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(Adopted and Promulgated by the Second Session of the Ninth National People's
Article 396 Definition of Agency Appointment Contract
An agency appointment contract is a contract whereby the principal and the agent
agree that the agent will handle the principal's affairs.
Article 397 Scope of Appointment
The principal may specifically appoint the agent to handle one or more of its
affairs, or generally appoint the agent to handle all of its affairs.
Article 398 Principal's Obligation to Prepay Expenses
The principal shall prepay the expenses for handling the entrusted affair. Any
expense necessary for handling the entrusted affair advanced by the agent shall
be repaid with interest by the principal.
Article 399 Agent's Obligation to Follow Instruction;
Deviation from Instruction
The agent shall handle the entrusted affair in accordance with the instruction
of the principal. Any required deviation from the principal's instruction is
subject to consent by the principal; in an emergency where the agent has difficulty
contacting the principal, the agent shall properly handle the entrusted affair,
provided that thereafter the agent shall timely notify the principal of the
situation.
Article 400 Delegation of Agency Subject to Consent;
Exceptions
The agent shall personally handle the entrusted affair. Subject to consent by
the principal, the agent may delegate the agency to a third person. If the delegation
is approved, the principal may issue instructions concerning the entrusted affair
directly to the delegate, and the agent is only responsible for its selection
of the delegate or its own instruction thereto. Where the agency is delegated
without consent, the agent shall be liable for any act of the delegate, except
in an emergency where the agent needs to delegate the agency in order to safeguard
the interests of the principal.
Article 401 Agent's Obligation to Inform
Upon request by the principal, the agent shall report on the progress of the
entrusted affair. Upon discharge of the agency contract, the agent shall render
an account of the entrusted affair.
Article 402 Agent's Act Binding on Principal; Exceptions
Where the agent, acting within the scope of authority granted by the principal,
entered into a contract in its own name with a third person who was aware of
the agency relationship between the principal and agent, the contract is directly
binding upon the principal and such third person, except where there is conclusive
evidence establishing that the contract is only binding upon the agent and such
third person.
Article 403 Agent's Non-performance toward Principal
Due to Act of Third Person; Non-performance toward Third Person Due to Act of
Principal
Where the agent entered into a contract in its own name with a third person
who was not aware of the agency relationship between the agent and the principal,
if the agent failed to perform its obligation toward the principal due to any
reason attributable to such third person, the agent shall disclose the third
person to the principal, allowing it to exercise the agent's rights against
such third person, except where the third person would not have entered into
the contract with the agent had it known the identity of the principal.
Where the agent failed to perform its obligation toward the third person due
to any reason attributable to the principal, the agent shall disclose the principal
to the third person, allowing the third person to select in alternative either
the principal or the agent as the other contract party against whom to make
a claim, provided that the third person may not subsequently change its selection
of the contract party.
Where the principal exercises the rights of the agent against the third person,
the third person may avail itself of any defense it has against the agent. Where
the third person selects the principal as the other party to the contract, the
principal may avail itself of any defense it has against the agent as well as
any defense the agent has against the third person.
Article 404 Property Acquired by Agent
Any property acquired by the agent in the course of handling the entrusted affair
shall be turned over to the principal.
Article 405 Remuneration to Agent
Upon completion of the entrusted affair by the agent, the principal shall pay
the remuneration thereto. Where the agency appointment contract is terminated
or the entrusted affair is not capable of being completed due to any reason
not attributable to the agent, the principal shall pay to the agent an appropriate
amount of remuneration. If the parties have agreed otherwise, such agreement
prevails.
Article 406 Liability of Agent; Unauthorized Act
Under an agency appointment contract for value, if the principal sustains any
loss due to the fault of the agent, the principal may claim damages. Under a
gratuitous agency appointment contract, if the principal sustains any loss due
to the agent's intentional misconduct or gross negligence, the principal may
claim damages.
Where the agent acted beyond the scope of authorization, thereby causing loss
to the principal, it shall pay damages.
Article 407 Agent Entitled to Indemnification in Case
of Loss
In the course of handling the entrusted affair, if the agent sustains any loss
due to a reason not attributable to itself, the agent may seek indemnification
from the principal.
Article 408 Additional Appointment by Principal Subject
to Consent
Subject to consent by the agent, the principal may, in addition to appointing
the agent, also appoint a third person to handle the entrusted affair. If such
appointment results in loss to the agent, it may seek indemnification from the
principal.
Article 409 Joint and Several Liability of Joint Agents
Where two or more agents jointly handle the entrusted affair, they are jointly
and severally liable to the principal.
Article 410 Right to Terminate at Any Time
Either the principal or the agent may terminate the agency appointment contract
at any time. Where the other party sustains any loss due to termination of the
contract, the terminating party shall indemnify the other party, unless such
loss is due to a reason not attributable to the terminating party.
Article 411 Discharge Due to Incapacitation
An agency appointment contract is discharged when either the principal or the
agent is deceased or incapacitated or enters into bankruptcy, except where the
parties have agreed otherwise, or where discharge is inappropriate in light
of the nature of the entrusted affair.
Article 412 Agent's Obligations in Case of Principal's
Incapacitation
Where discharge of the agency appointment contract due to the death, incapacitation
or bankruptcy of the principal will harm the principal's interests, the agent
shall continue to handle the entrusted affair before an heir, legal agent or
liquidation team thereof takes over the entrusted affair.
Article 413 Heir's Obligations in Case of Agent's Incapacitation
If the agency appointment contract is discharged as a result of the death, incapacitation
or bankruptcy of the agent, the heir, legal agent or liquidation team thereof
shall timely notify the principal. Where discharge of the agency contract will
harm the principal's interests, before the principal makes any care-taking arrangement,
the heir, legal agent or liquidation team of the agent shall take the necessary
measures.
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