5 July, 2012

Legal News & Analysis – Asia Pacific – China – Dispute Resolution

On May 10, 2012, the Supreme People’s Court issued the Interpretation on Laws Applicable to the Trial of Cases Involving Disputes over Sale and Purchase Contracts, which took effect on July 1, 2012. Under the interpretation, if the parties to a transaction fail to enter into a written agreement and one party asserts that a contract was formed based on a delivery or acceptance order, settlement order or a receipt, the People’s Courts are instructed to rule in accordance with the transaction method, transaction custom or other available evidence. If the parties have signed a pre-contract in the form of a subscription order, letter of intent or memorandum of understanding promising to conclude a sale and purchase contract within a specific time period and one party fails to perform, the other party may file a claim in the People’s Courts for damages and an order to terminate the pre-contract. The Interpretation also clarifies the rules applicable to the trial of disputes involving delivery, transfer of title, risk of loss during transport and other trade terms.

The full Chinese text of the interpretation is available here.

For further information, please contact:

Elizabeth Cole, Partner, Orrick