Judicial Summary
Property partition clauses in a divorce agreement bear obvious personal attributes and shall therefore be governed primarily by the Marriage Law rather than the Contract Law.
Nevertheless, if a property disposition clause in a divorce agreement is not formulated to balance marital property interests and exists independently of personal marital relations, such clause shall also be regulated by the Contract Law.
The nature of property payment provisions in a divorce agreement shall be comprehensively determined by reference to other agreement terms and the parties’ true intent at the time of signing.
Case Brief
Xu (male) and Qiu (female) completed divorce registration at the civil affairs bureau on September 18, 2008, and signed a Divorce Agreement.
In the agreement, Xu undertook to pay Qiu RMB 307,000. He subsequently paid only RMB 25,000 and refused to settle the remaining balance. Qiu therefore filed a lawsuit, requesting Xu to continue performing his payment obligation under the agreement.
Court Judgment
Both the first-instance and appellate courts held that the provision whereby Xu voluntarily paid Qiu RMB 307,000 arose directly from the dissolution of their marital relationship and was not subject to the provisions governing gift contracts under law. The defendant’s request to revoke the clause lacked factual and legal basis and was dismissed. The court ruled that Xu must continue to perform the agreement.
Xu later applied for retrial and submitted new evidence proving that he currently suffers from community-acquired pneumonia, sepsis, and chronic hepatitis B, and had been hospitalized twice between July and October 2011.
Upon retrial, the court confirmed the validity of the Divorce Agreement. A review of other terms showed that the couple had no minor children to support, no jointly-owned real estate or other joint assets to divide, and no joint claims or debts incurred during marriage.
Based on the overall facts and evidence, the RMB 307,000 voluntarily promised by Xu to Qiu shall be deemed spousal financial assistance provided by one party to the other upon divorce.
For such reasonable financial assistance, the assisting party may adjust, terminate or discontinue performance due to substantial changes in personal circumstances, and shall have no right to demand repayment of amounts already paid.
Given that Xu now suffers from multiple severe illnesses and his financial condition has deteriorated significantly, his application to terminate and discharge the payment clause complies with laws and regulations and was upheld by the retrial court.
Legal Comment
The core disputed issues of this case are:
- How to characterize the legal nature of the clause stipulating Xu’s payment to Qiu in the Divorce Agreement;
- Whether such clause is revocable or capable of being terminated.
First, as persons with full capacity for civil conduct, Xu and Qiu signed the Divorce Agreement at the civil affairs bureau out of genuine intention, and the agreement does not violate any mandatory provisions of laws and administrative regulations. The Divorce Agreement is therefore authentic and legally valid.
The first-instance and appellate courts held that the payment provision involved personal marital relations and the balancing of multiple interests, rather than a simple gratuitous gift, and thus the gift revocation rules under the Contract Law were inapplicable.
By contrast, the retrial court held that other clear terms of the Divorce Agreement confirmed the couple had no other property or debt interests to settle during the marriage. Qiu also admitted in court that the payment was not consideration for the division and settlement of marital joint assets and liabilities.
Accordingly, although the payment provision was set out in the Divorce Agreement, it is essentially an ordinary gift clause subject to the Contract Law. In view of Xu’s current difficult living conditions, the retrial court affirmed his right to discontinue performance.
It is evident that where spouses agree on property payments upon divorce for the purpose of balancing property interests, the nature and purpose of the clause shall be explicitly stated in writing, so as to avoid disputes arising from differing judicial characterization of clause nature.