Article 153 of China’s Civil Code stipulates that contracts violating laws or mandatory administrative regulations are invalid, except where such laws or regulations do not invalidate the contract. So, what are the exceptional circumstances? Typically, there are three types. The first is operating beyond the business scope. For example, if a company engages in a business not included in its registered scope, this does not invalidate the contract. The second is when mandatory administrative approval was not obtained initially but is later fulfilled. The third involves regulatory behavioral rules. What are regulatory behavioral rules? For instance, if a shop lease contract stipulates that the shop can operate 24 hours a day, but local administrative regulations restrict operating hours to 16 hours, the contract remains valid. I am Attorney Lyu Qiang from Xuzhou. If you have any Chinese legal issues, feel free to contact me. If you like my video, please subscribe to my channel.
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