Sales contracts dominate daily business life. In China their legal basis is mainly the PRC Contract Law of 1999. To further clarify legal issues arising out of sales contracts, the Supreme People’s Court of the People’s Republic of China (“SPC”) has issued the Interpretations on the Application of Law in Disputed Sales Contract Cases (“Interpretations”), which became effective on 1 July 2012. Whereas former interpretations by the SPC covered various aspects of the PRC Contract Law, this is the first time that the SPC has focused exclusively on sales contracts. The Interpretations are comprehensive and cover six chapters and 45 articles. Due to the power of the SPC to issue generally binding regulations and interpretations, they are binding for all courts in China and will also influence application of the PRC Contract Law by domestic and international arbitration institutions.
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