China tightens control over commercial contracts

The State Administration of Commerce and Industry (SAIC) recently promulgated the Measures on Supervision and Handling of Unlawful Contractual Practices (the Measures) , which will take effect as of November 13, 2010. The Measures aim to further regulate the entry and performance of commercial contracts, paying particular attention to how standard contractual clauses are applied by the business operators, in an effort to better protect the legitimate interests of the contracting parties.

The Measures define "unlawful contractual practices" as behaviours designed to derive illegal profits from contractual activities and in contravention of applicable laws and regulations. The Measures target three types of actions. The first is contractual fraud, meaning obtaining money or valuables by means of fabricating facts or concealing truth for the purposes of possessing money or valuables of the others. The second is seeking an illegitimate benefit by means of bribery,