Journal of International Commercial Law and Technology Vol.4,Issue 1 (2009) 3.1.3 Hidden Contract Laws Apart from the sources above,there are many"hidden laws"functioning at the same time.The reason to call them "hidden laws",as explained,is because these are something which unlikely or very difficult to be found without a great deal of research as well as a high level of familiarity with the Chinese legal and political system.However, these hidden laws are sometimes very powerful in dealing with individual cases. In a simple term,these laws are 'hiding'in two different places.One is in other legislations or statute in the country and the other is in the vast administrative regulations,rules and ordinance and so on.There are many examples of this kind.For instance,the law of the PRC on Chinese-foreign Equity Joint Ventures(2001)is one of them,in which,many provisions are contract related.12 As to the administrative part,policies,rules,regulations and ordinances from different levels of government are always referred in litigation as a major source of the law. Given the fact that there are more than 30 provincial level governments,hundreds of city councils and thousands of local councils,the volume of regulations and ordinances are considerable.Many of the contract related regulations could be found in this system.Sources of this kind are normally available in Chinese version only and rarely published in the place other then its local jurisdiction.Interestingly,these so-called laws'can be very powerful in dealing with the individual cases.For example,if a dispute arises regarding a manufacturing contract signed between a foreigner and a local Chinese provider in an administrative district,in Zhengzhou city,which is the capital of HeNan province in China.To solve the dispute,the court will need to look at the ordinance published by the authority in the district level,city level,provincial level and national level.Moreover,depending on the nature of the business,the court may also need to look at the laws in other areas such as foreign investment.(Li,2007)Therefore,it is fair to say that the task of finding the hidden laws would be a'mission impossible'for most foreigners,not to mention the big number of conflicts13 among these laws(L.Wang,2008). Thus,as practitioner who is not quite familiar with the system and not sure where to find the law,the task can be enormous.The best way is to get as much information as one can from the counter party of the contract at the contract drafting stage.Of course,seeking independent advice from local practitioners is absolutely crucial. Comparing with the Western way of doing a comprehensive research before signing a contract,in China,getting to know the people who know the law is much more important then getting to know the law by yourself.In the situation where a different point or conflicts in law or regulation is detected,which can be often,take the regulation or law made by a higher level of administrative body or decision-making authority. 3.2 The legislation-what the law looks like UCL comprises of two main types of provisions,namely "the General Provisions"and "the Specific Provisions" 14.The general provisions provide some contract essentials,including formation of the contract,contract effectiveness,performance,modification and termination etc.These essentials are applicable to all the contracts.15 Comparing with the general provisions,the specific provision is a list of specific types of contract,such as contract for sales of good,contract for donation,contract for financial leasing and construction contract etc.16 Reading the provisions while acknowledging the particular cultural,political and economic situation,one would be dazzled by the familiarity of most of the black-letter-rules,but one would be also amazed by some of the unexpected surprises that the law may provide.For example,Article 11 explicitly mentions that e-mails not only as a tool for contract conclusion,but also as a proof of writing.And,it has rules on the liability for misusing confidential information obtained during pre-contractual negotiations,Art.43 UCL.(X.Wang,2003) One of the distinctive characteristics of this UCL is its significant similarity with the UNIDROIT Principles of international commercial contracts,especially the similarities between the UCL General provisions and the UNIDROIT Contract Principles.These similarities include,for example,the application of the rules,where both of these two documents chose to have a broad approach of what contract/s can be governed by the rules. 12 Many contract related articles can be found in Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures(2001),including article 2,14 and 15. 13Article 14 of Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures(2001)provides that'in case of heavy losses,failure of a party to perform its obligations under the contract and the articles of association,or force majeure etc.,the parties to the joint venture may terminate the contract through their consultation and agreement,subject to approval by the examination and approval authorities and to registration with the state's competent department in charge of industry and commerce administration.In cases of losses caused by a breach of contract,the financial responsibility shall be borne by the party that has breached the contract'Article 94 of UCL provides that the parties may dissolve the contract under any of the following circumstances including,for example,force majeure,which does not need any approval by any authorities. 14 Although there is the Supplementary Provision in the Act,this paper is not discussing it because its insignificance of containing one Article only on the effectiveness of the new Contract Law and provides for the abrogation of the three former e UC icle aicle 1. The specific provisions in UCLare from article 130 to article 427,which include 15 different types of specific contract. 16Journal of International Commercial Law and Technology Vol. 4, Issue 1 (2009) 16 3.1.3 Hidden Contract Laws Apart from the sources above, there are many “hidden laws” functioning at the same time. The reason to call them “hidden laws”, as explained, is because these are something which unlikely or very difficult to be found without a great deal of research as well as a high level of familiarity with the Chinese legal and political system. However, these hidden laws are sometimes very powerful in dealing with individual cases. In a simple term, these laws are ‘hiding’ in two different places. One is in other legislations or statute in the country and the other is in the vast administrative regulations, rules and ordinance and so on. There are many examples of this kind. For instance, the law of the PRC on Chinese-foreign Equity Joint Ventures (2001) is one of them, in which, many provisions are contract related.12 As to the administrative part, policies, rules, regulations and ordinances from different levels of government are always referred in litigation as a major source of the law. Given the fact that there are more than 30 provincial level governments, hundreds of city councils and thousands of local councils, the volume of regulations and ordinances are considerable. Many of the contract related regulations could be found in this system. Sources of this kind are normally available in Chinese version only and rarely published in the place other then its local jurisdiction. Interestingly, these ‘so-called laws’ can be very powerful in dealing with the individual cases. For example, if a dispute arises regarding a manufacturing contract signed between a foreigner and a local Chinese provider in an administrative district, in Zhengzhou city, which is the capital of HeNan province in China. To solve the dispute, the court will need to look at the ordinance published by the authority in the district level, city level, provincial level and national level. Moreover, depending on the nature of the business, the court may also need to look at the laws in other areas such as foreign investment.(Li, 2007) Therefore, it is fair to say that the task of finding the hidden laws would be a ‘mission impossible’ for most foreigners, not to mention the big number of conflicts13 among these laws (L. Wang, 2008). Thus, as practitioner who is not quite familiar with the system and not sure where to find the law, the task can be enormous. The best way is to get as much information as one can from the counter party of the contract at the contract drafting stage. Of course, seeking independent advice from local practitioners is absolutely crucial. Comparing with the Western way of doing a comprehensive research before signing a contract, in China, getting to know the people who know the law is much more important then getting to know the law by yourself. In the situation where a different point or conflicts in law or regulation is detected, which can be often, take the regulation or law made by a higher level of administrative body or decision-making authority. 3.2 The legislation – what the law looks like UCL comprises of two main types of provisions, namely “the General Provisions” and “the Specific Provisions” 14. The general provisions provide some contract essentials, including formation of the contract, contract effectiveness, performance, modification and termination etc. These essentials are applicable to all the contracts.15 Comparing with the general provisions, the specific provision is a list of specific types of contract, such as contract for sales of good, contract for donation, contract for financial leasing and construction contract etc.16 Reading the provisions while acknowledging the particular cultural, political and economic situation, one would be dazzled by the familiarity of most of the black-letter-rules, but one would be also amazed by some of the unexpected surprises that the law may provide. For example, Article 11 explicitly mentions that e-mails not only as a tool for contract conclusion, but also as a proof of writing. And, it has rules on the liability for misusing confidential information obtained during pre-contractual negotiations, Art. 43 UCL.(X. Wang, 2003) One of the distinctive characteristics of this UCL is its significant similarity with the UNIDROIT Principles of international commercial contracts, especially the similarities between the UCL General provisions and the UNIDROIT Contract Principles. These similarities include, for example, the application of the rules, where both of these two documents chose to have a broad approach of what contract/s can be governed by the rules. 12 Many contract related articles can be found in Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures (2001), including article 2, 14 and 15. 13 Article 14 of Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures (2001) provides that ‘in case of heavy losses, failure of a party to perform its obligations under the contract and the articles of association, or force majeure etc., the parties to the joint venture may terminate the contract through their consultation and agreement, subject to approval by the examination and approval authorities and to registration with the state's competent department in charge of industry and commerce administration. In cases of losses caused by a breach of contract, the financial responsibility shall be borne by the party that has breached the contract’. Article 94 of UCL provides that the parties may dissolve the contract under any of the following circumstances including, for example, force majeure, which does not need any approval by any authorities. 14 Although there is the Supplementary Provision in the Act, this paper is not discussing it because its insignificance of containing one Article only on the effectiveness of the new Contract Law and provides for the abrogation of the three former Contract Laws. 15 The general provisions in UCL are from article 1 to article 129. 16 The specific provisions in UCL are from article 130 to article 427, which include 15 different types of specific contract