Relaxations of Contractual Privity and the Need for Third Party Rights in Chinese Contract Law
In Mindy Chen-Wishart, Alexander Loke, and Stefan Vogenauer (eds), Studies in the Contract Laws of Asia II: Formation and Third Party Beneficiaries (Oxford University Press, 2018), Chapter 3.
19 Pages Posted: 28 Aug 2018 Last revised: 13 Apr 2020
Date Written: August 23, 2018
This chapter examines the position of third party beneficiaries in Chinese law. Article 64 of the Chinese Contract Law states that where a contract for the benefit of a third party is breached, the debtor is liable to the creditor. The author regards this as leaving unanswered the question of whether the third party has a right of direct action against the debtor. One view regards the third party as having the right to sue for the benefit although this right was ultimately excluded from the law. Another view, supported by the Supreme People’s Court, is that Article 64 does not provide a right of action for a third party and merely prescribes performance in ‘incidental’ third party contracts. The third view is that there is a third party right of action in cases of ‘genuine’ third party contracts but courts are unlikely to recognize a third party action where the contract merely purports to confer a benefit on the third party.
Keywords: Chinese law, Third party rights
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