.

A deposit (earnest money (deposit)) is a form of guarantee — if the paying party breaches, it cannot demand return of the deposit; if the receiving party breaches, it shall return twice the deposit. The amount shall not exceed 20% of the contract price. An advance payment (down payment/advance payment) is a prepayment — if the contract is not performed, the advance payment shall be returned, and there is no punitive effect. The legal nature and legal consequences of the two are completely different. Pay close attention to the wording when signing a contract.

The choice depends on the specific circumstances. Negotiation has low cost and preserves relationships, but depends on the willingness of both parties. Arbitration is confidential, one instance final, and professional, but requires an arbitration agreement and has higher fees. Litigation has comprehensive procedural safeguards and two instances, but proceedings are public and take relatively longer. If the contract contains a valid arbitration clause, arbitration is the only option; otherwise, litigation is generally chosen. A lawyer can recommend the most suitable approach based on the specifics of the case.

Under the Civil Code, a civil juristic act performed by one party by means of fraud or duress, causing the other party to act contrary to its true intention, the defrauded or coerced party has the right to request the court or arbitration institution to revoke it. The right of revocation must be exercised within one year from the date when the party knows or should know the grounds for revocation. However, the party claiming fraud or duress bears the burden of proof and needs to provide sufficient evidence.