Article 518

Where there are two or more creditors, and any or all of the creditors may request the debtor to perform the obligation, their claim is a joint and several claim; where there are two or more debtors, and the creditor can request any or all of the debtors to perform the full obligation, the obligation is a joint and several obligation.

A joint and several claim or a joint and several obligation shall be provided by law or agreed by the parties.

Article 519

Where it is difficult to determine the share of obligation among the debtors assuming joint and several liabilities, each debtor is deemed to owe an equal share.

A debtor assuming joint and several liabilities who has assumed obligation in excess of his own share has the right to contribution against the other debtors assuming joint and several liabilities to the extent of the share not performed by the other debtors, and accordingly shall be entitled to the rights of a creditor, provided that the other creditors’ interests shall not be harmed. The defenses of the other debtors assuming joint and several liabilities against the creditor may be asserted against such a debtor.

Where a debtor assuming joint and several liabilities against whom the right to contribution is claimed is unable to perform the share he is liable to assume, the other debtors assuming joint and several liabilities shall be liable for the relevant part of the obligation on a pro rata basis.

Article 520

Where one of the debtors assuming joint and several liabilities has performed his obligation, offset his obligation, or placed the subject matter of the obligation in escrow, the obligation of the other debtors owed to the creditor is extinguished to the corresponding extent, and such a debtor has the right to contribution against the other debtors in accordance with the provisions of the preceding Article.

Where the obligation of one of the debtors assuming joint and several liabilities is discharged by the creditor, the obligation of the other debtors assuming joint and several liabilities owed to the creditor is extinguished to the extent of the share that such a debtor assumes.

Where the obligation of one of the debtors assuming joint and several liabilities has merged with the claim of the creditor to be held by the same person, after deducting such share of obligation, the creditor’s claim against the other debtors assuming joint and several liabilities continues to exist.

Where a creditor delays in accepting the performance of one of the debtors assuming joint and several liabilities, such delay takes effect on the other debtors assuming joint and several liabilities.

Article 521

Where it is difficult to determine the share among the creditors with joint and several claims, each creditor is deemed to have an equal share.

A creditor who has accepted the performance of obligation in excess of his own share shall reimburse the other creditors with joint and several claims with him on a pro rata basis.

The relevant provisions on a joint and several obligation in this Chapter may be applied to a joint and several claimmutatis mutandis.

Article 522

Where the parties agree that the debtor shall perform the obligation to a third

person, if the debtor fails to perform the obligation to the third person or the performance does not conform to the agreement, the debtor shall bear default liability to the creditor.

Where it is provided by law or agreed by the parties that a third person may directly request the debtor to perform the obligation to him, and the third person does not explicitly reject it within a reasonable period of time, if the debtor fails to perform the obligation to the third person or the performance does not conform to the agreement, the third person may request the debtor to bear default liability. The defenses that the debtor has against the creditor may be asserted against the third person.

Article 523

Where the parties agree that the obligation shall be performed by a third person to the creditor, if the third person fails to perform the obligation or the performance does not conform to the agreement, the debtor shall bear default liability to the creditor.

Article 524

Where a debtor fails to perform an obligation, and a third person has an lawful interest in the performance of the obligation, the third person is entitled to perform it to the creditor on behalf of the debtor, unless the obligation may only be performed by the debtor based on the nature of the obligation, as agreed by the parties, or as provided by law.

After the creditor accepts the performance of such obligation by the third person, his claim against the debtor shall be assigned to the third person, unless otherwise agreed by the debtor and the third person.

Article 525

Where the parties have mutual obligations to each other and there is an order of performance of the obligations, the parties shall perform the obligations at the same time. Any party has the right to reject the other party's request for performance before the other party performs. Any party has the right to reject the other party's request for the corresponding performance if the other party’s performance does not conform to the agreement.

Article 526

Where the parties have mutual obligations to each other and there is an order of performance of the obligations, if the party obligated to perform first fails to perform the obligation, the party obligated to perform later has the right to reject the request for performance made by that party. Where the performance of the party obligated to perform first does not conform to the agreement, the party obligated to perform later has the right to reject the request made by the former party for performance of the corresponding obligation.

Article 527

A party obligated to perform the obligation first may suspend his performance if there is definite evidence proving that the other party falls under any of the following situations:

(1)   its operating conditions are seriously deteriorated;

(2)   it transfers property or withdraws capital to evade debts;

(3)   the good will of its business has been lost; or

(4)   there’s another circumstance under which it has lost or is losing its ability to perform the obligation.

A party that suspends the performance with no such definite evidence shall bear default liability.

Article 528

A party who suspends performance in accordance with the provisions of the preceding Article shall notify the other party in a timely manner. The performance shall be resumed if the other party provides an appropriate bond. After a party suspends its performance, where the other party fails to restore his ability to perform the obligation and fails to provide an appropriate bond within a reasonable period of time, it shall be deemed to be an indication through his act that the party will not perform his principal obligation, and the party that suspends the performance may cancel the contract and may request the other party to bear default liability.

Article 529

Where a debtor’s performance of an obligation has become difficult owing to the reason that the creditor fails to notify the debtor that it has split into two or more entities, merges with another entity, or changed its domicile, the debtor may suspend performance or place the subject matter in escrow.

Article 530

A creditor may reject the debtor’s early performance of the obligation, unless the early performance is not detrimental to the interests of the creditor.

Any additional expenses incurred to the creditor due to the debtor’s early performance of the obligation shall be borne by the debtor.

Article 531

A creditor may reject the debtor’s partial performance of the obligation, unless the partial performance is not detrimental to the interests of the creditor.

Any additional expenses incurred to the creditor due to the debtor’s partial performance of the obligation shall be borne by the debtor.

Article 532

After a contract becomes effective, any party shall not fail to perform its contractual obligations on the ground that either party’s name or entity name, legal representative, the responsible person, or the person handling the contract has been changed.

Article 533

After a contract is formed, where a fundamental condition upon which the contract is concluded is significantly changed which are unforeseeable by the parties upon conclusion of the contract and which is not one of the commercial risks, if continuing performance of the contract is obviously unfair to one of the parties, the party that is adversely affected may re-negotiate with the other party; where such an agreement cannot be reached within a reasonable period of time, the parties may request the people’s court or an arbitration institution to rectify or rescind the contract.

Article 537

Where the people’s court determines that the right of subrogation has been established, the counterparty of the debtor shall perform the obligation to the creditor. After the performance is accepted by the creditor, the corresponding rights and obligations between the creditor and the debtor, and those between the debtor and the counterparty, are terminated. Where the debtor’s claim or an accessory claim related thereto against the counterparty is subject to preservation or enforcement measures, or where the debtor becomes bankrupt, it shall be dealt with in accordance with the provisions of the relevant laws.

Article 538

Where a debtor gratuitously disposes of his proprietory rights and interests by waiving his claims, waiving the security for his claims, or transferring his properties without consideration, and the like, or maliciously extends the period of performance of his due claim, and the enforcement of the creditor’s claim is thus adversely affected, the creditor may request the people's court to revoke the debtor's act.

Article 539

Where a debtor transfers his property at an obviously unreasonably low price, takes anothers’ property or provides security for anothers’ obligation at an obviously unreasonable high price, and the enforcement of the creditor’s claim is thus adversely affected, the creditor may request the people’s court to revoke the debtor’s act if the counterparty of the debtor knows or should have known such circumstance.

Article 540

The scope of the right to revocation shall be limited to the creditor’s claim. The necessary expenses for the creditor to exercise the right to revocation shall be borne by the debtor.

Article 541

The right to revocation shall be exercised within one year from the date on which the creditor knows or should have known the cause for the revocation. The right to revocation shall be extinguished where a creditor does not exercise such right within five years since the date on which the act of the debtor occurs.

Article 542

Where an act of the debtor adversely affecting the enforcement of the creditor’s claim is revoked, such act does not have legal effectab initio.

Chapter VI

Modification and Assignment of Contracts

Article 543

The parties may modify the contract upon agreement through consultation.

Article 544

Where the content of the contract that the parties agree to modify is not clear, it is presumed that the contract has not been modified.

Article 545

A creditor may assign his claim in whole or in part to a third person, except that:

(1)   a claim is not assignable by virtue of its nature;

(2)   a claim is not assignable as agreed by the parties; or

(3)   a claim is not assignable in accordance with law.

Where the parties agree that a non-pecuniary claim may not be assigned, such agreement shall not be asserted against abona fidethird person. Where the parties agree that a pecuniary claim may not be assigned, such agreement shall not be asserted against a third person.

Article 546

Where a creditor assigns his claim but fails to notify the debtor thereof, the assignment is not effective against the debtor.

The notice of the assignment of a claim may not be revoked, unless consented to by the assignee.

Article 547

Where a creditor assigns his claim, the assignee shall acquire the accessory right related to the claim, unless the accessory right belongs exclusively to the creditor.

Failure to register the assignment of the accessory right or failure to change the possession thereof shall not affect the acquisition of the accessory right by the assignee.

Article 548

After a debtor receives a notice of assignment of a claim, the debtor’s defenses against the assignor may be asserted against the assignee.

Article 549

A debtor may claim a set-off against the assignee under any of the following circumstances:

(1)   when the debtor receives the notice of assignment of a claim, the debtor has a claim against the assignor which becomes due prior to or at the same time of the due date of the assigned claim; or

(2)    the debtor’s claim and the assigned claim are generated on the basis of the same contract.

Article 557

A claim or obligation shall be terminated under any of the following circumstances:

(1)   the obligation has been performed;

(2)   the obligations are offset against each other;

(3)   the debtor has placed the subject matter in escrow in accordance with law;

(4)   the creditor has exempted the obligation;

(5)   the claim and obligation are merged to be held by the same person; or

(6)    any other circumstance under which the parties’ agreement is terminated as provided by law or agreed by the parties.

The relationship of rights and obligations under a contract shall be terminated upon rescission of the contract.

Article 558

After the parties’ claims and obligations are terminated, the parties shall, in compliance with the principle of good faith and the like, perform such obligations as sending notification, rendering assistance, keeping confidentiality, and retrieving the used items according to the course of dealing.

Article 559

Upon termination of a claim and an obligation, a right accessory to the claim shall be extinguished concomitantly, unless otherwise provided by law or agreed by the parties.

Article 560

Where a debtor owes to a creditor multiple obligations of the same kind, and the debtor’s performance is not sufficient to discharge all of the obligations, upon making performance, the debtor shall designate which obligation is to be discharged, unless otherwise agreed by the parties.

Where the debtor fails to make such a designation, the due obligation shall be performed first. Where multiple obligations are all due, the obligation not secured or with the least security shall be performed firs. Where none of the obligations are secured or the obligations are equally secured, the obligation with which the debtor assumes the heaviest burden shall be performed first. Where the burdens are the same, the obligations shall be performed in the order of their due dates. Where the due dates are the same, the obligations shall be performed on a pro rata basis.

Article 561

In addition to performing the principal obligation, a debtor shall pay to the creditor interests and other expenses related to the enforcement of the obligation. Where the payment is not sufficient to discharge all of the obligations, unless otherwise agreed by the parties, he shall perform the obligation in accordance with the following order:

(1)   the relevant expenses incurred by the creditor for enforcing his claim;

(2)   the interests; and

(3)   the principal obligation.

Article 562

The parties may rescind the contract upon agreement through consultation.

The parties may agree on the causes for rescission of the contract by a party. When a cause for rescission of contract arises, the party with the right to rescission may rescind the contract.

Article 563

The parties may rescind the contract under any of the following circumstances:

(1)   the purpose of a contract is not able to be achieved due toforce majeure;

(2)    prior to expiration of the period of performance, one of the parties explicitly expresses or indicates by his act that he will not perform the principal obligation;

(3)   one of the parties delays his performance of the principal obligation and still fails to perform it within a reasonable period of time after being demanded;

(4)    one of the parties delays his performance of the obligation or has otherwise acted in breach of the contract, thus makes it impossible for the purpose of the contract to be achieved; or

(5)   any other circumstance as provided by law.

For a contract under which the debtor is required to continuously perform an obligation for an indefinite period of time, the parties thereto may rescind the contract at any time, provided that the other party shall be notified within a reasonable period of time.

Article 564

Where a time limit for exercising the right to rescind the contract is provided by law or agreed by the parties, if the parties have not exercised such right upon expiration of the period, such a right shall be extinguished.

Where no time limit for exercising the right to rescind the contract is provided by law or agreed by the parties, such a right shall be extinguished if the party with the right to rescission does not exercise such right within one year after he knows or should have known the causes for rescission, or within a reasonable period of time after being demanded by the other party.

Article 565

Where one of the parties requests to rescind the contract in accordance with law, the other party shall be duly notified. The contract shall be rescinded at the time the notice reaches the other party, or, where the notice states that the contract shall be automatically rescinded if the debtor fails to perform his obligation within a specified period of time, the contrct shall be rescinded when the debtor fails to perform the obligation upon expiration of such specified period of time. Where the other party has objections to the rescission of the contract, either party may request the people's court or an arbitration institution to determine the validity of the rescission.

Where one of the parties, without notifying the other party, requests the rescission of the contract by directly filing a lawsuit or applying for arbitration in accordance with law, and the people’s court or arbitration institution confirms such request, the contract shall be rescinded when a duplicated copy of the complaint or the application letter for arbitration is served on the other party.

Article 566

After a contract is rescinded, where the obligations have not yet been performed, the performance shall cease; where the obligations have already been performed, the parties may, taking into account the performance status and the nature of the contract, request restoration to the original status or other remedial measures taken, and have the right to request for compensation for losses.

Where a contract is rescinded due to a default, the party with the right to rescind the contract may request the breaching party to bear default liability, unless otherwise agreed by the parties.

After the principal contract is rescinded, a security provider shall still be obligated to secure the debtor’s liability, unless otherwise agreed in the security contract.

Article 567

Termination of the relationship of rights and obligations under a contract does not affect the validity of the contract clauses regarding settlement and liquidation.

Article 568

Where the parties mutually owe obligations to each other, and the subject matter of the obligations are of the same kind and quality, any party may offset his obligation against the due obligation of the other party, unless the obligation cannot be offset by virture of the nature of the obligations, or in accordance with the agreements by the parties or the provisions of law.

A party who claims a set-off shall notify the other party. The notice shall become effective when it reaches the other party. No conditions or time limit may be attached to the set-off.

Article 569

Where the parties mutually owe obligations to each other and the subject matter of the obligations are not of the same kind or quality, the obligations may also be offset upon agreement by the parties through consultation.

Article 570

Where it is difficult to perform an obligation under any of the following circumstances, a debtor may place the subject matter in escrow:

(1)   the creditor refuses to accept the performance without just course;

(2)   the creditor cannot be located;

(3)    the creditor dies with his heirs or estate administrator not determined, or the creditor loses his capacity for performing civil juristic acts with no guardian determined; or

(4)   any other circumstance as provided by law.

Where the subject matter is not suitable for being placed in escrew or the expenses therefor are too high, the debtor may sell the subject matter through auction or sale and place the proceeds thus obtained in escrow in accordance with law.

Article 571

A subject matter or the proceeds obtained from auction or sale of the subject matter is placed in escrow where the debtor delivers the subject matter or proceeds thereof to the escrow agency in accordance with law.

Where a subject matter or its proceeds has been placed in escrow, the debtor is deemed to have delivered the subject matter to such extent.

Article 572

After a subject matter is placed in escrow, the debtor shall promptly notify the creditor or the creditor’s heir, estate administrator, guardian, or custodian for his property.

Article 573

After a subject matter is placed in escrow, the risk of destruction, damage, or loss thereof shall be assumed by the creditor. During the period the subject matter is  placed in escrow, the accrued proceeds of the subject matter shall belong to the creditor. The expenses thus incurred shall be borne by the creditor.

Article 574

The creditor may collect the subject matter placed in escrow at any time, except that where the creditor owes due obligation to the debtor, the escrow agency shall reject the creditor’s request for collecting it before the creditor performs such obligation or providing security therefor.

The creditor’s right to collect the subject matter placed in escrow is extinguished if such right is not exercised within five years from the date the subject matter is delivered to the escrow agency, and such subject matter shall be escheated to the State after the escrow agency’s expenses are deducted. However, where a creditor fails to perform his due obligation to the debtor, or where the creditor waives his right to collect the subject matter placed in escrow in writing to the escrow agency, the debtor has the right to take back the subject matter after paying the escrow agency’s expenses.

Article 575

Where a creditor exempts part or all of the debtor’s obligations, the claims and obligations shall be terminated in part or in whole, unless the debtor objects within a reasonable period of time.

Article 576

Where a claim and an obligation are merged to be held by the same person, the claim and obligation shall be terminated, unless it is detrimental to the interests of a third person.

Chapter VIII Default Liability

Article 577

Where a party fails to perform his contractual obligation or his performance does not conform to the agreement, he shall bear default liability such as continuing to perform his obligations, taking remedial measures, or compensating for losses.

Article 578

Where a party explicitly expresses or indicates by his act that he will not perform his contractual obligation, the other party may request the former party to bear default liability before expiration of the time period of performance.

Article 579

Where a party fails to pay the price, remuneration, rent, or interests, or fails to perform another pecuniary obligation, the other party may request for such payment or performance.

Article 580

Where a party fails to perform a non-pecuniary obligation or his performance does not conform to the agreement, the other party may request for such performance unless:

(1)   the performance is impossible eitherde jureorde facto;

(2)    the object of the obligation is not suitable for a compulsory performance or the expenses for the performance are too high; or

(3)    the creditor fails to request for performance within a reasonable period of time.

Where one of the situations specified in the preceding paragraph exists so that the purpose of the contract cannot be achieved, the people’s court or an arbitration institution may terminate the contractual relationship of rights and obligations upon request by a party, but the default liability shall still be borne without being affected.

Article 581

Where a party fails to perform his obligation or his performance does not conform to the agreement, if the obligation shall not be enforced by virtue of the nature of the obligation, the other party may request such party to bear the expenses of a substitute performance by a third person.

Article 582

Where the performance does not conform to the agreement, default liability shall be borne in accordance with the contract between the parties. Where the default liability is not stipulated or is not clearly stipulated in the contract, and if it cannot be determined according to the provisions of Article 510 of this Code, the aggrieved party may, by virtue of the nature of the object and according to the degree of the loss, reasonably request the other party to bear the default liability such as repair, redoing, replacement, return of the object, decrease in price or remuneration, and the like.

Article 583

Where a party fails to perform his contractual obligation or his performance does not conform to the agreement, he shall make compensation if, after he has performed his obligation or has taken remedial measures, the other party still suffers loss.

Article 584

Where a party fails to perform his contractual obligation or his performance does not conform to the agreement so that the other party suffers loss, the amount of compensation shall be equivalent to the loss caused by the breach of contract, including the benefits expected to be obtained should the contract had been performed, except that it shall not exceed the loss that may be caused by the breach that the breaching party forsees or should have forseen at the time of conclusion of the contract.

Article 585

The parties may agree that, upon default by a party, a certain amount of liquidated damages shall be paid to the other party according to the circumstance of the breach, or the parties may agree on the method of calculating the compensation for losses arising from the breach.

Where the agreed liquidated damages are lower than the loss caused, the people's court or an arbitration institution may increase the amount upon request of a party. Where the agreed liquidated damages are excessively higher than the loss caused, the people's court or an arbitration institution may make appropriate reduction upon request of a party.

Where the parties agree on the liquidated damages for delayed performance, the breaching party shall continue to perform the obligation after paying the liquidated damages.

Article 586

The parties may agree that one party deposits earnest money to the other party to secure his claim. An earnest money deposit contract becomes effective upon actual delivery of the earnest money.

The amount of the earnest money shall be agreed by the parties, except that it shall not exceed 20% of the value of the object of the principal contract, and any excessive part does not have the effect as earnest money. Where the amount of the earnest money actually delivered is more or less than the agreed amount, the agreed amount of the earnest money shall be deemed to have been changed.

Article 587

After a debtor has performed his obligation, the earnest money shall be calculated as part of the price or be refunded. Where a party paying the earnest money fails to perform his obligation or fails to perform it in conformity with the agreement, so that the purpose of the contract cannot be achieved, he is not entitled to request refund of the earnest money. Where a party receiving the earnest money fails to perform his obligation or fails to perform it in conformity with the agreement, so that the purpose of the contract cannot be achieved, he shall refund twice the amount of the earnest money to the other party.

Article 588

Where the parties agree on both liquidated damages and earnest money, when a party defaults, the other party may choose to apply either the clause on the liquidated damages or the clause on the earnest money.

Where the earnest money is not sufficient to compensate the losses caused by one party’s default, the other party may request compensation for the losses in excess of the amount of the earnest money.

Article 589

Where a debtor performs his obligation in accordance with the agreement, and the creditor refuses to accept the performance without just cause, the debtor may request the creditor to compensate for any additional expenses.

The debtor does not need to pay interests for the period of delay in acceptance by the creditor.

Article 590

Where a party is unable to perform the contract due toforce majeure, he shall be exempted from liability in whole or in part according to the impact of theforce majeure, unless otherwise provided by law. The party unable to perform the contract due toforce majeureshall promptly notify the other party to mitigate the losses that may be caused to the other party, and shall provide proof of theforce majeurewithin a reasonable period of time.

Where theforce majeureoccurs after a party’s delay in performance, such party’s default liability shall not be exempted.

Article 591

After a party defaults, the other party shall take appropriate measures to prevent further loss. Where the loss is aggravated due to the failure of taking appropriate measures, no compensation shall be claimed for the aggravated part of the losses.

Article 597

If the ownership of a subject matter is unable to be transferred owing to the fact that the seller fails to obtain the right of disposal, the buyer may rescind the contract and request the seller to bear default liability.

Where there are laws, administrative regulations prohibiting or restricting the transfer of a subject matter, such provisions shall be followed.

Article 598

A seller shall perform its obligation of delivering the subject matter or the documents for taking delivery thereof, and transferring the ownership over the subject matter to the buyer.

Article 599

A seller shall deliver the relevant certificates and information other than the documents for taking delivery of the subject matter to the buyer in accordance with the contract or the course of dealing.

Article 600

Where a subject matter to be sold involves intellectual property rights, unless otherwise provided by law or agreed by the parties, the intellectual property rights thereof does not belong to the buyer.

Article 601

A seller shall deliver the subject matter at a time as agreed in the contract. Where a time period for delivery is stipulated in the contract, the seller may deliver the subject matter at any time within such period.

Article 602

Where there is no agreement between the parties on the time period for delivery or the agreement is unclear, the provisions of Article 510 and Subparagraph (4) of Article 511 of this Code shall be applied.

Article 603

A seller shall deliver the subject matter at the agreed place of delivery.

Where there is no agreement between the parties on the place of delivery or the agreement is unclear, if it cannot be determined according to the provisions of Article 510 of this Code, the following provisions shall be applied:

(1)   where the subject matter needs to be transported, the seller shall consign it to the first carrier for its delivery to the buyer; and

(2)   where the subject matter does not need to be transported, if the seller and the buyer know the location of the subject matter when they conclude the contract, the seller shall deliver the subject matter at the said location; if the location of the subject matter is unknown, the seller shall deliver the subject matter at the seller's place of business at the time when the contract is concluded.

Article 604

The risks of destruction, damage, or loss of the subject matter shall be borne by the seller prior to the delivery and by the buyer after the delivery, unless otherwise provided by law or agreed by the parties.

Article 605

Where a subject matter fails to be delivered within the agreed time limit owing to the buyer’s reason, the buyer shall bear the risks of destruction, damage, or loss of the subject matter from the time he breaches the agreement.

Article 606

Where a seller sells a subject matter en route that has been consigned to a carrier for transport, unless otherwise ageed by the parties, the risks of destruction, damage, or loss of the subject matter shall be borne by the buyer from the time when the contract is formed.

Article 607

A buyer shall bear the risks of destruction, damage, or loss of the subject matter when the seller has transported the subject matter to the place designated by the buyer and delivered to the carrier in accordance with the agreement.

Where there is no agreement between the parties on the place of delivery or the agreement is unclear, if the subject matter needs to be transported according to Subparagraph (1) of the second paragraph of Article 603 of this Code, the buyer shall bear the risks of destruction, damage, or loss of the subject matter when the seller consigns the subject matter to the first carrier for transport.

Article 608

Where a seller has placed the subject matter at the place of delivery in accordance with the agreement or the provisions of Subparagraph (2) of the second paragraph of Article 603 of this Code, if the buyer fails to take delivery thereof in default, the risks of destruction, damage, or loss of the subject matter shall be borne by the buyer from the time the buyer defaults.

Article 609

A seller's failure to deliver the documents and information of the subject matter in accordance with the agreement does not affect the shift of the risks of destruction, damage, or loss of the subject matter.

Article 610

Where a subject matter fails to meet the quality requirements so that the purpose of the contract cannot be achieved, the buyer may refuse to accept the subject matter or may rescind the contract. Where the buyer refuses to accept the subject matter or rescind the contract, the risks of destruction, damage, or loss of the subject matter shall be borne by the seller.

Article 611

Where a seller’s performance is not in conformity with the agreement, the assumption of the risks of destruction, damage, or loss of the subject matter by the buyer does not affect the buyer's right to request the seller to bear default liability.

Article 612

A seller has an obligation to guarantee that no third person has any right over the subject matter delivered, unless otherwise provided by law.

Article 613

Where, at the time a contract is concluded, the buyer knows or should have known that a third person has a right over the subject matter of the contract, the seller shall not assume the obligation provided in the preceding Article.

Article 614

Where a buyer has a definite evidence to prove that a third person has a right over the subject matter, he may suspend payment therefor, unless the seller has provided an appropriate bond.

Article 615

A seller shall deliver the subject matter in conformity with the quality requirements as agreed by the parties. Where the seller provides quality specifications of the subject matter, the subject matter delivered shall conform to the specified quality requirements.

Article 616

Where there is no agreement between the parties on the quality requirements of the subject matter or the agreement is unclear, if the quality requirements cannot be determined according to the provisions of Article 510 of this Code, the provisions of Subparagraph (1) of Article 511 of this Code shall be applied.

Article 617

Where a subject matter delivered by the seller fails to meet the quality requirements, the buyer may request the seller to bear default liability in accordance with the provisions of Article 582 to 584 of this Code.

Article 618

Where the parties agree to alleviate or exempt the seller’s liability for the defects of the subject matter, if the seller, intentionally or by gross negligence, fails to inform the buyer about the defect of the subject matter, he has no right to claim alleviation or exemption of the liability.

Article 619

A seller shall deliver the subject matter in compliance with the packaging method as agreed in the contract. Where there is no agreement between the parties on the packaging method or the agreement is unclear, if the packing method cannot be determined according to the provisions of Article 510 of this Code, the subject matter shall be packed in a general way, or, in the absence of a general way, in a manner sufficient to protect the subject matter and conducive to saving resources and protecting the ecological environment.

Article 620

After a buyer receives the subject matter, he shall inspect it within the agreed period for inspection. If there is no agreed period for inspection, the buyer shall inspect it in a timely manner.

Article 621

Where the parties have agreed on a period for inspection, the buyer shall, within the period for inspection, notify the seller of any inconformity of the subject matter with the agreed quantity or quality. If notice is not given to the seller owing to the buyer’s indolence, the subject matter is deemed to be in conformity with the agreed quantity or quality.

Where the parties have not agreed on a period for inspection, the buyer shall notify the seller of any inconformity of the subject matter with the agreed quantity or quality within a reasonable period of time after he discovers or should have discovered the inconformity. Where the buyer fails to notify the seller within a reasonable period of time or within two years after he takes delivery of the subject matter, the subject matter shall be deemed to be in conformity with the agreed quantity or quality, except that where there is a warranty period within which the quality of the subject matter is guaranteed, the warranty period shall be applied.

Where a seller knows or should have known that the subject matter delivered does not conform to the agreement, the buyer is not subject to the time limit for notification as provided in the preceding two paragraphs.

Article 622

Where a period for inspection agreed by the parties is excessively short, and it is difficult for the buyer to complete a comprehensive inspection within such a period by virtue of the nature of the subject matter and in accordance with the course of dealing, such period shall be deemed only as a period for the buyer to raise objections to the patent defects of the subject matter.

Where an agreed period for inspection or a warranty period for quality guarantee is shorter than the period provided by the relevant laws and administrative regulations, the latter shall prevail.

Article 623

Where the parties have not agreed on an inspection period, and the buyer has signed a delivery note, confirmation slip, or the like document on which the quantity, model, and specifications of the subject matter are stated, the buyer shall be presumed to have inspected the quantity and the patent defects of the subject matter, unless there is sufficient evidence to overturn such a presumption.

Article 624

Where a seller delivers a subject matter to a third person according to the instructions given by the buyer, if the inspection standard agreed between the seller and the buyer are inconsistent with that agreed between the buyer and the third person, the inspection standard agreed between the seller and the buyer shall prevail.

Article 625

Where, in accordance with the provisions of laws and administrative regulations or as agreed by the parties, the subject matter shall be recycled after expiration of its valid service life, the seller has the obligation to recycle the subject matter by himself or by an authorized third person.

Article 626

A buyer shall make payment in accordance with the agreed amount and method of payment. where there is no agreement between the parties on the amount of price  or the method of payment, or the agreement is unclear, the provisions of Article 510 and Subparagraph (2) and (5) of Article 511 of this Code shall be applied.

Article 627

A buyer shall make payment at the place agreed in the contract. Where there is  no agreement between the parties on the place of payment, or the agreement is unclear, if the place cannot be determined in accordance with the provisions of Article 510 of this Code, the buyer shall make the payment at the seller’s place of business, except that payment shall be made at the place where the subject matter or the document for taking delivery thereof is delivered if the payment is conditioned upon the delivery of the subject matter.

Article 628

A buyer shall make payment at the time agreed in the contract. Where there is no agreement between the parties on the time for payment, or the agreement is unclear, if the time for payment cannot be determined according to the provisions of Article 510 of this Code, the buyer shall make payment at the same time as it receives the subject matter or the document for taking delivery thereof.

Article 629

Where the amount of the subject matter delivered by a seller exceeds the agreed amount, the buyer may accept or refuse to accept the excessive part. Where the buyer accepts the excessive part, it shall pay for it at the price agreed in the contract. If the buyer refuses to accept the excessive part, he shall notify the seller in a  timely manner.

Article 630

Any proceeds accrued from the subject matter before delivery shall belong to the seller and any proceeds accrued from the subject matter after delivery shall belong to the buyer, unless otherwise agreed by the parties.

Article 631

Where a contract is rescinded due to the inconformity of the principal subject matter with the agreed requirements, the effect of the rescission shall be effective against the accessory subject matter. Where a contract is rescinded due to the inconformity of the accessory subject matter with the agreed requirements, the effect of the rescission shall be effective against the principal subject matter.

Article 632

Where the object of a contract is composed of several subject matters, if one of them fails to conform to the requirements agreed in the contract, the buyer may rescind the part of the contract in connection with that subject matter. However, where separation of the said subject matter from the other subject matters is to markedly harm the value of the subject matters of the contract, the buyer may rescind the contract in connection with the multiple subject matters concerned.

Article 633

Where the subject matters are to be delivered by installment, if a seller fails to deliver one lot of the subject matters, or has delivered the lot in a manner not in conformity with the agreement, so that the purpose of the contract in connection with the said lot cannot be achieved, the buyer may rescind the part of the contract in connection with the said lot.

Where a seller fails to deliver one lot of the subject matters, or delivered the lot in a manner not in conformity with the agreement, so that the subsequent delivery of the remaining lots cannot achieve the purpose of the contract, the buyer may rescind the part of the contract in connection with the said lot and the remaining lots.

Where a buyer has rescinded a part of the contract in connection with one lot of the subject matters, if the said lot and any other lot are interdependent on each other, the buyer may rescind the contract in connection with all the lots disregarding  whether they have been delivered or not.

Article 634

Where a buyer under an installment contract fails to make payment and the unpaid amount reaches one-fifth of the total price, if the buyer still fails to pay the due installment amount within a reasonable period of time after being demanded, the seller may request the buyer to pay the total sum or he may rescind the contract.

The seller who rescinds the contract may request the buyer to pay a fee for the use of the subject matter.

Article 635

The parties to a sale by sample shall seal up the sample and may make specifications of its quality. The subject matter delivered by the seller shall be identical in quality with the sample and its specifications.

Article 636

Where a buyer to a sale by sample is unaware of the sample's hidden defects, even if the subject matter delivered is identical with the sample, the quality of the subject matter delivered by the seller shall still conform to the general standard for the same category of goods.

Article 637

The parties to a sale on trial use may agree on a period for trial use of the subject matter. Where there is no agreement between the parties on the period for trial use or the agreement is unclear, if the period for trial use cannot be determined according to the provisions of Article 510 of this Code, it shall be determined by the seller.

Article 638

A buyer to a sale on trial use may purchase or refuse to purchase the subject matter within the period for trial use. Where, upon expiration of the period for trial use, the buyer makes no indication as to whether to purchase it or not, the buyer is deemed to have purchased the subject matter.

If a buyer to a sale on trial use has, within the period for the trial use, already made partial payment or has sold, leased, created a security interest in the subject matter, the buyer is deemed to have agreed to purchase it.

Article 639

Where there is no agreement between the parties to a sale on trial use on the fee for the use of the subject matter, or the agreement is unclear, the seller has no right to request the buyer to pay such fee.

Article 640

The risks of destruction, damage, or loss of the subject matter shall be borne by the seller within the period for the trial use.

Article 641

The parties may agree in a sales contract that the seller retains the ownership of the subject matter if the buyer fails to pay the price or perform other obligations.

The ownership of the subject matter retained by a seller, without being registered, shall not be asserted against a bona fide third.

Article 642

Where the parties agree that the seller shall retain the ownership of the subject matter of the contract, unless otherwise agreed by the parties, the seller has the right  to take back the subject matter if the buyer falls under any of the following circumstances before such ownership is transferred and losses are thus caused to the seller:

(1)   the buyer fails to make payment in accordance with the contract, and fails to pay it within a reasonable period of time after being demanded;

(2)     the buyer fails to fulfill the specific conditions in accordance with the contract; or

(3)     the buyer sells, pledges, or otherwise improperly disposes of the subject matter.

The seller may negotiate with the buyer to take back the subject matter. Where such negotiation fails, the procedures for enforcement of security interests may be applied mutatis mutandis.