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Public policy

15 January, 2016 - 09:11

This doctrine denotes good customs and public order, meaning that juristic acts must conform to the mainstream moral and ethical standard of the society. Obviously, this refers to the moral and ethical standards generally accepted by, and according with the basic values of, the society. Article 6 of the French Civil Code provides: Statutes relating to public policy and morals may not be derogated from by private agreements. Germany, Japan, and Taiwan also adopt this doctrine in their civil codes. Due to the past influence of the jurisprudence of the former Soviet Union, the term ‘public policy’ is not used in the Chinese Contract Law. Instead, expressions such as ‘public interest’ and ‘social morality’ are used.

In modern society, with the rise of democratic politics, the market economy and individualism, ethics has, to a large extent, become a relative concept. Against this background, the doctrine of public policy incorporates the mainstream of social ethics and moral values into the law enforcement provisions. The doctrine of public policy embodies ethics and moral values that change as the society evolves, as a concrete manifestation of the legal standards of the social ethics and moral values that the citizens are expected to attain.

Against the backdrop of the contemporary separation between morality and law and between natural and positive law, the doctrine of public policy is equivalent to the institutionalisation of moral law into the legal system that plugs the loophole of ‘customs’ as a source of law. It has the drawback of becoming outdated as the society evolves. From the legal perspective, the doctrine of public policy restricts the personal autonomy of achieving personal interest at the expense of social ethics; in the area of tort law, this doctrine expands the scope of protection such that an individual may not be harmed by moral hazard.

Civil acts that are contrary to the doctrine of public policy are legally void. In the field of juristic acts, it restricts the autonomous space of individuals and prohibits any attempt to attain individual achievement by sacrificing social morality. Like the doctrine of good faith, judges use the legal principle of public policy as the social yardstick for adjudicating cases to determine the parties’ rights and obligations. Effectively, this principle introduces extra-legal standards for preservation of social morality and safeguarding public interests.

Case Study 1.5

Judicial application of the doctrine of public policy

In 1963, Mr Huang of Sichuan married Ms Jiang. Huang and Jiang did not have any children and separated for a long time after their marriage. In 1990, their matrimonial house was demolished, and they were assigned another house as compensation. In 1996, Huang cohabited with another woman, Zhang, in a rented apartment. Zhang later gave birth to a son. In early 2000, Huang was diagnosed with cancer. He made a will, bequeathing his housing allowance, provident fund, pension and his 50% interest in the matrimonial home, in the total sum of 60,000 yuan, to Zhang. The will was notarised. Two days later, Huang died. Zhang claimed her interests in the property bequeathed to her under Huang’s will, but in vain. She brought the case to court. It was held that Huang’s will was invalid on the ground of infringing public policy, in that Zhang was a ‘mistress.’ The court ruled that Jiang was entitled to the entire estate of Huang.

Do you think this case was correctly decided?

The core value of this doctrine is to defend the moral and ethical standards of a society. The judge in the above case probably thought that the doctrine of public policy would require him to disallow extramarital sex, and to defeat Zhang’s claim. However, the court’s decision is wrong in that the motive of Huang’s bequest was not to maintain the extramarital affair, but to express gratitude to Zhang for taking care of him. It is submitted that such bequest does not infringe any public policy and should have been upheld. In contrast, the court should have revisited this doctrine in a case where, for example, a married man gives another woman certain property for the purpose of maintaining their extramarital affair.

Self-test 1.4

Chen and Guo are good friends. Recently, Chen has been in financial difficulty. He asks Guo to lend him 50,000 yuan. Guo agrees to see him in a pub. When they met, Guo gives Chen 50,000 yuan, and he signs an IOU, acknowledging the debt. They leave the pub and meet a robber, who asks them to surrender all property. At that moment, Chen says to Guo, ‘I now repay 50,000 yuan to you.’ Seeing this, of course, the robber takes the money right away.

Guo sues Chen for repayment of the loan of 50,000 yuan. In defence, Chen contends that the IOU does not specify the time for repayment of the loan. According to article 62 of the Contract Law, a debtor is obliged to repay at any time upon request by the creditor if the contract does not prescribe the time for repayment. Chen claims that he has already repaid 50,000 yuan to Guo.

Do you think Chen’s defence is meritorious? Why or why not?