Large Gifts of Marital Property Without an Affair: Are They Valid Under Chinese Law?

English translation. Original Chinese title: 无不正当关系的婚内大额赠与效力研究. Author: June Zhang (legal name: Zhang Hongjun), PRC-licensed attorney, Xiamen, Fujian.

Abstract

Disputes over substantial transfers by one spouse to a third party during marriage cannot simply be reduced to the question of “gifts made in an extramarital affair.” Under Chinese law, the basis for invalidating a gift does not necessarily depend on an improper relationship between the donor and recipient. Such a relationship is an important additional fact supporting findings that the transfer was gratuitous, that the recipient acted in bad faith, and that the transaction violated public order and good morals. Even without evidence of that relationship, a gift may still be held invalid under the rules governing disposal of jointly owned property, invalid civil juristic acts and restitution for unjust enrichment, provided it can be established that the property belonged jointly to the spouses, that its disposal clearly exceeded ordinary household affairs, that the other spouse neither consented nor subsequently ratified it, and that the recipient acquired it gratuitously and did not qualify for acquisition in good faith. Where the recipient raises a sale, loan or payment-on-behalf defence, however, the party alleging a gift must prove the gift to the standard of excluding reasonable doubt. Bank statements alone will not necessarily satisfy that burden.

Keywords: jointly owned marital property; substantial gifts; improper relationships; unauthorised disposal; standard of proof.

1. The issue

In judicial practice, a spouse who discovers unusual outflows of property during the marriage will often seek repayment from the third-party recipient on the ground that the gift contract is invalid. Many existing decisions concern extramarital affairs, cohabitation or other breaches of the duty of fidelity. This can create a misconception: a gift can be invalidated only if an improper relationship between donor and recipient is proved. In this article, I argue that this confuses the substantive requirements of the claim with the evidential significance of particular facts. An affair can strengthen a finding of a violation of public order and good morals and of bad faith on the recipient’s part. The core protection of marital property nevertheless lies in the authority to dispose of property owned jointly by the spouses, the limits of authority in ordinary household affairs, the basis on which the recipient acquired the property, and the standard of proof applicable to the alleged gift.

2. Case background and the court’s starting point

The case materials show that Ms X and Mr Y registered their marriage in 2002. Between 30 June 2022 and 1 January 2025, Mr Y transferred a total of RMB 40 million to Ms Z’s account. Ms X alleged that, after deducting one transfer of RMB 2 million described as a loan and amounts transferred back by Ms Z, Ms Z still held RMB 30 million of jointly owned marital property without having provided consideration. Ms X therefore sought a declaration that the gifts were invalid and an order for repayment. Ms Z argued that the payments were not gifts: RMB 500,000 was a pass-through payment, almost RMB 30 million represented payments for purchases of liquor, and the remaining short-term funding transfers had already been settled. She submitted bank statements, company records, order information from a liquor purchasing platform, sales lists, cargo consignment contracts, notarial certificates and screen recordings.

The court of first instance identified the issue as whether the transfers constituted gift contracts and, if so, whether those contracts were invalid. It held that bank statements could establish the movement of funds but could not establish Mr Y’s intention to give the money gratuitously or an agreement by Ms Z to accept it as a gift. The video and audio recordings were also insufficient to prove a gift: there were disputes concerning their basic identifying information, original recording media, the parties to the calls and the evidential weight of the contents. The court also accepted Ms Z’s explanations involving sales, pass-through payments and short-term funding. It ultimately dismissed the claims because the alleged gifts had not been established to the standard of excluding reasonable doubt. The key point was not a finding that “the transfers were valid because there was no improper relationship.” It was that “the alleged gifts themselves had not been proved.”

3. The legal framework: establish the facts before assessing validity

First, the existence of a gift is a prerequisite. Article 657 of the Civil Code defines a gift contract by reference to the donor’s gratuitous transfer and the recipient’s acceptance. A bank transfer is only the outward form of payment. Its underlying basis may be a gift, sale, loan, investment, payment on another person’s behalf or short-term funding arrangement. Under Articles 90, 91 and 109 of the Supreme People’s Court’s Interpretation of the Civil Procedure Law, the party asserting a gift relationship bears the burden of proving the basic facts giving rise to it. In relation to the existence of a gift, the court’s degree of conviction must reach the standard of excluding reasonable doubt.

Second, authority to dispose of the property determines the assessment of validity. Where spouses have not agreed to a separate-property regime, property acquired during marriage is, in principle, jointly owned marital property, and the spouses have equal rights to deal with it. Article 1060 of the Civil Code provides that civil juristic acts undertaken for ordinary household needs bind both spouses. A substantial disposal beyond ordinary household affairs cannot automatically be decided by one spouse alone. Articles 299 and 301 further provide that joint owners enjoy ownership of the jointly owned property together and that, in principle, its disposal requires the consent of all joint owners.

Third, protection of the recipient is subject to the rules on acquisition in good faith. Article 311 of the Civil Code requires good faith, acquisition at a reasonable price, and completion of registration or delivery. A gratuitous recipient necessarily lacks the “reasonable price” element and will ordinarily be unable to qualify for acquisition in good faith. A recipient asserting acquisition through a transaction should provide mutually corroborating evidence, such as contracts, invoices, logistics records, acknowledgements of receipt, reconciliations, settlement records, tax records, inventory records or records of onward sales. Courts should not readily find that lawful consideration existed where the evidence consists only of self-generated documents or cannot be reconciled with the timing and amounts of the transfers and ordinary transaction practices.

4. An improper relationship is not a necessary prerequisite

Articles 1043 and 153 of the Civil Code, together with Article 7 of Interpretation (II) on the Marriage and Family Book of the Civil Code, expressly address typical gifts made in breach of the duty of fidelity. Where one spouse gives jointly owned marital property to another person, or disposes of it at a manifestly unreasonable price, for purposes involving bigamy, cohabitation with another person or another breach of the duty of fidelity, the court should uphold the other spouse’s claim that the act is invalid for violating public order and good morals and apply Article 157. The Supreme People’s Court’s 2025 model case concerning the gift-contract dispute between Cui, Ye and Gao likewise confirms that a gift to a third party in breach of the duty of fidelity is invalid and that the recipient must return the amount actually received.

Article 7, however, addresses how to decide a case in which a purpose involving a breach of the duty of fidelity exists. It does not establish the converse rule that a gift cannot be invalidated where no improper relationship exists. A practical view published by the Supreme People’s Court’s First Civil Division expressly states that, where one spouse gratuitously gives joint property to another person for purposes other than ordinary household needs and seriously harms the other spouse’s property interests, the gift should be invalid in its entirety, rather than only in part. While the joint ownership continues, the marital property cannot be divided in advance into a separate half for each spouse. The formulation refers to “another person,” rather than to an affair partner. This indicates that the legal basis lies in joint ownership and authority to dispose of the property, rather than in a particular intimate relationship.

Comparable cases support this point. In a case from Nanjing’s Gulou District People’s Court reported by the People’s Court Daily, a husband gave RMB 2.03 million of jointly owned marital property, in six transfers, to a former adopted son after the adoptive relationship had been terminated. The court held that the gifts were not made for ordinary household needs, that the wife had not consented, and that the gratuitous recipient could not qualify for acquisition in good faith. It declared the gifts invalid and ordered repayment in full. No extramarital affair was involved. The claim nevertheless succeeded on the basis of the undivided nature of the marital property, unauthorised disposal and the recipient’s failure to meet the requirements for acquisition in good faith. An improper relationship is therefore not a necessary condition of invalidity; it is an additional factor strengthening the public-order-and-good-morals route.

5. Assessment criteria where there is no evidence of an improper relationship

Without evidence of an improper relationship, courts should be particularly careful to avoid moral presumptions and should conduct the analysis in stages.

1. The nature of the property. Did the funds derive from property acquired during the marriage? Do exceptions apply, such as separate property, an agreed property regime, or a gift or inheritance designated for one spouse?
2. The scale and purpose of the disposal. Do the amount, frequency and duration clearly exceed ordinary household expenditure, reasonable maintenance, customary gifts or normal business needs?
3. The other spouse’s consent. Was there express authority, subsequent ratification, informed acquiescence over time or an arrangement for joint business operations?
4. The basis of the recipient’s acquisition. Was reasonable consideration paid? Is there a coherent body of evidence of a genuine transaction? Are the price and manner of performance commercially plausible?
5. The recipient’s state of knowledge. Did the recipient know, or ought the recipient to have known, that the payer was married, that the source of the funds was unusual, or that the disposal clearly harmed the other spouse’s interests?

The claimant spouse may establish an initial evidential basis through substantial and frequent transfers, unusual payment descriptions, chat records, audio and video recordings, a marked mismatch with the recipient’s earning capacity, and an absence of contracts, invoices and delivery records. A recipient raising an affirmative defence of sale, loan, investment or payment on another’s behalf should bear the corresponding burden of proving the facts supporting that defence. The court must ultimately assess the evidence as a whole, applying ordinary experience, to determine whether a gift has been established to the standard of excluding reasonable doubt. In other words, “no improper relationship” is not in itself a reason to dismiss the claim, but “a very large amount” does not itself prove a gift either.

6. Limits and exceptions protecting genuine transactions

Article 9 of Interpretation (II) on the Marriage and Family Book adopts a particular balance for transfers of equity interests. Where one spouse transfers an interest in a limited liability company that was acquired using jointly owned marital property but is registered in that spouse’s name, the court will not uphold the other spouse’s claim that the transfer contract is invalid merely because the transfer lacked consent and harmed that spouse’s interest in the marital property. An exception applies where there is evidence that the transferor and transferee colluded maliciously to harm the other spouse’s lawful rights and interests. This rule shows that, in genuine transactions for value, the law does not mechanically invalidate a disposal by one spouse. Instead, it balances marital property rights and the security of market transactions through division of property, compensation, damages or the exception for malicious collusion.

Accordingly, in cases without an improper relationship, the decision cannot be detached from the underlying legal relationship. If the third party is a liquor merchant, logistics provider, business partner, relative or ordinary friend, the court must first determine whether there is a verifiable legal basis for the acquisition. Genuine sales, genuine loans, reasonable maintenance and expenditure for a family business should not be repackaged as invalid gifts. Conversely, if the transaction defence has merely been assembled after the event and cannot explain discrepancies in amounts, the destination of deliveries, reconciliations and settlements, or commercial plausibility, the acquisition may still be characterised as unauthorised disposal or receipt without legal basis even though there was no affair.

7. Applying the analysis to the case materials

This case is useful because of the competing explanations for the payments. The claimant relied on a video transcript containing the words “gave it to me voluntarily,” the substantial and continuing transfers, Mr Y’s advanced age and the alleged commercial implausibility of the transactions. The defendant explained the payments as liquor purchases, pass-through payments and short-term funding. The first-instance court strictly applied the higher standard of proof for the existence of a gift. Its warning that a spouse cannot prove the case through bank statements alone is methodologically sound. In particular, once the defendant has advanced specific transaction explanations and submitted supporting materials, the court must determine “whether there was a gift” before considering “whether the gift was invalid.”

Under the principles drawn from comparable cases, however, the claim for invalidity and repayment should not be rejected merely because no improper relationship between Mr Y and Ms Z can be proved if further evidence on appeal or in separate proceedings establishes that the defendant’s evidence of liquor purchases, pass-through payments and short-term funding cannot be matched to the disputed transfers. Relevant defects may include self-generated documents, unusual document numbering, missing acknowledgements of receipt or invoices, prices markedly out of line with the market, or inconsistencies between logistics and recipient information. The original media, the identities of the participants and the completeness of the video evidence would also need to be confirmed. On that basis, the claim would rest not on “a gift to an affair partner,” but on the substantial transfer of jointly owned marital property gratuitously or without a lawful basis, beyond ordinary household authority, without the joint owner’s consent, and in circumstances in which the recipient cannot establish acquisition for value in good faith.

Conversely, if the defendant can produce a coherent evidential chain of contracts, platform orders, bank payments, cargo consignment records, acknowledgements of receipt, inventory or onward-sales records, and reconciliations between the parties, showing that RMB 30 million represented genuine consideration for liquor purchases, that the RMB 500,000 payment can be traced as a payment on another’s behalf, and that the short-term funding was indeed repaid, the claimant’s allegation of a gift cannot be sustained. In that situation, the law should not undermine genuine transactions in the name of protecting jointly owned marital property.

8. Conclusion

The invalidity of a substantial gift by one spouse to a third party during marriage does not depend on proof of an improper relationship. Such a relationship principally brings the case within the stronger evaluative framework of public order and good morals and breach of the duty of fidelity. Its absence does not preclude applying the rules on disposal of jointly owned property, the limits of ordinary household authority, the requirements for acquisition in good faith and unjust enrichment.

Comparable cases should be assessed through four stages: establishing the gift; identifying the lack of authority to dispose of the property; examining the basis of the recipient’s acquisition; and determining the consequences in restitution. First, the gift or payment without legal basis must be established to the standard of excluding reasonable doubt. The court should then examine whether the act exceeded ordinary household affairs, whether the other spouse consented, and whether acquisition for value in good faith occurred. Finally, it should determine the amount to be returned under the rules on restitution following invalidity or unjust enrichment. This approach can prevent arbitrary transfers of marital property while protecting ordinary transactions from disruption by later disputes between spouses.

Appendix: principal authorities and their role in the analysis

References

1. Civil Code of the People’s Republic of China. Text available through the National People’s Congress legal database and government republications: NPC text; government republication.
2. Supreme People’s Court, Interpretation (II) on the Application of the Marriage and Family Book of the Civil Code of the People’s Republic of China, Fa Shi [2025] No. 1. Official text.
3. Supreme People’s Court, Model Cases Concerning Marriage and Family Disputes. Official publication.
4. Supreme People’s Court, Interpretation on the Application of the Civil Procedure Law of the People’s Republic of China, published on the website of the Supreme People’s Court Intellectual Property Court. Text cited in the Chinese manuscript.
5. First Civil Division of the Supreme People’s Court, ed., Questions and Answers on Civil Trial Practice, Law Press, 2021; quoted in the Yindu District People’s Court, Henan, webpage entitled “Supreme People’s Court First Civil Division: A Spouse’s Gift of Jointly Owned Marital Property to Another Person Is Invalid in Its Entirety.” Court webpage.
6. People’s Court Daily, “Husband Disposes of RMB 2.03 Million in Jointly Owned Marital Property Without Authority: Court Declares the Gifts Invalid and Orders the Recipient to Return the Full Amount,” republished by Shandong Courts. Republication.
7. Guizhou High People’s Court model case, “Fang v Liu and Ma: Gift Dispute,” republished by the Guizhou People’s Congress website. Republication.
8. Supreme People’s Court Guiding Case No. 66, Lei v Song: Divorce Dispute. Official publication.
9. Case materials: Civil Judgment (2026) Min 0203 Min Chu No. 1322 of the Xiamen Siming District People’s Court, together with the parties’ litigation submissions and evidential materials. Chinese case reference: （2026）闽0203民初1322号.

Author’s note from the Chinese manuscript: June Zhang (legal name: Zhang Hongjun) is a PRC-licensed attorney in Xiamen, Fujian, licence no. 13502199911278128. Her principal areas of practice are marriage and family matters and wealth planning, litigation and arbitration, and banking and finance.