Legal basis: Civil Code of People's Republic of China (PRC).
Article 502 A lawfully formed contract shall become effective upon its formation, unless otherwise provided by law or agreed by the parties. In accordance with the provisions of laws and administrative regulations, if the contract should go through the approval procedures, such provisions shall prevail. If the failure to go through the formalities such as approval affects the effectiveness of the contract, it will not affect the performance of the obligation clauses such as approval and the effectiveness of relevant clauses in the contract. If the party that should go through the formalities for approval fails to perform its obligations, the other party may require it to bear the responsibility for violating its obligations. The modification, assignment and dissolution of a contract shall be subject to the provisions of laws and administrative regulations, and the provisions of the preceding paragraph shall apply and shall be subject to approval.
Article 506 The following exemption clauses in the contract are invalid: (1) Causing personal injury to the other party; (2) Causing property losses to the other party due to intentional or gross negligence. A contract is invalid under any of the following circumstances: (1) one party concludes a contract by fraud or coercion, which harms the interests of the state; (2) Malicious collusion that harms the interests of the state, the collective or a third party; (3) Covering up illegal purposes in a legal form; (4) damaging the public interest; (5) Violating the mandatory provisions of laws and administrative regulations.