Measures aim to curb and punish offences related to harmful contracts

On 13 October, the State Administration for Industry and Commence published the Supervising and Dealing With Contractual Violations Measures. The Measures were made on the basis of article 127 of the PRC Contract Law to fill the legal vacuum created following the abolition of the Investigating Illegal Acts Committed by Means of Contracts Interim Provisions in 2008. With effect from 13 November, the Measures aim to govern three types of offence that jeopardize the national or public interest through the use of contracts, and impose administrative penalties on offenders.

Contractual frauds

The Measures expressly ban contractual frauds by which the parties involved use contracts illegally to cheat others out of property by making false statements or withholding the truth.

These contractual frauds refer to the inducement of others to enter into or falsely execute a contract, fabricating the capacity of a signatory to the contract, stealing or falsely using the name of another party, fabricating the subject matter of the contract or sources of goods or sales channels, disseminating or making use of false information, withholding material facts, concealing actual capacity for performance, maliciously imposing unenforceable contractual terms, fabricating reasons to terminate a contract or providing false guarantees.