Advancing the healing theory of China’s contract law for oral land sale contracts: a legal reform recommendation

Given the significance of land contracts, it is important to ensure the clarity of the authorities governing them. China’s Contract Law (the supreme contractual authority) establishes the ‘healing theory’ as a general rule to validate oral contracts (including oral land sale contracts) that would otherwise be invalid for violating mandatory requirement of writing. However, Contract Law fails to articulate the specific events that trigger the theory, which creates discretions for Chinese courts to apply the theory in land sale contract cases contradictorily and excessively, potentially imposing unfairness on claimants. The author advances the theory’s underpinnings and demonstrates why the theory substitutes writing, protects reliance and strengthens Contract Law’s important goals and principles. The author proposes a solution to addressing the courts’ discriminatory approach and uncertainty, through identifying two events that trigger the theory in ways that align with the theory’s underpinnings and Contract Law’s rules, recommending Contract Law to articulate the two events as a legal reform, so claimants would have certainty to exercise contractual freedom to validate oral land sale contracts and enjoy contractual remedies. The analysis in land contract cases provides a perspective about how the theory could apply generally. The reform has economic, legal and social significance.