Managing Corporate Exit Deadlocks and Tooling Repossession in China
Managing corporate deadlocks and tooling repossession in China demands registered bailment contracts, court asset preservation orders, and formal liquidation.
Article 888 Civil Code
Meaning
Statutory provisions in private law establish the legal conditions under which a bailment or custody agreement takes effect between parties. Under article 888 civil code provisions, a contract for custody forms upon the actual physical handover of the deposited property from the depositor to the custodian unless the contracting parties explicitly agree in writing that consent alone creates the binding obligation. Chinese courts treat this rule as a default real contract standard where performance begins at physical receipt.
The statutory scope covers commercial storage arrangements and temporary holding agreements across manufacturing supply chains, establishing clear boundaries where liability for property damage begins only when possession transfers.
Custody Requirement
Physical delivery converts preliminary storage negotiations into enforceable obligations. Commercial practice in Chinese logistics warehouses frequently relies on signed receipt documents to verify the moment control shifts. When goods arrive at a third party warehouse, risk of loss remains with the supplier until the facility signs the transfer log.
Courts require clear proof of delivery to confirm that custody obligations exist under the law.
Deposit Boundary
Commercial contracts often attempt to alter the default receipt requirement by inserting clauses that make agreements binding upon signature. Parties retain the legal right to contract around the physical delivery requirement under the statute. Where no explicit written clause exists, unsigned delivery or partial shipments create liability only for the precise quantity physically accepted by the warehouse operator.
Liability Assignment
Carelessness or unauthorized use of property during the bailment period triggers statutory compensation duties for the bailee. Storage facilities must maintain basic standard conditions to protect goods against preventable damage or theft. When damage occurs without fault by the bailee, financial liability does not attach under administrative and civil rulings.