Meaning
Statutory remedies under the PRC Civil Code govern the return of property and compensation of losses following a judicial declaration of contractual invalidity. This mechanism defines the process of article 157 void contract restitution, which requires parties to return any asset acquired under the failed agreement. When restitution is impossible, courts demand monetary compensation to restore the parties to their pre-contractual state.
Civil Remedy
Judicial authorities apply this rule to reallocate property rights after a transaction fails. Under article 157 void contract restitution, the return of physical assets holds priority over financial compensation.
Restitution Method
Property valuation is the primary method for determining the compensation amount when an asset has been sold or consumed. If the asset cannot be returned in its original condition, a court-appointed appraiser determines its market value at the time the contract was declared void. This prevents unjust enrichment by ensuring that the party who received the asset does not benefit from its subsequent use or disposal.
The determination of value must exclude any speculative profit that would have been earned if the contract remained valid.
Liability Allocation
Allocation of losses depends on the fault of each party. If both parties are responsible for the contractual invalidity, they must share the resulting losses proportionally. This rule limits the recovery of the plaintiff when they failed to perform basic due diligence before signing.
