China: Brief Introduction Of E-Contract Of PRC Civil Code

Nowadays series of transactions such as online shopping, online communication have become the norm. The "PRC Civil Code" ("Civil Code" will effective on January 1, 2021) have taken in consideration such "new normal" and established several provisions on the conclusion and performance of electronic contracts for the first time.

Conclusion terms

According to Article 469 "The Parties may conclude a contract in writing, orally or in other forms. A written form is a letter of contract, letter, telegram, telex, fax and other forms that can show the contents in a tangible form".

Electronic data exchange, e-mail, etc., which are capable of presenting the contents in a tangible form and can be retrieved and checked at any time, shall be deemed as a written form.

Given the constant presence of electronic data in daily life, the way to conclude a written form contract is no longer restraint to the form of traditional letter of contract, telex or telegram etc. while the use of WeChat or e-mail as a carrier for contracts is on the rise.

The most common question is whether in the event of an economic dispute a WeChat record or email exchange, in which parties have agreed on a subject matter, can be defined as a contract.

In this regard, the Civil Code expanded the definition of the "written form" of the current Contract Law, adding the provision that "Electronic data exchange, e-mail, etc., which are capable of presenting the contents in a tangible form and can be retrieved and checked at any time, shall be deemed as a written form", which can provide clear guidance in practice as to whether such an approach constitutes a contract.

According to Article 491 of the PRC Civil Code "Where a contract is concluded by the Parties in the form of letters or electronic messages and requires the signing of a confirmation letter, the contract is formed when the confirmation letter is signed".

Where the information about commodities or services released by a Party through the internet or other information networks meets the conditions of the offer, the contract is formed when the other Party selects such commodities or services and submits the order successfully, except otherwise agreed by the Parties.

The conclusion of a contract shall comply with the offer and acceptance of the law before it becomes effective.

Firstly, "Where the information about commodities or services released by a Party through the internet or other information networks meets the terms of the offer" of this article refers to the commodity or service information published by a Party shall meet the conditions of the offer, which shall be specific and have the main terms sufficient to establish the contract, such as the subject matter of the contract, quantity, quality, price and other elements.

Secondly, "the contract is formed when the other Party selects such commodities or services and submits the order successfully" indicates that to constitute a valid acceptance, the following two conditions must be met: (i) the selection of the goods or services; and (ii) the order is submitted successfully, then the electronic contract is established.

Performance terms

According to Article 512 of the PRC Civil Code "Where the subject matter of an electronic contract concluded through the internet or other information networks is the delivery of goods and the delivery is made by express delivery and logistics, the time of receipt signed by the consignee shall be the delivery time.

If the subject matter of an electronic contract is the provision of services, the time specified in the generated electronic certificate or practical certificate shall be the time of provision of services; if there is no time specified in the aforementioned certificates or the time specified is inconsistent with the actual time of service provision, the actual time of service provision shall prevail.

If the subject matter of an electronic contract is delivered by means of online transmission, the delivery time shall be the time when the subject matter of the contract enters into a specific system designated by the other Party and can be retrieved and identified. Where the parties to an electronic contract have otherwise agreed on the mode and time of delivery of the commodities or services, such agreement shall prevail.

The conclusion of the contract is the basis for the performance of the contract. Only the contract is actually performed can be deemed as to reach the interests of both Parties and achieve the purpose of the contract.

For example, ordering food on a certain platform, the contract between the two Parties is established from the moment to choose the specific merchant, food and delivery time to the moment the order is successfully submitted. After the delivery by the Courier and upon the buyer's receipt, the contractual obligations of the two Parties are fulfilled.

It should be noted that this provision stipulates that the delivery time of the subject matter of the electronic contract concluded through the internet and other networks shall be the time of the receiver's signature, according to Article 604 of "Civil Code", the risk of damage to or loss of the subject matter shall be borne by the seller before delivery and by the buyer after delivery, unless otherwise provided by law or agreed by the Parties.

Under the online shopping scenario, the "delivery" means that the risk of damage and loss of online shopping goods shall be borne by the merchants before the goods are signed for acceptance, and the risks after signing for the goods shall be borne by the consumers.

Meanwhile, it is not difficult to see from the above provisions that electronic contract and paper contract have been in the same legal status, but further separate provisions have been made in defining the time of conclusion and performance of the electronical contracts.

The Civil Code in the regulation of the terms of the electronic contract is the clearance of its legal status, in case of practical matters related to the electronic contract, we will also need to consider with the related special laws such as the E-Commerce Law or Electronic Signature Law in view of the case for further analysis.

At the same time since the civil code will take effect at the beginning of next year, we do believe that the judicial explanation of key issues of Civil Code will also be published and we will introduce accordingly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.