Ar cle 497 A standard clause is void under any of the following circumstances:
(1) existence of a circumstance under which the clause is void as provided in Sec on 3 of Chapter VI of Book
One and Ar cle 506 of this Code;
(2) the party providing the standard clause unreasonably exempts or alleviates himself from the liability,
imposes heavier liability on the other party, or restricts the main rights of the other party; or
(3) the party providing the standard clause deprives the other party of his main rights.
Ar cle 498 Where a dispute arises over the understanding of a standard clause, the clause shall be
interpreted in accordance with its common understanding. Where there are two or more interpreta ons of a
standard clause, the clause shall be interpreted in a manner unfavorable to the party providing the standard
clause. Where a standard clause is inconsistent with a non-standard clause, the non-standard clause shall
prevail.
Ar cle 499 Where a rewarder through making a public announcement promises to pay a reward to anyone
who has completed a par cular act, the person who has completed the act may request the rewarder to pay.
Ar cle 500 During the course of concluding a contract, the party that falls under any of the following
circumstances and causes loss to the other party shall bear the liability for compensa on:
(1) under the guise of concluding a contract, engaging in consulta on with malicious inten on;
(2) inten onally concealing material facts or providing false informa on concerning the conclusion of the
contract; or
(3) conduc ng any other acts contrary to the principle of good faith.
Ar cle 501 The par es shall not disclose or improperly use the trade secrets or other con den al
informa on that are obtained in the course of concluding a contract, regardless of whether the contract is
formed or not. The party that discloses or improperly uses such trade secrets or informa on and thus causes
losses to the other party shall bear the liability for compensa on.
Chapter III E ect of Contracts
Ar cle 502 A contract formed in accordance with law becomes e ec ve upon its forma on, unless otherwise
provided by law or agreed by the par es.
Where there are laws or administra ve regula ons providing that a contract shall be subject to the approval
and other procedures, such provisions shall be followed. Where failure to complete the approval or other
procedures is to a ect the validity of the contract, the validity of the clauses concerning the performance of
an obliga on of ling for approval, and the like, and the other relevant clauses in the contract shall not be
a ected. Where the party obligated to complete applica on for approval or other procedures fails to do so,
the other party may request the former party to bear the liability for breach of such obliga on.
Where there are laws or administra ve regula ons providing that modi ca on, assignment, or rescission of
a contract shall be subject to approval or other procedures, such provisions shall be followed.
Ar cle 503 Where a person without authority concludes a contract in the name of a principal, and if the
principal has already started performing the contractual obliga ons or accepted the performance of the
other party, the contract is deemed ra ed.
Ar cle 504 Where the legal representa ve of a legal person or the responsible person of an unincorporated
organiza on concludes a contract ultra vires, such an act is e ec ve and the contract is binding on the legal
person or the unincorporated organiza on unless the other party knows or should have known that the legal
representa ve or the responsible person acts ultra vires,.
Ar cle 505 Where the par es conclude a contract beyond their scope of business, the validity of the contract
shall be determined according to the provisions in Sec on 3 of Chapter VI of Book One of this Code and this
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