Journal of International Commercial Law and Technology Vol.4,Issue 1 (2009) the supply and demand were all strictly decided by the government,and the entire economy was self-reliance and there was no necessity to have establish law during that period of time(M.Zhang,2006). With the development of the nation,especially the changing culture in trade,the lack of specialised laws in the area of contract started to show its inconvenience and complications,which required a more operable and clearer instruction from the legislature.Against this background,in 1981,the National People's Congress passed the Economic Contracts Law of PRC.Moreover,two other important Laws were made consequently to govern some special contracts such as contracts with foreign interests and technology transaction contracts.The two laws were the Law of the PRC on Economic Contracts Involving Foreign Interests and the Law of the PRC on Technology Contracts. The purpose of the Law of the PRC on Economic Contracts Involving Foreign Interests was to promote foreign trade and investment.It therefore drawn upon some"Western notions of freedom of contract and party autonomy."(Potter,1992)Moreover,it specified that international treaties and practices were applicable to matters not covered by Chinese law,with the exception of PRC reservation.I However,at the meantime,the other two PRC contract related laws still retained many socialist vestiges,such as the sanctity of State ownership and the instrumental view of law.(F.Chen,2001) Development of domestic economy and the international trend of globalization required China to open up its market further and to provide some more sensible laws in the area of contract.Other elements were adding the necessity such as the inconsistency among these three pieces legislation as well as the overlapping contents. Responding to these problems,a decision was made by the State Council to do a substantial reform of the law governs the area of contract.As the achievement of this initiative,in 1999,the PRC enacted the Uniform Contract Law(UCL).The UCL was passed for the purpose of"protecting the legitimate rights and interests of the parties to contracts,maintaining the socio-economic order and promoting the socialist modernization."2 It was believed that this promulgation of the UCL was especially important to China at the time because of China's then desire to join the World Trade Organization (WTO)(F.Chen,2001).This new law also invalidated of those three laws simultaneously.3 Generally speaking,The UCL gives parties more freedom and flexibility in their contractual relations than existed prior to this enactment(Hitchingham,2000).It also demonstrated the China's willingness to open its legal system to foreign influences and to receive inspirations from foreign laws.4 To provide a comprehensive understanding of this law and its implications to trading with China,some specific features of this piece of legislation were discussed in next part of this paper by comparing with the law of contract in the Common law tradition as well as UNIDROIT 2004 3 The PRC Contract Law and its implications to trade Structurally,the UCL is divided into three parts-General Provisions,Specific Provisions and Supplementary Provisions-with 23 Chapters featuring 428 Articles.The first part-General Provisions-has 8 Chapters:General Provisions;Conclusion of Contracts;Effectiveness of Contracts;Performance of Contracts;Modification and Assignment of Contracts;Termination of the Rights and Obligations of Contracts;Liability for Breach of Contracts,Miscellaneous Provisions.The second part-Specific Provisions-contains 15 Chapters dealing with 15 types of contract:Sales,Supply and Use of Electricity,Water,Gas or Heating;Donation;Loans,Lease;Financial Lease;Hired Works;Construction Projects,Transport,Technology;Storage;Warehousing;Mandate;Commission Agency;Intermediation.The Supplementary Provisions contain one Article on the effectiveness of the new Contract Law and provides for the abrogation of the three former Contract Laws. In drafting the new Contract Law,the Chinese legislators referred extensively to the UNIDROIT Principles of International Commercial Contracts.5 Many Articles of the UCL,in particular those in the chapter on General Provisions,are similar in nature to the UNIDROIT Principles in Contract Law.Moreover,as mentioned above,the UCL also includes a set of specific provisions,which aims to provide a more practical guideline to the contract issues in specific areas. Article 142,the Law of the PRC on Economic Contracts Involving Foreign Interests 2 UCL,art.1(PRC). 3 UCL,art.428(PRC). 4 Accordingly,UCL was firstly drafted by scholars familiar with the Civil Law system and then was amended by scholars from Common Law study background,many international conventions was heavily referred to as well,which was to maximise the capacity of this contract law to the vast cases coming from the commercial reality.The legal principles that Chinese legislators referred to including the Principles of International Commercial Contracts drafted by the International Institute for the Unification of Private Law (UNIDROIT Principles),the United Nations Convention for the International Sale of Goods (CISG),and other foreign legal standards.See for example,James C.Hitchingham,Stepping Up to the Needs of the International Market Place:An Analysis of the 1999 "Uniform"Contract Law of the People's Republic of China,1 Asian- Pacific Law Policy Journal 8:4(2000). Here is the previous version of UNIDROIT,which was published in 1994. 13Journal of International Commercial Law and Technology Vol. 4, Issue 1 (2009) 13 the supply and demand were all strictly decided by the government; and the entire economy was self-reliance and there was no necessity to have establish law during that period of time (M. Zhang, 2006 ). With the development of the nation, especially the changing culture in trade, the lack of specialised laws in the area of contract started to show its inconvenience and complications, which required a more operable and clearer instruction from the legislature. Against this background, in 1981, the National People's Congress passed the Economic Contracts Law of PRC. Moreover, two other important Laws were made consequently to govern some special contracts such as contracts with foreign interests and technology transaction contracts. The two laws were the Law of the PRC on Economic Contracts Involving Foreign Interests and the Law of the PRC on Technology Contracts. The purpose of the Law of the PRC on Economic Contracts Involving Foreign Interests was to promote foreign trade and investment. It therefore drawn upon some “Western notions of freedom of contract and party autonomy.”(Potter, 1992) Moreover, it specified that international treaties and practices were applicable to matters not covered by Chinese law, with the exception of PRC reservation. 1 However, at the meantime, the other two PRC contract related laws still retained many socialist vestiges, such as the sanctity of State ownership and the instrumental view of law.(F. Chen, 2001) Development of domestic economy and the international trend of globalization required China to open up its market further and to provide some more sensible laws in the area of contract. Other elements were adding the necessity such as the inconsistency among these three pieces legislation as well as the overlapping contents. Responding to these problems, a decision was made by the State Council to do a substantial reform of the law governs the area of contract. As the achievement of this initiative, in 1999, the PRC enacted the Uniform Contract Law (UCL). The UCL was passed for the purpose of "protecting the legitimate rights and interests of the parties to contracts, maintaining the socio-economic order and promoting the socialist modernization."2 It was believed that this promulgation of the UCL was especially important to China at the time because of China's then desire to join the World Trade Organization (WTO) (F. Chen, 2001). This new law also invalidated of those three laws simultaneously.3 Generally speaking, The UCL gives parties more freedom and flexibility in their contractual relations than existed prior to this enactment (Hitchingham, 2000). It also demonstrated the China’s willingness to open its legal system to foreign influences and to receive inspirations from foreign laws.4 To provide a comprehensive understanding of this law and its implications to trading with China, some specific features of this piece of legislation were discussed in next part of this paper by comparing with the law of contract in the Common law tradition as well as UNIDROIT 2004. 3 The PRC Contract Law and its implications to trade Structurally, the UCL is divided into three parts - General Provisions, Specific Provisions and Supplementary Provisions - with 23 Chapters featuring 428 Articles. The first part - General Provisions - has 8 Chapters: General Provisions; Conclusion of Contracts; Effectiveness of Contracts; Performance of Contracts; Modification and Assignment of Contracts; Termination of the Rights and Obligations of Contracts; Liability for Breach of Contracts; Miscellaneous Provisions. The second part - Specific Provisions - contains 15 Chapters dealing with 15 types of contract: Sales; Supply and Use of Electricity, Water, Gas or Heating; Donation; Loans; Lease; Financial Lease; Hired Works; Construction Projects; Transport; Technology; Storage; Warehousing; Mandate; Commission Agency; Intermediation. The Supplementary Provisions contain one Article on the effectiveness of the new Contract Law and provides for the abrogation of the three former Contract Laws. In drafting the new Contract Law, the Chinese legislators referred extensively to the UNIDROIT Principles of International Commercial Contracts.5 Many Articles of the UCL, in particular those in the chapter on General Provisions, are similar in nature to the UNIDROIT Principles in Contract Law. Moreover, as mentioned above, the UCL also includes a set of specific provisions, which aims to provide a more practical guideline to the contract issues in specific areas. 1 Article 142, the Law of the PRC on Economic Contracts Involving Foreign Interests 2 UCL, art. 1 (PRC). 3 UCL, art. 428 (PRC). 4 Accordingly, UCL was firstly drafted by scholars familiar with the Civil Law system and then was amended by scholars from Common Law study background, many international conventions was heavily referred to as well, which was to maximise the capacity of this contract law to the vast cases coming from the commercial reality. The legal principles that Chinese legislators referred to including the Principles of International Commercial Contracts drafted by the International Institute for the Unification of Private Law (UNIDROIT Principles), the United Nations Convention for the International Sale of Goods (CISG), and other foreign legal standards. See for example, James C. Hitchingham, Stepping Up to the Needs of the International Market Place: An Analysis of the 1999 "Uniform" Contract Law of the People's Republic of China, 1 Asian￾Pacific Law & Policy Journal 8: 4 (2000). 5 Here is the previous version of UNIDROIT, which was published in 1994