Legal relations under public law may be created, altered or extinguished by contracts, except where no contract may be made by the nature of the relations or under law or regulation.

Where an administrative authority is unable to determine the facts or the legal relations as the basis for an administrative disposition notwithstanding an inquisition process having been conducted ex officio, it may enter into a compromise or an administrative contract with a citizen in lieu of administrative disposition in order to settle the dispute and to effectively achieve the purpose of administration.

An administrative contract made by an administrative authority with a citizen, whereby both are obligated to render performance, shall meet the following requirements:
1. The contract shall include a stipulation setting out the specific purpose for which payment made by the citizen will be used;
2. The payment made by the citizen shall be helpful to the administrative authority in the performance of it functions; and
3. The payment made by the citizen shall be comparable and reasonably related with the performance to be rendered by the administrative authority.
Where an administrative authority has no discretion in rendering the administrative disposition, the payment of the citizen as stipulated in the administrative contract signed by the administrative authority in lieu of administrative disposition shall only be of the type that may be stipulated as an incidental provision under article 93, paragraph 1, hereof.
The contract referred to in the first paragraph shall describe explicitly the specific purposes for which payment made by the citizen will be used and state to the effect that the payment will be used only for such specified purposes.

Where one of the parties to an administrative contract is a citizen and it is required by law that such party be determined by way of evaluation and selection or any other type of competition, the administrative authority shall publish in advance the qualifications required and the procedure for making decision. Additionally, the candidates shall be given the opportunity to express their views before a decision is made.

All administrative contracts shall be made in writing, unless other different forms are prescribed by law or regulation.

An administrative contract with stipulations which, if performed, may cause encroachment upon any right of a third party , shall be of no force and effect without the written consent of such third party .
An administrative contract made in lieu of an administrative disposition which, as required by law or regulation, may only be rendered with the approval or consent of or the joint efforts with another administrative authority, shall be of no force and effect without the approval and consent of or joint efforts with such administrative authority.

An administrative contract shall be of no force and effect if it is null and void by mutatis mutandis application of provisions of the Civil Code.
An administrative contract shall be null and void if it is contrary to the proviso to article 135 or the provision of article 138 hereof.

In any of the following circumstances, an administrative contract in lieu of administrative disposition shall be null and void:
1. Where an administrative disposition with the similar contents would be null and void;
2. Where an administrative disposition with the similar contents would be voidable by reason of being contrary to law and the fact is known to both parties to the contract ;
3. Where the conclusion of a compromise agreement does not meet the requirement set forth in article 136 hereof; and
4. Where the conclusion of a bilateral contract does not meet the requirement set forth in article 137 hereof.

A partly void administrative contract shall be void in its entirety; provided that, if the parties can be deemed to be prepared to sign the contract leaving out the part that is void, the remaining part of the contract shall be valid.

Where one of the parties to an administrative contract is a citizen, the administrative authority may provide, in the manner as agreed in writing, necessary guidance or assistance in relation to the performance of the contract on the part of the citizen.

Where one of the parties to an administrative contract is a citizen and, after the conclusion of the contract, another authority under the public juristic person to which the contracting authority is subordinate exercises its public authority beyond the scope of the contractual relationship, thereby increasing apparently the cost and expenses of the other party to the contract in performance of his obligations or causing him other unexpected losses, the other party is entitled to claim compensation from the contracting authority for his losses; provided that, no compensation may be claimed if there is no direct and necessary relevance between the exercise of such public authority and the performance of the contract.
The contracting authority shall make a decision in writing and state therein the reasons for its decision on a claim brought under the preceding paragraph.
The claim for compensation under the first paragraph of this article shall be brought within one year from the time when the other party becomes aware of his losses.
In the case of a dispute arising out of or in connection with the payment of compensation or if the other party to the contract is dissatisfied with the amount of compensation, he may file with the administrative court an action for payment.

Where one of the parties to an administrative contract is a citizen, the administrative authority may adjust the terms of the contract to the extent necessary or terminate the same for the purpose of preventing or eliminating any material jeopardy to the public interest.
No adjustment or termination under the preceding paragraph may be made without paying the other party a compensation for the property loss which he may have suffered as a result of such adjustment or termination.
The adjustment or termination under the first paragraph and a decision on payment of compensation under paragraph 2 hereof shall be put in writing, stating therein the reasons therefor.
If the other party finds it difficult to perform the terms as adjusted under the first paragraph hereof, he is entitled to terminate the contract by a written statement, giving therein his reasons therefor.
If the other party disagrees on the amount of compensation, he may file with the administrative court an action for performance.

In the case of changes of circumstances occurred after the conclusion of an administrative contract to the extent beyond the expectation at the time of conclusion of the contract, thereby making the original stipulations in the contract obviously unfair, either party may request the other party to make appropriate adjustment to the contract, and is entitled to terminate the contract if no adjustment is possible.
In the situation described in the preceding paragraph, if one of the parties to the administrative contract is a citizen, the administrative authority may, for the purpose of maintaining the public interest, demand that the other party continues to perform his obligations as originally stipulated against the payment of a compensation for any loss he may suffer.
The request for adjustment or termination under the first paragraph and a decision on payment of compensation under paragraph 2 hereof shall be put in writing, stating therein the reasons therefor.
If the other party disagrees on the amount of compensation offered pursuant to paragraph 2 hereof, he may file with the administrative court an action for performance.

Where it is stipulated in an administrative contract that enforcement will be voluntarily accepted and the obligor fails to make performance, the obligee is entitled to seek compulsory execution based on the contract as a title of execution.
If one of the parties to the contract is a central administrative authority, the stipulation referred to in the preceding paragraph shall be subject to ratification by the competent Yuan, ministry or another authority of the same level as the case may require; if one of the parties to the contract is an administrative authority under a local self-governing body, such stipulation shall be subject to ratification by the chief administrative officer of such local self-governing body. If the contract involves matters on commission, such stipulation shall have no force and effect without the ratification given by the commissioning authority.
The provisions set forth in the Administrative Proceeding Acts with respect to compulsory execution shall be applicable mutatis mutandis to the exercise of compulsory execution under the first paragraph hereof.

Matters relating to administrative contracts not provided for in this Act shall be governed by provisions of the Civil Code as applicable mutatis mutandis.