1985.07.25
STATE ADMINISTRATION OF INDUSTRY & COMMERCE
PROVISIONAL REGULATIONS OF THE STATE ADMINISTRATION FOR
INDUSTRY AND COMMERCE ON THE CONFIRMATION AND HANDLING OF INVALID
ECONOMIC CONTRACTS
(Promulgated 25 July 1985 by the State Administration for
Industry and Commerce)
These Regulations are formulated in accordance with the Economic
Contract Law of the People's Republic of China with a view to
accurately confirming and handling invalid economic contracts, in
order to protect the legal rights and interests of the parties
concerned and to maintain social and economic order.
I THE BASIS OF CONFIRMATION OF AN INVALID ECONOMIC CONTRACT
Invalid economic contracts shall, in accordance with the
provisions of Article 7 of the Economic Contract Law, be
confirmed in line with the following aspects:
(1) A principal party to an economic contract shall not be
considered competent if:
(a) the economic contract is signed in the name of a legal
person by a social group or organisation which is not eligible as a
legal person;
(b) the economic contract is signed in the name of an individual
household business operation which has obtained a business
licence without verification of its registration; or
(c) the economic contract is signed by a person whose capacity is
limited State law.
(2) The subject matter of an economic contract shall render the
contract illegal if:
(a) the articles of the economic contract violate State
laws, administrative legislation, policies or plans;
(b) the purpose of the economic contract is the purchase or sale of
goods that are explicitly forbidden by the State, or the contract
involves the sale of goods without a permit, or constitutes conduct
contravening the law or policies;
(c) the economic contract is signed by a party with false
intentions or through such means as coercion or deception; or
(d) a party to the economic contract has evaded the law and brought
losses upon State interests, public interests or the interests of
another person.
(3) An agent's signature shall be invalid if:
(a) a contract is signed by an agent who does not have a power of
attorney or who goes beyond the authorised sphere of representation
or whose power of agency has terminated, and the signature is
not ratified by the represented party;
(b) A contract is signed between an agent on behalf of the
represented party and the agent itself;
(c) a contract is signed between an agent on behalf of the
represented party and another party represented by the agent; or
(d) a contract is signed by an agent who is involved in a
conspiracy with the other party to the contract to harm the
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