Review whether the means and contents of the contract are legal - World Credit Organization

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7.3 Check whether the method and content of the contract are legal

Article 52 of the "Contract Law" stipulates that the contract is invalid under any of the following circumstances:

(1) One party concludes the contract by means of fraud and coercion, which damages the national interest;

(2) Maliciously colluding to harm the interests of the state, collective or third party;

(3) Cover up illegal purposes in a legal form;

(4) Damage to social public interests;

(5) Violating mandatory provisions of laws and administrative regulations.

Article 54 stipulates that one of the parties to the following contracts has the right to request the people's court or an arbitration institution to modify or cancel it:

(1) concluded due to a major misunderstanding;

(2) It is obviously unfair when the contract is concluded.

If one party uses fraud, coercion or taking advantage of the other party's danger to make the other party conclude a contract against its true intention, the aggrieved party has the right to request the people's court or an arbitration institution to change or revoke the contract.

If a party requests a change, the people's court or arbitration institution shall not revoke it.

It can be seen from the above clauses that if the method of contract conclusion or the agreed content is illegal, the contract will be invalid. When reviewing the means and content of the contract, the following aspects should be noted.

1. A contract concluded by one party by means of fraud or coercion.

(1) Determination of the validity of a contract concluded by one party by means of fraud or coercion.

In our country's original legislation, whether it is the "General Principles of Civil Law" or the three contract laws, all contracts concluded due to fraud or duress are treated as invalid contracts without exception. This approach does not fully consider the complexity of fraud and coercion, which is not conducive to the stability of the contract. Judging from foreign legislative experience, in order to ensure the stability of contracts, most countries treat contracts concluded by fraud or coercion as revocable contracts rather than invalid contracts. For example, Article 318 of the "German Civil Code" stipulates: "Only the party to the contract may revoke the determination of the treatment due to error, coercion or fraud; the opposite party to the right of revocation is the other party." "Japan Article 96 of the Civil Code stipulates: "An expression of will made due to fraud and coercion may be revoked."

my country's later "Contract Law" (referring to: the contract law passed on March 15, 1999), for the determination of the validity of contracts concluded due to fraud and duress, the following "dichotomy" is adopted, namely:

1. If one party concludes a contract by means of fraud or coercion, if it damages the interests of the state, the contract is invalid. The purpose of this regulation is to protect national interests, but it also leaves a certain space for the public power to violate the freedom of contract on the grounds of national interests.

2. If one party uses fraud and coercion to force the other party to conclude a contract against its true intention, if the national interest is not damaged, the contract can be revoked. Under normal circumstances, the main effect of the fraudulent or coerced party after being deceived or coerced is that the expression of intention is untrue, that is, the freedom of will is restricted, and the party concerned makes an expression that does not conform to its true intention. But, objectively, will this untruthful expression definitely bring actual damage to the deceived or coerced party? In practice, the situation of fraudulent and coerced contracts is very complicated. Therefore, characterizing such contracts as revocable contracts and giving the fraudulent or coerced party the right to choose respects the independent will of the parties, safeguards the interests of the victims, and is also conducive to ensuring the stability of the contract.

(2) Elements of fraud.

The Supreme People's Court clearly stipulates in Article 68 of the "Opinions on Several Issues Concerning the Implementation of the General Principles of the Civil Law of the People's Republic of China (Trial Implementation)" that: "One party intentionally informs the other party of false information, or deliberately conceals the truth, and induces If the other party makes a false declaration of intent, it may be deemed a fraudulent act.” The so-called fraudulent act refers to an act in which one party intentionally informs the other party of false information, or conceals the truth, and induces the other party to make a false declaration of intent and conclude a contract.

In practice, there are many types of fraudulent behaviors, such as selling fake and shoddy products, forging product origin or quality certificates, providing false product instructions, signing contracts without the ability to perform to defraud deposits or loans, etc. . Various fraudulent acts may cause losses to the deceived party. From a practical point of view, fraud and coercion may directly damage the interests of the state, and may also damage the interests of the collective or a third party.

The elements of fraud are:

1. Subjectively, the fraudulent party has the intention to deceive. The so-called intentional deceit means that the fraudulent party knows that what he tells the other party is false, and may cause the other party to fall into a wrong understanding, and hopes or allows this result to happen. It can be seen that the fraudulent party is actually malicious. The fact that the fraudulent party informs false information, regardless of whether it benefits itself or a third party, does not prevent the formation of malicious intent. If the fraudster realizes that his fraudulent behavior will benefit himself or a third party and cause damage to the other party and acts maliciously, it can be considered that the fraudster has subjective malice.

2. Objectively speaking, the fraudulent party committed a fraudulent act. The so-called fraudulent behavior refers to the deceitful behavior of the fraudulent party as an external behavior. In practice, it mostly manifests as deliberate statement of false facts or deliberate concealment of the real situation to make others fall into the wrong behavior. The so-called deliberate disclosure of false information refers to false statements, such as saying that a product of low quality is a high-quality product. The so-called intentional concealment of the real situation means that the perpetrator is obliged to truthfully inform the other party of a certain real situation but deliberately fails to do so. According to the principle of good faith, the parties should truthfully inform the other party of important information such as the method of use, performance, and hidden defects of the product.

3. The defrauded party falls into error due to fraud. In the case of fraud, the defrauded party falls into a false perception due to fraud. It should be noted: (1) The false information provided by the fraudster is closely related to the content of the contract; if there is no connection with the content of the contract, it cannot be considered that there is a causal link between the fraudulent act and the misunderstanding. (2) The victim misunderstood the content of the contract based on a false situation, for example, mistaking the counterfeit medicine for the real medicine due to misbelief in the other party’s fake medicine propaganda. If after the fraudster commits the fraudulent act, the deceived person does not fall into a mistake or the error content that occurs is not caused by fraud, it does not constitute fraud.

4. The defrauded person expressed his will due to a mistake. The defrauded person expressed his will and concluded a contract based on the erroneous understanding of the fraud, which shows that there is a causal link between the fraudulent behavior and the victim's untrue expression of will. If the defrauded person falls into a mistake due to the fraudulent behavior, but does not express his intention, it cannot be considered as fraudulent.

(3) Elements of coercion.

The Supreme People's Court defined how to determine coercion in Article 69 of the "Opinions on Several Issues Concerning the Implementation of the General Principles of the Civil Law of the People's Republic of China (Trial Implementation)", that is, "to give the life, honor and If it causes damage to the legal person’s honor, reputation, property, etc., or threatens to cause damage to the honor, reputation, property, etc. or property damage, forcing the other party to make a false declaration of intention and conclude a contract.

The constituent elements of coercion are:

1. The perpetrator has the intention to coerce. The so-called intentional coercion means that the perpetrator clearly knows that his behavior will cause the counterparty to fall into psychological fear, and expresses his will against his true will, and hopes or allows this result to happen. Generally speaking, the intention of coercion does not include the coercion's desire to obtain certain benefits for itself through the coercion, and profit is only a matter of its motivation. It is precisely because the coercion has the intention of coercion, so its degree of fault is relatively large.

3. The intimidator has carried out an act of coercion. Coercive behavior includes the threat of imminent harm or the threat of direct harm to another person. The intimidator can threaten to cause damage to citizens, their relatives and friends, or threaten to cause damage to a legal person. The coercion does not necessarily depend on whether the harm is serious. Fear can constitute coercion. It should be noted that since the coercive act is carried out against a specific party, the determination of whether the coercive act is constituted should be judged on the basis of whether the specific victim, rather than ordinary people, feels fear under the circumstances at the time. Coercion can be constituted even if the victim does not feel fear.

Coercive behavior is usually carried out to force the other party to enter into the contract when the contract is concluded. After the contract is concluded, one party's coercion to force the other party to change or terminate the contract may also constitute coercion. If the purpose of coercion is not to force the other party to enter into a contract, such behavior will constitute a tort or other illegal act, and there will be no issue of coercion into a contract.

3. The coerced person entered into a contract due to coercion. That is to say, because one party's coercive behavior makes the other party psychologically fearful, that is, because he is facing damage or will face damage, he will have a psychological state of terror and fear. Under the domination of this psychological state, the coerced person is coerced to conclude contract. Since the coerced person concluded the contract under the condition of being intimidated, the meaning is untrue. However, if the coercive act of the coercing party does not arouse fear in the coerced person or even if there is fear, but does not make a certain expression of will, it cannot be considered that there is a causal relationship between the coercive act and the expression of will of the coerced person.

4. Coercive and threatening actions constitute coercion only when they are illegal. Coercion imposes a kind of coercion and threat on the other party. This threat must be illegal and has no legal basis. If one party exerts some kind of pressure on the other party under the premise of legal basis, it does not constitute coercion. Therefore, since the right to sue is the legal right of the parties concerned, after the conclusion of the contract, if one party refuses to perform the contract, and the other party exerts pressure on the other party to perform the contract by legal means such as filing a lawsuit, it does not constitute coercion. Similarly, since the objective evaluation of other people's credit status belongs to the right of freedom of speech of the parties concerned, the credit company's means of disseminating the debtor's debt record to require the debtor to sign a repayment agreement does not constitute coercion.

2. A contract in which the parties maliciously collude to damage the interests of the state, collective or third party.

The contract of malicious collusion refers to the illegal collusion between the two parties to conclude a certain contract, which causes damage to the interests of the state, the collective or a third party. It can be seen that the behavior of the perpetrator is obviously illegal, so it can be treated as an illegal contract. Such contracts are void contracts.

The main characteristics of this type of contract are:

1. The party concerned is out of subjective malice. The so-called maliciousness is relative to good faith, that is, knowing or should know that a certain behavior will cause damage to the country, the collective or a third party, and intentionally do it. If both parties or one of the parties does not know or should not know the damage results of their actions, it does not constitute malicious intent. The party involved has malicious intent, indicating that it has the subjective intention to violate the law.

2. The purpose of the collusion between the parties is to harm the interests of the state, the collective or a third party. Collusion, first of all, means that the parties have a common purpose, that is, they all hope to harm the interests of the state, the collective or a third party through the implementation of certain actions. The common purpose may be manifested as an agreement reached by the parties in advance, or it may be that one party expresses its intention, and the other party or other parties know that the purpose achieved by implementing the act is illegal, and express acceptance in a tacit way. Secondly, the parties cooperated with each other or jointly implemented the illegal act. The intention expressed by the parties in malicious collusion is true, but this expression of intention is illegal and therefore invalid.

Third, cover illegal purpose contracts with legal forms.

The so-called concealment of illegal purpose in a legal form means that the behavior performed by the party is legal in form, but illegal in content and purpose. This kind of behavior is also called concealment behavior. In the implementation of this kind of behavior, the form or behavior intentionally expressed by the party concerned is not to achieve its purpose, nor is it the real meaning, but only hopes to cover up and achieve its illegal purpose through this form and behavior. For example, in the transfer of real estate, the buyer and the seller achieve the purpose of evading national taxation. On the surface, they sign a house gift contract and handle the gift certificate, but they pay the house money in private.

4. Contracts that damage the public interest.

According to the practice of civil legislation in our country, harming the public interest is equivalent to the principle of public order and good customs in foreign civil laws. This principle originated in Rome and has become one of the legal foundations widely followed in the world today. For example, Article 6 of the French Civil Code states: "Individuals may not specifically agree to legal acts contrary to public order and good morals." Article 138(1) of the German Civil Code states: "Laws contrary to good morals behavior, invalid". Article 91 of the Japanese Civil Code stipulates: "Judicial acts whose subject matter is contrary to public order and good customs are invalid."

As the basic principle of modern civil law, the principle of public order and good customs embodies the value concept of social standard. Its main function is to adjust the conflict between personal interests, social interests and public interests, and to maintain social and economic order.Order and public morality play a major role, so it is considered by some scholars to be the supreme principle in modern civil law.

In my country's civil legislation, both the "General Principles of Civil Law" and "Contract Law" regard safeguarding social interests as a basic principle, which is equivalent to the principle of public order and good customs in Western countries in terms of its status and role.

In practice, there are two issues that should be paid attention to when determining no effect:

1. Correctly handle the relationship between contracts that damage the public interest and other invalid contracts. Judging from the essence and core of the invalid contract system, the reason why such contracts are invalidated is because they violate the law and social public interests. Judging from the provisions of Article 52 of the "Contract Law", other types of invalid contracts also have the attribute of directly or indirectly damaging the public interest.

2. Correctly grasp the judgment standard of harming social public interests: As a basic principle clause, its most basic characteristics are abstract and general, so it is particularly important to master its judgment standard in practice, and this judgment standard It cannot be directly stipulated by legislation. Because if various specific standards and applicable situations are directly stipulated by legislation, this clause will lose its abstractness and generality, and at the same time, it will lose its function of overcoming the limitations of statutory law. Judging from foreign legislation and judicial experience, the so-called standards are often sought through some writings and classic cases.

V. Contracts that violate the mandatory provisions of laws and administrative regulations.

This kind of contract is a typical invalid contract. The laws mentioned here refer to the laws formulated by the National People's Congress and its Standing Committee, and the administrative regulations refer to the regulations formulated by the State Council. Acts that violate these national laws and regulations are of course invalid. Even if the parties violated the law subjectively due to negligence, that is, they did not know at the time of signing the contract that the terms of the contract entered into were prohibited by the law, the contract should also be confirmed to be invalid.

It is worth noting that my country's Contract Law only stipulates that contracts that violate the mandatory provisions of national laws and administrative regulations stipulated by the State Council are invalid, but does not mention contracts that violate administrative regulations, local regulations and local regulations invalid question. This is not to say that all contracts in violation of these provisions are valid, but it only means that contracts in violation of these provisions are not necessarily invalid contracts. Whether these contracts should be declared invalid should take into account various factors, for example, objectively there are some administrative Regulations, local regulations and local regulations contradict the spirit of laws and administrative regulations.

6. Contracts that are required by laws and administrative regulations to go through approval, registration and other procedures to become effective.

Contracts that require approval, registration and other formalities as stipulated by laws and administrative regulations to become effective are not effective contracts before approval and registration are completed. At present, the contracts that need to be approved and registered mainly include: land use rights, real estate, motor vehicle sales and mortgage contracts.

The above content is excerpted from "Building an Integrity Unit - ICE8000 Integrity Management" (written by Fang Bangjian, free to use, but please indicate the source)