Newsletter
IMPORTANT INTERPRETATION ON COMMODITY HOUSING SALE CONTRACTS
On 28 April 2003, the PRC Supreme People's Court (SPC) issued an interpretation on the relevant issues concerning the application of law for trying cases on dispute over contract for the sale of commodity houses. The interpretation took effect on 1 June 2003. In the PRC legal system, judicial interpretations are rulings made by the SPC concerning the specific application of laws, and have the force of law. In circum-stances where legislation makes no explicit pro-vision, or its provisions are not sufficiently clear, courts at all levels should make their judgments in accordance with SPC's judicial interpretations.
The interpretation contains explicit provisions on four long-standing points of dispute with regard to the sale of commodity housing (i.e. housing that can be bought and sold on the free market): (1) advertisements and promotional literature for the sale of commodity housing have the legal status of either an offer or an invitation for offer, according to their impact on the conclusion of the sale contract for the housing, and the price of the housing; (2) an advance sale contract for commodity housing should not be held void on the grounds that it was not registered with the competent authority; (3) under the circumstances set out in the interpretation, the seller is liable to pay compensation for losses up to the amount of purchase price already made; (4) the principles for determining liability with regard to incon-sistencies between the actual and contracted floor area of housing are based on a standard of accuracy of 3%.
The interpretation also addresses matters such as the rescission of housing sale contracts, the no-tification to parties, the assumption of risk, and the vendor's warranty liabilities. The issuance of the above interpretation will provide a stronger legal basis and greater protection for the rights of commodity housing purchasers.