II Concept of contract effectiveness Contract effectiveness means that the contract generates legal effect and imposes compulsory binding forces on the main parties and the third person of the contract. The legal binding forces are not from the will of the parties, but from the law. As far as the parties are concerned, the legal binding forces mean: rights and interests of the parties generated by the contract are protected by law. The parties must carry out obligations of the contract. Otherwise, they must take responsibilities for breaching the contract. As far as the third person is concerned, the third person is not allowed to violate public orders and customs or harm contract rights. 【1】 It is known from the concept of contract effectiveness that the conditions for contracts to take effect are as the following: (I) General key elements for contract effectiveness Key elements for contract effectiveness are not collectively listed in the Contract Law of our country. According to article 44 of the Contract Law, the precondition for contract effectiveness is contract establishment. So key elements for contract establishment are a part of key elements for contract effectiveness. In addition, the signing of contract by parties is regarded as a legal conduct. According to article 55 of General Principles of Civil Law, general key elements for valid contracts also include the following: 1 Parties of the contracting parties have corresponding capacity for civil conduct It is stipulated in term 1 of article 9 of the Contract Law that: “Parties signing any contract shall have legal capacity for private rights and capacity for civil conduct.” Parties of a contract are the main bodies of the contract and the contract is valid only when the parties have legal capacity for private rights and capacity for civil conduct. Legal persons shall sign contracts under the preconditions that the business scope is approved by relevant administrative organs and does not violate national regulations on limited operation, franchise operation and other controlled operations. When natural persons sign contracts, person with qualified capacity is allowed to sign contracts that guarantee his or her benefits, on which there are no quantity limits. It is also permitted for them to sign contracts suitable for their age, intelligence and spiritual and physical health. Person with full civil capacity is permitted to sign any contracts not prohibited by law. 2 True expression of meaning Legal conduct is a conduct whose core is meaning expression. Without meaning expression, there is no legal conduct. Modern civil law theories believe that meaning expression is the key element of legal conducts. Meaning expression means conducts of a doer by which the doer expresses his or her true expectations of the legal results. 【4】In a context, true expression of meaning refers to the consistency of the doer’s “heart-felt meaning” and “meaning of meaning expression”. According to principle of autonomy of meaning, true meaning expression of the parties when signing contracts is the precondition for effectiveness of the contracts. 3 Contract contents shall not violate law and public interests Not violating law means that expression contents shall not be against compulsory or prohibitive regulations, and it is also not allowed to abuse legal authorization or randomicity to avoid the laws. Law here shall be understood in an extensive sense. 【4】Laws mentioned here include laws stipulated by the NPC and its standing committee and administrative regulations issued by the State Council. 4 Confirmation and possibility of contract target Contract target refers to the object pointed jointly by contract rights and obligations. Contract confirmation means that contract target is confirmed when the contract is signed or by other forms after signing the contract. It is a common practice to confirm contract target when signing the contract and it is rare to confirm the target after the contract is signed, such as the case of maximum amount mortgage contract. Possibility of contract target means the possibility to materialize the contract. It is impossible to realize the contract if the contract target is not confirmed and it is meaningless to determine contract target if there is no possibility to materialize the contract. Therefore, confirmation and possibility of contract target is one of the key elements to validate the contract. (II) Special key elements for contract effectiveness 1 Contract with collateral conditions and term Parties can set up additional conditions for the effectiveness of contract so as to determine whether the contract is valid according to whether the additional conditions are materialized. The additional conditions weather uncertain things will happen in the future. Article 45 of the Contract Law stipulates that: “The parties may agree on some collateral conditions relating to the effectiveness of a contract. The contract with entry-into-force conditions shall be effective when such conditions are accomplished. The contract with dissolving conditions shall be null and void when such conditions are accomplished.” Article 46 of the Contract Law stipulates that: “The parties may agree on a conditional time period as to the effectiveness of the contract. A contract subject to an effective time period shall come into force when the period expires. A contract with termination time period shall become invalid when the period expires.” 2 Contract must follow legal forms Law has special regulations on contract forms. For example, article 56 of General Principles of Civil Law stipulates that: “A civil juristic act may be in written, oral or other form. If the law stipulates that a particular form be adopted, such stipulation shall be observed.” A contract will not generate legal power if its form is not correct. I think that the specific form needed by contract establishment is also the specific form needed by contract effectiveness. It is stipulated in article 44 of the Contract Law that: “Contracts set up according to law come into effect when the contracts are established.” So contract establishment and contract effectiveness happen at the same time. Therefore, the specific form for contract establishment is also the specific form for the precondition for the contract to be effective. In addition, if person with qualified capacity sign contracts not in conformity with his or her age, intelligence and spiritual and physical conditions, the contracts are valid only after the contracts are recognized by the legal agent of the person; contract signed in the name of the trustee when the signer has no right to act as an agent, or the agent over-use his or her authorized power, or the authorized power is terminated, the contract is valid only after being recognized by the trustee. So, contracts mentioned above are effective only when they conform to specific forms required by law and the conformity of contract with legal requirements on form is a condition for such contracts to take effect.
