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Gao Shengping: Formal Review of the counterpart in Corporate Surety


Abstract: Since the distinction between the effective and administrative mandatory provision does not cover the ultra vires of private law£¬the validity of the guarantee contract without internal resolution should not be determined simply by the norm nature of article 16 of Company Law £¬when the ultra vires guarantee is offered by the company legal representative£® It is inappropriate to deny the examination obligations of the counterpart according to the rule stipulated by article 61£¬paragraph 3 of General Provisions of Civil Law£¬¡°any restriction on the legal representative¡¯s right of representation imposed by the bylaws or the supreme organ of the legal person shall not be set up against bona fide opposite parties¡±£® Under article 50 of Contract Law£¬is essential to determine the validity of ultra vires guarantee for the company£® It is the obligation of the counterpart to exam the authority of the legal representative in order to determine whether the counterpart know or should know the ultra vires of the legal representative£® However£¬the counterpart should only take the obligation of reviewing the company bylaw and internal resolution etc formally£¬in order to avoid increasing the burden of the counterpart to review£¬save transaction costs£¬balance the interests of all parties and achieve the legislative purpose of article 16 of Company Law£®If the counterpart did not meet the obligation of formal review and know the ultra vires of the legal representative £¬not ratified by the company£¬the guarantee contract shall not be effective to the company£¬and the loss of the counterpart should be shared between the counterpart and the legal representative according to their fault£®

KeyWords: Corporate Surety; Ultra Vires; Legal Representative; Apparent Representation; Formal Review

(Editor: Liu Xiaoling)

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