The newly enacted Property Law refers to various types of contracts, such as contracted management of land, contracts on transfer of the right to use construction land, easement contracts, security contracts, mortgage contracts, contracts on pledge rights, etc. These contracts are in principle governed by the Contract Law, save for the contracts relating to state-owned land, which are subject to the specific laws mentioned in the previous section. In practice, business entities often deal with collective and rural enterprises and we will give a brief account of these issues below.
Article 19 of the Law on Land Contract in Rural Areas provides that land shall be contracted out in accordance with the following procedures:
- a contract-working team shall be elected by the villagers assembly of the collective economic organization concerned;
- the contract-working team shall, in accordance with the provisions of laws and administrative rules and regulations, draw up and announce its contracting plan;
- convening, according to law, the villagers assembly of the collective economic organization concerned to adopt the contracting plan through discussion;
- making known to the public arrangements for the implementation of the contracting plan; and
- concluding the contract.
The contractor of a household contract shall be the peasant household of the collective economic organization concerned. Article 48 of the Law provides that, where the party giving out contracts gives out the contracts for rural land to units or individuals other than the ones of the collective economic organization concerned, the matter shall first be subject to consent by not less than two-thirds of the members of the villagers assembly, or of the villagers’ representatives, of the collective economic organization concerned and it shall be submitted to the township (town) people’s government for approval.
In case of dispute, article 56 provides that, where a party fails to perform the obligations in a contract or the obligations it performs are at variance with the ones agreed upon, it shall, in accordance with the Contract Law, bear responsibility for breach of the contract.