Types of System Development Contracts
| Contract Type | Obligation | Vendor Liability |
|---|---|---|
| Contract for Work (Civil Code Art. 632) | Completion of the deliverable | Vendor bears completion responsibility |
| Quasi-Mandate (Art. 656) | Performance of services | No completion obligation; duty of care only |
In practice, multi-phase contracts are common: quasi-mandate for requirements definition and design; contract for work for development and testing.
2020 Civil Code Reform: Non-Conformity Liability
The April 2020 reform replaced "warranty against defects" (瑕疵担保責任) with non-conformity liability (契約不適合責任, Articles 562–564).
Key changes: - Applies regardless of whether the defect is "hidden" - Remedies expanded to include: cure demand (repair/replacement), price reduction, rescission, and damages
Notice Period
The buyer (user) must give notice within 1 year of discovering the non-conformity (Article 566).
Free Tool Related to This Article
Statute of Limitations Checker
Try our free simulator related to this topic.
Try for free →Mutual Cooperation Obligations
Courts recognize that users also bear cooperation obligations. Where a user fails to clarify requirements or delays decisions, the vendor's liability may be reduced.
Common Disputes and Responses
Bug-ridden deliverable: Demand cure (repair) under Article 562; if refused, seek price reduction or rescission.
Project collapse: Claim damages for breach of contract (Article 415) under a contract for work; duty-of-care breach under quasi-mandate.
Unilateral additional fees: Under a contract for work, in-scope work cannot generate additional charges. Pre-agree on a change management process.
Key Contract Provisions to Include
- Requirements finalization procedure (signed agreement)
- Change management process (change request → estimate → approval)
- Acceptance criteria and timeline
- Liability cap clause
- Non-conformity liability period (e.g., 1 year from acceptance)
Summary
Most system development disputes stem from ambiguous requirements and unclear responsibility allocation. Addressing these contractually — with clear acceptance criteria, change management, and liability limitations — is the most effective prevention.