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The concept of a contract

15 January, 2016 - 09:11

In traditional Continental civil law system, the two essential elements of a contract are the parties’ intent and the expression of such intent by the parties. Article 1101 of the French Civil Code (Code Civil des Franςais) states: A contract is an agreement by which one or several persons bind themselves, towards one or several others, to transfer, to do or not to do something. This reveals that the traditional civil law approaches the contract law from the perspective of the law of obligations.

The common law jurisdictions, on the other hand, view contract from a different perspective. According to the Encyclopaedia Britannica, a contract is a promise enforceable by law.The making of a contract requires the mutual assent of two or more persons … If one of the parties fails to keep the promise, the other is entitled to legal recourse.

When the common law and Continental civil law definitions of contract are compared, the definition of contract in Continental civil law is more abstract. It is based on expression of the parties’ intent (or translated as expression of will). The common law, on the other hand, defines it from the perspective of enforceability in a court of law. This reflects the pragmatic approach of the common law, a tradition that can also be seen in the common law of tort and other subjects.

The Chinese contract law follows the Continental civil law tradition. According to Article 2 of the Contract Law, a contract is an agreement among natural persons, legal persons or other organizations as equal parties for the establishment, modification of a relationship involving the civil rights and obligations of such entities.

Apart from the term ‘contract,’ you may come across other related terms in Chinese contract law. We explore these briefly below.