in legal proceedings.
Chinese lawyers infrequently are retained by other Chinese, and instead are hired to represent foreign parties before administrative or judicial bodies.7
China's Foreign Economic Contract Law
In 1985, an Economic Contract Law Involving Foreigners (Foreign Economic Contract Law or FECL) was adopted.8
It appears that Chinese law will apply to a substantial number of foreign trade transactions, but in the absence of a relevant provision of Chinese law governing a specific contractual dispute, the FECL provides that international practice shall apply. The problem with using this body of law is that it is undefined.9 It is reasonable to assume that the Chinese party will take the position that Chinese law will control the validity of the transaction, especially if arbitration or litigation occurs in China.10
Beginning in 1978, individuals acquired greater freedom to take part in economic activity, and, as a result, to enter into contracts.11 Prior to that time, virtually all economic activity was conducted by state-owned enterprises.12
Relational contracting is the predominant form of contracting in the PRC, and derives from two sources: the variety of ways the contracts originate in society and the relational configuration that unites the primary parties themselves.13
Economic entities of all kinds are understood by the Chinese as sufficiently autonomous to enter into genuine contractual relationships and are known as primary parties.14 Secondary parties approve the contract after the primary parties have negotiated it and agreed to its terms.15
Although the FECL provides an overarching framework for contracting activity, it is not the exclusive statutory source of contract norms. The norms that arise from the contracting parties, custom in trade, and other nonstatutory sources of law provide background for and give life to any statute or set of regulations, which would be virtually...