Liability For Ineffective Contract Formation

The case is as follows: Xinluo international trading company (hereinafter referred to as Xinluo company) is the sole proprietorship company registered by the defendant Zheng Guangrong in Hongkong, which ended in October 31, 1995.

On the 9 day of 1994, the Xinluo company authorized Dong Xinhua and the plaintiff to deal with the real estate paction. The two sides signed a "purchase contract". The contract stipulated that the Xinluo company sold the property to the Jin Shan Dynasty, the total price was RMB 1 million 600 thousand yuan, and the Xinluo company made the same month in July 28th, and agreed to pay a penalty.

Since then, Jin Shan has paid most of the money to Xinluo company.

In October 4, 1994, Jin Shanzhao got the property certificate of the house, and found that the construction area was not enough for the contracted construction area, which was objection to Dong Xinhua.

In the same year in November 10th, Kim Shan Chao began to use the management of the housing.

Because the two sides did not reach an agreement for the pfer of property rights, Jinshan filed a lawsuit against the people's Court of Siming District of Xiamen, requesting that the house should be confirmed, and that the Xinluo company should return the excess charge and assume the responsibility for breach of contract.

Because the Xinluo company failed to appear in court to participate in the litigation through the announcement, the court of first instance ruled in absentia in accordance with the law and delivered the judgment to the judgment.

The Xinluo company refused to accept the appeal.

After hearing the case, the court of second instance sent back a retrial with unclear facts and insufficient evidence.

During the retrial, Zheng Guangrong took part in the proceedings because the Xinluo company was closed.

In the court hearing, the plaintiff complained that it had paid over 148 yuan in succession, but the defendant had repeatedly broken the contract, demanded that the house sale and purchase contract be confirmed, and the defendant returned the overdue payment and paid the penalty.

Defendant Zheng Guangrong argued that housing has not yet been pferred.

It is now required to confirm that the relationship between the house and the seller is invalid, and that the purchase will be returned to the plaintiff.

The purchase contract has not yet been legally effective, and there is no question of liquidated damages.

After the trial, the Siming District Court held that although the plaintiff and the Xinluo company signed the purchase and sale contract, they had already paid most of the housing charge and actually used and managed the house of dispute. However, the two sides have not been able to pfer the pfer of property rights to the housing management department so far. They should rescind the housing sales contracts between the two parties and return the property they acquired.

Accordingly, the court ruled in July 23, 1997 that the relationship between the defendant and the defendant was invalid and the two sides returned their property.

After the judgment of the first instance, the plaintiff refused to accept the Jin Dynasty, appealed to the intermediate people's Court of Xiamen, requested the cancellation of the original trial decision, and ordered the appellant to continue to fulfill the purchase contract.

The intermediate people's Court of Xiamen held that although the two sides had not handled the pfer of property rights, the Jin Dynasty had already paid most of their housing bills, and Zheng Guangrong also used the house to pay for the good deeds, and gave all the housing warrants to the Jin Dynasty.

Now that Zheng Guangrong has made a case that the house has not gone through the formalities for pfer of the house, there is no justification for it, and the contract can be carried out. It should continue to perform. It can be pferred from the two parties to the real estate management department.

The court decided in November 30, 1997 to revoke the original trial decision. The two sides will go to the Xiamen land and housing management department to reissue the real estate paction procedures within 10 days after the decision comes into effect.

On this issue, the decisions of the court of first instance and the court of second instance represent two opposing views respectively.

Here, I do not want to analyze the two points of view from the perspective of the current law, and mainly discuss how we view the contract that has not yet been established from the perspective of ought to be.

At the same time, the third chapter of the law also takes the validity of the contract as the subject. In the forty-fourth clause, "a contract established according to law shall come into force when it is established. The provisions of laws and administrative regulations shall be approved and registered, and the procedures shall be effective."

The forty-fifth, forty-sixth provision stipulates that a contract with a valid term or term will come into force from the time of the conditional accomplishment or the time limit.

From these Provisions, we can clearly see that the establishment and entry into force of contracts are not only different in time but also in effectiveness. So what is the difference between the "legal binding force" and "effective" of the contract?

At the same time, the contract law makes a systematic stipulation on the validity and invalidity of the contract in the chapter "validity of contract". What does it mean by the contract's validity and invalidity?

To answer these questions, we must start with the establishment and entry into force of the contract.

The establishment of a contract does not involve any state intervention. It is entirely the result of the autonomy of the parties.

Since the establishment of the contract concerns only whether the parties have reached a satisfactory agreement, theoretically, there is only one requirement for the establishment of the contract, that is, the meaning of the parties is consistent.

It must be noted that this statement is precondition, that is, only the "legally established" contract is legally binding.

What is legally established?

The author believes that this involves the effectiveness of the contract (effective and invalid) system.