Abstract: China’s civil legislation limits the legal sources of legality norms for contracts to laws and administrative regulations so as to eliminate inappropriate interference by departmental and local interests in contract freedom and provide legal protection for the establishment of a unified national market. This approach can be described as a unique phenomenon of legal reservation with Chinese characteristics. Under the binary evaluation framework of contract content, the validity of a contract that violates both law and lower-level rules can be evaluated by connecting the higher-level law being violated with legality norms. To evaluate through public order and good morals clauses the effect of a contract that violates only lower-level rules, a methodological “gap” must be bridged. Judges should maintain humility when determining the violation of public order and good morals by a contract that violates only administrative rules. They should first evaluate whether the provisions violated by the contract comply with the legal order and then enter the stage of balancing interests in a dynamic system. In the process of balancing interests, the freedom of contract as a fundamental right always holds an important position, and the negation of the effect of the contract must be fully demonstrated. The limitation of the hierarchy of legal sources in legality norms is not a temporary solution, but has significant implications for legal application.

Key Words: hierarchy of legal sources, legal reservation, public order and good morals, evaluation of compliance with legal order, dynamic system

Author: Cai Rui, assistant research fellow, CASS Institute of Law;

Source: 2 (2025) Chinese Journal of Law.