Article 19 of the Marriage Law states, "The spouses may reach an agreement that the properties of, and/or obtained by, either spouse and/or both spouses, before and/or during their marriage, maybe individually and/or jointly owned by such spouse/both spouses, in part or in whole. Such an agreement shall be made in writing. Where no agreement is reached, or the agreement is not clear, Articles 17 and 18 of this Law shall apply. The agreement reached between and by both spouses in respect of their properties before and/or during their marriage shall be binding on both of them. Where it is agreed that the properties obtained by either spouse during their marriage are to be individually owned by such spouse, any debt owed by such spouse to any other party shall be repaid with such spouse's properties, provided that such third party is aware of such an agreement."
The provisions on the agreed community property system may be interpreted as follows: (1) In terms of the property under the agreed community property system, such system covers both the property items acquired during the marriage relationship and those owned by either spouse or both the spouses before marriage. (2) In terms of the ownership of the property items which may be subject to agreement, the agreed community property system under the Marriage Law of the PRC provides for several typical property ownership modes for the spouses to choose from and apply and does not allow the spouses to arbitrarily create any other property ownership mode. The Marriage Law of the PRC stipulates three modes of property ownership: the first is separate ownership, under which the property is owned by each spouse separately; the second is common ownership, under which the property is commonly owned by both the spouses; and the third is partial common ownership, under which part of the property is commonly owned by both the spouses. (3) Based on the formal requirements of the community property agreement, the agreement is an important legal act and should be in written form. The validity of oral agreements without any dispute between the spouses was recognized in China's previous judicial practice. However, community property agreement shall not be made orally according to the provisions of the new Marriage Law. (4) Based on the relationship between the community property agreement and the provisions of the legal property system, the community property agreement has the priority effect. In other words, if there is a valid agreement between the spouses, the ownership of the property should be determined as agreed, excluding the application of the provisions of the legal property system. (5) From the perspective of the external effect of the community property agreement, the property agreement between the spouses shall not constitute a defence against any bona fide third party. In other words, even if the spouses agree that the property acquired each of them during their marriage shall be owned by each of them, neither of them may refuse to pay off any debt owed alone by the other to any third party based on such agreement, unless such third party knew the existence of such agreement.
The Marriage Law of the PRC also stipulates the economic compensation system applicable to divorce, which is related to the agreed community property system. Article 40 of the Marriage Law states, "Where both spouses agree in writing that the properties obtained by each spouse during their marriage shall be individually owned, the spouse who contributes more in terms of raising their child, supporting their elder(s), assisting the other in work, etc., shall be entitled, upon their marriage, to claim for reasonable compensation from the other, who shall be obligated to make such compensation." The main purpose of the economic compensation system for divorce is to balance the rights and obligations between the spouses and avoid unfairness caused by their choice of the agreed property system.
