Fiduciary Principles in Chinese Family Law

He Jian

Peking University

Abstract: The existing literature on fiduciary law focuses primarily on commercial settings, and fiduciary principles in the area of family law have seldom been considered. This essay sheds light on the fiduciary principles in Chinese family law. There is a set of classic fiduciary duty rules under Chinese family law, such as conflict-of-interest rules and remedies for fraudulent transfers. There are also two special sets of rules that might be considered candidates for traditional fiduciary principles in family law, namely the rules on property distribution in a divorce and the rules on property management for different family members. Moreover, the duty of loyalty in Chinese family law, as well as in many other civil law jurisdictions, is much broader in scope than the traditional duty of loyalty under the common law. This broad duty of loyalty includes the duty of sexual fidelity, the duty of notification about certain sexual activities of one spouse during or even before marriage, and the duty of support between family members. This difference may go back to the historical distinction between law and equity, as well as the logical appropriateness of a broad understanding of the term “loyalty.”

Keywords: fiduciary principles, fiduciary duty, duty of loyalty, duty of care, duty of sexual fidelity

Introduction

Fiduciary law is a special legal field in common law jurisdictions, rooted in the distinction between law and equity, a distinction that is not part of the civil law tradition (Samet, 2016, pp. 139-166; Gelter & Helleringer, 2019, p. 583). Nevertheless, a comparative study of fiduciary principles across common law and civil law traditions is still possible, at least with a functional approach (Michaels, 2006, pp. 339-382). This is because a number of obligations in many civil law jurisdictions pursue ends very similar to those of the fiduciary principles in common law.

The existing literature in this area, mostly conducted by civil law academics, focuses on fiduciary principles in laws of agency, corporation, or finance in Germany, France, and other continental European countries (Gelter & Helleringer, pp. 583-602; Graziadei, 2014, pp. 286-300), as well as in Japan (Ramseyer & Tamaruya, 2019, pp. 643-663) and China (Howson, 2019, pp. 603-622; Wu, 2020, p. 431). As a comparative legal study, this essay will shed light on fiduciary principles in Chinese family law, which is substantially built upon the Marriage Law of the People’s Republic of China (2001 Amendment) [hereinafter Marriage Law 2001] and its three judicial interpretations,①Interpretation I of the Supreme People’s Court (SPC) on Several Issues in the Application of the Marriage Law of the People’s Republic of China (Supreme People’s Court Interpretation No. 30, 2001); Interpretation II of the SPC on Several Issues in the Application of the Marriage Law of the People’s Republic of China (Supreme People’s Court Interpretation No. 19, 2003); Interpretation III of the SPC on Several Issues in the Application of the Marriage Law of the People’s Republic of China (Supreme People’s Court Interpretation No. 18, 2011) (hereinafter Interpretation I, II, and III of Marriage Law, respectively).and now their successor, theBook of Marriage and Familyof the Civil Code of the People’s Republic of China (hereafter referred to as Civil Code)②Promulgated by the Third Session of the 13th National People’s Congress on May 28, 2020, effective on January 1, 2021.and its new judicial interpretation.③Interpretation I of the SPC on the Application of Book of Marriage and Family of the Civil Code of the People’s Republic of China (Supreme People’s Court Interpretation No. 22, 2020) (hereinafter Interpretation on Marriage and Family).The comparison is valuable from the outsider’s perspective because fiduciary duty in the realm of family law has rarely been explored either in China or in other civil law countries (Miller & Gold, 2016; Graziadei, 2014, p. 292; Scott & Scott, 1995, p. 2401; Scott & Chen, 2019, pp. 227-248). It is even helpful to the insider because no study in Chinese academia has viewed the fragmented, yet interrelated, rules of Chinese family law from the perspective of fiduciary principles or from any other unified perspective.

This essay focuses on the similarities and differences between fiduciary duty in Chinese family law and its counterpart in traditional common law. Regarding similarities, Chinese family law has a set of classic common-law fiduciary principles, including those on conflict of interest, remedies for fraudulent transfers, and access to information mechanisms on certain property (e.g., the community property), all classified under “duty of loyalty,” and several rules on the duty of care. Moreover, China has special rules that might be considered “natural” or logical extensions and, hence, candidates for commonlaw fiduciary principles in the context of family law. These rules include: (a) the rule for distributing income, appreciation, and other proceeds of separate property during marriage (as a special type of duty of loyalty); and (b) different standards of duty of care and related rules of allocating risk or losses (as modified versions of the traditional business judgment rule of commercial law). Neither of these examples belongs to traditional fiduciary law, but they share similar ends or functions with commonlaw fiduciary duty.

Further, this essay will reveal profound differences in the duty of loyalty between Chinese family law and traditional common law. The scope of the duty under Chinese family law is much broader than its counterpart in common law in that it includes the additional duties of sexual fidelity during marriage, disclosure of certain sexual activities to one’s spouse during or even before marriage, and support between family members. The duty of loyalty in such a broad sense is not only a general principle of Chinese family law, but also a subcategory of the principle of good faith in the entirety of Chinese civil law. Moreover, such a broad understanding of the duty of loyalty can be observed in many other civil law jurisdictions. For such an interesting and common phenomenon, this essay also offers a preliminary explanation based primarily on historical and logical grounds.

The first three parts of this essay make the aforesaid “similarity” comparison. Part I focuses on the duty of loyalty between spouses under Chinese family law. Part II introduces the further duty of loyalty between parents and children (as well as other family members). Part III describes the duty of care in Chinese family law. Part IV provides the aforesaid “difference” contrast and the related explanation. Then follows the conclusion.

Duty of Loyalty Between Spouses

Under fiduciary law, the duty of loyalty means that the fiduciary must not place his/her personal interests above those of the principal (Scott & Scott, p. 2420).①see Bayer v. Beran, 49 N.Y.S.2d 2 (1944) (“The fiduciary must subordinate his individual and private interests to his duty to the corporation whenever the two conflict.”).It is the same in Chinese family law. In the spousal relationship, for example, the duty of loyalty centers on community/marital property matters, which concern both spouses’ interests yet might be managed or otherwise affected by one spouse. Despite variations, the duty of loyalty in the common law generally refers to the following rules: (a) conflict-of-interest rules, such as avoiding self-dealing; (b) remedies for fraudulent transfers; and (c) the duty of notification concerning the entrusted property (Scott & Chen, p. 237; Bray, 2019, pp. 452-454; McDaniel, 2003, p. 1; McDaniel, 2005, pp. 40-43; Rakow, 2014, p. 771; Gold, 2014, pp. 175-193). Besides, the duty of loyalty may also exist between parents and children (Scott & Scott, pp. 2401-2476). Most of these rules have their counterparts under Chinese family law.

Conflict-of-Interest Rules

Restrictions on disposal of community property.

The statutory matrimonial property regime in China is the community property system. The community property is co-owned by both spouses and shall be “equally” dealt with.②Civil Code of the People’s Republic of China, Art. 1062 para. 2.That is, disposal of the community property shall be jointly made by both spouses. Where one spouse alone disposes of the community property, the validity of the (unauthorized) disposal is undetermined until it is ratified or rejected later by the other spouse.①The validity of the contract associated with the unauthorized disposal is a different issue from the validity of the disposal under Chinese law. If the contract is concluded by the disposing spouse in that person’s own name with a third party, it is valid despite the lack of right of disposal. In contrast, if the contract is concluded by the disposing spouse on behalf of both spouses, it is undetermined in principle due to the unauthorized agency (Id., Art. 171 para. 1), or valid as an exception if there is apparent agency (Id., Art. 172).As an exception, each spouse is entitled to dispose of community property (usually registered in the disposer’s individual name, in his/her possession, or in other ways under that person’s control) alone in accordance with the necessaries doctrine, that is, if and as long as the disposal is meant to meet the needs of the family’s daily life.②Id., Art. 1060 para. 1. A similar view existed long before the promulgation of the Civil Code; see Interpretation I of Marriage Law, Art. 17.

The disposal restriction on community property makes an unauthorized disposal by one spouse a tortious infringement against the other,③see Civil Code of the People’s Republic of China, Art. 311 para. 2.but it cannot always deter such a disposal. This is because of the application of thebona fidepurchase rule④For the bona fide purchase rule in general, see Civil Code of the People’s Republic of China, Art. 311.from property law. The co-owned family home would arguably enjoy special protection, and does in a few jurisdictions (Henrich & Schwab, 1995; Berger, 1977, p. 55; He, 2020, pp. 201-218). Under the existing Chinese law, however, the innocent spouse who co-owns the family home is merely entitled to monetary recourse (rooted in tort law) against the other spouse instead of any claim against abona fidepurchaser.⑤Interpretation on Marriage and Family, Art. 28.

The case of “mixture of separate and community property.”

In the course of a marriage, the community property owned by both spouses and the separate property owned by each spouse may be mixed in many ways. One spouse’s premarital savings (separate property), for example, may be used for the family’s daily life. In contrast, one spouse’s income during marriage (community property) may be used to repay a mortgage on the family home, which one spouse bought before marriage and is, therefore, separate property. Given the potential of one spouse to exploit community property for the benefit of his/her separate property, Chinese law has developed a set of rules to deter such selfishness, partly by borrowing doctrines or theories from the US (Xia, 1999, pp. 234-245; He, 2014, pp. 134-144). These rules are traditionally not related to the fiduciary principles of the common law (McDaniel, pp. 1-4; Scott & Chen, pp. 235-238), but maybe regarded as a new type of rule due to the functional similarity of discouraging one spouse’s selfishness in property matters.

Different modes of mixing separate and community property.

The most typical case of mixing concerns the distribution of the accruedappreciation(increase in value) during marriage of a mortgaged house that is a premarital property and hence the separate property of one spouse, but whose mortgage load is partly or fully paid down using community property.⑥For a comprehensive comparative legal study with a focus on Chinese law, see He, J. (2015). Classifying the appreciation of separate property during marriage: Also on the spirit of the Chinese statutory matrimonial system. The Jurist, 4, 95-115.This is a common issue for all modern societies (He, 2015, 97-105, 114-115; He, 2014, pp. 137; Hu, 2010, p. 112). Under Chinese law, first, the community property used to pay down the loan will be fully reimbursed to the community; and second, the house’s appreciation during marriage will be distributed to both spouses (as owners of the community property) on a contribution basis.①The calculation rule of the contribution basis is still controversial. see He, J. (2015). Classifying the appreciation of separate property during marriage: Also on the spirit of the Chinese statutory matrimonial system). The Jurist, 4, 96-105.The rule is also applicable by analogy to other cases where the community property and the separate property are mixed, and the latter has increased in value during marriage.

A special case is the mixture of separate property and marital labor. All marital labor (the income or proceeds of a spouse’s labor during marriage) is community property.②see Civil Code of the People’s Republic of China, Art. 1062 para. 1 item 1.Obviously, one spouse’s marital labor and separate property are very likely to be mixed. For instance, one spouse usually continues a premarital stock investment by devoting time or expertise during marriage, or continues to manage a premaritally established business enterprise. In this case, the separate property might also generate appreciation, income, or other types of proceeds during marriage.

Incoherency of the contemporary rule.

The special quality of the mixture of marital labor and separate property lies in its distribution rule. As mentioned above, aproportional approachis adopted regarding the appreciation of separate property in an ordinary mixture case. To maintain coherency, the same rule should apply to the mixture of marital labor and separate property. However, anall-or-nothing approachis adopted because of borrowing the widely accepted distinction under the law of the US. That is,active appreciationof the separate property resulting from marital labor is fully community property, whereasnatural appreciationorpassive appreciationduring marriage that is attributed to inflation, or the market remains separate property.③see Interpretation on Marriage and Family, Art. 5.

Another stark contradiction is related to the types of proceeds of separate property. Apart from active and passive appreciation, there are alsoincomeandinvestment proceeds. The separate property’s income during marriage is all separate property, while its investment proceeds are all community property. In practice, the most difficult and controversial task would be to define all these three types of proceeds by distinguishing one from another. For instance, rent earned from a premarital house during marriage could be classified as either income or investment proceeds (He, 2015, p. 110; He, 2014, p. 145). Similarly, the appreciation of a premarital stock investment would be either passive appreciation or investment proceeds (He, 2015, p. 113; Cheng & Wu, 2013, pp. 114-116).

All these contradictions curtail the deterrence effect of the distribution rule on proceeds of separate property during marriage. An economically rational spouse might thereby be encouraged to reserve his/her separate property exclusively to generate passive appreciation or more separate property. Obviously, an arrangement of this kind does not necessarily accord with the best economic interests of the whole family. Further, it may even burden the relationship of the spouses.

As an alternative, all the proceeds of each spouse’s separate property during marriage could be classified as investment proceeds, which belong to community property. In this case, there is no reason for a spouse to be selfish because both spouses share proceeds of any type. A spouse is encouraged to use marital labor and arrange all the (community and separate) property in the best interests of the family (He, 2020, p. 24).

Fraudulent Transfer Rules

Given that the community property embodies the interests of both spouses, it is not infrequent that one spouse tries to infringe the other’s interests by a fraudulent transfer of community property. There are basically two ways: first, the community property might be directly concealed or transferred to a third party; second, debts might be forged to burden the community property and, thereby, the innocent spouse. Both ways have long been widely held to be tortious infringements on community property (Hu, 2001, p. 184; Huang, 2020, pp. 185-188). However, the legal remedies that are available have gone through a transition, as explained below.

Ordinary compensation.

The earliest remedy against a fraudulent transfer in a divorce case is ordinary compensation as a tort law claim. This was expressly provided for in a judicial interpretation of 1993 as follows:

Where one spouse refuses to surrender any community property by illegally concealing or transferring such property, or illegally sells off, destroys, or damages such property, less or no property shall be distributed to this spouse in the case of [community] property partition. To be concrete, the property so concealed, transferred, sold off, destroyed, or damaged shall be treated as actually being distributed to the spouse committing the foregoing conduct, and the [community] property share to which the other spouse is entitled shall be reimbursed with other community property; if the community property available is insufficient for reimbursement, the difference shall be made up by the spouse committing the foregoing conduct… (translation; emphasis added)①Several Specific Opinions of the SPC on the Division of Property Involved in the Trial of Divorce Cases by People’s Courts (Supreme People’s Court Interpretation No. 32, 1993) (hereinafter Property Division Opinions), Art. 21.

It is noteworthy that the emphasized phrase “less or no property” refers to the community property available for partition, not to the property concealed, transferred, sold off, destroyed, or damaged. It is equal to thereimbursementin the second sentence cited above. This wording does not punish the wrongful spouse by deprivation of some part of that spouse’s otherwise fair share of the community property. In contrast, it merely ensures that the innocent spouse gets exactly what he/she is entitled to in anordinarypartition, that is, as if the community property had never been concealed, transferred, sold off, destroyed, or damaged.②see similarly The Civil Senate of the Intermediate Court of Guiyang (1988). New issues and measures of property division in divorce cases. People’s Judicature, 12, 11.

Punitive damages or disgorgement.

In 2001, the rule of the aforesaid judicial interpretation was basically integrated into the amended Marriage Law (Ma, 2002, p. 396). However, only the first sentence of the above quotation was retained, while the second sentence, starting with the phrase “[t]o be concrete,” was deleted as follows.

If, at the time of divorce, one spouse conceals, transfers, sells off, destroys, or damages the community property, or fabricates any debt in pursuit of seizing the other spouse’s property, less or no property may be distributed to the spouse committing the foregoing conduct…①Marriage Law of the People’s Republic of China (2001 Amendment), Art. 47.(emphasis added)

This is an important change. Literally, “less or no property” in the new provision of the Marriage Law 2001 is not necessarily equal to strict reimbursement in the sense of ordinary compensation, due to the omission of the further clarification found in the judicial interpretation of 1993. Instead, it sounds as if the wrongful spouse may be punished by receiving less community property or none, regardless of what that spouse’s strictly fair share would be. In fact, this view is widely accepted in practice (Ma, 2002, p. 398)②see Sun Wenqing v. Guo Meide, Civil Judgment of the Supreme People’s Court Min Yi Zhong Zi [2013] No. 210; Cui v. Li, Civil Judgment of the Hebei Provincial High People’s Court Ji Min Yi Zhong Zi [2014] No. 28.and, with minimal adjustments, the provision of the Marriage Law on this issue is now also absorbed into the Civil Code.③see Civil Code of the People’s Republic of China, Art. 1092.

However, the underlying reasons for the shift in remedies have never been clarified. The legislators of both the Marriage Law and the Civil Code are merely content with the reasoning that a fraudulent transfer in a divorce constitutes a tort or an illegal act; hence, the wrongful spouse “shall obviously bear” the penalty of being awarded less or no property (Hu, pp. 184-185; Huang, p. 187). This is not persuasive. Chinese tort law is based on the principle of compensation to make up for the damages. In line with this, ordinary compensation, as prescribed in the judicial interpretation of 1993, should have been retained in the Marriage Law as well as in the Civil Code. The reason why these two laws provide uniformly for a different remedy, which is similar to punitive damages (Gao, 2001, p. 18; Mo, 2004, November 9) or disgorgement (or accounting for profits) in the common law,④For the conceptual difference between disgorgement and accounting for profits, see Bray, S. L. (2019). Fiduciary remedies. In Evan J. Criddle, Paul B. Miller & Robert H. Sitkoff (eds.), The Oxford handbook of fiduciary law (p. 465). Oxford University Press.may be related to the spousal duty of loyalty. Given the intimacy of the relationship between spouses, such a remedy would properly discourage a fraudulent transfer without raising doubts about its potentially “punitive” character. Similar rules are well established not only in the family law of common law jurisdictions (Scott & Chen, p. 237; Adams, 1997, pp. 449-459), but also in the Company Law of the People’s Republic of China (hereinafter Company Law 2005, 2018, respectively).⑤Company Law of the People’s Republic of China (2018 Amendment), Art. 148.

To constitute a fraudulent transfer, the intention (or malice) of a spouse is required. Negligence would not suffice (Hu, p. 184; Huang, p. 186). Currently, the fraudulent transfer may take place at any time during marriage,⑥see Civil Code of the People’s Republic of China, Art. 1092; Guiding Case No. 66 (a guiding case is noticed but not necessarily adjudicated by the SPC; it bears authority similar to a judicial interpretation in China).no longer being restricted to the period of a divorce proceeding (i.e., from filing suit to the execution of the decree) (Hu, p. 184).⑦see Marriage Law of the People’s Republic of China (2001 Amendment).

Despite the literal ambiguity, the phrase “less or no property” refers to the target property of a fraudulent transfer, not to all the community property (Hu, p. 184).①see Sun Wenqing v. Guo Meide, Civil Judgment of the Supreme People’s Court Min Yi Zhong Zi [2013] No. 210; Cui v. Li, Civil Judgment of the Hebei Provincial High People’s Court Ji Min Yi Zhong Zi [2014] No. 28; Guiding Case No. 66; Huang, W. (ed.). (2020). Commentaries on the Book of Marriage and Family of the Civil Code of the People’s Republic of China. Law Press·China, pp. 187-188 (vaguely expressing a similar view).The court has discretion to decide what share of the property is forfeit, depending on the seriousness of the wrongful conduct and the specific circumstances of the case (Hu, p. 184).②see Huang, W. (ed.). (2020). Commentaries on the Book of Marriage and Family of the Civil Code of the People’s Republic of China. Law Press·China, pp. 187.Such a disgorgement-like remedy seems to be available only in a divorce proceeding (or thereafter) and may not be claimed during marriage.③This possibility is not mentioned in the drafter’s commentary either. see Id. at 187-188.

Partition of community property during marriage.

When one spouse commits a fraudulent transfer, the other spouse can petition the court for partition of the community property during marriage.④see Civil Code of the People’s Republic of China, Art. 1066 item 1.This saves the burden and trouble of a divorce. As in divorce, the fraudulent transfer must be made intentionally (maliciously) (Huang, 2020, p. 104; Xi, 2011, p. 84). Here, however, the community property subject to partition is not restricted to the target of the fraudulent transfer; instead, all the community property is available for partition (Huang, 2020, p. 102; Xi, 2011, p. 84). This distinction makes sense because a fraudulent transfer usually destroys the trust between spouses, and the other community property is still at risk of being fraudulently transferred. On the other hand, given that partition during marriage is an exception to the principle of the statutory matrimonial property regime, the partition shall also facilitate the maintenance and usage of the community property (Xi, 2011, p. 86). Therefore, a partition of all the community property during marriage may not always occur.

Access to Information on Community Property

Although both spouses co-own the community property under the law, any specific piece of it is usually possessed or controlled by one spouse. To protect the other (non-controlling) spouse’s interests therein, the first step is to ensure the latter’s access to information regarding community property. Currently, in China, there is no uniform rule. Instead, different local rules are in progress and in competition with each other. They can be divided into two categories.

Right of information during marriage.

Some local regulations on women’s protection provide that each spouse has the right of information regarding all the community property during marriage. This is not only a private right but also a public one related to a government agency’s duty to assist an inquiry of one spouse about community property registered in the other’s name. In Guangzhou, for example, one spouse with proof of the marriage relationship may apply to different agencies to inquire about the property registered in the name of the other spouse, including stocks, real estate, cars, and other assets.①see Provisions of Guangzhou City on the Protection of Rights and Interests of Women (2015 Amendment), Art. 23. see similarly Measures of Henan Province for the Implementation of the Law of the People’s Republic of China on the Protection of the Rights and Interests of Women (2008 Amendment), Art. 19; Regulations of the Ningxia Hui Autonomous Region on the Protection of Rights and Interests of Women (2019 Amendment), Art. 35; Regulations of Jiangsu Province on the Protection of Rights and Interests of Women (2020 Amendment), Art. 32.Personal bank accounts are a rare exception: As a rule, and obviously based on the special confidentiality policy in the financial sector, the spouse of a depositor is not entitled to information about the latter’s account (Li, 2011, p. 149).②see Law of the People’s Republic of China on Commercial Banks (2015 Amendment), Art. 29.

Duty to file financial statements in divorce.

Another way to ensure access to information on community property is the requirement for each spouse to file a comprehensive financial statement in a divorce proceeding.③The related rules are also applicable in other cases where a property partition is involved, such as in an independent property partition proceeding after the divorce. see Guidelines of the Intermediate People’s Court of Shenzhen Municipality on Implementing the System of Property Declaration for Divorce Cases, 2019, Art. 9.This is common practice in common law jurisdictions (Hofstein & Weiner, 2003, p. 17; Scott & Chen, p. 237), but only a recent “experiment” in a few provinces or municipalities in China. In Shenzhen,④see similarly Guidelines for Courts in Guangdong Province on the Procedures for Hearing Divorce Cases, 2018, Arts. 40-45.for instance, the divorcing parties must file financial statements covering not only all the community property, but also debts, as well as property obtained before marriage.⑤Id. Guidelines of the Intermediate People’s Court of Shenzhen Municipality, Arts. 1-2.If one spouse files an incorrect statement intentionally or due to gross negligence, the court may apply the “less or no property” remedy to the portion of the property that is misstated.⑥Id. Art. 6.Besides, such a misstatement might be regarded as forging or destroying material evidence and thereby obstructing trial. That could result in a fine or detention, and even criminal liability.⑦Id. Art. 8; Civil Procedure Law of the People’s Republic of China (2017 Amendment), Art. 111 para. 1 item 1.

Duty of Loyalty Between Parents and Children

The parent-child relationship is a classic scenario of fiduciary principles in family law (Scott & Scott, p. 2401; Scott & Chen, pp. 228-235). In contrast to the risk that a marriage may end in divorce, there is generally no such breakup between parents and children. However, this difference only implies that formal legal arrangements, including fiduciary duties, might be applied much less frequently than in the spousal relationship, and correspondingly, that there is much more room for informal, extralegal bonding and monitoring mechanisms (Scott & Chen, pp. 228-231). Given that a child is usually weak and vulnerable in relation to its parents, whereas one spouse is presumably equal to the other, the parent-child relationship is subject to even more comprehensive and stricter legal arrangements. The duty of loyalty is also included.

Special Duty of Loyalty for Divorcing Parents

Divorce is a crisis not only for the divorcing spouses but also for their children. Although the spouses would care for the interests of their children in the ordinary course of a marriage, they might ignore or sacrifice the children’s welfare for their own interests in a divorce; for example, to get a quick divorce based on agreement①Spouses in China have two ways of getting divorced, either by agreement or through a lawsuit. see Civil Code of the People’s Republic of China, Arts. 1076-1080.or a more favorable financial arrangement (Scott & Chen, p. 234). To discourage incentives of this kind, Chinese family law supports the following measures.

First, the duty of the parent toward the child does not cease upon divorce. The noncustodial parent still has “the right and duty to support, educate, and protect” the children, as does the custodial parent.②see Civil Code of the People’s Republic of China, Art. 1084 para. 2.Especially, under changed circumstances or with other good reasons, more child support could be claimed beyond the agreed or adjudicated amount.③Id. Art. 1085 para. 2; see Interpretation on Marriage and Family, Art. 58.

Second, although the custody of a child is in principle subject to the parents’ agreement, there are restrictions or exceptions. In the absence of an agreement, the custody shall be decided by the court “in the best interests of the child.” If the child has reached the age of eight, its true will—asprima facieevidence of its own interests—shall be respected.④Id. Art. 1084 para. 3.

Third, the community property shall be distributed, absent any agreement, taking into consideration the actual circumstance of the property and “under the principle of caring for the interests of the children, the wife, and the no-fault party.”⑤Id. Art. 1087 para. 1.According to the drafter’s comments, the order in which the law lists these three parties demands that the children’s welfare has priority in a property distribution (Huang, p. 174).

General Duty of Loyalty for Parents as Guardians

In China, most provisions on the parent-child relationship are not in the fifth Book of the Civil Code,Book of Marriage and Family, but in the first Book,Book of General Provisions. This is because the latter contains a set of rules on guardianship, which primarily applies in the parentchild relationship. Technically speaking, a parent in China is thereby more like a guardian under guardianship law than like a parent under family law. Under the law of guardianship, a parent is generally subject to the following duties, which are similar to the duty of loyalty.

First and most important, a guardian shall perform the duty of guardianship in the best interests of the ward.⑥see Civil Code of the People’s Republic of China, Art. 35 para. 1.This is a generalized version of the aforesaid principle of the child’s best interests in the case of a divorce. It applies to all guardianship duties in protecting the person, property, and any other lawful rights and interests of the ward.⑦Id. Art. 34 para. 1.Especially, the guardian shall not dispose of the ward’s property except by way of safeguarding the ward’s interests,⑧Id. Art. 34 para. 1.such as for its daily living expenses or education, and such disposal shall be “in its best interests.”⑨see Huang, W. (ed.) (2020). Commentaries on the Book of General Provisions of the Civil Code of the People’s Republic of China. Law Press·China, p. 96.

A guardian is also the statutory agent of the ward. Under agency law, it is well established that in agency by mandate, neitherself-dealingnordual agencyis allowed. Namely, an agent shall not perform any juristic act with itself in the name of the principal, nor shall an agent perform any juristic act in the name of one principal with any other principal represented by it at the same time, unless with the consent or ratification of the related principal(s).①see Civil Code of the People’s Republic of China, Art. 168.However, these two restrictions only apply to an agent under mandate, not to a legal statutory agent. Moreover, the ward, as a person with limited or no legal capacity, is not able to consent to or ratify the juristic act concerned in the event of a self-dealing or dual agency. These agency law restrictions are hence not applicable in the context of guardianship.

Second, the true will of a ward shall be respected because it usually reflects and accords with the ward’s best interests. In the case of a minor ward, the ward’s true will shall be taken into consideration according to the ward’s age and intelligence.②Id. Art. 35 para. 2.In the case of an adult ward, the ward’s true will shall be respected to the fullest extent. That is, the guardian shall safeguard and assist the ward in performing juristic acts compatible with the ward’s intelligence and mental health, and shall not interfere in any affairs the ward is capable of handling alone.③Id. Art. 35 para. 3.

In the event of a serious default, the court will disqualify the guardian pursuant to a special petition filed by a relevant third party, without affecting the (disqualified) guardian’s ongoing duty of support toward the ward.④Id. Arts. 35-36. For a list of various defaults, see also Law of the People’s Republic of China on the Protection of Minors (2020 Revision), Art. 17.However, in the event of other defaults that may not result in disqualification, the guardianship law does not clearly state the legal remedies. General remedies in tort law are available (Huang, 2020, p. 94), with a special limitation period that starts to run from the day when the statutory agency/the guardianship is terminated.⑤see Civil Code of the People’s Republic of China, Art. 190.There could be more. For example, in the case of a fraudulent transfer of family property (co-owned by the parent guardian and the child ward, similar to spousal community property),⑥The term “family property” is rarely defined under Chinese law. see, e.g., Civil Code of the People’s Republic of China, Art. 56.the remedy of disgorgement shall be available by analogy (see Howson, 612-615, for more detail).⑦A much broader application of the disgorgement remedy exists under the Chinese company law. see Company Law of the People’s Republic of China (2018 Amendment), Art. 148.Actually, a similar remedy does exist for fraudulent transfer of an estate among inheritors.⑧Interpretation I of the SPC on the Application of the Book of Succession of the Civil Code of the People’s Republic of China, Art. 43.

The legal arrangements described above are applicable not only to a parent guardian, but also to other guardians, such as an adult child as guardian of an elderly parent, or a spouse as guardian of the other spouse. The Chinese guardianship law provides thereby a uniform basic framework for all these relationships, which could be further supplemented or modified by rules in family law or in other legal fields.

Third, the selection or designation of the guardian shall follow the principle of the best interests of the ward.⑨see Civil Code of the People’s Republic of China, Arts. 31, 36.In line with this principle, there are two priority rules for different cases. Where the ward is a minor child, the guardian, as the person who can best protect the child’s interests, shall be chosen in the following order: (a) parents; (b) grandparents; (c) older siblings; and (d) other individuals or organizations (with further requirements).①Id. Arts. 27.Where the ward is an adult, in contrast, the guardian shall be chosen in this order: (a) the spouse; (b) parents or children; (c) other close relatives; and (d) other individuals or organizations (also with further requirements).②Id. Arts. 28.

The executive branch in China rarely intervenes in guardianship matters. This is different from the relatively active monitoring mechanism, with elaborate accounting and reporting duties, found in some of the common law jurisdictions (Scott & Chen, pp. 240-243). The only exception could be theentrusted caretakingof a minor, where the minor ward’s parents or other guardians entrust the guardianship partially to a third party. Herein the local organizations or agencies (i.e., the minor’s school or kindergarten, as well as the related residents’ committee or villagers’ committee) would intervene to the extent of assisting the minor’s parents or other guardians in getting basic information on the minor.③see Law of the People’s Republic of China on the Protection of Minors (2020 Revision), Arts. 22-23.

Duty of Care

Property Management

The Chinese Company Law provides expressly for corporate directors’ and senior management’s duty of diligence—an equivalent of the duty of care (Howson, p. 609)—to the company. Under Chinese family law, in contrast, there is only a set of rules with a similar function.

Property management in the spousal relationship.

Under Chinese law, the only express provision on the duty of care between spouses is related tosquanderingof community property, a serious default in the duty of care in the context of the statutory matrimonial property regime. Squandering is any intentional “arbitrary disposal or waste of the community property beyond a reasonable extent” (Huang, 2020, pp. 104, 186). It leads to the remedy of disgorgement as in the case of a fraudulent transfer.④see Civil Code of the People’s Republic of China, Arts. 1066, 1092.

For other defaults in the duty of care, which are not clearly provided for but may also inflict damages on the community property, the remedies vary from case to case.

In the case ofpure economic losses(e.g., failure of investments) that might arise in the ordinary course of managing the community property, the managing spouse shall be free of any liability. More accurately, the community property, not the separate property of the managing spouse, shall be liable for losses or debts incurred in the management of the community property. This mechanism encourages a spouse to work his/her best to create more community property without the fear of incurring any disadvantage in doing so (He, 2020, p. 34).

In contrast, where one spouse infringes on a specific community asset (e.g., a property right) while managing the community property, that spouse would be liable in tort if at fault. Further, given that the management of the community property is gratuitous, the managing spouse’s liability shall be limited to the case of intention or gross negligence, as prescribed in many other gratuitous relationships.①see Civil Code of the People’s Republic of China, Arts. 43, 316, 897, 929, 1148.As with thebusiness judgment rule(Howson, p. 611) in company law, the tort rule excluding slight negligence of the managing spouse also plays a role in liability restriction.

Property management in the parent-child relationship.

In regard to property management between parents and children, as well as between other family members, the law of guardianship plays a critical role. Based on the principle of the ward’s best interests, the duty of care in managing the ward’s property may be classified as follows.

First, the guardian shall not dispose of the ward’s property except in the latter’s best interests. This exception is to be strictly interpreted. The ward’s best interests are not equal to maximizing its personal wealth, but to sustaining and developing its person. Therefore, instead of being invested in the pursuit of wealth maximization, the ward’s property shall be maintained to meet the ward’s personal needs. The disposal of the ward’s property is therefore an exception; so is its investment. For example, the guardian shall be liable for losses inflicted on the ward’s property in the case of an investment failure. This is different from the case of property management between spouses.

Also, the guardian shall be liable in tort for infringement of the ward’s property rights. Similarly, given the gratuitous character of the guardianship, the guardian’s liability shall be restricted to the case of intention or gross negligence.

In Chinese family law, the duty of care between spouses in the management of the community property is different from the case where other family members are involved. This distinction goes back primarily to the different purposes of property management. The management of the community property aims to create more wealth or community property, whereas the management of a ward’s property focuses on the maintenance and development of the child and, hence, only the maintenance of the property. Different purposes lead to different rules of allocating risks or losses. These differentiated duty-of-care obligations may also be regarded as modified versions of the traditional business judgment rule, which is critical for the judgment of duty of care, yet mostly applied in company law or other commercial settings.

The Necessaries Doctrine

The necessaries doctrine (in its modern form) is rarely considered in traditional fiduciary law. In the literature, however, there is an attempt to reconsider this doctrine in terms of fiduciary principles. Based on the doctrine, the courts recognize that “each spouse has a duty to care for the other and provide for basic needs” (Scott & Chen, p. 237).

In my opinion, the duty ofcareshould not be confused with the duty ofcaretaking. The duty of care, as with its counterpart in tort, is a specific standard of duty. In contrast, the duty of caretaking (for the other spouse) refers to the content of a specific monetary duty, similar to the duty of spousal support.

On the other hand, because the necessaries doctrine involves property matters in the interests of the marital community and is thereby similar to the management of community property, it may be related to the duty of loyalty. Under Chinese law, the necessaries doctrine covers all property matters necessary to meet the needs of the family’s daily life, ranging from making a contract to disposing of community property. It discourages a selfish act in that any contract or disposal made by a spouse alone, beyond meeting the needs of the family’s daily life, cannot be justified under this doctrine. Such act is hence an unauthorized agency on behalf of both spouses or an unauthorized disposal of the community property, and the acting spouse bears sole liability therefor.

Special Qualities of the Duty of Loyalty in Chinese Family Law

After the similarity comparison in the first three parts, this part will show the difference of Chinese family law from the common law regarding fiduciary principles. Such difference might not only exist between Chinese law and the common law but also, in general, between the civil law and the common law.

Duty of Loyalty Revisited

Duty of sexual fidelity.

Compared with the duty of loyalty, the duty of fidelity is seldom used in legal English.①But see, e.g., Bayer v. Beran, 49 N.Y.S.2d 2 (1944) (“The concept of loyalty, of constant, unqualified fidelity, has a definite and precise meaning.”)Chinese, however, uses only one term for both—the duty of loyalty (zhongshi yiwu). In this context, there is a long-established rule in Chinese family law (enacted first in Article 4 of the Marriage Law and now in its successor, Article 1043 of the Civil Code) that “the spouses shall be loyal to each other.”②see Marriage Law of the People’s Republic of China (2001 Amendment), Art. 4; see Civil Code of the People’s Republic of China, Art. 1043 para. 2.It is widely recognized that this duty of loyalty refers primarily to the duty ofsexual fidelity(Sui, 2011, p. 38; Xu, 2012, p. 77; Hu & Wang, 2020, p. 76).

The duty of loyalty is one of the most controversial issues among scholars of Chinese family law. The first debate is whether it is a legal duty or merely a moral duty.③For an overview, see Yu, Y. (2007). On the Law of Family. Law Press·China, pp. 239-240.Given that damages would be granted in the case of one spouse’s bigamy or cohabitation with a third person, which constitutes a serious default in the duty of loyalty, it is logically compulsory that there must be a legal duty of loyalty (Zhang & Miao, 2019, p. 40). In other words, the duty of loyalty cannot be merely a moral one.

Furthermore, the duty of loyalty is not only a specific legal duty, but also a general legal principle, at least in the context of Article 4 of the Civil Code (Fang, Fan & Zhang, 2020, p. 15; Chen, 2016, p. 36).①For the contrary view, see Yang, D., & Long, Y. (eds.). (2020). The Law of Marriage and Family. China Renmin University Press, pp. 61-62. For a definition of the duty of loyalty in property matters between spouses, see Hu, J., & Wang, T. (2020). The mental aspect of the duty of loyalty between spouses. Journal of Law Application, 11, 76.It could even be regarded as a subcategory of the principle of good faith—the “emperor clause” of the entire civil law—in family law (Zhang & Miao, 2019, p. 42). As a general principle, the duty of loyalty or the principle of loyalty can help courts to further develop the law in many contexts, as with any general principle under Chinese law.

There are three reasons to regard the duty of loyalty as a general principle of family law. First, as mentioned above, not every breach of duty leads to legal remedies under the existing law. This can only be justified if the loyalty requirement is not a specific duty that inevitably corresponds with a breach of duty and hence a remedy, but is rather a general flexible principle that leaves room for discretion and does not always lead to remedies. Second, it accords with the results of literal and systematic interpretations. Literally, the phrase “both spouses shall be loyal to each other” in Article 1043 of the Civil Code, for example, does not include any specific legal consequence; and systematically, the rule appears in the general part of the family law, together with other well-established general principles. Third, there was a similar interpretation in the Company Law. Before being officially recognized in the Company Law 2005, the duty of loyalty had rested only upon the principle of good faith (Howson, pp. 609-611).

Another debate relates to the validity of the so-calledloyalty agreement, which often contains anagreed sum—similar to apenalty, but only as a contractual substitute for the statutory compensation—for certain breaches of the duty of loyalty (Sui, 2011, pp. 38-41; Wu, 2020, pp. 18-20).②Apart from an agreed sum as a monetary remedy, other non-monetary liabilities might also exist in a loyalty agreement, such as the waiver of custody, the promise of a divorce agreement, etc. The clauses of such non-monetary liabilities are obviously invalid.Despite the underlying public policy controversy, it is logically reasonable to recognize the validity of a loyalty agreement. So long as the duty of loyalty is held as a legal duty, the parties should be allowed to make an estimate of the potential damages in case of a breach. Meanwhile, if the agreed sum is too high, the general rule to adjust the agreed sum can be applied (Liu, 2011, pp. 10-11).

Duty of loyalty in the broader sense.

Although the duty of loyalty refers primarily to the duty of sexual fidelity under Chinese family law, it is used from time to time in a much broader sense in the literature, which additionally includes: (a) the duty of not (intentionally) abandoning the other spouse, and not harming the other spouse for a third person’s interests (Yu, 2007, pp. 238-239; Fang, Fan & Zhang, 2020, p. 15); (b) the duties listed in the first category, plus the duty of emotional communication and respect for each other;③see Leading Group for the Implementation of the Civil Code of the Supreme People’s Court. (ed.). (2020). Understanding and applying the Books of Marriage, Family and Succession of the Civil Code of the People’s Republic of China. People’s Court Press, p. 35.and (c) all the other duties between spouses, such as all the aforementioned duties, and the duty of spousal support, among others.④see Zhang, J., & Miao, Y. (2019). The spousal duty of loyalty as quasi-debt. Journal of Central China Normal University (Humanities and Social Sciences), 58(3), 41 (indicating such a definition in comparative law).

As a general principle of family law, the duty of loyalty could be further interpreted in its broadest sense which would include status-related and property-related duties,①For the contrary view, see Yang, D., & Long, Y. (eds.). (2020). The Law of Marriage and Family. China Renmin University Press, pp. 61-62. For a definition of the duty of loyalty in property matters between spouses, see Hu, J., & Wang, T. (2020). The mental aspect of the duty of loyalty between spouses. Journal of Law Application, 11, 76.and its scope could be extended from the spousal relationship to all types of family member relationships. This broadest duty of loyalty, or principle of loyalty, accords completely with the Civil Code, which provides that

Husband and wife shall be loyal to each other, respect, and care for each other. Family members shall respect the elderly, take care of the young, help each other, and maintain a marital and familial relationship of equality, and civility.②see Civil Code of the People’s Republic of China, Art. 1043 para. 2.

Moreover, this broadest interpretation is compatible with the idea of the duty of loyalty as a general principle, which may not be limited to certain scenarios like sexual fidelity, nor limited to the spousal relationship. The broader its scope, the better it works as a guideline for all of family law.

Duty to Notify Spouse of Sexual Activities during or before Marriage

Obviously, the duty of sexual fidelity only exists during marriage. Regarding sexual activities with a third person before marriage, this duty does not require a spouse to notify the other spouse, either before or during marriage. This brings us to another duty of loyalty of one spouse (usually the wife), i.e., if a child born during marriage may be a nonmarital child (one whose biological parents are not both spouses, but instead are one spouse and a third person), this spouse is obliged to inform the other spouse of the related sexual activity. In such cases, Chinese courts generally admit in a divorce proceeding that the innocent spouse (usually the husband) is entitled to reimbursement of the child support spent during marriage (based on unjust enrichment or tort) and damages for emotional distress (Cheng, 2009, pp. 80-82).

Note that the duty of notification, although related to sexual activities of one spouse before or during marriage with a third person, is not always covered by the duty of sexual fidelity (Zhang & Miao, pp. 41-42); and even where the duties overlap, the duty of notification is not dispensable. For example, a slight breach of the duty of loyalty (e.g., a one-night stand) would not trigger liability under the duty of sexual fidelity, even if it resulted in a pregnancy. However, remedies are still available under the duty of notification if the other spouse is not told about the baby’s true parentage.

Duty of Support Between Family Members

In China, the duty of support in the broad sense covers spousal support, child support, support for elderly parents, and support for grandparents, grandchildren, or siblings in certain cases (Huang, 2020, p. 105).③see Civil Code of the People’s Republic of China, Arts. 26, 1058, 1059, 1067, 1068, 1071, 1074, 1075.The duty of support is included in the duty of loyalty (in the broad sense); for example, spouses shall be loyal to and hence care for each other. To encourage performance of the duty, a policy of “carrots and sticks” was adopted.

Regarding the “carrots” impetus, first, one spouse is entitled to reimbursement from the other for assuming more duties in raising children, caring for the elderly, assisting the other spouse in his/her work, etc.①see Civil Code of the People’s Republic of China, Art. 1088.Second, the law of succession provides similar encouragement. For example, a decedent’s daughter-in-law or son-in-law is not a legal heir, but a widowed daughter-in-law or son-in-law who has made the predominant contribution in supporting the decedent shall be treated as a successor first in order.②Id. Art. 1129.Likewise, a larger share of an estate may be given to a successor who has made the predominant contribution in supporting the decedent.③Id. Art. 1130 para. 3.Moreover, an appropriate share of an estate may be given to a person (other than a successor) who was largely responsible for supporting the decedent.④Id. Art. 1131.

The “sticks” penalties are similar in essence, using compensatory or even punitive remedies to discourage nonperformance of the duty of support. For instance, if a spouse has the statutory duty of support toward a person who suffers a serious illness and needs medical treatment, but the other spouse refuses to pay medical expenses, the spouse in need of the money is entitled to a partition of the community property during marriage. This is the same remedy as in the case of a fraudulent transfer.⑤Id. Art. 1066 item 2.Besides, the law of succession discourages nonperformance of the duty of support. Where a successor to an estate was able to support the decedent but failed to do so, he/she shall receive no share or a smaller share of the estate.⑥Id. Art. 1130 para. 4.In the case of an abandonment, the successor will be disinherited.⑦Id. Art. 1125 para. 1 item 3.Moreover, under a gift contract, if the donee fails to perform the duty of support to the donor, the donor may rescind the donation.⑧Id. Art. 663 para. 1 item 2.

A General Distinction Between Civil Law and Common Law Traditions

From the perspective of comparative law, the duty of sexual fidelity, the duty of notification, and the duty of support in Chinese family law have two characteristics in common.

First, none of them is included in the duty of loyalty or the fiduciary principles of the traditional common law, although some commentators believe that the common-law duty of loyalty relates to sexual fidelity in the case of adultery,⑨Adultery may not only generally result in family law consequences (e.g., reduction of maintenance), but also tort liability in certain common law jurisdictions. see McMillian, L. (2012). Adultery as tort. North Carolina Law Review, 90(6), 1987-2032.and that the duty of care includes the duty of support in the case of abandonment (Scott & Chen, p. 236).⑩“Under traditional law, for example, violations of the duty of loyalty (adultery, cruelty) and duty of care (desertion) were grounds for divorce.” It is an interesting question whether sexual infidelity with members of the same sex could be classified as adultery in different jurisdictions. However, this will not affect the relationship between sexual fidelity and the duty of loyalty, and hence will not be discussed here.However, as analyzed above the alleged relationship between duty of care and duty of support goes back primarily to the confusion betweencareandcaretaking. Similarly, the connection of loyalty and sexual fidelity may be the result of overinterpretation of the plain meaning of the term “loyalty,” which nevertheless has a fixed content in the context of the duty of loyalty in the common law tradition.

Second, the duty of loyalty depicted in this part also appears, to a greater or less extent, in other civil law jurisdictions.①see generally, Zhang, J., & Miao, Y. (2019). The spousal duty of loyalty as quasi-debt. Journal of Central China Normal University (Humanities and Social Sciences), 58(3), 41. (on the law of France, Germany, Japan, Germany, Austria and Switzerland).In Switzerland, for example, it is provided that the spouses “owe each other loyalty and support.”②Swiss Civil Code, Art. 159 para. 3 (“They owe each other loyalty and support.”).The duty of loyalty therein demands “loyalty in all emotional, sexual, spiritual, social and economic areas” (Schwander, 2018).③“Die Treuepflicht gebietet Loyalität in allen emotionalen, sexuellen, seelisch-geistigen, gesellschaftlichen und wirtschaftlichen Bereichen.”Moreover, in Germany, the German Civil Code provides, at first glance, that “[t]he spouses have a mutual duty of conjugal community; they are responsible for each other,”④German Civil Code, Art. 1353 para. 1.without mentioning the duty of loyalty. However, the duty of loyalty is widely held as being included in this provision, with two different meanings.⑤Reinhard Voppel, § 1353 BGB, in Staudinger BGB, §§ 1353-1362, Wirkungen der Ehe im Allgemeinen, Sellier-de Gruyter (Berlin), Neubearbeitung 2018, Rn. 29.In the broad sense, it contains all marital duties between spouses. It has a similar meaning in family law as the principle of good faith for the law of obligations.⑥Id. Rn. 18.In contrast, the duty of loyalty in the narrow sense refers to sexual fidelity.

The reason for the different understanding of the duty of loyalty between the common law and the civil law is historical. Fiduciary duty under the common law, which originates from the distinction between law and equity, is more the product of history than of logic. Only in this context is it possible and understandable to discuss whether, for instance, fiduciary law comes under contract law or tort law (Bray, 2019, pp. 463-464), or law schools should teach a separate fiduciary law course (Chodos, 2011, pp. 837-850); and only in this context is the fiduciary duty or the duty of loyalty restricted to its traditional scope.

On the contrary, civil law jurisdictions have no comparable distinction between law and equity, so fiduciary obligations reside perfectly well under contract law, tort law, family law, and other legal fields. This is logically almost inevitable.⑦see, e.g., Graziadei, M. (2014). Virtue and utility: Fiduciary Law in Civil Law and Common Law jurisdictions. In Andrew S. Gold & Paul B. Miller (eds.). Philosophical Foundations of Fiduciary Law (p. 290). Oxford University Press (discussing the relationship between contract law and fiduciary law). For the contrary view, see Bray, S. L. (2019). Fiduciary remedies. In Evan J. Criddle, Paul B. Miller & Robert H. Sitkoff (eds.). The Oxford handbook of fiduciary law (pp. 451, 464). Oxford University Press.In this context, as a general principle of family law, the duty of loyalty may enjoy much broader room in adjusting the family relationship than may its counterparts in the common law. It is logically coherent that the duty of loyalty is extended to both personal and property relationships, and from the spousal relationship to most family relationships. Besides, the misunderstanding of the duty of loyalty and the duty of care in the common law also illustrates that the contemporary meaning and scope of the duty of loyalty in the common law would be broader if logic rather than history had been followed.

Conclusion

Based on the functional method of comparative law study, this essay examined several fiduciary duty rules under Chinese family law, which can be divided into two groups.

The first group of fiduciary duty rules in Chinese family law pursues similar ends as do the fiduciary principles in common law jurisdictions. They are similar in function. Apart from a set of rules in common, including conflict-of-interest rules, remedies for fraudulent transfers, access to information on certain property (e.g., community property) and the duty of care in different cases of property management, there are two special rules in China, which might be regarded as “natural” or logical extensions of the common law fiduciary principles in the context of family law and, hence, the candidates for its future. These special rules comprise: (a) the rule for distributing income, appreciation, and other proceeds of separate property during marriage (as a special type of duty of loyalty); and (b) different standards of duty of care and related rules of allocating risk or losses (as modified versions of the business judgment rule in commercial settings).

The second group of fiduciary duty rules in Chinese family law are the duty of loyalty rules, which are different. The Chinese termzhongshi yiwuis translated literally as “duty of loyalty,” but this onlysoundslike its counterpart in the common law.Zhongshi yiwuextends to the duty of sexual fidelity during marriage, the duty of notification about certain sexual activities of one spouse during or even before marriage, and the duty of support between family members.

The duty of loyalty in Chinese family law, as a combination of related rules in the aforesaid two groups, turns out to be a general principle of Chinese family law, and is similar to and even a subcategory of the principle of good faith throughout the civil law. The duty of loyalty in such a broad sense also appears in other civil law jurisdictions. Such a widespread distinction in the scope of the duty of loyalty may go back primarily to the historical distinction of law and equity in the common law tradition, and to the logical appropriateness of a broad understanding of the term (duty of) “loyalty,” which exists in many civil law jurisdictions. The latter may have contributed to the distinction, in the common law tradition, between the duty of loyalty and the duty of sexual fidelity in the case of adultery.