Application of the General Provisions of the PRC Civil Code

Summary

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• The new Supreme People's Court interpretation covers a wide range of very important of points relating to application of the PRC Civil Code including sources of law, civil capacity, guardianship, issues surrounding agency and civil liability, and the statute of limitations
• It also covers a number of very practical points relating to contractual interpretation
• A key focus is on the entitlement to rescind a contract based on a material misunderstanding
• Another is the impact of an error by a third party messenger or intermediary
• The interpretation also covers concealment as a form of fraud, another ground for rescinding a contract

On March 1, 2022, the Supreme People's Court, Interpretation on Several Issues Concerning the Application of Book One: General Part of the <PRC Civil Code> (the SPC Interpretation) (最高人民法院关于适用《中华人民共和国民法典》总则编若干问题的解释) entered into force. Consisting of nine sections and 39 provisions in total, the SPC Interpretation provides clarification on a number of important issues relating to how the general provisions under the PRC Civil Code (中华人民共和国民法典) (which entered into effect on Jan. 1, 2021) should be applied. Some of the most important issues addressed in the SPC Interpretation include sources of law, civil capacity, guardianship, issues surrounding the validity of contracts, agency and civil liability, and the statute of limitations. There are four rules contained in the SPC Interpretation that have a material bearing on the validity of contractual agreements.

According to Article 147 of the PRC Civil Code, a party is entitled to rescind a contract if the contract is entered into based on a material misunderstanding