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

Abstract

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

Suggested Citation

Chen, Lei, Relaxations of Contractual Privity and the Need for Third Party Rights in Chinese Contract Law (August 23, 2018). 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., Available at SSRN: https://ssrn.com/abstract=3237311

Lei Chen (Contact Author)

Durham Law School ( email )

Palatine Centre
South Road
Durham, DH1 3LE
United Kingdom

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