CONTRACT LAW OF THE PEOPLE'S REPUBLIC OF CHINA (2)

Article 201 Remedies in Case of Failure to Make Loan Amount Available Or Failure to Draw Down Where the lender failed to make the loan amount available on the prescribed date and in the prescribed amount, thereby causing loss to the borrower, it shall pay damages. Where the borrower failed to draw down on the prescribed date and in the prescribed amount, it shall nevertheless pay the interest on the prescribed date and in the prescribed amount.

Article 202 Lender Entitled to Monitor Use of Proceeds The lender may examine and monitor the application of the proceeds in accordance with the contract. The borrower shall periodically provide the lender with materials such as related financial and accounting reports, etc. in accordance with the contract.

Article 203 Lender's Remedies in Case of Borrower's Misuse of Proceeds Where the borrower fails to use the proceeds for the prescribed purpose, the lender may withhold funding, call the loan, or terminate the contract.

Article 204 Minimum and Maximum Interest Rates The interest rate on the loan provided by a financial institution engaged in lending operation shall be prescribed between the minimum and maximum rates mandated by the People's Bank of China.

Article 205 Time of Interest Payment The borrower shall pay the interest at the prescribed time. Where the time of interest payment was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, if the loan term is less than one year, the interest shall be paid together with the principal at the time of repayment; if the loan term is one year or longer, the interest shall be paid at the end of each annual period, and where the remaining period is less than one year, the interest shall be paid together with the principal at the time of repayment.

Article 206 Time of Principal Repayment The borrower shall repay the principal at the prescribed time. Where the time of repayment was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the borrower may repay at any time; and the lender may demand repayment from the borrower within a reasonable time.

Article 207 Delayed Repayment Interest Where the borrower failed to repay the loan at the prescribed time, it shall pay delayed repayment interest in accordance with the contract or the relevant stipulations of the state.

Article 208 Calculation of Interest in Case of Prepayment Where the borrower prepays the loan, unless otherwise agreed by the parties, the interest shall be calculated based on the actual period of loan.

Article 209 Extension of Loan Term The borrower may apply to the lender for extension of the loan term before its maturity. Upon consent by the lender, the loan term may be extended.

Article 210 Time of Effectiveness of Loan Contract between Natural Persons A contract for loan of money between natural persons becomes effective at the time the lender makes the loan amount available.

Article 211 Interest under Loan Contract between Natural Persons Under a contract for loan of money between natural persons, if payment of interest was not prescribed or clearly prescribed, the loan is deemed interest free. Under a contract for loan of money between natural persons, the interest rate on the loan may not contravene the relevant stipulations of the state regarding limit on loan interest rate.

Chapter Thirteen Leasing Contracts

Article 212 Definition of Leasing Contract A leasing contract is a contract whereby the lessor delivers to the lessee the lease item for it to use or accrue benefit from, and the lessee pays the rent.

Article 213 Terms of Leasing Contract A leasing contract includes terms such as the name, quantity and purpose of the lease item, lease term, amount of rent, time and method of rent payment, as well as maintenance and repair of the lease item, etc.

Article 214 Limit on Lease Term; Renewal The lease term may not exceed twenty years. If the lease term exceeds twenty years, the portion of the lease term beyond the initial twenty year period is invalid. At the end of the lease term, the parties may renew the lease, provided that the renewed term may not exceed twenty years commencing on the date of renewal.

Article 215 Writing Requirement in Case Lease Term Is Six Months or Longer Where the lease term is six months or longer, the lease shall be in writing. If the parties fail to adopt a writing, the lease is deemed a non-term lease.

Article 216 Lessor's Obligation to Deliver Lease Item The lessor shall deliver the lease item to the lessee in accordance with the contract and shall, during the lease term, keep the lease item fit for the prescribed purpose.

Article 217 Manner of Using Lease Item The lessee shall use the lease item in the prescribed manner. Where the manner of use of the lease item was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the lease item shall be used in a manner consistent with its nature.

Article 218 Lessee Not Liable for Wear and Tear Where the lessee used the lease item in the prescribed manner or in a manner consistent with its nature, thereby causing wear and tear to the lease item, it is not liable for damages.

Article 219 Lessor Entitled to Terminate in Case of Unauthorized Use Where the lessee failed to use the lease item in the prescribed manner or in a manner consistent with its nature, thereby causing damage to it, the lessor may terminate the contract and claim damages.

Article 220 Lessor's Maintenance Obligations The lessor shall perform the obligations of maintenance and repair of the lease item, except otherwise agreed by the parties.

Article 221 Lessee's Remedies in Case of Lessor's Failure to Maintain Lease Item Where the lease item needs maintenance or repair, the lessee may require the lessor to perform maintenance or repair within a reasonable time. If the lessor fails to fulfill its obligations of maintenance or repair, the lessee may maintain or repair the lease item on its own at the lessor's expense. Where the lessee's use of the lease item is impaired due to maintenance or repair thereof, the rent shall be reduced or the lease term shall be extended accordingly.

Article 222 Lessee's Obligation of Due Care The lessee shall keep the lease item with due care and shall be liable for damages if the lease item was damaged or lost due to improper care.

Article 223 Improvement or Addition Subject to consent by the lessor, the lessee may make improvement on or addition to the lease item. If the lessee made improvement on or addition to the lease item without consent by the lessor, the lessor may require the lessee to restore the lease item to its original condition or claim damages.

Article 224 Sublease Subject to consent by the lessor, the lessee may sublease the lease item to a third person. Where the lessee subleases the lease item, the leasing contract between the lessee and the lessor remains valid, and if the third person causes damage to the lease item, the lessee shall pay damages. Where the lessee subleases the lease item without the consent of the lessor, the lessor may terminate the contract.

Article 225 Benefit Accrued from Lease Item During Lease Term During the lease term, any benefit accrued from the possession or use of the lease item belongs to the lessee, except otherwise agreed by the parties.

Article 226 Time for Rent Payment The lessee shall pay the rent at the prescribed time. Where the time of payment was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the rent shall be paid at the end of the lease term if it is less than one year; if the lease term is one year or longer, the rent shall be paid at the end of each annual period, and where the remaining period is less than one year, the rent shall be paid at the end of the lease term.

Article 227 Lessor's Remedies in Case of Non-Payment of Rent Where the lessee failed to pay or delayed in paying the rent without cause, the lessor may require the lessee to pay the rent within a reasonable period. If the lessee fails to pay the rent at the end of such period, the lessor may terminate the contract.

Article 228 Lessee's Remedies in Case of Third Party Claim; Duty to Notify If due to any claim by a third person, the lessee is unable to use or accrue benefit from the lease item, the lessee may require reduction in rent or refuse to pay rent. In case of any claim by a third person, the lessee shall timely notify the lessor.

Article 229 Leasing Contract Not Affected by Change of Ownership Any change of ownership to the lease item does not affect the validity of the leasing contract.

Article 230 Sale of Dwelling Unit under Lease Where the lessor is to sell a dwelling unit under a lease, it shall give the lessee a reasonable advance notice before the sale, and the lessee has the right of first refusal under the same conditions.

Article 231 Lessee's Remedies in Case of Damage Not Attributable to Itself Where the lease item was damaged or lost in part or in whole due to any reason not attributable to the lessee, the lessee may require reduction in rent or refuse to pay rent; where the purpose of the contract is frustrated due to damage to or loss of the lease item in part or in whole, the lessee may terminate the contract.

Article 232 Non-Term Lease Where the term of a lease was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, such lease is deemed a non-term lease. Either party may terminate the contract at any time, provided that the lessor shall give the lessee a reasonable advance notice before it terminates the contract.

Article 233 Lessee Entitled to Terminate in Case of Danger to Safety or Health Where the lease item poses a danger to the safety or health of the lessee, the lessee may terminate the contract at any time even if the lessee was aware of the quality non-compliance of the lease item at the time of conclusion of the contract.

Article 234 Lease of Dwelling Unit Assumable Where the lessee is deceased during the term of a dwelling unit lease, the person jointly living in the unit with the lessee while the lessee was alive may continue leasing it on the terms of the original leasing contract.

Article 235 Condition of Lease Item at End of Lease Term The lessee shall return the lease item at the end of the lease term. The returned lease item shall be in a condition resulting from its use in the prescribed manner or in a manner consistent with its nature.

Article 236 Effect of Continued Use Beyond Lease Term Upon expiration of the lease term, if the lessee continues to use the lease item without objection by the lessor, the original leasing contract remains effective, provided that it becomes a non-term lease.

Chapter Fourteen Financial Leasing Contracts

Article 237 Definition of Financial Leasing Contract A financial leasing contract is a contract whereby the lessor, upon purchase of the lessee-selected lease item from a lessee-selected seller, provides the lease item to the lessee for its use, and the lessee pays the rent.

Article 238 Terms of Financial Leasing Contract; Writing Requirement A financial leasing contract includes terms such as the name, quantity, specifications, technical performance, and method of inspection of the lease item, the lease term, the rental components and the time, method and currency of payment, as well as the ownership of the lease item at the end of the lease term, etc. A financial leasing contract shall be in writing.

Article 239 Lessee's Assumption of Buyer's Rights Under the sales contract concluded by the lessor according to the lessee's selection of the seller and the lease item, the seller shall deliver the subject matter to the lessee in accordance with the contract, and the lessee enjoys the rights of the buyer in respect of taking delivery of the subject matter.

Article 240 Lessee's Assumption of Buyer's Remedies in Case of Seller's Non-performance The lessor, the seller and the lessee may agree that any claim arising from the seller's non-performance of its obligations under the sales contract will be made by the lessee. Where the lessee makes such a claim, the lessor shall provide assistance.

Article 241 Certain Amendment of Sales Contract Subject to Consent by Lessee Absent consent by the lessee, the lessor may not amend any lessee-related term in the sales contract concluded by it according to the lessee's selection of the seller and the lease item.

Article 242 Exclusion of Lease Item from Bankruptcy Assets of Lessee Title to the lease item vests in the lessor. In case the lessee enters into bankruptcy, the lease item is not part of its bankruptcy assets.

Article 243 Determination of Rental Components Unless otherwise agreed by the parties, the rent under a financial leasing contract shall be determined based on the major portion of or full costs of purchasing the lease item and the lessor's reasonable profit.

Article 244 Lessor Not Liable for Non-fitness of Lease Item; Exceptions Where the lease item does not comply with the contract or is not fit for the intended purpose, the lessor is not liable, except where the lessee relied on the skills of the lessor in selecting the lease item or the lessor interfered in the selection thereof.

Article 245 Warranty by Lessor The lessor shall give warranty in respect of the lessee's possession and use of the lease item.

Article 246 Lessor Not Liable for Damage or Injury If while in the possession of the lessee, the lease item caused personal injury or property damage to any third person, the lessor is not liable.

Article 247 Lessee's Obligation of Due Care; Maintenance Obligations The lessee shall keep and use the lease item with due care. While in possession of the lease item, the lessee shall perform the obligations of maintenance and repair thereof.

Article 248 Lessor' s Remedies in Case of Non-payment by Lessee The lessee shall pay the rent in accordance with the contract. Where the lessee fails to pay the rent within a reasonable period after receiving demand for payment from the lessor, the lessor may require payment of the full rent; or it may terminate the contract and repossess the lease item.

Article 249 Partial Refund in Case of Termination by Lessor Where the parties agreed that title to the lease item will vest in the lessee at the end of the lease term, and after paying a major portion of the rent, the lessee is unable to pay the remaining balance, resulting in the lessor's termination of the contract and repossession of the lease item, if the value of the repossessed lease item exceeds the rent owed by the lessee and other expenses, the lessee may require partial refund.

Article 250 Ownership of Lease Item at End of Lease Term The lessor and the lessee may agree on the ownership of the lease item at the end of the lease term. Where ownership of the lease item was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, title to the lease item shall vest in the lessor.

Chapter Fifteen Contracts of Hired Works

Article 251 Definition of Contract of Hired Work A contract of hired work is a contract whereby the hiree completes certain work as required by the hirer and delivers the work product, and the hirer pays the remuneration. Hired works include works such as processing, custom-made work, repair, reproduction, testing, and inspection, etc.

Article 252 Terms of Contract of Hired Work A contract of hired work includes terms such as the subject matter of hire, quantity, quality, remuneration, method of hire, supply of materials, time of performance, standard applicable to and method of acceptance inspection, etc.

Article 253 Use of Hiree's Own Resources; Delegation of Main Task Subject to Consent The hiree shall use its own equipment, skills and labor to complete the main tasks, except otherwise agreed by the parties. Where the hiree has delegated a main task of the hired work to a third person for completion, it shall be responsible to the hirer for the work product completed thereby; if the delegation was not approved by the hirer, the hirer may also terminate the contract.

Article 254 Delegation of Ancillary Task by Hiree The hiree may delegate any ancillary task of the hired work to a third person for completion. Where the hiree delegated any ancillary task of the hired work to a third person for completion, it shall be responsible to the hirer for the work product completed thereby.

Article 255 Materials Supplied by Hiree Subject to Inspection Where the hiree is to supply the materials, it shall select the materials in accordance with the contract and shall make such materials available for inspection by the hirer.

Article 256 Hiree's Timely Inspection of Materials Supplied by Hirer Where the hirer is to supply the materials, it shall supply the materials in accordance with the contract. The hiree shall timely inspect the materials supplied by the hirer, and where non-compliance is discovered, it shall timely instruct the hirer to replace or supplement the materials or otherwise cure the non-compliance. The hiree may not replace the materials supplied by the hirer without authorization, and may not replace any component which does not require repair.

Article 257 Hiree's Remedies in Case of Hirer's Delay in Responding Where the hiree discovers that the drawings or technical requirements provided by the hirer are unreasonable, it shall timely notify the hirer. Where the hiree sustains any loss due to reasons such as the hirer's delay in responding, etc., the hirer shall pay damages.

Article 258 Hirer Responsible for Its Change of Requirements Where the hirer changed its requirements for the hired work while the work was under way, thereby causing loss to the hiree, the hirer shall indemnify the hiree.

Article 259 Hirer's Obligation to Assist in Performance Where performance of the hired work requires assistance by the hirer, it is obligated to provide assistance. Where the hired work is not capable of being completed due to failure by the hirer to fulfill its obligation to assist, the hiree may demand performance from the hirer within a reasonable period and extend the time of its own performance; where the hirer fails to perform at the end of such period, the hiree may terminate the contract.

Article 260 Hirer's Right to Monitor In the course of performing the hired work, the hiree shall consent to any necessary monitoring and inspection by the hirer. Any monitoring or inspection conducted by the hirer may not impair the normal work of the hiree.

Article 261 Delivery of Work Product by Hiree Upon completion of the hired work, the hiree shall deliver the work product to the hirer and shall submit thereto the required technical materials and related quality certificate. The hirer shall conduct acceptance inspection of the work product.

Article 262 Hirer's Remedies in Case of Quality Non-compliance Where the work product delivered by the hiree fails to meet the quality requirements, the hirer may require the hiree to assume liabilities for breach of contract by way of repair, remaking, reduction in remuneration, or payment of damages.

Article 263 Time of Payment of Remuneration The hirer shall pay the remuneration at the prescribed time. Where the time of payment was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the hirer shall make payment at the time of the hiree's delivery of the work product; where the work product is partially delivered, the hirer shall make payment accordingly.

Article 264 Hiree's Possessory Lien in Case of Non-Payment Where the hirer fails to pay the remuneration or cost of materials, etc. to the hiree, the hiree is entitled to a possessory lien on the work product completed, except otherwise agreed by the parties.

Article 265 Hiree's Obligation of Due Care for Materials and Work Product The hiree shall keep the materials supplied by the hirer and the completed work product with due care, and shall be liable for damages in case of any damage or loss due to improper care.

Article 266 Hiree's Confidentiality Obligations The hiree shall keep the relevant information confidential as required by the hirer, and may not retain any replica or technical material without permission by the hirer.

Article 267 Liability of Joint Hirees Joint hirees are jointly and severally liable to the hirer, except otherwise agreed by the parties.

Article 268 Hirer's Termination Right Subject to Indemnification The hirer may terminate the contract of hired work at any time, provided that it shall indemnify the hiree for its loss as a result, if any.

Chapter Sixteen Contracts for Construction Projects

Article 269 Definition of Contract for Construction Project A contract for construction project is a contract whereby the contractor performs project construction, and the developer pays the price. Contracts for construction projects include contracts for survey, design, and construction.

Article 270 Writing Requirement A contract for construction project shall be in writing.

Article 271 Tendering Process in Construction Project Tendering for a construction project shall be conducted in an open, fair and impartial manner in accordance with the relevant laws.

Article 272 Contracting and Subcontracting in Construction Projects The developer may enter into a contract for construction project with a prime contractor, or enter into contracts for survey, design, and construction with the surveyor, designer, and constructor respectively. The developer may not divide a construction project which should be completed by one contractor into several parts and contract them out to several contractors. Subject to consent by the developer, the prime contractor or the contractor for survey, design, or construction may delegate part of the contracted work to a third person. The third person and the prime contractor or the contractor for survey, design, or construction shall be jointly and severally liable to the developer in respect of the work product completed by such third person. The contractor may not assign in whole to any third person the contracted construction project, or divide the whole contracted construction project into several parts and separately assign each part to a third person under the guise of sub-contracting. The contractor is prohibited from sub-contracting any part of the project to an entity not appropriately qualified. A sub-contractor is prohibited from further sub-contracting its contracted work. The main structure of the construction project must be constructed by the contractor itself.

Article 273 Major State Construction Projects A contract for a major state construction project shall be concluded in accordance with the procedure prescribed by the state and in compliance with the state-approved documents such as the investment plan and feasibility studies report, etc.

Article 274 Terms of Contract for Survey or Design A contract for survey or design includes terms such as the time limit for submission of the relevant basic information and documents (including budget estimate), the quality requirements, fees, and other conditions of cooperation, etc.

Article 275 Terms of Construction Contract A construction contract includes terms such as the scope of the project, the construction period, the time for commencement and completion of any work to be commissioned in the interim, the quality of the project, the cost of the project, the time for delivery of technical materials, the responsibilities for the supply of materials and equipment, the appropriation of funds and settlement of account, inspection upon completion of the project, the scope and period of quality warranty, and cooperation between the parties, etc.

Article 276 Supervision of Construction Project Where the construction project is subject to supervision, the developer shall enter into an agency appointment contract for project supervision with a project supervisor in writing. The rights, obligations and associated legal liabilities of the developer and supervisor shall be prescribed in accordance with the provisions hereof concerning agency appointment contracts and the provisions of other relevant laws and administrative regulations.

Article 277 Developer's Right to Inspect Provided that the developer does not interfere with the normal operation of the contractor, it may inspect the progress and quality of the work at any time.

Article 278 Concealed Work In the case of concealed work, the contractor shall give the developer notice for inspection prior to concealment. Where the developer fails to timely conduct inspection, the contractor may extend the relevant project milestones, and is entitled to claim damages for work stoppage or work slowdown, etc.

Article 279 Inspection of Completed Project; No Use Prior to Inspection Upon completion of the construction project, the developer shall conduct acceptance inspection according to the construction drawings and specifications, and in accordance with the rules of construction inspection and quality inspection standard prescribed by the state. Once the construction project has passed the acceptance inspection, the developer shall pay the prescribed price and accept the construction project. The completed construction project may be put into use only after it has passed the acceptance inspection; if the construction project has not been inspected or has failed the inspection, it may not be put into use.

Article 280 Developer's Remedies in Case of Non-compliant Survey or Design Where the developer sustains any loss from construction delay due to non-compliance of the survey or design or due to delayed delivery of the survey or design documents, the surveyor or the designer shall continue to improve the survey or design, reduce or forgo the survey fee or design fee, and pay damages.

Article 281 Developer's Remedies in Case of Non-conforming Construction Where the construction project fails to meet the prescribed quality requirements due to any reason attributable to the constructor, the developer is entitled to require the constructor to repair, re-construct or make alteration free of charge within a reasonable time. Where delivery of the project is delayed due to such repair, re-construction or alteration, the constructor shall be liable for breach of contract.

Article 282 Contractor Liable for Personal and Property Damage Where the construction project caused personal injury and property damage during its reasonable usage period due to any reason attributable to the contractor, the contractor shall be liable for damages.

Article 283 Contractor's Remedies in Case of Developer's Failure to Provide Necessary Conditions Where the developer fails to provide raw materials, equipment, site, funds, or technical information at the prescribed time and in accordance with the contractual requirements, the contractor may extend the relevant project milestones, and is entitled to claim damages for work stoppage or slowdown, etc.

Article 284 Contractor's Remedies in Case of Project Interruption Due to Reasons Attributable to Developer If an ongoing project is stopped or delayed due to any reason attributable to the developer, the developer shall take the appropriate measures to make up or mitigate the loss, and shall indemnify the contractor for its loss and out-of-pocket expenses arising from resulting work stoppage, slowdown, reshipment, re-dispatch of mechanical equipment, and excess inventory of materials and assemblies, etc.

Article 285 Surveyor's Remedies in Case of Developer's Failure to Cooperate Where in the course of survey or design, any repeating work, work stoppage or change of design occurs due to the developer's change of plan, the incorrect information provided by it, or its failure to provide the working conditions necessary for the survey or design at the prescribed time, the developer shall increase the fees in light of the actual amount of work done by the surveyor or designer.

Article 286 Contractor's Remedies in Case of Developer's Failure to Pay Price If the developer failed to pay the price in accordance with the contract, the contractor may demand payment from the developer within a reasonable period. Where the developer fails to pay the price at the end of such period, the contractor may enter into an agreement with the developer to liquidate the project, and may also petition the People's Court to auction the project in accordance with the law, unless such project is not fit for liquidation or auction in light of its nature. The construction project price shall be paid in priority out of proceeds from the liquidation or auction of the project.

Article 287 Provisions Governing Contracts of Hired Works Applicable A matter not provided for in this Chapter shall be governed by the relevant provision governing contracts of hired works.

Chapter Seventeen Carriage Contracts

Section One General Provisions

Article 288 Definition of Carriage Contract A carriage contract is a contract whereby the carrier carries the passenger or cargo from the place of departure to the prescribed destination, and the passenger, consignor or consignee pays the fare or freightage.

Article 289 Common Carrier May Not Deny Reasonable Carriage Requirement A common carrier may not deny any normal and reasonable carriage requirement by a passenger or consignor.

Article 290 Obligation of Carrier to Carry in Safe and Timely Manner The carrier shall safely carry the passenger or cargo to the prescribed destination within the prescribed time or within a reasonable time.

Article 291 Obligation of Carrier to Travel by Prescribed Route The carrier shall carry the passenger or cargo to the prescribed destination by the prescribed route or the normal route.

Article 292 Passenger's Remedies in Case of Carrier's Failure to Travel by Prescribed Route The passenger, consignor or consignee shall pay the fare or freightage. Where the carrier failed to carry the passenger or the cargo by the prescribed or normal route, thereby increasing the fare or freightage, the passenger, consignor or consignee may refuse to pay any increased portion thereof.

Section Two Passenger Carriage Contracts

Article 293 Formation of Passenger Carriage Contract A passenger carriage contract is formed upon the carrier's delivery of the passenger ticket to the passenger, except otherwise agreed by the parties or provided by the relevant usage.

Article 294 Carrier's Remedies in Case of Passenger's Failure to Pay Fare The passenger shall board the mode of transportation with a valid passenger ticket. If the passenger boards without a ticket, travels beyond the prescribed destination, boards a class higher than the prescribed class, or boards with an expired ticket, he shall pay the fare retroactively, and the carrier may charge additional fare in accordance with the relevant stipulations. Where the passenger fails to pay the fare, the carrier may refuse to carry.

Article 295 Passenger's Failure to Board on Time Where the passenger is unable to board the mode of transportation at the time prescribed on the passenger ticket due to any reason attributable to himself, he shall carry out the formality for ticket refund or reschedule within the prescribed period. Where the passenger delays in carrying out the relevant formality, the carrier may refuse to refund the fare, and is no longer obligated to carry such passenger.

Article 296 Carry-on Luggage In the course of carriage, the passenger's carry-on luggage shall be within the prescribed limit. Where his luggage exceeds the prescribed limit on carry-on luggage, the additional luggage shall be checked in.

Article 297 Boarding with Prohibited Item The passenger may not carry in person, or place in his luggage, any hazardous material which is flammable, explosive, toxic, corrosive, or radioactive, etc., or possibly endangers people or property on board, or an otherwise prohibited item. Where the passenger violates the previous paragraph, the carrier may unload, destroy or turn over to the relevant authority the prohibited item. Where the passenger insists on carrying in person or placing in his luggage the prohibited item, the carrier shall refuse to carry.

Article 298 Carrier's Obligation to Inform The carrier shall timely inform the passenger of any major cause preventing it from normal carriage, as well as precautions relating to transportation safety.

Article 299 Passenger's Remedies in Case of Delay The carrier shall carry the passenger according to the time and carrier number prescribed on the passenger ticket. Where the carrier delays in carriage, it shall, upon request by the passenger, either reschedule or refund the fare.

Article 300 Passenger's Remedies in Case of Unilateral Change of Mode of Transportation by Carrier Where the carrier unilaterally changed the mode of transportation, thereby lowering the standard of service, it shall, upon request by the passenger, refund or reduce the fare; where the service standard is enhanced as a result, no additional fare shall be charged.

Article 301 Carrier's Obligation to Assist Passenger In the course of carriage, the carrier shall use its best effort to assist any passenger who has a medical emergency, is in labor or encounters a dangerous situation.

Article 302 Carrier Liable for Injury of Passenger; Exceptions The carrier shall be liable for damages in case of injury or death of the passenger in the course of carriage, except where such injury or death was attributable to the passenger's own health, or the carrier has established that such injury or death was caused by the passenger's intentional misconduct or gross negligence. The provisions in the previous paragraph apply to a passenger who is exempted from buying a ticket or holds a discount ticket pursuant to the relevant stipulations, or who is permitted by the carrier to board without a ticket.

Article 303 Provisions Governing Loss of Passenger's Luggage Where the passenger's carry-on luggage was damaged or lost in the course of carriage, the carrier shall be liable for damages if it was at fault. Where the passenger's check-in luggage was damaged or lost, the relevant provisions governing cargo carriage apply.

Section Three Cargo Carriage Contracts

Article 304 Consignor's Obligation to Inform; Liability for Misrepresentation In consigning its cargo, the consignor shall correctly provide the carrier with the name of the consignee or the consignee to whose order the cargo is deliverable, as well as any necessary information relating to carriage of the cargo, such as the name, nature, weight, and quantity of the cargo and the place for taking delivery thereof. Where the carrier sustains any loss due to the consignor's provision of false information or omission of any material information, the consignor shall be liable for damages.

Article 305 Certain Cargo Carriage Subject to Approval Where carriage of the cargo is subject to any procedure such as approval or inspection, etc., the consignor shall submit to the carrier the relevant documents evidencing completion of such procedure.

Article 306 Packing of Cargo in Prescribed Manner The consignor shall pack the cargo in the prescribed manner. Where a packing method was not prescribed or clearly prescribed, Article 156 hereof applies. Where the consignor violates the previous paragraph, the carrier may refuse to carry.

Article 307 Carriage of Hazardous Materials In consigning any hazardous material which is inflammable, explosive, toxic, corrosive, or radioactive, etc., the consignor shall, in accordance with the stipulations of the state governing the carriage of hazardous materials, properly pack the hazardous material and affix thereon applicable signs and labels for hazardous materials, and shall submit its name and nature as well as related precautionary measures to the carrier in writing. If the consignor violates the previous paragraph, the carrier may refuse to carry, and may also take the appropriate measures to prevent loss at the consignor's expense.

Article 308 Consignor's Right of Disposal Prior to Delivery Prior to carrier's delivery of the cargo to the consignee, the consignor may require the carrier to suspend the carriage, return the cargo, change the destination or deliver the cargo to another consignee, provided that it shall indemnify the carrier for any loss it sustains as a result.

Article 309 Taking Delivery of Cargo by Consignee Upon arrival of the cargo, if the carrier knows of the consignee, it shall timely notify the consignee, who shall timely take delivery. Where the consignee delays in taking delivery, it shall pay expenses such as safekeeping fee, etc. to the carrier.

Article 310 Inspection by Consignee; Effect of Failure to Inspect Upon taking delivery of the cargo, the consignee shall inspect the cargo at the prescribed time. Where the time for inspection was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the consignee shall inspect the cargo within a reasonable time. The consignee's failure to raise any objection concerning the quantity of, or any damage to, the cargo within the prescribed time or within a reasonable time is deemed prima facie evidence of delivery by the carrier in compliance with the description in the transportation documents.

Article 311 Carrier Liable for Damage or Loss during Carriage; Exceptions The carrier is liable for damages in case of damage to or loss of the cargo in the course of carriage, provided that it is not liable for damages if it has established that such damage to or loss of the cargo was caused by force majeure, the intrinsic characteristics of the cargo, reasonable depletion, or the fault of the consignor or consignee.

Article 312 Amount of Damages in Case of Loss of Cargo Where the parties agreed on the amount of damages in case of damage to or loss of the cargo, the damages payable is the prescribed amount; if the amount of damages was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, it shall be calculated based on the prevailing market price at the destination when the cargo was or should have been delivered. Where a law or administrative regulation provides otherwise in respect of the method for calculation of damages and any limitation on damages, such provisions apply.

Article 313 Liabilities of Joint Carriers Using the Same Method of Transportation Where two or more carriers jointly carry the cargo using the same method of transportation, the carrier contracting with the consignor shall be responsible for the whole course of carriage. Where the loss occurred at a particular segment, the carrier contracting with the consignor and the carrier for such segment are jointly and severally liable.

Article 314 Freightage in Case of Force Majeure Where the cargo was lost in the course of carriage due to force majeure, if the freightage has not been collected, the carrier may not require payment thereof; if the freightage has been collected, the consignor may claim refund.

Article 315 Carrier's Possessory Lien in Case of Non-payment Where the consignor or consignee fails to pay the freightage, safekeeping fee and other expenses in connection with the carriage of the cargo, the carrier is entitled to a possessory lien on the corresponding portion of the cargo, except otherwise agreed by the parties.

Article 316 Placing Cargo in Escrow Where the consignee is not known or refuses to take delivery of the cargo without cause, the carrier may place the cargo in escrow under Article 101 hereof. Section Four Multi-modal Carriage Contract

Article 317 Rights and Obligations of Multi-modal Carriage Operator A multi-modal carriage operator is responsible for performing, or arranging for performance of, the multi-modal carriage contract, and it enjoys the rights and assumes the obligations of a carrier throughout the course of carriage.

Article 318 Agreement between Multi-modal Carriage Operator and Segment Carriers The multi-modal carriage operator and the segment carriers may prescribe their respective duties concerning each segment, provided that the obligations of the multi-modal carriage operator with respect to the entire course of carriage are not affected by any such agreement.

Article 319 Multi-modal Carriage Document Upon receipt of the cargo delivered by the consignor, the multi-modal carriage operator shall issue thereto a multi-modal carriage document. The multi-modal carriage document may either be assignable or non-assignable as required by the consignor.

Article 320 Consignor's Liability Notwithstanding Assignment of Document Where the multi-modal carriage operator sustains any loss due to the fault of the consignor in the course of consigning the cargo, the consignor shall be liable for damages notwithstanding its subsequent assignment of the multi-modal carriage document.

Article 321 Applicable Law Governing Loss of Cargo in Multi-modal Carriage Where damage to or loss of the cargo occurred within a particular segment of the course of a multi-modal carriage, the multi-modal carriage operator's liability for damages and any limitation thereon are governed by the applicable transportation law of the jurisdiction which such segment is under. Where the segment in which the cargo was damaged or lost cannot be determined, the liability for damages shall be borne in accordance with this Chapter.

Chapter Eighteen Technology Contracts

Section One General Provisions

Article 322 Definition of Technology Contract A technology contract is a contract whereby the parties prescribe their rights and obligations in respect of the development or transfer of technology, or in respect of technical consulting or service.

Article 323 General Requirements Concerning Technology Contract Conclusion of a technology contract shall be conducive to the advancement of science and technology, and expedite the conversion, application and dissemination of scientific and technological achievements.

Article 324 Terms of Technology Contract; Patents Terms of a technology contract shall be prescribed by the parties, and generally include the following:
(i) project name;
(ii) contents, scope and requirement of the subject matter;
(iii) the plan, schedule, period, place, territory and method of performance;
(iv) confidentiality of technical information and materials;
(v) allocation of responsibilities for risks;
(vi) ownership of the technology and allocation of benefits accrued therefrom;
(vii) standard applicable to and method of acceptance test;
(viii)price, remuneration or licensing fee and the method of payment;
(ix) liquidated damages or method for calculation of damages;
(x) method of dispute resolution;
(xi) definition of terms and phrases.
The parties may agree to include the following materials relating to the performance of the contract as an integral part thereof: technical background information, feasibility studies and technical evaluation report, project task matrix and project plan, technical standard, technical specifications, original design and technique documents, as well as other technical documentation. Where the technology contract involves any patent, it shall set forth the name of the invention/innovation, the patent applicant and the patentee, the date of application, the application number, patent number and the term of the patent.

Article 325 Payment Method; Royalty The method for payment of the price, remuneration or licensing fee under a technology contract shall be prescribed by the parties, who may prescribe lump-sum payment based on one-time calculation or installment payment based on one-time calculation, and may also prescribe royalty payment or royalty payment plus advance payment of initial fee. Where a royalty payment method is prescribed, the royalty may be calculated as a percentage of the product price, any increase in product value resulting from exploitation of the patent or use of the technical secret, profit, or product sales, and may also be calculated by any other method prescribed by the parties. The royalty rate may be fixed or subject to annual increase or decrease. Where a royalty payment is prescribed, the parties shall prescribe in the contract a method for inspection of the relevant accounting books.

Article 326 Employee-developed Technology; Definition Where the right to use and the right to transfer employee-developed technology belong to a legal person or an organization of any other nature, the legal person or organization may enter into a technology contract in respect of such employee-developed technology. The legal person or organization shall reward or remunerate the individual(s) who developed the technology with a percentage of the benefits accrued from the use and transfer of the employee-developed technology. Where the legal person or organization is to enter into a technology contract for the transfer of the employee-developed technology, the employee-developer has the right of first refusal under the same conditions. An employee-developed technology is a technology developed in the course of completing a task assigned by a legal person or an organization of any other nature, or developed by primarily utilizing the material and technical resources thereof.

Article 327 Non-employee-developed Technology The right to use and the right to transfer non-employee-developed technology belong to the individual developer, who may enter into a technology contract in respect thereof.

Article 328 Individual's Rights with Respect to Technology Developed Thereby The individual who developed the technology is entitled to identify himself as the developer in the documentation related thereto, and to receive honor certificate and reward.

Article 329 Invalidity of Technology-monopolizing and Infringing Contract A technology contract which illegally monopolizes technology, impairs technological advancement or infringes on the technology of a third person is invalid.

Section Two Technology Development Contract

Article 330 Definition of Technology Development Contract A technology development contract is a contract concluded in respect of the development of a new technology, product, technique or material and the associated system. Technology development contracts include commissioned development contracts and cooperative development contracts. A technology development contract shall be in writing. A contract on the conversion of a scientific achievement with potential for industrial application is governed by reference to the provisions applicable to technology development contracts.

Article 331 Obligations of Commissioning Party The commissioning party under a commissioned development contract shall, in accordance with the contract, provide development funds and pay remuneration; supply technical materials and original data; complete its tasks of cooperation; and accept the developed technology.

Article 332 Obligations of Developer in Commissioned Development The developer under a commissioned development contract shall, in accordance with the contract, prepare and implement the development plan; use development funds in a reasonable manner; timely complete the development and deliver the developed technology, as well as provide the relevant technical materials and necessary technical guidance so as to help the commissioning party master the developed technology.

Article 333 Commissioning Party's Breach Where the commissioning party breached the contract, thereby causing stoppage, delay or failure of the development, it shall be liable for breach of contract.

Article 334 Developer's Breach Where the developer breached the contract, thereby causing stoppage, delay or failure of the development, it shall be liable for breach of contract.

Article 335 Obligations of Parties in Cooperative Development Parties to a cooperative development contract shall, in accordance with the contract, make investment, including investment in the form of technology; participate in the development by performing their respective tasks; and cooperate with each other in the development.

Article 336 Breach of Cooperative Contract Where a party to a cooperative development contract breached the contract, thereby causing stoppage, delay or failure of the development, it shall be liable for breach of contract.

Article 337 Termination of Contract in Case Technology Becomes Public Where the technology which is the subject matter of a technology development contract was made public by a third person, thereby rendering performance of the technology development contract no longer meaningful, the parties may terminate the contract.

Article 338 Allocation of Responsibility for Risk of Failure; Duty to Inform upon Discovery of Circumstance Which May Lead to Failure If in the course of implementing a technology development contract, the development failed in whole or in part due to any insurmountable technical difficulty, allocation of the responsibility for such risk shall be prescribed by the parties. Where the allocation of responsibility for such risk was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, it shall be shared by the parties in a reasonable manner. Where a party discovers any circumstance which may lead to the failure of the development in whole or in part as described in the previous paragraph, it shall timely notify the other party and take the appropriate measures to mitigate loss; where the party failed to timely notify the other party and take the appropriate measures, thereby causing further loss, it shall be liable for such further loss.

Article 339 Right to Patent Application in Commissioned Development Unless otherwise agreed by the parties, the right to apply for patent on the invention/innovation resulting from a commissioned development belongs to the developer. Where the developer is granted a patent, the commissioning party may exploit such patent free of charge. Where the developer is to assign the right to apply for patent on the invention/innovation resulting from the commissioned development, the commissioning party has the right of first refusal under the same conditions.

Article 340 Right to Patent Application in Cooperative Development Unless otherwise agreed by the parties, the right to apply for patent on the invention/innovation resulting from a cooperative development belongs to the parties therein jointly. Where a party is to assign its joint patent application right, the other parties have the right of first refusal under the same conditions. Where a party in the cooperative development declares a waiver of its joint patent application right, the other party may apply by itself, or the other parties may jointly apply, as the case may be. Where a patent is granted on the invention/innovation, the party waiving its patent application right may exploit such patent free of charge. If a party in the cooperative development does not consent to the application for patent, the other party or parties may not apply for patent.

Article 341 Right to Use or Transfer Technical Secret The right to use and transfer the technical secret resulting from a commissioned or cooperative development, and the method for allocation of benefits accrued therefrom shall be prescribed by the parties. Where such matters were not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, all of the parties are entitled to use and transfer the technology, provided that the developer in a commissioned development may not transfer the technology to a third person before it delivers the technology to the commissioning party.

Section Three Technology Transfer Contracts

Article 342 Types of Technology Transfer Contract Technology transfer contracts include contracts for the assignment of patent, assignment of patent application right, transfer of technical secrets, and patent licensing. A technology transfer contract shall be in writing.

Article 343 Limit on Scope of Implementation May Not Restrict Competition A technology transfer contract may set forth the scope of exploitation of the patent or the use of the technical secret by the transferor and the transferee, provided that it may not restrict technological competition and technological development.

Article 344 Term of Patent Licensing Contract May Not Exceed Patent Term A patent licensing contract is only valid during the term of the patent. Where the term of the patent expires or the patent is invalidated, the patentee may not enter into a patent licensing contract with any other person in respect thereof.

Article 345 Obligations of Patent Licensor The transferor under a patent licensing contract shall, in accordance with the contract, license the patent to the transferee, deliver the technical materials related to the exploitation of the patent, and provide the necessary technical guidance.

Article 346 Obligations of Patent Licensee The transferee under a patent licensing contract shall exploit the patent in accordance with the contract and may not license the patent to any third person except as provided in the contract; and shall pay the licensing fee in accordance with the contract.

Article 347 Obligations of Transferor of Technical Secret The transferor under a contract for transfer of technical secret shall, in accordance with the contract, supply the technical materials, provide technical guidance, and warrant the practical applicability and reliability of the technology, and shall abide by its confidentiality obligations.

Article 348 Obligations of Transferee of Technical Secret The transferee under a contract for transfer of technical secret shall, in accordance with the contract, use the technology, pay the licensing fee and abide by its confidentiality obligations.

Article 349 Warranty of Title, Completeness, Correctness and Effectiveness The transferor under a technology transfer contract shall warrant that it is the lawful owner of the technology provided, and shall warrant that the technology provided is complete, free from error, effective, and capable of achieving the prescribed goals.

Article 350 Transferee's Confidentiality Obligations The transferee under a technology transfer contract shall, to the prescribed extent and within the prescribed period, abide by its confidentiality obligations in respect of the non-public and secret portion of the technology provided by the transferor.

Article 351 Transferor's Liabilities for Breach Where the transferor failed to transfer technology in accordance with the contract, it shall refund the licensing fee in part or in whole, and shall be liable for breach of contract; where the transferor exploited the patent or used the technical secret beyond the prescribed scope, or unilaterally allowed the patent to be exploited or the technical secret to be used by a third person in breach of the contract, it shall cease the breach and be liable for breach of contract; where the transferor breached any prescribed confidentiality obligation, it shall be liable for breach of contract.

Article 352 Transferee's Liabilities for Breach Where the transferee failed to pay the prescribed licensing fee, it shall pay the overdue licensing fee and pay liquidated damages in accordance with the contract; where it failed to pay the overdue licensing fee and liquidated damages, it shall cease exploitation of the patent or use of the technical secret, return the technical materials, and be liable for breach of contract; where the transferee exploited the patent or used the technical secret beyond the prescribed scope, or allowed the patent to be exploited or the technical secret to be used by a third person without consent by the transferor in breach of the contract, it shall cease the breach and be liable for breach of contract; where the transferee breached any prescribed confidentiality obligation, it shall be liable for breach of contract.

Article 353 Transferor Liable in Case of Infringement; Exception Where the exploitation of the patent or the use of the technical secret by the transferee in accordance with the contract infringes on the lawful interests of any other person, the liability shall be borne by the transferor, except otherwise agreed by the parties. Article 354 Sharing of Improvement The parties may, on the basis of mutual benefit, provide in the technology transfer contract for the method of sharing any subsequent improvement resulting from the exploitation of the patent or use of the technical secret. If such method was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, neither party is entitled to share any subsequent improvement made by the other party.

Article 355 Applicability of Other Laws or Administrative Regulations Where the relevant laws or administrative regulations provide otherwise in respect of technology import/export contracts or in respect of patent contracts or contracts for patent application, such provisions prevail.

Section Four Technical Consulting Contracts and Technical Service Contracts

Article 356 Definitions of Technical Consulting and Technical Service Contracts Technical consulting contracts include contracts for provision of feasibility studies, technical forecast, specialized technical investigation, and analysis and evaluation report, etc. in respect of a particular technical project. A technical service contract means a contract whereby one party solves a particular technical problem for the other party by utilizing its technical knowledge, excluding a contract for construction project or a contract of hired work.

Article 357 Obligations of Client under Technical Consulting Contract The client under a technical consulting contract shall, in accordance with the contract, describe the problem on which consultancy is sought, provide the technical background information as well as related technical materials and data; and accept the work product from, and pay the remuneration to, the consultant.

Article 358 Obligations of Consultant under Technical Consulting Contract The consultant under a technical consulting contract shall complete the consulting report or answer the question within the prescribed period; the consulting report submitted shall comply with the requirements set forth in the contract.

Article 359 Remedies for Breach; Consultant Not Liable for Loss Where the client under a technical consulting contract failed to provide the necessary materials and data in accordance with the contract, thereby impairing the progress and quality of the work, or failed to accept or delayed in accepting the work product, it may not claim refund of the remuneration paid, and shall pay any unpaid remuneration. Where the consultant under the technical consulting contract failed to provide the consulting report within the prescribed period or the consulting report submitted does not comply with the contract, it shall be liable for breach of contract by way of reducing or foregoing the remuneration, etc. The client under a technical consulting contract shall bear the loss resulting from any decision made by it based on the complying consulting report and opinion provided by the consultant, except otherwise agreed by the parties.

Article 360 Obligations of Client under Technical Service Contract The client under a technical service contract shall, in accordance with the contract, provide the working conditions and complete its tasks of cooperation; accept the work product and pay the remuneration.

Article 361 Obligations of Service Provider under Technical Service Contract The service provider under a technical service contract shall, in accordance with the contract, complete the services, solve the technical problem, warrant the quality of its work, and communicate the knowledge for solving the technical problem.

Article 362 Remedies for Breach Where the client under a technical service contract failed to perform its contractual obligations, or rendered non-conforming performance, thereby impairing the progress and quality of the work, or failed to accept or delayed in accepting the work product, it may not claim refund of the remuneration paid, and shall pay any unpaid remuneration. Where the service provider under a technical service contract failed to complete services in accordance with the contract, it shall be liable for breach of contract by way of forgoing the remuneration, etc.

Article 363 Ownership of New Technology in Connection with Technical Consulting/Service Contract In the course of performing a technical consulting contract or a technical service contract, any new technology developed by the consultant or service provider utilizing the technical materials and working conditions provided by the client belongs to the consultant or service provider. Any new technology developed by the client utilizing the work product provided by the consultant or service provider belongs to the client. However, if the parties agree otherwise in the contract, such provision prevails.

Article 364 Technology Intermediary Service or Technical Training Where a relevant law or administrative regulation provides otherwise in respect of technology intermediary service contracts or technical training contracts, such provisions prevail.

Chapter Nineteen Safekeeping Contracts

Article 365 Definition of Safekeeping Contract A safekeeping contract is a contract whereby the depository keeps the deposit delivered by the depositor, and eventually returns it thereto.

Article 366 Safekeeping Fee The depositor shall pay the safekeeping fee to the depository in accordance with the contract. Where the safekeeping fee was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the safekeeping is gratuitous.

Article 367 Formation of Safekeeping Contract A safekeeping contract is formed upon delivery of the deposit, except otherwise agreed by the parties.

Article 368 Deposit Voucher Upon the depositor's delivery of the deposit to the depository, the depository shall issue a deposit voucher thereto, except otherwise provided by the relevant usage.

Article 369 Place and Manner of Safekeeping The depository shall keep the deposit with due care. The parties may prescribe the place and manner of safekeeping. The place and manner of safekeeping may not be changed without authorization, except in an emergency situation or for the purpose of safeguarding the depositor's interests.

Article 370 Depositor's Obligation to Inform Where the deposit delivered by the depositor has defects or requires special safekeeping measures in light of its nature, the depositor shall inform the depository of the relevant situation. Where the depositor failed to inform, thereby causing damage to the deposit, the depository is not liable for damages; where the depository sustains any loss as a result, the depositor shall be liable for damages, except where the depository was, or should have been, aware of the situation and failed to take remedial measures.

Article 371 Delegation of Safekeeping Prohibited Except with Prior Agreement The depository may not delegate safekeeping of the deposit to a third person, except otherwise agreed by the parties. Where the depository delegated safekeeping of the deposit to a third person in violation of the previous paragraph, thereby causing damage to the deposit, the depository shall be liable for damages.

Article 372 Use of Deposit Prohibited Except with Prior Agreement The depository may not use, or allow to be used, the deposit, except otherwise agreed by the parties.

Article 373 Depository's Obligations in Case of Third Party Claim Where a third person makes a claim on the deposit, the depository shall perform its obligation of returning the deposit to the depositor, except where an order of preservation or enforcement is carried out in respect of the deposit in accordance with the law. Where a third person has initiated a suit against the depository or has applied for attachment of the deposit, the depository shall timely notify the depositor.

Article 374 Depository Liable in Case of Damage or Loss; Exception If the deposit was damaged or lost due to improper safekeeping by the depository during the deposit period, the depository shall be liable for damages, provided that if the safekeeping is gratuitous, and the depository has established that it was without gross negligence, it is not liable for damages.

Article 375 Depositor's Obligation to Declare Valuable Deposit Where the depositor is to deposit money, securities, or any other valuable item for safekeeping, it shall make a declaration to the depository on such item, which shall be inspected or sealed by the depository. Where the depositor failed to make such declaration, upon damage to or loss of the deposit, the depository may indemnify the depositor to the extent of the value of a regular item.

Article 376 Retrieval of Deposit The depositor may retrieve the deposit at any time. Where a deposit period was not prescribed or clearly prescribed, the depository may require the depositor to retrieve the deposit at any time; where a deposit period was prescribed, absent special cause, the depository may not require the depositor to retrieve the deposit before the end of the deposit period.

Article 377 Depository's Obligation to Return Deposit and Fruit At the end of the deposit period, or if the depositor retrieves the deposit before the end of the deposit period, the depository shall return the original item together with any fruit thereof to the depositor.

Article 378 Safekeeping of Fungible Items Where the depository keeps money deposit, it may return money of the same type and quantity. Where the depository keeps any other fungible item, it may return any item of the same type, quality and quantity in accordance with the contract.

Article 379 Time of Payment of Safekeeping Fee Under a safekeeping contract for value, the depositor shall pay to the depository the safekeeping fee at the prescribed time. Where the time of payment of the safekeeping fee was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the safekeeping fee shall be paid at the same time the deposit is retrieved.

Article 380 Depository's Lien in Case of Non-payment Where the depositor fails to pay the safekeeping fee and other expenses, the depository is entitled to a possessory lien on the deposit, unless otherwise agreed by the parties.

Chapter twenty Warehousing Contracts

Article 381 Definition of Warehousing Contract A warehousing contract is a contract whereby the warehouser stores the goods delivered by the depositor, and the depositor pays the warehousing fee.

Article 382 Effectiveness of Warehousing Contract A warehousing contract becomes effective upon its formation.

Article 383 Storage of Hazardous Material Where the depositor intends to store any hazardous material which is inflammable, explosive, toxic, corrosive, or radioactive, etc., or any material susceptible to deterioration, it shall describe the nature of the goods and provide the relevant information. Where the depositor violates the previous paragraph, the warehouser may reject the goods and may also take the appropriate measures to prevent loss at the depositor's expense. Where the warehouser is to store any hazardous material which is inflammable, explosive, toxic, corrosive, or radioactive, etc., it shall be equipped with the appropriate safekeeping conditions.

Article 384 Inspection by Warehouser; Passing of Responsibility The warehouser shall, in accordance with the contract, conduct warehouse-in inspection of the goods. Where in the course of such inspection, the warehouser discovers any non-compliance of the goods, it shall timely notify the depositor. After inspection and acceptance by the warehouser, if any non-compliance in respect of the type, quantity or quality of the goods occurs, the warehouser shall be liable for damages.

Article 385 Warehouse Receipt Upon the depositor's delivery of the goods, the warehouser shall issue thereto a warehouse receipt.

Article 386 Contents of Warehouse Receipt The warehouser shall sign or seal the warehouse receipt. The warehouse receipt shall set forth the following:
(i) name and domicile of the depositor;
(ii) the type, quantity, quality, and packing method of the goods, and the number of packages thereof and the marks thereon;
(iii) the depletion standard for the goods;
(iv) the warehousing facility;
(v) the warehousing period;
(vi) the warehousing fee;
(vii) if the goods are insured, the insured amount, term of insurance and the name of the insurer;
(viii)the preparing and issuing person and place and date of preparation and issuance.

Article 387 Nature and Assignability of Warehouse Receipt The warehouse receipt is the voucher for retrieving the goods. Where the depositor or holder of the warehouse receipt has endorsed the warehouse receipt and the warehouser has signed or sealed thereon, the right to retrieve the goods may be assigned.

Article 388 Warehouse Receipt Holder's Right to Inspect Upon request by the holder of the warehouse receipt, the warehouser shall allow him to inspect the goods or take samples therefrom.

Article 389 Obligation of Warehouser to Notify in Case of Damage Where the warehouser discovers that the warehoused goods are deteriorating or are otherwise damaged, it shall timely notify the depositor or holder of the warehouse receipt.

Article 390 Warehouser's Obligations and Rights in Respect of Deteriorating Goods Where the warehouser discovers that the warehoused goods are deteriorating or are otherwise damaged, thereby endangering other goods and normal safekeeping, it shall demand disposal of the goods by the depositor or the holder of the warehouse receipt as necessary. In an emergency situation, the warehouser may dispose of the goods as necessary, provided that thereafter it shall timely notify the depositor or holder of the warehouse receipt of the situation.

Article 391 Warehousing Period Where the warehousing period was not prescribed or clearly prescribed, the depositor or holder of the warehouse receipt may retrieve the goods at any time, and the warehouser may require the depositor or holder of the warehouse receipt to retrieve the goods at any time, provided that the other party shall be given the time required for preparation.

Article 392 Retrieval of Goods At the end of the warehousing period, the depositor or holder of the warehouse receipt shall retrieve the goods by presenting the warehouse receipt to the warehouser. Where the depositor or holder of the warehouse receipt delays in retrieving the goods, additional warehousing fee shall be charged; where the goods are retrieved before the end of the warehousing period, the warehousing fee shall not be reduced.

Article 393 Placing Goods in Escrow in Case of Failure to Retrieve At the end of the warehousing period, if the depositor or holder of the warehouse receipt failed to retrieve the goods, the warehouser may demand retrieval within a reasonable period, and if the goods are not retrieved at the end of such period, the warehouser may place the goods in escrow.

Article 394 Warehouser's Liabilities in Case of Damage to Goods Where the goods were damaged or lost during the warehousing period due to improper safekeeping by the warehouser, it shall be liable for damages. If the goods deteriorated or were damaged due to their nature, non-conforming packing method, or storage beyond their shelf-life, the warehouser is not liable for damages.

Article 395 Provisions Governing Safekeeping Contracts Applicable A matter not provided for in this Chapter shall be governed by the relevant provision applicable to safekeeping contracts.

Chapter Twenty One Agency Appointment Contracts

Article 396 Definition of Agency Appointment Contract An agency appointment contract is a contract whereby the principal and the agent agree that the agent will handle the principal's affairs.

Article 397 Scope of Appointment The principal may specifically appoint the agent to handle one or more of its affairs, or generally appoint the agent to handle all of its affairs.

Article 398 Principal's Obligation to Prepay Expenses The principal shall prepay the expenses for handling the entrusted affair. Any expense necessary for handling the entrusted affair advanced by the agent shall be repaid with interest by the principal.

Article 399 Agent's Obligation to Follow Instruction; Deviation from Instruction The agent shall handle the entrusted affair in accordance with the instruction of the principal. Any required deviation from the principal's instruction is subject to consent by the principal; in an emergency where the agent has difficulty contacting the principal, the agent shall properly handle the entrusted affair, provided that thereafter the agent shall timely notify the principal of the situation.

Article 400 Delegation of Agency Subject to Consent; Exceptions The agent shall personally handle the entrusted affair. Subject to consent by the principal, the agent may delegate the agency to a third person. If the delegation is approved, the principal may issue instructions concerning the entrusted affair directly to the delegate, and the agent is only responsible for its selection of the delegate or its own instruction thereto. Where the agency is delegated without consent, the agent shall be liable for any act of the delegate, except in an emergency where the agent needs to delegate the agency in order to safeguard the interests of the principal.

Article 401 Agent's Obligation to Inform Upon request by the principal, the agent shall report on the progress of the entrusted affair. Upon discharge of the agency contract, the agent shall render an account of the entrusted affair.

Article 402 Agent's Act Binding on Principal; Exceptions Where the agent, acting within the scope of authority granted by the principal, entered into a contract in its own name with a third person who was aware of the agency relationship between the principal and agent, the contract is directly binding upon the principal and such third person, except where there is conclusive evidence establishing that the contract is only binding upon the agent and such third person.

Article 403 Agent's Non-performance toward Principal Due to Act of Third Person; Non-performance toward Third Person Due to Act of Principal Where the agent entered into a contract in its own name with a third person who was not aware of the agency relationship between the agent and the principal, if the agent failed to perform its obligation toward the principal due to any reason attributable to such third person, the agent shall disclose the third person to the principal, allowing it to exercise the agent's rights against such third person, except where the third person would not have entered into the contract with the agent had it known the identity of the principal. Where the agent failed to perform its obligation toward the third person due to any reason attributable to the principal, the agent shall disclose the principal to the third person, allowing the third person to select in alternative either the principal or the agent as the other contract party against whom to make a claim, provided that the third person may not subsequently change its selection of the contract party. Where the principal exercises the rights of the agent against the third person, the third person may avail itself of any defense it has against the agent. Where the third person selects the principal as the other party to the contract, the principal may avail itself of any defense it has against the agent as well as any defense the agent has against the third person.

Article 404 Property Acquired by Agent Any property acquired by the agent in the course of handling the entrusted affair shall be turned over to the principal.

Article 405 Remuneration to Agent Upon