Unlike Korea's civil law, China Civil Code formed a Civil Law system under the Economic Contract Act (1981) and the Technology Contract Act (1987). After that, as the market economy evolved, the Economic Contract Act, which contained previous planned economic factors, was revised in 1993. These three major Contract Laws had many defects due to overlapping contents and gaps in regulations corresponding to mutual contradictions and general rules of contract due to differences in the time of enactment or subject to discipline. As the transition from the planned economy to the market economy progressed, the fundamental resolution of contradictions within the contract law became an urgent task, and a unified contract law aimed at integrating various contract laws was enacted in March 1999. Since then, China has integrated the contract law, which existed in the form of a law for each type of civil act, into the Civil Act and passed it on May 28, 2020, and has been in effect since January 1, 2021. Thus, China transformed all civil acts into a system that regulates one unified basic law, not several enforcement laws.
These Chinese Civil Laws are regulations governing civil relations, and China's unique People's Republic of China Contract Law has been enacted and implemented under the influence of legislative systems of British-American and Continental Laws such as Germany. Chinese Civil Law referred to the system and court rules of German Civil Law and British-American Law, and implied the nature of internationalization, and contract management by administration, a socialist characteristic, was abolished and started as a completely modern law. In particular, Chapter 8 stipulates penalty liability in a total of 18 articles, and the fact that penalty liability is pointed out as an important issue under Chinese Civil Law not only introduces strict liability under German Risk Liability but also includes Liability for Defect Security.
In that situation, China's Civil Law faces a new problem. Under Chinese Civil Law, Liability for defect security is being evaluated somewhat complicated. Some say that the Liability for defect security under Chinese Civil Law is a legal policy attributable to no-fault liability (strict liability), but some say that if the quality of the object traded under the contract does not conform to the agreement, the party should be liable for penalty. Article 612 and Article 614 of the same Act stipulate the liability for defect security of rights, and Article 615 and Article 617 of the same Act respectively, but it can be seen that there are differences in the legal effect. In other words, defects in rights are adopted by strict liability as a principle attributable to defects, and for defects in goods, the buyer may claim a claim for reduction, such as refusal to receive, cancellation of contracts, additional claims (repair, exchange, reissuance), return, and payment. In the end, Strict Liability and penalty Liability coexist the Liability for defect security.