In the Event of Void of Contract: Application of the Restitution Rules in the Chinese Civil Code

Abstract

If a contract that includes a payment is void, the rule of Article 157 of the Civil Code of PRC “return of the property” can be the relief of real right or the relief of obligation. In particular, when the contract is aimed at the transfer of ownership, and its public notice is not completed, the claim for recovery shall be established; on the contrary, the claim for unjust enrichment shall be established. The difference in contract type is decisive in determining the claim of restitution. In the event of the contract void, the right of claims derives from property law, unjust enrichment law， or contract law. Therefore, Article 157 cannot be used as the basis of the independent claim. Regarding forms of restitution, restitution in kind is the principle, and restitution in value is the supplement, but the parties may make a special agreement on the form. The scope of restitution for the recipient includes the extant enrichments and the fruits; meanwhile, its subjective state should be considered. If malicious, he should return the fruits that should have been collected but not collected. Overall, the Contract Part of the Civil Code realizes the renewal and expansion of unjust enrichment law.