Social Sciences in China (Chinese Edition)

No. 7, 2025

On Contract Lapse—Institutional Supply and Independent Knowledge System

(Abstract)

Li Shigang

China’s contract lapse mechanism engages in global legal discourse through its unique generative logic and systemic orientation. While Chinese law does not define a general “l(fā)apse system,” terms such as “l(fā)apse” do appear in the Civil Code and other legal instruments, and some legal mechanisms effectively reflect the logic of lapse. In China’s private law, lapse mechanisms are now widespread, particularly in the domain of juristic acts, with contract lapse serving as a representative example. Contract lapse constitutes one type of contract termination, existing alongside but distinct from invalidation and rescission. Through legal interpretation, we can delineate the functions, categories, conditions, and effects of the lapse system in Chinese law. The function of contract lapse is to allow substantive contractual elements for validity to exert ongoing influence after a contract has been concluded. After a contract meets the conditions for validity and becomes effective, it will lapse if the substantive elements that maintain its subsistence are extinguished. In principle, lapse occurs automatically, without requiring notice, and takes effect prospectively, without retroactive force. The lapse mechanism is especially well-suited to resolving issues concerning the validity of interdependent contracts. A general theoretical exploration of contract lapse holds demonstrative value for the development of an independent legal knowledge system in China.