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Fakao Objective practice questions

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Question 1Role knowledge and relevant Chinese legal/financial foundations

According to Xi Jinping Thought on the Rule of Law, what is the fundamental purpose and core value orientation of comprehensively advancing law-based governance in China?

  1. Serving the people and ensuring that law-based governance is for the people and relies on the people Correct answer.
  2. Prioritizing rapid economic growth over procedural legal constraints
  3. Establishing judicial independence completely decoupled from legislative oversight
  4. Replacing statutory legislation with administrative policy directives

Explanation

Under Xi Jinping Thought on the Rule of Law, 'adhering to a people-centered approach' (坚持以人民为中心) is the fundamental value position. Advancing law-based governance must protect the people's fundamental rights, promote social fairness and justice, and ensure that the rule of law is for the people, relies on the people, and benefits the people.

Question 2Role knowledge and relevant Chinese legal/financial foundations

In Chinese jurisprudence and constitutional theory, which of the following best describes the relationship between the PRC Constitution and ordinary statutes enacted by the National People's Congress (NPC)?

  1. The Constitution possesses supreme legal authority; any statute, administrative regulation, or local decree that contravenes the Constitution is invalid Correct answer.
  2. Ordinary national statutes have equal legal force with the Constitution and can tacitly repeal constitutional provisions
  3. Administrative regulations issued by the State Council take precedence over constitutional articles during national emergencies
  4. Local regulations enacted by special economic zones automatically supersede the Constitution within their territory

Explanation

Under Article 5 of the PRC Constitution and the PRC Legislation Law (立法法), the Constitution is the fundamental law of the state with supreme legal effect. No laws, administrative regulations, or local regulations may conflict with the Constitution.

Question 3Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Constitution, which organ possesses the exclusive power to interpret the Constitution and supervise its enforcement?

  1. The Standing Committee of the National People's Congress (NPCSC) Correct answer.
  2. The Supreme People's Court (SPC)
  3. The National Supervisory Commission (NSC)
  4. The Ministry of Justice (MOJ)

Explanation

Pursuant to Article 67(1) of the PRC Constitution, the Standing Committee of the National People's Congress exercises the power to interpret the Constitution and supervise its enforcement.

Question 4Role knowledge and relevant Chinese legal/financial foundations

In the historical evolution of Chinese legal codification, which imperial code is renowned as the most complete and influential exemplar of the traditional Chinese legal system, serving as the blueprint for East Asian legal tradition?

  1. The Tang Code (Tang Lü Shu Yi / 唐律疏议) Correct answer.
  2. The Book of Law of the Wei (Fa Jing / 法经)
  3. The Great Qing Code (Da Qing Lü Li / 大清律例)
  4. The Nine-Chapter Law of Han (Jiu Zhang Lü / 九章律)

Explanation

The Tang Code with Commentary (Tang Lü Shu Yi, promulgated in 653 CE) represents the pinnacle of ancient Chinese feudal jurisprudence, characterized by the integration of Confucian moral principles and legal punishments (引礼入法), and served as the foundational model for traditional legal codes across East Asia.

Question 5Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Judges Law (法官法) and PRC Lawyers Law (律师法), which of the following activities constitutes a statutory violation of legal professional ethics for a practicing attorney?

  1. Simultaneously representing two parties with conflicting interests in the same civil litigation Correct answer.
  2. Refusing to accept a civil representation where the client insists on pursuing an unlawful claim
  3. Providing pro bono legal aid to an indigent criminal defendant assigned by a legal aid center
  4. Publishing an academic commentary analyzing a publicly delivered final appellate judgment

Explanation

Under Article 39 of the PRC Lawyers Law and the Code of Conduct for Lawyers, an attorney is strictly prohibited from representing both opposing parties in the same legal matter or case involving conflicting interests.

Question 6Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Legislation Law (立法法), if a newly enacted special national law conflicts with a previously enacted general national law on the same subject, which organ determines which provision applies if there is uncertainty?

  1. The Standing Committee of the National People's Congress (NPCSC) Correct answer.
  2. The Supreme People's Court
  3. The State Council Legislative Affairs Department
  4. The Ministry of Justice

Explanation

Pursuant to Article 105 of the PRC Legislation Law, when a new general provision conflicts with an old special provision enacted by the same organ (such as the NPC or NPCSC), the NPCSC shall make a ruling on which provision applies.

Question 7Role knowledge and relevant Chinese legal/financial foundations

Under Article 20 of the PRC Criminal Law, what standard distinguishes justifiable defense (正当防卫) from excessive defense (防卫过当)?

  1. Whether the defensive act clearly exceeds the limits of necessity and causes substantial harm (明显超过必要限度造成重大损害) Correct answer.
  2. Whether the defender suffered bodily injury before initiating physical resistance
  3. Whether the defensive act employed identical weapons or means as the unlawful assailant
  4. Whether the defender obtained prior permission or intervention from law enforcement officers

Explanation

Article 20(2) of the PRC Criminal Law provides that justifiable defense that clearly exceeds the limits of necessary defense and causes major harm constitutes excessive defense and incurs criminal liability, though punishment shall be mitigated or waived.

Question 8Role knowledge and relevant Chinese legal/financial foundations

Under Article 20(3) of the PRC Criminal Law, in which scenario does the defender possess the statutory right of 'special defense' (特殊防卫 / 无过当防卫), incurring no criminal liability even if the attacker is killed?

  1. Defending against an ongoing violent crime of murder, robbery, rape, kidnapping, or other violent crime seriously endangering personal safety Correct answer.
  2. Defending against ongoing daytime pickpocketing of a wallet in a crowded public transit bus
  3. Defending against verbal defamation and insult published on a social media forum
  4. Defending against minor property trespass where the intruder immediately surrenders and flees

Explanation

Article 20(3) of the PRC Criminal Law grants special defense: taking defensive action against ongoing physical assaults, murder, robbery, rape, kidnapping, or other violent crimes that seriously jeopardize personal safety, resulting in death or injury to the perpetrator, is justifiable defense and is not excessive defense.

Question 9Role knowledge and relevant Chinese legal/financial foundations

Under Article 24 of the PRC Criminal Law, what is the essential legal requirement for establishing voluntary crime discontinuation (犯罪中止)?

  1. Voluntarily abandoning the crime during its commission or automatically and effectively preventing the criminal consequence from occurring Correct answer.
  2. Failing to complete the crime due to unexpected external resistance or police intervention
  3. Expressing verbal remorse to the victim after the criminal consequence has already fully materialized
  4. Confessing all criminal facts to the public security organ after being arrested and interrogated

Explanation

Article 24 of the PRC Criminal Law defines criminal discontinuation as voluntarily abandoning the commission of the crime in the process of committing it, or voluntarily and effectively preventing the occurrence of the criminal outcome. It requires both voluntariness (能达目的而不欲) and effectiveness if the act has progressed.

Question 10Role knowledge and relevant Chinese legal/financial foundations

Zhang and Li agreed to burglarize an empty warehouse at night. While Li stood watch outside, Zhang broke in and discovered an elderly guard sleeping inside. Without Li's knowledge or agreement, Zhang murdered the guard to eliminate a witness. How should Li's criminal liability be determined under PRC Criminal Law doctrine on complicity and excess of accomplice (实行过限)?

  1. Li is liable only as an accomplice for burglary (theft); he is not criminally liable for the intentional homicide committed solely by Zhang Correct answer.
  2. Li must be convicted of intentional homicide as a joint principal offender under strict joint liability
  3. Li's burglary charge is extinguished because Zhang committed a more serious violent felony
  4. Li is criminally exempt from all punishment because he remained physically outside the premises

Explanation

Under the PRC Criminal Law doctrine of excess of accomplice (实行过限), where one co-perpetrator independently commits an act outside the scope of the shared joint criminal intent (共同犯罪故意), other co-perpetrators who did not share or foresee that intent are not liable for the excess act. Li only agreed to and participated in theft/burglary, so he is guilty of theft and not intentional homicide.

Question 11Role knowledge and relevant Chinese legal/financial foundations

Wang, a cashier at a private technology company, used her custody over company funds to transfer RMB 500,000 into her personal account, falsified the company ledger to conceal the transfer, and sold the securities she bought with the money while intending to keep the proceeds permanently. Which crime did Wang commit under the PRC Criminal Law?

  1. Crime of misappropriation of funds (挪用资金罪)
  2. Crime of embezzlement of public funds (贪污罪)
  3. Crime of duty embezzlement (职务侵占罪) Correct answer.
  4. Crime of contract fraud (合同诈骗罪)

Explanation

Under Article 271 of the PRC Criminal Law, personnel of non-state companies or enterprises who take advantage of their position to unlawfully take corporate property into their own possession commit the crime of duty embezzlement (职务侵占罪). Wang permanently appropriated company funds for herself.

Question 12Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Criminal Procedure Law (刑事诉讼法), what is the maximum statutory period for which a public security organ may detain (拘留) a major suspect who is caught committing crimes from place to place, repeatedly committing crimes, or forming a gang to commit crimes, before requesting approval of arrest from the People's Procuratorate?

  1. 30 days Correct answer.
  2. 14 days
  3. 7 days
  4. 3 days

Explanation

Under Article 91 of the PRC Criminal Procedure Law, for major suspects who commit crimes from place to place (流窜作案), repeatedly commit crimes (多次作案), or form a gang to commit crimes (结伙作案), the time for requesting arrest approval by the public security organ may be extended to 30 days.

Question 13Role knowledge and relevant Chinese legal/financial foundations

Under the Exclusionary Rule for Illegal Evidence (非法证据排除规则) in the PRC Criminal Procedure Law, which of the following evidence MUST be strictly excluded from serving as the basis for indictment or judicial verdict?

  1. Suspect confessions obtained through torture to extract confession (刑讯逼供) or other unlawful violent means Correct answer.
  2. Physical evidence whose collection procedural defect was subsequently explained and remedied with adequate clarification
  3. Witness testimony recorded in writing after the witness was properly informed of the legal duty to testify truthfully
  4. Electronic data authenticated through unbroken blockchain hashing verification

Explanation

Pursuant to Article 56 of the PRC Criminal Procedure Law, suspect confessions gathered by torture to extract confession or other unlawful methods, and witness testimonies/victim statements gathered by violence, threats, or other unlawful methods, shall be excluded and cannot be used as the basis for indictment or trial.

Question 14Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Criminal Procedure Law, what legal consequence applies when a criminal defendant appeals (上诉) a first-instance conviction and the People's Procuratorate does NOT file a protest (抗诉)?

  1. The second-instance court is legally mandated to reduce the defendant's sentence by at least one year
  2. The second-instance people's court may not increase the criminal penalty of the defendant under the principle of non-reformatio in peius (上诉不加刑原则) Correct answer.
  3. The second-instance court can convert a fixed-term imprisonment sentence into life imprisonment if it discovers aggravating facts
  4. The appeal is immediately dismissed without substantive hearing because the Procuratorate did not protest

Explanation

Under Article 237 of the PRC Criminal Procedure Law, in cases where only the defendant, their statutory agent, defender, or near relative appeals, the second-instance people's court shall not increase the criminal punishment imposed on the defendant (non-reformatio in peius).

Question 15Role knowledge and relevant Chinese legal/financial foundations

Under the General Provisions of the PRC Civil Code (民法典总则编), at what age does a natural person acquire full capacity for civil conduct (完全民事行为能力) under the general rule, and what is the exception for minors aged 16 or above?

  1. At age 18; however, a minor aged 16 or above whose principal source of income is their own labor is deemed to have full capacity Correct answer.
  2. At age 16; however, individuals under age 20 must have parental consent for all transactions
  3. At age 21 under all circumstances without exception
  4. At age 18; no exceptions exist under Chinese civil law

Explanation

Under Articles 17 and 18 of the PRC Civil Code, an adult aged 18 or older has full capacity for civil conduct. A minor who has reached the age of 16 and whose main source of living is their own labor income is deemed a person with full capacity for civil conduct.

Question 16Role knowledge and relevant Chinese legal/financial foundations

Under Article 188 of the PRC Civil Code, what is the ordinary statutory period of limitation (普通诉讼时效期间) for civil actions to protect civil rights, and from when does it begin to run?

  1. Three years, running from the date the obligee knows or should have known that their right has been infringed and who the obligor is Correct answer.
  2. Two years, running strictly from the date the contract was executed
  3. Five years, running from the date the physical damage first appeared
  4. One year, running from the date of verbal demand for payment

Explanation

Article 188 of the PRC Civil Code sets the ordinary period of limitation for civil claims at three years. It runs from the date when the rights holder knows or should have known of the infringement of their rights and the identity of the obligor.

Question 17Role knowledge and relevant Chinese legal/financial foundations

Under the Property Rights Book of the PRC Civil Code (民法典物权编), when does the creation or transfer of a real property right (immovable property, such as an apartment) take legal effect between private parties?

  1. Upon registration in the real estate register according to law (依法登记发生效力) Correct answer.
  2. Upon signing the written real estate purchase and sale contract
  3. Upon physical handover of the apartment keys to the purchaser
  4. Upon full payment of the agreed purchase price to the seller's bank account

Explanation

Under Article 209 of the PRC Civil Code, the creation, alteration, transfer, or extinction of immovable property rights becomes legally effective upon registration in accordance with law, unless otherwise provided by law.

Question 18Role knowledge and relevant Chinese legal/financial foundations

Under Article 311 of the PRC Civil Code, which of the following is an indispensable statutory condition for a third party to acquire ownership of property under the doctrine of bona fide acquisition (善意取得)?

  1. The transferee was in good faith when the property was transferred, paid a reasonable price, and the property has been registered or delivered as required by law Correct answer.
  2. The transferor had full legal title and authority to dispose of the property at the time of transfer
  3. The true owner gave express written consent to the unauthorized disposition
  4. The transferee acquired the property gratuitously as a gift without paying consideration

Explanation

Under Article 311 of the PRC Civil Code, bona fide acquisition requires: (1) the transferor lacked the right of disposal; (2) the transferee was in good faith (had no knowledge of lack of title) at the time of transfer; (3) the transfer was made at a reasonable consideration; and (4) the transferred property has been registered (for immovables) or delivered (for movables).

Question 19Role knowledge and relevant Chinese legal/financial foundations

Under Article 406 of the PRC Civil Code, what is the default rule regarding the mortgagor's right to transfer the mortgaged property during the mortgage term?

  1. The mortgagor may transfer the mortgaged property; the mortgage right is not affected by the transfer unless the parties agreed otherwise Correct answer.
  2. The mortgagor is strictly prohibited from transferring the mortgaged property under any circumstances
  3. The mortgagor may transfer the property only if the court grants an advance judicial authorization
  4. The transfer of mortgaged property automatically extinguishes the mortgagee's security interest

Explanation

Article 406 of the Civil Code reformed prior law: during the mortgage period, a mortgagor may transfer the mortgaged property. If the parties have agreed otherwise, such agreement shall govern. The transfer of the mortgaged property does not affect the mortgage right (mortgage attaches to the property).

Question 20Role knowledge and relevant Chinese legal/financial foundations

Under the Contracts Book of the PRC Civil Code (民法典合同编), what rule applies when an offer (要约) is made via electronic message (e.g., data text or email)?

  1. The offer takes effect when the data message enters the designated electronic system, or when the offeree knows or should know it entered an undesignated system Correct answer.
  2. The offer takes effect only when the sender receives a physical handwritten receipt by mail
  3. The offer takes effect at the exact moment the sender presses the send button regardless of transmission success
  4. Electronic messages cannot constitute legally binding offers under Chinese contract law

Explanation

Under Article 137 and Article 474 of the PRC Civil Code, expressions of intent made via electronic data message take effect upon arrival: if a specific system is designated, upon entry into that system; if no specific system is designated, when the recipient knows or should have known of its entry into the system.

Question 21Role knowledge and relevant Chinese legal/financial foundations

Under Article 538 and Article 539 of the PRC Civil Code, which remedy allows a creditor to request a people's court to revoke a debtor's act of gratuitously transferring property or selling property at an unreasonably low price that impairs the realization of the creditor's due claim?

  1. Creditor's right of revocation (债权人撤销权) Correct answer.
  2. Creditor's right of subrogation (债权人代位权)
  3. Defense of simultaneous performance (同时履行抗辩权)
  4. Right of distress and private repossession (私力救济扣押权)

Explanation

Articles 538–542 of the PRC Civil Code establish the creditor's right of revocation (actio Pauliana): where a debtor waives due claims, gratuitously transfers property, or sells property at an unreasonably low price known to the counterparty, impairing the creditor's claims, the creditor may petition the court to revoke the act.

Question 22Role knowledge and relevant Chinese legal/financial foundations

Under the Tort Liability Book of the PRC Civil Code (民法典侵权责任编), what is the statutory standard of liability for product liability (产品责任) where a defective product causes personal injury or property damage to a consumer?

  1. Strict liability (no-fault liability / 无过错责任) on the manufacturer Correct answer.
  2. Fault liability requiring the consumer to prove subjective negligence of the manufacturer's chief executive
  3. Presumption of fault where the manufacturer is exonerated if it complied with an obsolete industry custom
  4. Fairness liability where damages are split evenly regardless of defectiveness

Explanation

Under Article 1202 of the PRC Civil Code, where a product defect causes damage to another person, the manufacturer shall bear tort liability under the strict (no-fault) liability principle. The victim does not need to prove negligence on the part of the manufacturer.

Question 23Role knowledge and relevant Chinese legal/financial foundations

Under the revised PRC Company Law (新公司法, effective July 1, 2024), what is the statutory maximum timeframe within which shareholders of a newly established limited liability company (LLC) must fully pay up their subscribed capital contributions?

  1. Within 5 years from the date of the company's establishment Correct answer.
  2. Within 20 years from the date of the company's establishment
  3. Within 30 days from the initial shareholder resolution
  4. Indefinitely at the sole discretion of each individual shareholder without any legal ceiling

Explanation

Article 47 of the revised PRC Company Law (2024) mandates that the capital contribution subscribed by all shareholders of a limited liability company shall be fully paid within five years from the date of the company's establishment in accordance with the company's articles of association.

Question 24Role knowledge and relevant Chinese legal/financial foundations

Under Article 52 of the revised PRC Company Law (2024), what procedure applies if a shareholder fails to pay their subscribed capital contribution on time and fails to rectify within the statutory grace period of at least 60 days after written notice from the company?

  1. The company may issue a written notice of forfeiture of shareholder rights (失权通知书), and the shareholder forfeits equity rights in the unpaid portion upon issuance Correct answer.
  2. The delinquent shareholder automatically acquires 100% of all other shareholders' shares as compensation
  3. The company must immediately dissolve and file for mandatory liquidation
  4. The defaulting shareholder is sentenced to criminal detention by the market supervision administration

Explanation

Article 52 of the revised Company Law introduces the equity forfeiture system (股东失权制度): where a shareholder fails to pay capital on time and does not pay within the specified grace period (at least 60 days) after written notice by the board of directors, the company may issue a written forfeiture notice. The shareholder loses equity rights in the unpaid capital contribution from the date the notice is issued.

Question 25Role knowledge and relevant Chinese legal/financial foundations

Under Article 23 of the revised PRC Company Law (2024), when may a creditor pierce the corporate veil (公司法人人格否认) to hold shareholders of an LLC or joint-stock company jointly and severally liable for corporate debts?

  1. When the shareholder abuses the company's independent legal person status and limited shareholder liability to evade debts, seriously damaging creditor interests Correct answer.
  2. Whenever the company experiences an ordinary commercial operational loss during a general economic downturn
  3. Whenever the company has fewer than three total registered shareholders
  4. When the company changes its registered legal representative without prior creditor approval

Explanation

Article 23 of the PRC Company Law provides that where a shareholder abuses the independent legal person status of the company or the limited liability of shareholders to evade debts and seriously harms the interests of the company's creditors, the shareholder shall bear joint and several liability for the debts of the company.

Question 26Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Enterprise Bankruptcy Law (企业破产法), what is the statutory repayment sequence for bankruptcy property distribution (破产财产清偿顺序) among unsecured claims after deducting bankruptcy expenses and community debts?

  1. 1st: Outstanding wages, medical/disability subsidies, and statutory social insurance for employees; 2nd: Outstanding taxes; 3rd: General unsecured bankruptcy claims Correct answer.
  2. 1st: General unsecured supplier claims; 2nd: Employee wages; 3rd: Shareholder equity returns
  3. 1st: Outstanding taxes; 2nd: Fines and administrative penalties; 3rd: Employee wages
  4. 1st: Fines and penalties; 2nd: General claims; 3rd: Outstanding taxes

Explanation

Under Article 113 of the PRC Enterprise Bankruptcy Law, after paying bankruptcy expenses and common interest debts, bankruptcy property is distributed in the following order: (1) wages, medical/disability subsidies, basic pension, and medical insurance premiums owed to employees; (2) taxes owed; (3) general unsecured bankruptcy claims.

Question 27Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Civil Procedure Law (民事诉讼法), which court possesses exclusive territorial jurisdiction (专属管辖) over a civil lawsuit involving a dispute over real property (immovable property)?

  1. The people's court of the place where the real property is located Correct answer.
  2. The people's court of the plaintiff's domicile
  3. The people's court of the place where the contract was signed
  4. Any court chosen at the sole discretion of the claimant in the complaint

Explanation

Under Article 34(1) of the PRC Civil Procedure Law, a lawsuit concerning a real property dispute shall be under the exclusive jurisdiction of the people's court in the locality where the real property is situated (不动产所在地人民法院专属管辖).

Question 28Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Civil Procedure Law, within how many days must a party file an appeal (上诉) against a first-instance civil judgment (判决) and a first-instance civil ruling (裁定), respectively, calculated from the date of service?

  1. 15 days for a judgment, 10 days for a ruling Correct answer.
  2. 30 days for a judgment, 15 days for a ruling
  3. 10 days for a judgment, 5 days for a ruling
  4. 60 days for a judgment, 30 days for a ruling

Explanation

Under Article 171 of the PRC Civil Procedure Law, if a party refuses to accept a judgment of first instance of a local people's court, they have the right to file an appeal within 15 days of the date on which the written judgment was served; for a written ruling, the appeal period is 10 days.

Question 29Role knowledge and relevant Chinese legal/financial foundations

Under the revised PRC Administrative Reconsideration Law (行政复议法), what is the general statutory time limit for a citizen or legal person to apply for administrative reconsideration after knowing of an administrative act?

  1. Within 60 days from the date they know or should have known of the administrative act Correct answer.
  2. Within 15 days from the date the act was performed
  3. Within 6 months from the date of verbal notice
  4. Within 3 years from the date of the administrative inspection

Explanation

Under Article 20 of the PRC Administrative Reconsideration Law, citizens, legal persons, or other organizations may apply for administrative reconsideration within 60 days from the date they know or should have known of the specific administrative act, unless a longer statutory period is provided by other laws.

Question 30Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Administrative Litigation Law (行政诉讼法), what is the burden of proof (举证责任) rule regarding the lawfulness of the sued administrative act?

  1. The defendant administrative organ bears the burden of proof to provide evidence and regulatory basis for the administrative act Correct answer.
  2. The plaintiff citizen bears the sole burden of proving that the administrative organ acted with subjective malice
  3. The people's court must conduct all factual investigations on its own without relying on parties' evidence
  4. The burden of proof is split equally with each party proving 50% of the statutory elements

Explanation

Article 34 of the PRC Administrative Litigation Law provides that the defendant administrative organ bears the burden of proof to provide the evidence and regulatory documents upon which the administrative act was based.

Question 31Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Law on the Application of Law to Foreign-Related Civil Relations (涉外民事关系法律适用法), which law governs the property relations between spouses if they have not chosen an applicable law and have no common habitual residence?

  1. The law of their common nationality, or the law of the place where the principal property is located if they have no common nationality Correct answer.
  2. The law of the forum court in all instances without exception
  3. The law of the place where the marriage ceremony was celebrated
  4. The law of the country with the highest gross domestic product

Explanation

Under Article 24 of the PRC Law on the Application of Law to Foreign-Related Civil Relations, spouses may choose the applicable law. If there is no choice, the law of their common habitual residence applies; if there is none, the law of their common nationality applies; if there is none, the law of the place where the principal property is located applies.

Question 32Role knowledge and relevant Chinese legal/financial foundations

Under the United Nations Convention on Contracts for the International Sale of Goods (CISG), to which China is a contracting state, what standard determines whether a breach of contract by one party is a fundamental breach (根本违约)?

  1. The breach results in such detriment to the other party as substantially to deprive them of what they are entitled to expect under the contract, unless unforeseeable Correct answer.
  2. Any late delivery exceeding 24 hours automatically constitutes a fundamental breach
  3. A breach is fundamental only if the breaching party is convicted of a criminal offense
  4. A breach is fundamental only if the total contract value exceeds USD 10 million

Explanation

Under Article 25 of the CISG, a breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person in the same situation would not have foreseen such a result.

Question 33Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Criminal Law, what constitutes the crime of dangerous driving (危险驾驶罪) under Article 133-1?

  1. Operating a motor vehicle on a road while intoxicated with a blood alcohol concentration of 80mg/100ml or above, or driving in a motorized racing manner with serious circumstances Correct answer.
  2. Failing to renew a vehicle inspection certificate within 30 days of expiration
  3. Parking a vehicle in a non-designated residential parking slot overnight
  4. Exceeding the highway speed limit by 5 km/h during clear daytime weather

Explanation

Article 133-1 of the PRC Criminal Law provides that driving a motor vehicle on a road while intoxicated (blood alcohol concentration of 80mg/100ml or more under national standards) or chasing/racing with motor vehicles under severe circumstances constitutes the crime of dangerous driving.

Question 34Role knowledge and relevant Chinese legal/financial foundations

Under the Personality Rights Book of the PRC Civil Code (民法典人格权编), which statement correctly describes protection against unauthorized deepfake face-swapping or voice synthesis?

  1. Right to commercial profit guarantees
  2. Right to tax-exempt corporate donations
  3. Article 1019 protects portraits against unauthorized technological forgery, and Article 1023 applies the rules on portrait protection to a natural person's voice by reference Correct answer.
  4. Right to unilateral breach of contract

Explanation

Article 1019 prohibits using information technology to forge another person's portrait. Article 1023 provides that protection of a natural person's voice is governed, by reference, by the relevant provisions on portrait rights. The provisions therefore cover unauthorized face and voice synthesis without incorrectly treating the two rules as identically worded independent rights.

Question 35Role knowledge and relevant Chinese legal/financial foundations

Under the Marriage and Family Book of the PRC Civil Code (民法典婚姻家庭编), what is the statutory 'cooling-off period' (离婚冷静期) for consensual divorce registrations filed at the civil affairs bureau?

  1. 30 days from the date the marriage registration authority receives the divorce application Correct answer.
  2. 10 days from the date of filing
  3. 6 months from the date of marriage
  4. 1 year of mandatory separation

Explanation

Article 1077 of the PRC Civil Code provides that within 30 days from the date the marriage registration authority receives the divorce registration application, either party may withdraw the application. If both parties do not apply for the divorce certificate within 30 days after the cooling-off period expires, the application is deemed withdrawn.

Question 36Role knowledge and relevant Chinese legal/financial foundations

Under the Succession Book of the PRC Civil Code (民法典继承编), what rule applies when multiple wills (testaments) executed in different formats (including notarized wills, holographic wills, and printed wills) conflict with one another?

  1. The last will executed in accordance with law shall prevail (以最后订立的遗嘱为准) Correct answer.
  2. The notarized will always prevails over all subsequent wills regardless of execution date
  3. All wills are automatically voided and statutory succession applies
  4. The will leaving the largest monetary bequest to charity automatically prevails

Explanation

Article 1142(3) of the PRC Civil Code abolished the historical priority of notarized wills; where several wills have been made and their contents conflict, the last will made according to law shall prevail.

Question 37Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Labor Contract Law (劳动合同法), when is an employer legally obligated to conclude an open-ended labor contract (无固定期限劳动合同) with an employee upon the employee's request?

  1. When the employee has worked for the employer for a consecutive period of not less than 10 years Correct answer.
  2. After the employee completes a 1-month probationary period
  3. Whenever the employee reaches the age of 30
  4. When the employer changes its registered trademark

Explanation

Under Article 14 of the PRC Labor Contract Law, an employer shall conclude an open-ended labor contract with an employee who proposes or agrees to renew the contract where the employee has been working for the employer for a consecutive period of not less than 10 years.

Question 38Role knowledge and relevant Chinese legal/financial foundations

Under the revised PRC Anti-Monopoly Law (反垄断法), which of the following is considered a 'monopoly agreement' (垄断协议) between competing business operators (horizontal monopoly agreement)?

  1. An agreement fixing or changing the price of commodities, restricting production volume, or dividing the sales market Correct answer.
  2. An agreement to jointly research new green energy technology without market allocation
  3. An agreement where a manufacturer sets a recommended non-binding retail price
  4. An agreement between a company and its wholly-owned subsidiary

Explanation

Under Article 17 of the PRC Anti-Monopoly Law, competing business operators are prohibited from concluding horizontal monopoly agreements that fix or change commodity prices, restrict production/sales volume, divide sales markets or raw material procurement markets, or restrict new technology development.

Question 39Role knowledge and relevant Chinese legal/financial foundations

Under the PRC Environmental Protection Law (环境保护法), which legal instrument allows public interest organizations to file environmental public interest litigation (环境民事公益诉讼) against polluters?

  1. Social organizations registered with civil affairs departments at or above municipal level that have engaged in environmental public interest activities for 5+ consecutive years without legal violations Correct answer.
  2. Any individual resident who dislikes the appearance of a lawful industrial park
  3. Only foreign non-governmental organizations without domestic registration
  4. Only profit-making commercial auditing firms

Explanation

Article 58 of the PRC Environmental Protection Law grants standing for environmental public interest civil litigation to social organizations registered with civil affairs departments of people's governments at or above the municipal level (with districts) that have specialized in environmental protection public interest activities for five consecutive years or more and have no record of legal violations.

Question 40Role knowledge and relevant Chinese legal/financial foundations

Under the revised PRC Administrative Penalty Law (行政处罚法), what is the statutory general limitation period for administrative organs to initiate an investigation and impose administrative penalties on unlawful acts?

  1. Two years, or five years if the unlawful act involves financial security, environmental protection, or public health with harmful consequences Correct answer.
  2. Six months in all administrative cases without exception
  3. Ten years for all minor administrative infractions
  4. Twenty years matching the criminal limitation period

Explanation

Article 36 of the revised PRC Administrative Penalty Law provides that where an illegal act is not discovered within two years, no administrative penalty shall be imposed. Where an illegal act involves life and health safety, financial security, or environmental ecology and causes harmful consequences, the period is extended to five years.

Question 41Role knowledge and relevant Chinese legal/financial foundations

Under Articles 61 and 62 of the PRC Civil Code, what is the default rule for civil consequences of activities performed by a legal representative (法定代表人) in the legal person's name?

  1. The legal representative personally bears 100% of all contract liabilities and the legal person is completely exempt
  2. The shareholders of the legal person must immediately pay all debts from their personal family bank accounts
  3. The contract signed by the legal representative is void ab initio unless approved by a notary
  4. The civil consequences of the legal representative's duty-related activities shall be borne by the legal person Correct answer.

Explanation

Under Article 61 and Article 62 of the PRC Civil Code, the legal representative acts on behalf of the legal person in civil activities. The civil consequences of civil activities carried out by the legal representative in the name of the legal person shall be borne by the legal person.

Question 42Role knowledge and relevant Chinese legal/financial foundations

Under Article 153 of the PRC Civil Code, what is the legal effect of a civil juristic act (民事法律行为) that violates mandatory provisions of laws and administrative regulations (法律、行政法规的强制性规定)?

  1. It is void (无效), unless such mandatory provision does not result in the invalidity of the civil juristic act Correct answer.
  2. It is valid in all instances provided the parties signed under seal
  3. It is voidable only if challenged within 10 days of signing
  4. It automatically converts into a non-binding gentlemen's agreement

Explanation

Article 153(1) of the PRC Civil Code provides that a civil juristic act that violates mandatory provisions of laws and administrative regulations is void, except where the mandatory provision does not lead to the invalidity of the civil juristic act (distinguishing validity mandatory rules 效力性强制性规定 from administrative regulatory rules 管理性强制性规定).

Question 43Role knowledge and relevant Chinese legal/financial foundations

Under Article 157 of the PRC Civil Code, what are the statutory legal consequences after a civil juristic act is declared void, revoked, or determined to have no legal effect?

  1. Property acquired shall be returned; if return is impossible, compensation based on value shall be made; the party at fault shall compensate the counterparty for resulting losses Correct answer.
  2. The party with the larger corporate capital contribution keeps all transferred assets permanently
  3. Both parties are immediately sentenced to administrative detention by the civil court
  4. The property is automatically confiscated into the national treasury regardless of civil rights

Explanation

Article 157 of the PRC Civil Code stipulates that after a civil juristic act is void, revoked, or determined to have no effect, property obtained as a result shall be returned; where return is impossible or unnecessary, compensation shall be made at market value. The party at fault shall compensate the other party for the losses incurred.

Question 44Role knowledge and relevant Chinese legal/financial foundations

Under Article 168 of the PRC Civil Code, what is the default rule regarding 'self-representation' (self-dealing / 自己代理) and 'dual representation' (双方代理) by an agent?

  1. An agent shall not perform a civil juristic act with themselves in the name of the principal, nor perform a juristic act on behalf of both parties with conflicting interests, unless consented to or ratified by the principal(s) Correct answer.
  2. Agents are encouraged to perform self-dealing transactions to maximize economic efficiency
  3. Dual representation is mandatory in all commercial sales transactions
  4. Self-dealing transactions are criminally punished with life imprisonment under the Civil Code

Explanation

Article 168 of the PRC Civil Code provides that an agent may not perform a civil juristic act with himself in the name of the principal, nor perform a civil juristic act on behalf of both principals to the same act, unless consented to or ratified by the principal(s) concerned.

Question 45Role knowledge and relevant Chinese legal/financial foundations

Under Article 301 of the PRC Civil Code, what voting threshold among co-owners is required by default to dispose of or conduct major repairs on a co-owned property (按份共有财产)?

  1. Consent of co-owners holding two-thirds (2/3) or more of the shares, unless otherwise agreed by the co-owners Correct answer.
  2. Unanimous consent of 100% of all co-owners without exception
  3. Consent of co-owners holding a simple majority (over 50%) of shares
  4. Consent of the oldest living co-owner

Explanation

Article 301 of the PRC Civil Code provides that the disposal of, or major repairs or alteration of nature/purpose to, a property held in tenancy in common (shares) shall be subject to the consent of co-owners holding two-thirds or more of the shares, unless otherwise agreed by the co-owners.

Question 46Role knowledge and relevant Chinese legal/financial foundations

Under Article 344 and Article 347 of the PRC Civil Code, how is the right to use land for construction purposes (建设用地使用权) for industrial, commercial, tourism, entertainment, and commercial residential purposes created by the state?

  1. Through competitive public bidding, auction, or listing on the open market (招标、拍卖、挂牌等公开竞价方式) Correct answer.
  2. Exclusively through gratuitous administrative allocation without fees
  3. Through private oral lottery conducted by local neighborhood committees
  4. Through unilateral self-declaration by property developers

Explanation

Article 347 of the PRC Civil Code mandates that land used for industrial, commercial, tourism, entertainment, and commercial residential purposes shall be assigned by means of public bidding, auction, or listing on a land exchange.

Question 47Role knowledge and relevant Chinese legal/financial foundations

Under Article 359 of the PRC Civil Code, what occurs upon the expiration of the term of the right to use land for residential construction purposes (住宅建设用地使用权)?

  1. The term is automatically renewed (自动续期) Correct answer.
  2. The land and residential building are immediately confiscated by the local municipality without compensation
  3. The homeowner must demolish the residential building at their own expense within 30 days
  4. The homeowner is evicted and the property is auctioned to foreign investors

Explanation

Article 359(1) of the PRC Civil Code provides that the term of the right to use construction land for residential purposes shall be automatically renewed upon expiration. Payment or reduction/exemption of renewal fees shall be handled in accordance with provisions of laws and administrative regulations.

Question 48Role knowledge and relevant Chinese legal/financial foundations

Under Article 414 of the PRC Civil Code, where the same movable or immovable property is mortgaged to two or more creditors, how is the priority of repayment (清偿顺序) determined between registered and unregistered mortgages?

  1. Registered mortgages rank ahead of unregistered mortgages; among registered mortgages, priority is determined by the chronological order of registration Correct answer.
  2. Unregistered mortgages always rank ahead of registered mortgages
  3. Repayment is distributed evenly per capita regardless of registration status or timing
  4. The mortgage with the smallest debt amount is paid first

Explanation

Article 414 of the PRC Civil Code establishes the priority ranking for multiple mortgages on the same property: (1) where the mortgages are registered, in the chronological order of registration; (2) registered mortgages have priority over unregistered mortgages; (3) where mortgages are not registered, in proportion to the claims.

Question 49Role knowledge and relevant Chinese legal/financial foundations

Under Article 563 of the PRC Civil Code, in which of the following circumstances may a party unilaterally terminate a contract (法定解除合同)?

  1. The counterparty explicitly expresses or indicates by their conduct that they will not perform their principal obligation (anticipatory breach / 预期违约) Correct answer.
  2. The market price of the raw materials fluctuates within a normal commercial range of 2%
  3. The purchasing party discovers a slightly cheaper supplier after signing the contract
  4. One party's legal representative changes their personal telephone number

Explanation

Article 563(1)(2) of the PRC Civil Code permits unilateral statutory contract termination if, prior to the expiration of the performance period, one party expressly states or indicates by their conduct that they will not perform their principal obligation.

Question 50Role knowledge and relevant Chinese legal/financial foundations

Under Article 585 of the PRC Civil Code, what power does a people's court or arbitration tribunal have if the agreed liquidated damages (违约金) are excessively higher than the actual losses caused by the breach?

  1. The court or tribunal may appropriately reduce the liquidated damages upon the request of the breaching party Correct answer.
  2. The court must double the liquidated damages as an exemplary punishment
  3. The court must void the entire underlying contract and return all goods
  4. The court has no power to adjust agreed liquidated damages under any circumstances

Explanation

Article 585(2) of the PRC Civil Code provides that where the agreed liquidated damages are excessively higher than the losses caused, the people's court or arbitration institution may appropriately reduce them upon the application of the party concerned.