Woodside Energy and Contract Law in China: A Case Study

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Assessment 2 Case Study
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Table of Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Types of contracts that Woodside Energy enters into..................................................................5
Sources of Contract Law in China...............................................................................................6
Legal requirements for the formation of a valid contract in the China........................................6
Remedies for the breach of the contract.......................................................................................7
Whether it is essential to appoint an agent in China....................................................................8
Whether Australia has Free Trade Agreement with China along with its inference...................8
Regulations that apply in China...................................................................................................8
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
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Executive Summary
Law plays a significant role in guiding the business at an international platform. International
law guides the business to meet the challenges at the global level. International laws assist in
explaining the professional and managerial duties for the performance of the business at an
international platform. Law of any country assists in establishing rules and regulations for
regulating the conduct of the persons in the society. In this context, business law assists in
establishing the standards that guide the business in regulating business functions. It is the duty
of each and every individual of the society and the businesses to abide by the government laws
and regulations. Woodside Energy is taken as a base for the whole report. This company
involves in the production of oil and gas in Australia as it is the largest company wholly
dedicated to the company of oil and gas.
In this report, it depicts the role of the law in doing the business art international platform. This
assignment assists in performing the managerial and professional duties legally. It also assists in
evaluating the multiple laws and the conflicts that may arise while performing international
duties. Further, it consists of the different types of contract that the company needs to be entered
in for the exporting purpose with China. It also explains the different law sources in the context
of China and the legal requirement that needs to be complied for the creation of the valid
contract. Further, the provisions related to the appointment of an agent in China are also
discussed. It further includes the provision of the Free Trade Agreement between China and
Australia. Lastly, it consists the several regulations that are based upon the nature of Woodside
Energy.
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Introduction
Enacting the contract law is the business practices of every organization for entertaining the
business practices. To govern the business function at the international platform the laws play a
significant role. These reports consist of different types of contract in which the business enter
into by considering the relevant laws dealing with it. Woodside Energy is an Australian
Company dealing with the production of oil and gas. This company performing the operating and
development activities in Australia and consult the business in different countries like Senegal,
United States, Canada, Myanmar, Republic of Korea, Gabon, New Zealand, Morocco, Cameroon
and Ireland (Woodside Petroleum, 2017). In Australia, Woodside Energy dealing with the
number of projects of liquefied natural gas. The company also conduct its operations in Enfield
and Vincent field of oils offshore from Exmouth situated in Western Australia. Further,
Woodside also operates the number of oil expansion offshore situate in Western Australia by
including the Nganhurra FPSO, the Okha FPSO and the Ggujima-Yin FPSO.
As a director of the Woodside Energy, it is important before entering into any international
transaction it is significant that the party must enter into the contract so as to legally bind the
parties with the international laws and regulations. This report assists in guiding the laws related
to the international contracts for the creation of the valid contract. It also meets the terms with all
the legal requirements by complying with the specific regulations of the government. For the
performance of the international agreements, the businesses can appoint an agent in the foreign
country to regulate the business. In this report, China is taken as a base with which Australia
expands its business.
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Law of any country is the binding practice which is enforced by the controlling authority. Laws
are the customs practices and rules that assist in governing the standards, resolving the disputes
and maintain rights and order which are accepted by society. The laws play a significant role in
managing the business at an international level. For the expansion of the business operations and
enter into the new entries in the market the role of the contract law is significant for guiding the
provision of the international business. Making the contracts is the business practice that
supports the businesses in conducting the operations at an international platform.
Types of contracts that Woodside Energy enters into
As Woodside Energy operates its business in different countries there are various contracts that
need to be entered by the company to successfully operating its business at an international
platform (Cassidy & Kosev, 2015). Generally, in this context there are generally four types of
agreements that must enter into by the exporting business dealing in the oil and gas development
are mentioned below:
Risk Agreements
There are several risks that are existing in the businesses during exporting which includes
ownership rights, crime and fraud especially against the exporting companies, financial risk
including the payments related to the loss or damage of the good during transit (Noe, et. al.,
2017). It is important to manage and mitigate the risk in the business of export and import.
Concessions
Concession agreements is a grant of rights, land or property by the government, Individual, local
authority, corporation or any individual. Concessions are the trade agreements in which there are
several items as well as the tariff related concessions are expanded during the negotiating rounds
of trade. This agreement is important for the development of trade so as to promote trade with
the developing countries.
Production sharing agreements
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Production sharing agreements are the contracts that are signed between the government and the
company extracting resources concerning with the number of resources that will be extracted and
reactive from the particular country.
Export contracts
Export contracts are the contracts that are sued and enacted for the purpose of international sale
of certain products, specifications and standards (Hu & Pelkmans, 2017). This contract includes:
 Measures of the units in both the numbers and words
 The total value of the contract in both numbers and words
 Delivery terms and conditions
 Payment terms
 Requirements of documents
 A contract must also contain insurance of goods against any loss or damage during
transportation
 Force majeure assists in relieving the parties from the performance of the contract in
some special circumstances
 Arbitration clause for the settlement of the disputes arise between the contractual parties
 Applicability of the law of the particular country
Sources of Contract Law in China
In China, there are various sources of the contract law that are mentioned below:
Contract law is mainly the case law in the Common law. In many jurisdictions, the contract law
is not codified and in regards to the sale of goods in many the jurisdiction of the common law are
codifies.
In the jurisdictions of the continental civil law such as Japan, Switzerland, Germany, Italy and
France, the contract law considers within the obligations and civil code. There are various laws
that considered as the part of the obligations is contract law, the law of unjust enrichment and
tort law. The General principles of the Civil and Contract law remain a sou8rces of the Chinese
Contract law.
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Administrative rules and regulations are also considered as the sources of the law of the Chinese
contract. According to Article 125 of the Contract law, the transaction practice is also forming
the sources of the contract law.
Legal requirements for the formation of a valid contract in China
The main purpose of the contract law is to protect the legal and lawful rights and interest of the
parties of the contract for safeguarding the economic and social order (Abdullah, et. al., 2017). A
contract must be enforceable in China by following the basic standards that are governed under
Article 1 to 428 mentioned below:
 A valid contract in China must be governed by the Chinese Law
 The language governing the contract must be Chinese
 Parties must possess the equal right to enter into a contract voluntarily and no entity or
individual has the right to interfere with such related right
 Contractual parties abide with the principle of fairness in respective of the rights and
obligations
 Further, it is important that the parties exercise and abide by the principle of good faith
while exercising their rights and obligations under the contract
 While performing the contract, the contractual parties are abiding with all the relevant
rules and regulations (Lu, 2018). Simultaneously it is important to observe the social
ethics without harming the interest of the public.
 A contract which is lawfully formed is binding on the parties. It is important that the
parties must perform contractual obligations in accordance with the contract.
 Parties are capable of entering into the contract and must have the capacity to performing
civil rights and acts.
 For a valid contract, there must be an exchange of offer and acceptance between the
parties of the contract
Remedies for the contravene of the contract
As per the Chinese Law, if the party does not perform as the contractual terms of the contract or
if the party is liable for the defective performance as within specifies a period of the contract
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then the aggrieved or innocent party is liable to claim damages. In this context, two remedies are
available:
 An innocent party can claim for the specific performance
 Cancellation of the contract
 Can claim damages
As per Article 107 of the Chinese Contract law, it states that if the party fails in the performance
of the contractual duties or if the performance is not as per the agreement then he or she is liable
for the performance, paying damages and can claim remedial measures (Cooter & Ulen, 2016).
As per the provision of the Common Law, the primary and standard remedy that can claim for
the breach of the contract is to claim damages. Specific performance is the remedy which is
granted in case of exceptional cases. In the civil law system, specific performance is the special
remedy which can be claimed when there is no other remedy is available or when the damages
are not enough to remedy to claim damages.
As per Article 362 of Contract law of the people's republic of China consist of the provisions
related to the remedies that can be claimed by the innocent party in case of breach of contract. If
the client is under the duty to perform the technical services contract and failed to perform the
contractual duties or non-conforming the performance or failed in providing the quality work or
failed in the performance of the work. In this context, the innocent part has the right to claim the
refund or claim the unpaid remuneration. If the services provided under the contract of technical;
services failed in providing the services as per the contract terms and regulations shall be
accountable for the breach of the contract terms.
Whether it is essential to appoint an agent in China
In accordance with Article 9 of Chinese Contract Law, while entering into the contract that
parties possess the capabilities for the performance of both the civil rights and acts. In this, the
party has the rights to appoint an agent for entire into a contract on the behalf of the principal in
accordance with the terms of the law.
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It is necessary to appoint an agent in the Commission contract and the contract of the
Commission agency. According to Article 396 of the Chinese Contract Law, Commission
contract is held between the principal and the agent and the agent is responsible for handling the
affairs of the principals (Marimuthu & Ibrahimb, 2018). In this, the agent is personally
responsible for the repayment of the expenses incurred by the agent while handling the
commissioned affairs.
On the other hand, the Contract of Commission Agency under Article 414 is a contract where the
commission agent is responsible for conducting the activities its own name on behalf of the
principal and the principal is liable to pay remuneration for it. While handling the commission
affairs, the commission agent is liable for the payment of the expenses that are borne by the
commission agent. The commission agent is responsible to bind the principal by acting on his
behalf.
Whether Australia has a Free Trade Agreement with China along with its inference
Yes, there is a Free trade agreement between the government of China and Australia. In this, the
China–Australia Free Trade Agreement (ChAFTA) is signed between the two countries on 17
June 2015 (Bolle, 2016). In accordance to the Australian Department of Foreign Affairs and
Trade, China was the largest market of export in China for providing both the goods and services
and the export is over one-third of the total turnover of the exports and it is an increasing source
of the foreign investment.
This agreement assists in improving the barriers to labour mobility and temporary access to new
entries (Lawrence, 2018). In the past four years, most of the Australian manufacturing, resources
and energy export markets will come under the China duty-free market.
Regulations that apply in China
Woodside Energy is the independent and largest producer of natural gas. There are various
regulations that are applicable to China are mentioned below:
Oil and Gas Regulation 2019 as this regulation covers up the issues related to the oil and gas
rules and regulations. It regulates the provisions related to the import and export of natural gas,
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oil, liquefied natural gas, dispute resolution, distribution and foreign investment, trading of
natural gas, downstream oil and development of the oil and natural gas (Shi & Variam, 2015). It
assists in governing the issues related to the laws of oil and gas.
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Conclusion
As per the discussions above, it is concluded that the role of the laws in governing the business
practices is significant and important. Contract laws are important to guide the parties to conduct
business operations in a fair and transparent manner. It also provides the right to the contractual
parties to claim remuneration in case of any loss suffered by the parties of the contract. With the
above discussions, it is concluded that the contract laws guide the parties to perform the
contractual obligations as per the rights and obligations mentioned under the contracts. Chinese
Contract law plays a significant role in providing protection to the parties govern the contractual
terms in an ethical and transparent manner. This report provides the opportunity to the learners to
enhance their learning regarding the Contract law prevail in China. It is imperative that the
Woodside Energy abide with the Chinese as well as the Australian contractual rules and
regulations. This report also guides the company in regard to the provision related to the Free
Trade Agreements. It assists the company to perform the managerial duties and responsibilities at
the national and international level by considering its business implications. With increasing
export and import, the business opportunities also expand along with an increase in the
profitability and productivity of the business. It also assists in the expansion of the business by
making the products and services popular at an international platform. Woodside Energy
possesses the rights to claim damages in case of any breach of the contract terms with different
countries. It is important to conduct international business at a fair and ethical manner. It helps
out the companies to makes ethical decisions while operating the international business.
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References
 Abdullah, N., Hanafi, H., & Murshamshul, M. K. (2017). The Duty of Good Faith in
Common Law: A New View on Contemporary Contract Law. Pertanika Journal Of
Social Science And Humanities, 25, 119-128.
 Bolle, M. J. (2016). Overview of labor enforcement issues in free trade agreements.
Oxford Law Review.
 Cassidy, N., & Kosev, M. (2015). Australia and the global LNG market. Reserve Bank of
Australia Bulletin, (March Quarter), 33-44.
 Cooter, R., & Ulen, T. (2016). Law and economics. Addison-Wesley.
 Hu, W., & Pelkmans, J. (2017). China-EU Leadership in Globalisation: Ambition and
capacity. CEPS.
 Lawrence, R. Z. (2018). US-China trade frictions and the global trading system. 18-1 US-
China Economic Relations: From Conflict to Solutions, 22.
 Lu, L. (2018). Shadow Banking for Cash-Strapped Entrepreneurs: A Study of Private
Lending Agreements Under Chinese Contract Law. Journal of Business Law, 216-229.
 Marimuthu, M., & Ibrahimb, C. M. Z. (2018). Intention to Appoint Legitimate Tax
Agents Among Sole Proprietorships in Negeri Sembilan, Malaysia. Macmillan
Publishing.
 Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2017). Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill
Education.
 Shi, X., & Variam, H. M. P. (2015). 7. China’s Gas Market Liberalisation. China’s
Domestic Transformation, 137.
 Woodside Petroleum, (2017). 2017 Annual Report. [Online]. Available at:
https://woodsideannouncements.app.woodside/14.02.2018+Annual+Report+2017.pdf
[Accessed on 17 April 2019].
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