etion Estimate = 10 Minutes

Figure 8 provides sample text included in service agreements regarding change, dissolution, and termination of the service agreement.

Modification of the agreement

In accordance with the PRC Contract Law, the parties to the service agreement may modify the contract upon consensus through consultation. To ensure clarity the law stipulates that contract shall be assumed as not having been modified if the content of the modification of the contract is not clearly agreed upon by the parties. It is recommended to confirm the modification in writing.

Termination of the agreement

The rights and obligations under a contract shall terminate in any of the following situations:

• Liabilities have all been met as contracted.
• The contract is dissolved.
• Liabilities are offset against each other.
• The debtor has deposited the targeted matter according to law.
• The creditor grants exemption from liabilities.
• Both creditor’s rights and liabilities are undertaken by one same person, or
• Other situations as provided for by law or stipulated by the parties.

Dissolution of the agreement

The parties may dissolve the contract upon consensus through consultation under any of the following circumstances:

• The aim of the contract cannot be attained because of force majeure. Force majeure is further discussed in unit 7.
• Before the period of performance expires, either party clearly indicates by word or by act that it will not discharge the principal debts.
• Either party delays the discharge of the principal debts and still fails to discharge them within a reasonable period of time after being urged.
• Either party delays the discharge of debts or is engaged in other illegal activities and thus makes realization of the aim of the contract impossible; or
• Any other circumstances as provided for by law.

If a time limit for exercising the right to dissolve the contract is provided for by laws or by agreement of the parties, and the party concerned does not exercise such right at the expiration of the time limit, such right shall vanish. If no time limit for exercising the right to dissolve is provided for by laws or by agreement of the parties, but the party concerned does not exercise such right within a reasonable period of time after being urged by the other party, such right shall vanish.

After the dissolution of a contract, for those clauses not yet performed, the performance shall cease. For those already performed, the party concerned may, in accordance with the situation of performance and the nature of the contract, demand their restoration to the original status or take other remedial measures, and have the right to claim compensation. The termination of rights and obligations under a contract shall not affect the validity of its clauses regarding settlement and liquidation.