Compiled from: Shandong High Court, "Civil Code of the People's Republic of China Study Guide", LeBang Law
 
Case review
On May 10, 2013, Company A and Company B signed a "Sales Contract", agreeing that A would purchase 2 million fiber optic temperature measurement systems from B for use in subway substations. Payment method: After Company A receives the project payment from the general contractor, it will pay Company B the corresponding proportion of the contract price. Company B's warranty period for the product is: 24 months from the date of acceptance by Company A or 28 months from the date of delivery to the site, whichever comes first. On December 25, 2013, Company A issued an engineering acceptance form to Company B, confirming that the equipment was operating normally. Additionally, the subway line had been in operation since December 28, 2014.

 

Because Company A did not receive the project payment from the general contractor, Company A did not pay the corresponding amount to Company B. In 2018, Company B filed a lawsuit with the court requesting Company A to pay the remaining project payment.
 
Company A argued that the conditions for payment had not been met and the performance period had not expired. After trial, the court found these arguments untenable. First, the subway line began operation on December 28, 2014, and according to the contract between the parties, the warranty period had already expired. Second, regarding the defense of paying in proportion to the owner's payment, this clause should be interpreted and understood based on the principle of good faith. Considering the nature and purpose of the transaction, the true intent of both parties was to partially transfer the commercial risk of the owner's delayed payment to Company B through the contract. However, the parties did not intend that "if the condition is not met, Company A would never have to pay." Based on general market conditions, common sense, and reason, after a reasonable period, Company A should fulfill its payment obligation.
 
 
Civil Code of the People's Republic of China
Article 158 A civil juristic act may be subject to a condition, unless such a condition is incompatible with its nature. A civil juristic act subject to a condition precedent becomes effective upon the fulfillment of the condition. A civil juristic act subject to a condition subsequent becomes invalid upon the fulfillment of the condition.
 
Article 159 Where a party to a conditional civil juristic act improperly prevents the fulfillment of a condition for its own benefit, the condition shall be deemed to have been fulfilled. Where a party improperly facilitates the fulfillment of a condition, the condition shall be deemed not to have been fulfilled.
 
Article 160 A civil juristic act may be subject to a time limit, unless it cannot be subject to a time limit due to its nature. A civil juristic act subject to an effective time limit shall take effect when the time limit arrives. A civil juristic act subject to a termination time limit shall become invalid when the time limit expires.
 
 
[1] The author's perspective
Not all legal acts can be subject to conditions. For example, conditions that violate the law or public order and good customs, or those involving identity acts such as marriage or divorce, are not permitted. It should be noted that conditions must be future uncertain facts (e.g., rain tomorrow). If a condition is based on a certain event (e.g., the sun rising from the east), it essentially becomes a time limit rather than a condition.
 
In daily life, setting a future date is the most common method when imposing a time limit on a civil juristic act. However, attention must be paid to the achievability of the date. A date such as "ten thousand years from now" exceeds the human lifespan limit and cannot serve as a time limit. In other words, if a date of an event is set as the time limit, it must be ensured that the event will definitely occur in the future; otherwise, it becomes a conditional legal act.