Advancing the ‘Healing Theory’ of China’s Contract Law for Oral Land Sale Contracts: A Legal Reform Recommendation
16 Pages Posted: 3 Jun 2019
Date Written: June 3, 2019
Abstract
Given the significance of land contracts, it is important to ensure the clarity of the authorities governing them. China’s Contract Law (the supreme contractual authority) establishes the ‘healing theory’ as a general rule to validate oral contracts (including oral land sale contracts) that would otherwise be invalid for violating the statutory requirement that they be in writing. However, the Contract Law fails to articulate the specific events that trigger the theory, which creates discretion for Chinese courts to apply the theory in oral land sale contract cases contradictorily and excessively, potentially imposing unfairness on claimants. The article explains the theory’s underpinnings and demonstrates why the theory substitutes for writing, protects reliance and strengthens the Contract Law’s goals and principles. This article also offers a solution to the courts’ discriminatory approach and uncertainty, by identifying two events that trigger the theory in ways that align with its underpinnings and the Contract Law’s rules. Accordingly, this article proposes a legal reform initiative and recommends that the Contract Law articulates the two events, so that claimants would have clear rules and certainty to exercise contractual freedom to validate oral land sale contracts. Given the importance of land and land sale contracts, the reform has economic, legal and social significance.
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